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The GoldBugg Report - August 26, 2008

August 26, 2008

-"Geopolitical risk is higher now than at any time since the end of the Cold War and looks set to remain heightened in the coming months. This will be a contributory factor in markedly higher gold prices in the coming months and years." Mark O'Byrne

-It is worth remembering that gold's price of 12 months ago was $650 and we are still up 28% since the start of the credit crisis ($650 to $834). A mean feat considering the extent of declines in other markets. Mark O'Byrne

-"Gold and silver are nearing the end of the savage correction they have endured. With silver the 'long shadow' of gold falling further on the decline we would expect it to outperform gold going forward, particularly as we see investment demand in that metal appearing ahead of that demand in gold." Julian Phillips

-Gold May Rally Through 2010 as Demand Gains, Citigroup Says. Gold may rebound from a slump and rally through 2010 as fabrication demand rises and on expectation the dollar will resume its decline against the euro, Citigroup Inc. said.

GOLD

-U.S. Suspends Sales of American Eagle Gold Coins, Treasury Says. The U.S. Mint suspended sales of its ``American Eagle'' gold coins after soaring commodity prices led collectors and investors to deplete supplies, a Treasury official said. Treasury spokeswoman Jennifer Zuccarelli confirmed the government notified dealers of the suspension last week. It is the first time in two decades that the Mint halted sales of the coins, which are made of 22-carat gold from domestic mines. The coins also contain small amounts of alloy for hardening.

Gold prices soared over the past year, with the most active gold futures reaching a record $1,033.90 an ounce on March 17 as the price of crude oil increased and the dollar weakened against the euro and other currencies. Commodity prices have since retreated. American Eagle coins, introduced in 1986, are also available in silver and platinum. The suspension was reported in today's editions of The Wall Street Journal. Bloomberg

-U.S. mint suspends gold coin sales; futures price is a fiction. Read more here-http://www.gata.org/node/6489

-American Eagle gold coins sold out after spree. Read more here-http://www.gata.org/node/6505

-The Eagle Has Been Grounded. Mint Halts Gold-Coin Sales After Supply Depleted Amid Price Drop. Read more here-http://www.gata.org/node/6504

-Another gold conspiracy unveiled! A dig at GATA from a U.S. gold coin dealer over assumptions it has made, and publicized, regarding the U.S. Mint's recent suspension of 1 ounce Gold Eagle sales. All credit to GATA though in that it has linked to this article on its own website too. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=60275&sn=Detail

-Why Precious Metals Retreated. Silver and gold lease rates were in negative territory the last few weeks as the central banks are selling cheap silver and gold to stabilize the financial markets, notes Jurg Kiener, CEO of Swiss Asia Capital. He tells CNBC's Martin Soong & Sri Jegarajah more. Read more here-

http://www.cnbc.com/id/15840232?video=826763189&play=1&__source=RSS*tag*&par=RSS

-Franklin Sanders: Paper prices no longer rule the precious metals markets. Twenty-eight years of brokering silver and gold have not prepared me for what I met this morning.

One of my wholesalers said he was not selling anything, only buying, until further notice. Another refused to give any prices until he adjusted his spreads.

Another was spreading one-ounce gold coins, normally at $7-$8, at $25. Another said he was making no sales for immediate delivery or deferred payment, only sales for 30 days' delivery paid at once. Read more here-http://www.gata.org/node/6492

-The gold rush is still on. Yes, the precious metal has pulled back with other commodities. But the underlying trends still suggest it will climb to $1,000 and beyond. Read more here-

http://articles.moneycentral.msn.com/Investing/CompanyFocus/TheGoldRushIsStillOn.aspx?page=all

-Gold "Bubble" Burst? Much of the financial media is once again heralding the bursting of the "gold bubble" or "precious metals bubble" and many seem to think that this is the end of the bull markets in gold and silver. It is interesting that it is the same commentators who never predicted a bull market in gold, barely acknowledged a bull market was in existence and yet they are again gleefully banging the "precious metals bubble is burst" drum.

The extent of the bearishness amongst many commentators and institutions is a classic contrarian indicator and is exactly what happens in bull markets which climb a 'wall of worry'. Bull markets do not normally end with the majority calling the top correctly rather they end when the majority (including the media) have been conditioned to expect ever higher prices and have given up attempting to call a top.

Only when the prevailing mass psychology is all bullish do bull markets end. As by then there are few buyers left to prop up prices and there is often a final exhaustion rally prior to the end of a bull market. We are a long way from that now with much of the media continuing to completely ignore gold most of the time and only some specialist financial media covering it on a regular basis.

There is blood in the street in the futures market and worry and fear is at levels not seen so far in this bull market and this should see prices bottoming in the coming days. Also it is worth recalling the huge sell off in 1974. Gold had surged from its fixed Gold Standard price of $35 per ounce to over $200 in 1974 prior to a brutal sell off that saw prices fall in half to nearly $100.

At the time, many called a market top and they were proved very wrong when prices subsequently rose 8 fold in the next 6 years. The fact that an asset class can be considered in a bubble when it has only recently surpassed its all time record nominal high of 28 years ago is astonishing and will be seen as so in the coming years when gold likely reaches its inflation adjusted high of some $2,400 per ounce. Don't believe the gold and silver "bubble" burst hype! Mark O'Byrne

-Unprecedented Investment Demand Leads to Supply Issues in Physical Bullion Market. The massive disconnect between the physical market and the paper futures market continues. There is now an unprecedented situation where large wholesalers and retailers of physical bullion in the US and internationally are having difficulty keeping up with investment demand.

Some are completely out of stock of some of the most popular bullion products such as gold Krugerrands (1 ozt) and gold American Eagles (1 ozt) and silver American Eagles (1 ozt) and silver bars (1 ozt, 10 ozt and 100 ozt).

There are similar issues internationally and The Times of India reports: "There is a shortage of the yellow metal in the bullion banks and traders." There are now also significant delays in delivering bullion (usual deliveries of 5 to 10 days are now taking some dealers 4 to 8 weeks to make). Gold Investments is a bullion broker and due to relationships with many of the major wholesalers in the US and EU has not been affected by these supply and delivery issues and can currently offer all bullion products in quantity for delivery internationally within 10 working days.

Large government mints and refiners are having difficulty meeting the demand and some are rationing supply to large dealers. Large wholesalers, retailers and institutions such as the Perth Mint are experiencing huge demand and even as spot prices have been falling sharply, there are little or no sellers and buyers are continuing to vastly outnumber sellers. Another indication of the sharp tightness in the bullion market is seen in the fact that premiums are rising very significantly on nearly all bullion coins and bars. Wholesale prices for some bullion coins have risen 2% to 3% in a matter of weeks.

This huge demand is not being reflected in the futures market where the speculative hot money of large hedge funds and institutions with short term horizons is leading to materially lower prices. Leveraged margin players who were long have had their heads handed to them on a plate as the shorts are pushing prices as low as possible in order to maximize profits. Clearly, this situation is not sustainable as ultimately the laws of supply and demand of the physical metal will dictate prices and not the speculative and manipulative antics of black box, momentum following traders.

Large, smart money is accumulating physical bullion away from the more risky leveraged casino that is the futures market. Thus, this latest of vicious sell offs is set to be another sharp correction in the gold bull market designed to as usual flush out the weak hands. The bounce when it comes will likely be just as dramatic as the shorts attempt to cover en masse. Should some large players decide to stand for delivery of near term futures contracts when they expire, then we could see some real fireworks and gold will be above $1,000/oz in very short order. Mark O'Byrne

-Why Buy Gold? Read more here-http://news.goldseek.com/ZihlmannInvest/1219244400.php

The chart above clearly shows one thing: long-term trends often last many years. The bear market that started in 1988 ended in 1993. The up-swing that followed lasted three years from 1993 until 1996 and culminated in what may be called a false break-out. Then another bear-market unfolded taking the gold price down to $250 over a period of almost four years.

Then the spike in the gold price (1999) came as a consequence of the central banks' announcement that they would be limiting their gold-sales. The 1999 bottom was tested again at the beginning of 2001. At that time, when few believed that any money should be put into precious metals, the present bull market started; a bull market we deem has still a long way to go in spite of the present correction.

In 2006, the gold price reached a fresh recovery high of $720.1 after a steep rise of roughly 80%. The correction that followed took it down to $560 or 22% before the gold price started to climb again. As per closing price of Friday August 15, gold has fallen 21% from its high reached in January 2008. This correction resembles the one we had gone through in 2006. The long-term trend is intact and we expect the gold price to reach a new high not later than 2009.

-Heavy demand for India gold amid dwindling stocks. India's gold prices were higher on Monday as foreign markets rebounded, but heavy demand from investors and retailers left sellers with little stocks to offer, dealers said. "I am saying 'no' to customers. I'm telling them to inquire the next day," said Jitendra Kantilal, partner at Jugraj Kantilal & Co, a large bullion trader in Mumbai's Zaveri Bazaar. Read more here-http://in.reuters.com/article/businessNews/idINIndia-35059020080818?rpc=401

SILVER

-Try to see gold and silver as just another currency. Gold and silver are likely to act more and more like a currency rather than metals with other uses from hereon. There will also be an increased decoupling from the euro and pound sterling which will go there own way against the dollar without influencing precious metal prices.

The painful mid-summer correction in precious metals appears to be over, and those who bought junior explorer shares at the depth of this panic have already been rewarded with large gains. However, there is still plenty of money to be made by buying the juniors as they remain at depressed prices relative to the metals.

Investors around the world are increasingly attracted to cash. That is logical in a world where shares look overvalued in a recessionary environment for profits, bonds are giving negative returns after inflation and real estate is still highly overvalued.

It is not logical, however, to buy US dollars. The systemic crisis in the US financial system has several more down legs to come. We know that typical financial crises last for about three years and we are only one year into this event.

The dollar may be on the rebound now, and possibly for this autumn but this rally will not last. Buying US stocks can only be a short term strategy and one doomed to failure, with a major bear market still to come.

That is why gold and silver remains the best investment opportunity, and the sell-off of mid-August gives a prime buying opportunity. The buyers of US stocks today are setting themselves up for big losses in the coming crash as the US economy is destined for even greater weakness in 2009 and profit expectations are still way too optimistic.

In an environment this bearish you can really only choose cash or precious metals for safety and treat the latter as currencies. Personally I prefer a currency outside the control of the US which is prone to devaluation and inflation. Gold and incredibly undervalued silver will rise to this challenge. The euro and pound also look losers. Peter J. Cooper-Story here-http://news.goldseek.com/GoldSeek/1218723600.php

-A Fabrication Bottleneck or Something More. The Internet is abuzz with reports that precious metal dealers have stopped selling coins and small bars because they have run out of inventory.

For example, Franklin Sanders reports on goldprice.org that his inability to purchase product from his suppliers is something that he has never seen before in his "twenty-eight years of brokering silver and gold." On Friday afternoon, Kitco posted the following notice: "Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products."

The rush out of fiat currency and into precious metals on this latest drop in prices is not just a North American phenomenon. The Times of India reports: "There is a shortage of the yellow metal in the bullion banks and traders."

The bottom line is that it is difficult, if not impossible, to buy coins and small bars. Mints and refiners are back-ordered. Dealer shelves are bare. But the question is, why? Is it just a fabrication bottleneck, or is something else happening?

When I see or hear that store "shelves are bare", my first reaction is that government price controls have been imposed. Price controls always create shortages. But there are no price controls on the precious metals at least not yet anyway. So absent price controls, the answer to dealer shortages is simply that the price of gold and silver is just too cheap. James Turk-Read more here-http://goldmoney.com/en/commentary.php

-Unfortunately, many folks are panicking or depressed about silver, gold and other commodities. I think that we need to remind ourselves about the legendary Jesse Livermore when he said to be "right and sit tight." Silver, gold, oil and other commodities are on a long, zig-zag upward march that can't be stopped by any firm or government agency.

The commodities super-bull market is alive and well because the fundamentals are too powerful to suppress. Don't get fooled or spooked by the irrational and ill-conceived short-term gyrations. Stick with the fundamentals and stay focused on the long-term. I know that I am. Paul Mladjenovic-Read more here-http://www.safehaven.com/article-10998.htm

-Now is not the time to panic. Whatever you do, don't be scared into selling! Invest whatever you can in gold and silver now. Sometimes I feel like a broken record when I issue buy recommendations and say that this is the lowest price you will ever again be able to buy silver, but I think it is true.

Silver has been making higher lows since 2003 and every missed buying opportunity means that you will end up buying at a higher price down the road. Timothy Silvers-Read more here-http://www.silverbrothers.com/081708.html

-Silver Shortage? What, Me Worry? David Bond-Read more here-http://news.silverseek.com/SilverSeek/1218779880.php

-Jason Hommel: Silver has run out now! Read more here-http://www.gata.org/node/6502

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1219089988.php

-David Morgan silver commentary-http://news.silverseek.com/SilverInvestor/1218807383.php

-Eric Sprott's Barron's interview on the markets, energy, gold and silver. Read more here-http://webreprints.djreprints.com/2012610711858.pdf

-Silver Is Key To Reducing Pneumonia Associated With Breathing Tubes. Read more here-http://www.sciencedaily.com/releases/2008/08/080819170435.htm

PLATINUM-PALLADIUM

-Platinum price to reach new highs over next quarters CPM Group expert. The CPM Group's commodity expert Jeffrey Christian tells Mineweb why platinum is still an attractive investment and reveals some of his price projections.

Platinum is still a relatively attractive investment in the market as the price is set to increase to $2,200 in the first half of next year and to remain at high levels of around $2000- $1,900/ounce through the end of 2009 and 2010, says the CPM Group's commodities expert Jeffrey Christian.

Christian told Mineweb in an interview that the downward movement in the platinum price over the last few weeks was technically driven as new resources funds and hedge funds were simply selling because the platinum price had started to decline.

He said there were no macro economic reasons for the technical sellers' actions, nor were they acting on price fundamentals. The sellers of platinum were following a "gut feeling" and price charts that prompted them to sell when the price declined and to buy when the price increased.

Vehicle manufacturers also played a role in recent platinum price movements as they bought PGMs to add to metal inventories in the first quarter when the South African power crisis erupted, but either sold or lived off their inventories in the second quarter as they fought for survival.

However, Christian said he has seen new buying in the market over the last two weeks by investors driven by platinum's long-term fundamentals. He believes the platinum market is currently tighter compared to nine months ago as the South African power crisis in the fist quarter of the year saw producers and refineries selling off inventories.

Lower prices also dampen selling in the physical market, while the auto industry's use of platinum has probably decreased by 2% and not by 10% as commonly believed. And while South African producers are pushing as much concentrate as possible through their smelters to make up for losses, this would only cause a short-term surge in supply. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page35?oid=60097&sn=Detail

-Platinum, Palladium Will Rise in Next Three Months, UBS Says. Platinum, palladium and silver will advance in the next three months, UBS AG said. UBS expects platinum to trade at $1,550 an ounce in one month and $1,700 in three months, the bank said today in an e-mailed report. Palladium will trade at $300 an ounce in one month and $350 in three months. Silver will trade at $14.70 an ounce in a month and $16.40 in three months. Bloomberg

DEFINITIONS-QUOTES-QUICK HITS

-Short Covering. Purchasing securities in order to close an open short position. This is done by buying the same type and number of securities that were sold short. Most often, traders cover their shorts whenever they speculate that the securities will rise. In order to make a profit, a short seller must cover the shorts by purchasing the security below the original selling price. Investopedia.com-Read more here-http://www.investopedia.com/terms/s/shortcovering.asp

-SEC May Propose New Short-Sale Rules Within `Weeks,' Cox Says. U.S. Securities and Exchange Commission Chairman Christopher Cox said his agency will propose new rules aimed at curtailing manipulative short sales of stocks in the "next few weeks." Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a754hMpneMR8&refer=home

-If Michael Phelps were to melt down the eight gold medals he won at the Beijing Olympics Games and sell the gold, he could probably make about $1,225. Read more here-

http://www.marketwatch.com/news/story/olympic-medals-more-valuable-metal/story.aspx?guid={6D995B86-A2F3-489A-A89E-0EE7EFCAB03A}&dist=TNMostRead

-For some additional perspective, it's well to remember that a year ago, gold was trading at $670/oz. "The events of a few days, or even a few months, do not necessarily undo what is so far an event that has been going on for seven years," said George Milling-Stanley, a director at the World Gold Council. "A bull market can stand a correction of 30% in the price from time to time and still remain intact." Casey Daily Resource

-Star fund manager sticks to $1600 gold troy ounce prediction despite slump. Despite gold falling to below $800 for the first time in nine months on Friday and hitting his fund's performance, AAA-rated star US equity manager François Mouté is standing by his prediction of the gold price reaching $1600 per troy ounce in the next year.

Mouté thinks this recovery in the dollar will prove short-lived. 'The recovering dollar has been another factor putting pressure on gold,' he says. 'But the dollar is not going much further up. So I think the problem caused by the dollar is essentially complete.' The basis for his bullishness on gold is a negative real interest rate environment. He points to the US headline CPI figure of 5.6% combined with the far lower levels of interest rates for fed funds and US treasury bills (2% and 1.8% respectively).

'We have negative real interest rates like we have not seen since the seventies, so I think fundamentally there is a strong background for gold in particular, but also commodities in general. I am patiently waiting for the price to return.' Silver exposure is also a significant feature of Mouté's portfolio. The silver price has also fallen, leaving it extremely undervalued according to the veteran Frenchman. 'Silver at $12.50 is like having gold at $600. Silver is very depressed at the moment,' he says. Read more here-

http://www.citywire.co.uk/selector/-/news/fund-manager-interviews/content.aspx?ID=311838

"Longer term, we would not be surprised to see gold double,'' the bank's analysts John Hill and Graham Wark wrote in a report. "We would be aggressive buyers at current levels expecting gold to work higher through 2009/10.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aVmAo0qxUH.U

-While gold is suffering during this time of a rallying U.S. dollar, nevertheless, Citigroup advised, "We would be aggressive buyers at current levels." While Citigroup finds that gold "has been punished amid a broad-based correction in commodities," the analysts assert that the floor in the U.S. dollar "is likely a short-term blip for gold, as it underscores the frailty of fiat currency globally."

"We see gold as attractive, heading into a period of seasonally strong physical out-take, which tends to tighten the market and allow any negative macro catalysts to be rapidly transmitted to prices. Gold will likely shine over time. Long-term drivers remain intact; falling mine production especially in S. Africa, competitive currency devaluations, wealth creation on India/China, and petrodollar flows." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=60092&sn=Detail

-Gold fundamentals remain very strong with geopolitical risk, deepening worries about the financial sector, poor economic data, soaring inflation and stagflation internationally leading to very significant physical demand internationally.

Retail demand is huge in the U.S. with retailers, wholesalers, refiners and government mints having difficulty keeping up with physical demand for coins and bars. In India too the demand is massive with gold inventories cleared out, shortages and soaring premiums.

Available bars of gold in India have all but disappeared, due to a 'perfect storm' that has restored gold's lustre and forced physical premiums skyward ahead of the peak season for jewellery demand. A senior figure at a bullion bank in London said "pretty well everyone is sold out of stock there. We have seen premiums as high as $2.50 an ounce which is unheard of in India. Most refiners are now booked solid through September."

Reuters reports strong physical demand throughout Asia and in India this week: "Premiums for gold bars shot to their highest level this year as consumers returned to the physical market in droves, encouraged by a sharp drop in bullion prices ahead of key religious festivals in Asia." Mark O'Byrne

-Another indication of the strength of precious metals investment demand is seen in the lack of selling or redemptions in the precious metal ETFs. Gold, silver, platinum and palladium prices have fallen some 20%, 36%, 39% and 51% respectively. However ETF gold holdings had only fallen 4.1% to 1000.1 tonnes as of last Friday. ETF holding's of silver, platinum and palladium are down 1.3%, 41.4% and 5.3% respectively.

This clearly shows that ETFs are being bought by long term holders who are concerned about macroeconomic and systemic risk. Speculators remain in the futures market with all the leverage and risk involved but smart money investors are remaining passively in the precious metals (particularly in gold and silver) in anticipation of higher prices as the global economic crisis deepens. Mark O'Byrne

-Peter Spina, of Goldforecaster.com, who is nearly always clearheaded about these things, wrote: "The short-covering rally in the dollar is a prime driver for the pullback in gold prices and that was aided by free market intervention by Central Banks.

All this has done is provided additional time before the serious nature of the financial crises has to be once again confronted. The ingredients are in place for a significantly higher gold price and this short-term anomaly only means that gold can still be accumulated sub $1,000 an ounce. The rapid rate at which dollars are being created (according to shadow stats the no longer published M3 is expanding at double digit rates) remains the primary driving force in the gold market, this cheap monetary policy will continue to debase the value, integrity and confidence in the faith-backed Dollar.

Competitive paper money devaluations will enhance gold's luster going forward as hundreds of billions of fictitiously created paper currency is used to continue these monstrous bailouts with government deficits rapidly growing." Casey Daily Resource

-Farmers' Almanac says cold winter ahead. Read more here-http://news.mainetoday.com/updates/031815.html

RARE COLORED DIAMONDS

-Auctioneers of luxury commodities such as art, wine and diamonds say investors are exploring alternative markets as stocks decline, economies stall and banks sack workers. Financial shares have led the MSCI World Index to a 17 percent slump this year as losses and writedowns top $500 billion. Art investment funds buy and sell a pool of works for a set fee and a share of any profit made. "Demand for the rarest things is still very strong,'' said Owen in a telephone interview. "The middle market is more difficult.'' Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEFEhsFWo_m8

-A rough diamond story. Rough diamond prices continue to rise, and listed diamond stocks continue going down, and down. The Diamond Trading Company (DTC), the marketing arm of De Beers, the world's biggest miner and marketer of rough diamonds by value, announced further price increases this week, for a 16% cumulative increase since the start of the year. But just as rough diamond prices have continued to rise, so investors have continued selling down listed diamonds stocks. Read more here-

http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=60323&sn=Detail

-African Diamond Industry Faces Diminished Reserves. "We can no longer guarantee big stones because mines are giving more of small stones." "We need to move over 100 tonnes for every little carat diamond. With increased cost of fuel and electricity mining is a very capital intensive business." Read more here-http://www.newera.com.na/archives.php?id=22296

OIL-GAS-GASOLINE

-Why oil won't fall below $100. With a surge in the price of global commodities, it's costing more to produce a barrel of oil than ever before. Read more here-

http://money.cnn.com/2008/08/21/news/economy/oil_price_floor/index.htm?postversion=2008082115

-As Oil Giants Lose Influence, Supply Drops. Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.

Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies.

And much of their production is in mature regions that are declining, like the North Sea. The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence and with it, their ability to increase supplies. Read more here-http://www.nytimes.com/2008/08/19/business/19oil.html?_r=2&adxnnl=1&oref=slogin&partner=rssnyt&emc=rss&pagewanted=print&adxnnlx=1219337595-6Ww+xwC1r6Dgn4DAnYjRqA

-Natural-Gas Discount to Crude Is `Too Large.' Natural gas is poised to outperform crude oil after prices for the heating and power-plant fuel dropped almost 40 percent since the end of June. The ratio of crude to gas futures prices on the New York Mercantile Exchange rose Aug. 14 to the highest level since September 2006. It also shows how historically, gas outperforms crude after the ratio climbs to more than 10 or 12 to 1.

The ratio of oil to gas prices, which has averaged 8.04 since 2000, reached 14.14 last week. "It's too large of a price disparity,'' said Tom Orr, director of research at Weeden & Co. in Greenwich, Connecticut. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aa_VeMmtncY0

-Gasoline running short in Alberta, B.C. Between 80 and 90 gas stations in British Columbia and Alberta have run out of fuel as Petro-Canada continues to grapple with an equipment breakdown at its Edmonton refinery. About a dozen stations were out of gasoline last week. Read more here-

http://www.globeinvestor.com/servlet/story/RTGAM.20080821.wgasshortage0821/GIStory/

COMMODITIES

-Commodities Rally, Heading for Biggest Weekly Jump Since 1975. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=adS1jGB9mmq8&refer=home

-Do the math: Commodities are oversold. We believe this correction, while painful, is healthy and constructive for natural resource markets over the long term. Commodity supplies remain extremely tight and as global population and emerging economies continue to grow, these trends will be supportive of commodity prices.

The risk to this scenario would be major policy changes by the world's most populous countries that would slow infrastructure spending, which we continue to view as unlikely. Frank Holmes is CEO and chief investment officer at U.S. Global Investors-Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=60332&sn=Detail

-Don't Write off Gold and Commodities Bull Run. Read more here-http://news.goldseek.com/GoldSeek/1218812400.php

INFLATION-STAGFLATION

-Canada Inflation Accelerates to Fastest Since 2003. Canada's annual inflation rate rose to the highest since 2003 in July because of a surge in gasoline prices for the country's drivers.

Consumer prices rose 3.4 percent from July 2007, Statistics Canada said today in Ottawa, in line with economists' median forecast in a Bloomberg survey.

Prices rose 0.3 percent from June, less than economists' 0.4 percent forecast. With most of July's gain tied to energy prices, which have dropped in the past month, the report may not affect the Bank of Canada's ability to cut interest rates to kick start growth. Policy makers signaled in mid-July that borrowing costs would stay put for the foreseeable future, citing slow growth and projecting inflation to peak at 4.3 percent next year, more than double their target.

"We see this report as a sign the Bank of Canada has room to cut rates,'' Karen Cordes, an economist at Scotia Capital Inc. in Toronto, said by telephone, adding cuts may come later this year. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aJQYJ_BbNk3w&refer=canada

-Canadian Wholesale Sales Rise at Fastest in 16 Months. Canadian wholesale sales rose at the fastest pace in 16 months as the automotive industry rebounded. Sales advanced 2 percent to C$45.2 billion ($42.4 billion), Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said sales would gain 0.7 percent, the median of 16 estimates. The agency revised May's gain to 1.5 percent from the initially reported 1.6 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aQyXuJeonIkM&refer=canada

-U.S. Producer Prices Surge More Than Forecast in July. Prices paid to U.S. producers rose twice as much as economists had forecast in July, reflecting the jump in energy and commodity costs that has since started to wane.

The 1.2 percent increase in the producer price index followed a 1.8 percent increase the prior month, the Labor Department said today in Washington. Costs were up the most in 27 years from a year before. So-called core prices that exclude fuel and food rose 0.7 percent after a 0.2 percent gain in June. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=aArLqb.zZlKM&refer=home

-Bracing for Inflation. Despite the recent softening of oil prices, the U.S. could be looking at double-digit inflation as early as 2009. Read more here-

http://www.businessweek.com/bwdaily/dnflash/content/aug2008/db20080815_021990.htm?chan=top+news_top+news+index_news+%2B+analysis

-U.S. food prices seen rising most since 1990. Read more here-http://www.gata.org/node/6503

-Meat, Dairy May Push Food Inflation to 28-Year High. Rising prices for meat, dairy products, cooking oil and fresh produce may accelerate U.S. food inflation this year at the fastest pace since 1980, the government said in a report.

Food-price gains may be as much as 6 percent this year, up from last month's top estimate of 5.5 percent, U.S. Department of Agriculture said in the report to be released Aug. 25. Gains may reach 14 percent for fats and oils, 9 percent for dairy products, 5.5 percent for fish and seafood, 6 percent for fresh fruits and vegetables and 3.5 percent for beef, the USDA said.

The last time food jumped as much was in 1980, when the U.S. was mired in a recession. Price gains are accelerating as producers spend more on energy and livestock feed, USDA economist Ephraim Leibtag said. Gasoline jumped to a record $4.114 a gallon at the pump on July 15, and corn used to raise cattle, hogs and poultry was the highest ever on June 27.

"The main story has stayed the same'' as last month, when the USDA predicted food inflation may reach the highest rate since 1989, Leibtag said today in an e-mail. The Bureau of Labor Statistics, which supplies the historical data that USDA uses in its forecasts, showed in an Aug. 14 report that food costs jumped 0.9 percent in July after a 0.8 percent increase in June, while energy rose 4 percent after a 6.6 percent gain the previous month. Food prices account for almost one-fifth of the consumer price index. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZrPJ8RP.Jpw

-Hershey's is raising prices on all their products. By a lot! The cost of your chocolate Kisses and other such items will be 10% higher in the near future. "Commodity costs have been volatile over the last several years and continue to remain at levels that are well above historical averages," said David J. West, president and chief executive of Hershey's. "Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20% to 45% since the beginning of the year." Perezhilton.com

-Higher Costs Are Taking a Toll on Business. Prices for goods purchased by American businesses surged more than expected in July and have jumped by nearly 10 percent over the last year the sharpest increase since 1981. Read more here-http://www.nytimes.com/2008/08/20/business/economy/20econ.html?_r=1&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

-U.S. Economy: Housing, Price Reports Raise Stagflation Danger. U.S. builders broke ground on the fewest new homes in 17 years and producer prices climbed the most since 1981, providing no sign of an economic recovery or easing inflation. Housing starts fell 11 percent in July to an annual rate of 965,000, the Commerce Department said today in Washington. The Labor Department reported the producer price index jumped 9.8 percent from a year before.

"There's no doubt we're in a period of stagflation now,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York who formerly worked at both the Federal Reserve Bank of New York and the Fed Board in Washington. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aBbE5iz5ywC8&refer=home

CREDIT-FINANCIAL CRISIS

-Credit crunch may take out large US bank warns former IMF chief. The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares.

Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely.

"The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come," Prof Rogoff said at a conference in Singapore. In an ominous warning, he added: "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," he said. Read more here-http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4563171.ece or

http://www.bloomberg.com/apps/news?pid=20601087&sid=admWYNXiEBEs&refer=home

-Nobel Laureates Say Credit Crunch Hurting Growth. Nobel Prize-winning economists Myron Scholes and Daniel McFadden predicted the yearlong credit squeeze will inflict more pain on the world economy and financial markets.

The crisis is "not over and I'm not exactly sure when it's going to end,'' Scholes said today at a conference in Lindau, Germany, featuring 14 Nobel laureates in economics. McFadden said in an interview "that as the crisis continues you will see a lot of business failures.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aTtYLhidMBuI&refer=home

-Bank borrowing from ECB is out of control. The European Central Bank has issued the clearest warning to date that it cannot serve as a perpetual crutch for lenders caught off-guard by the severity of the credit crunch. Not Wellink, the Dutch central bank chief and a major figure on the ECB council, said that banks were becoming addicted to the liquidity window in Frankfurt and were putting the authorities in an invidious position.

"There is a limit how long you can do this. There is a point where you take over the market," he told Het Finacieele Dagblad, the Dutch financial daily. "If we see banks becoming very dependent on central banks, then we must push them to tap other sources of funding," he said. Read more here-http://www.gata.org/node/6506

-Dollar Surge Will Not Stop America From Feeling Effects of Global Crunch. Read more here-http://www.gata.org/node/6495

-The next credit crunch. Our easy access to plastic is about to dry up and with it our ability to fake living the good life. We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble.

That conclusion comes from the latest data on credit card debt. It's growing fast, but the problem is bigger than that and to understand what it means, we have to take a few steps back. Read more here-http://money.cnn.com/2008/08/18/news/economy/Colvin_next_credit_crunch.fortune/index.htm

-Goldman sees more pain for banks, brokers. Analysts cut profit estimates and warn of more write-downs, asset sales. Read more here-

http://www.marketwatch.com/News/Story/Story.aspx?guid={9C094170-BC50-4FFF-A5A7-9E603A93F3F4

-Sharp contraction in money supply points to Wall Street crunch. The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.

Data compiled by Lombard Street Research shows that the M3 "broad money" aggregates fell by almost $50 billion (L26.8 billion) in July, the biggest one-month fall since modern records began in 1959.

"Monthly data for July show that the broad money growth has almost collapsed," said Gabriel Stein, the group's leading monetary economist. On a three-month basis, the M3 growth rate has fallen from almost 19 percent earlier this year to just 2.1 percent (annualized) for the period from May to July. This is below the rate of inflation, implying a shrinkage in real terms.

The growth in bank loans has turned negative to a halt since March. "It's obviously worrying. People either can't borrow, or don't want to borrow even if they can," said Mr. Stein. Read more here-http://www.gata.org/node/6498

-Pimco's El-Erian Says Raising Bank Capital Is Harder. Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co., said it has become harder for financial firms to raise capital because investors such as sovereign wealth funds have gotten ``smarter.''

"We are in the process of a major adjustment of the banking system which is made harder because you don't have the capital to lubricate it,'' El-Erian said in an interview from Newport Beach, California, on Bloomberg Radio. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=alU0HWTj3r4Q&refer=home

-Lehman May Report $4 Billion Writedown, JPMorgan Says. Lehman Brothers Holdings Inc. may write down about $4 billion in credit-related investments and other assets when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said. "The credit environment continues to be difficult,'' New York-based analysts led by Kenneth Worthington wrote in a report yesterday. "It will be another difficult quarter for Lehman.''

Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, the analysts wrote. The company may have already been selling some commercial mortgage assets, they added. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaZw_5o4U1Y4&refer=home

-Merrill, Wachovia in Danger of Failing: Strategist. Read and watch video here-http://www.cnbc.com/id/26262925

-Morgan Stanley Says Financial Crisis Will Last: Report. Read more here-http://www.cnbc.com/id/26252398

FREDDIE-FANNIE

-Fannie, Freddie Fall as Barron's Says Bailout Likely. Fannie Mae and Freddie Mac fell to almost 18-year lows in New York trading on concern the government will be forced to bail out the mortgage-finance companies, wiping out common stockholders.

Both Fannie and Freddie slid as much as 12 percent after Barron's said government officials anticipate the companies will fail to raise the equity capital they need, prompting the U.S. Treasury to step in. Fannie is down 82 percent this year. Freddie has fallen 85 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=amCEpnB6I_Hw&refer=home

-Investors expecting wipeout for Fannie and Freddie. Read more here-http://www.gata.org/node/6501

-Fed's Lacker Clashes With Paulson on Fannie, Freddie. Richmond Federal Reserve Bank President Jeffrey Lacker called for ``demonstrably'' privatizing Fannie Mae and Freddie Mac, becoming the first Fed official to publicly clash with the Bush administration's strategy of keeping them as federally backed firms.

"I would prefer to see them credibly and demonstrably privatized,'' Lacker said today in an interview with Bloomberg Television. He agreed with former Fed Chairman Alan Greenspan's view that the two largest U.S. mortgage finance firms ought to be nationalized, then split up and sold off.

Treasury Secretary Henry Paulson by contrast has tried to keep Fannie Mae and Freddie Mac in their current form as government-sponsored companies owned by shareholders. Lacker's remarks come as a slide in the firms' stocks and increase in their borrowing costs spur speculation the Treasury will intervene. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHbJk11JLWtk&refer=home

-Bernanke Tries to Define What Institutions Fed Could Let Fail. Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a0v71H6gketc&refer=home

U.S. DOLLAR

-The Strong Dollar Illusion from Peter Schiff. Read more here-http://www.321gold.com/editorials/schiff/schiff081808.html

-The Dollar: Short-Term Rebalancing Of Expectations, Long Term Risk. Read more here-http://www.321gold.com/editorials/brusuelas/brusuelas081508.html

U.S.-U.K. RECESSION

-U.S. Economy: Leading Index Signals Deeper Slowdown. The U.S. slowdown will deepen in the second half of the year as housing continues to slump and unemployment rises, according to a measure designed to predict the economy's direction.

The Conference Board's index of leading indicators fell 0.7 percent in July, more than triple the drop forecast by economists surveyed by Bloomberg News. Separate reports showed the number of Americans collecting unemployment insurance remained near a five- year high last week and manufacturing in the Philadelphia region shrank for a ninth straight month. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a37O.tbVC1c8&refer=home

-U.S. Economy Facing `Rough Patch,' Fisher Tells Morning News. The U.S. economy will face a ``rough patch'' before improving, and central bankers are partly to blame for ``letting things get too far,'' with easy credit, Dallas Federal Reserve Bank President Richard Fisher told the Dallas Morning News. "I blame the regulators, including the Federal Reserve, for letting things get too far,'' said Fisher, who spoke to the newspaper in a question-and-answer session last week, in an article published today.

"The credit markets are rough right now,'' he said. ``So I expect us to have a rough patch here before we pull our socks up.'' Fisher also told the newspaper that inflationary forces in China will likely increase after the Olympics, and that the impact might be felt in the U.S. Fisher is the only voting member of the interest rate- setting Federal Open Market Committee to dissent five times this year in favor of tighter policy than his colleagues. Bloomberg

-Mrs. Fields to file for bankruptcy. The cookie company reveals its finances are crumbling, in a filing with the Securities and Exchange Commission. Read more here-

http://money.cnn.com/2008/08/15/news/companies/mrsfields_bankrupt.ap/index.htm

-UK 'Recession And Unemployment.' Some 300,000 people will lose their jobs over the next two to three years and unemployment levels may top two million, Britain's business leaders say. The British Chambers of Commerce (BCC) also forecasts the UK economy will enter recession within the coming year.

In its latest quarterly economic forecast, the BCC said Britain was heading into a "technical" recession of two or more quarters of declining output over the next six or nine months. Read more here-http://uk.biz.yahoo.com/18082008/140/uk-recession-unemployment.html

-Apocalyptic times for Britain's economy. Read more here-http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/08/20/dl2004.xml

-Goldman Sachs Says Half of the World Economy Faces Recession. Goldman Sachs Group Inc. said countries that account for half of the world's economy face a recession a year after the credit crisis began.

The U.S., Japan, the 15-nation euro area and the U.K. are ``either in recession or face significant recession risks in the months ahead,'' Goldman's London-based international economist Binit Patel said in a report to clients today.

A year since the U.S. housing slump sparked about $500 billion in credit market losses for banks globally, the world's largest economies are all stumbling as rising borrowing costs combine with record commodity prices to sap growth. The U.S. is close to a recession and France, Germany and Japan all contracted in the second quarter. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=atnK8SXk1G.8&refer=home

JIM ROGERS

-Jim Rogers Predicts Bigger Financial Shocks Loom, Fueling a Malaise That May Last for Years. The U.S. financial crisis has cut so deep and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae and Freddie Mac that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.

Indeed, the U.S. financial debacle is now so ingrained and a so-called "Super Crash" so likely that most Americans alive today won't be around by the time the last of this credit-market mess is finally cleared away if it ever is, Rogers said. The end of this crisis "is a long way away," Rogers said. "In fact, it may not be in our lifetimes." Read more here-

http://jutiagroup.com/2008/08/19/exclusive-interview-jim-rogers-predicts-bigger-financial-shocks-loom-fueling-a-malaise-that-may-last-for-years/

-Jim Rogers Says Commodities Will Rebound After Drop. Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said a tumble in commodities from records represented a temporary reverse in a long-term rally. "I don't see that it's the end of the bull market,'' the chairman of Rogers Holdings, said in an interview in Bangkok before speaking at an investor conference later today.

"Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,'' he said. Soybeans, copper, platinum and crude oil have dropped from all-time highs after a rally in the dollar curbed demand for raw materials as a hedge against inflation and concerns increased that economic growth will slow.

Sixteen of the 19 commodities in the Reuters/Jefferies CRB Index fell this month, after the index plunged 10 percent in July, the biggest such drop in 28 years. "I am contemplating whether it's time to get involved in base metals again,'' Rogers, 65, said today. "I haven't bought any for awhile.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601012&sid=abseyMStTAb4&refer=commodities

DR. DOOM

-On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.

He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac. The audience seemed skeptical, even dismissive.

As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, "I think perhaps we will need a stiff drink after that." People laughed and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a "permabear."

When the economist Anirvan Banerji delivered his response to Roubini's talk, he noted that Roubini's predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer. But Roubini was soon vindicated. In the year that followed, subprime lenders began entering bankruptcy, hedge funds began going under and the stock market plunged.

There was declining employment, a deteriorating dollar, ever-increasing evidence of a huge housing bust and a growing air of panic in financial markets as the credit crisis deepened. By late summer, the Federal Reserve was rushing to the rescue, making the first of many unorthodox interventions in the economy, including cutting the lending rate by 50 basis points and buying up tens of billions of dollars in mortgage-backed securities.

When Roubini returned to the I.M.F. last September, he delivered a second talk, predicting a growing crisis of solvency that would infect every sector of the financial system. This time, no one laughed. "He sounded like a madman in 2006," recalls the I.M.F. economist Prakash Loungani, who invited Roubini on both occasions. "He was a prophet when he returned in 2007." Read more here-http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=2&oref=slogin&ref=business&pagewanted=print

REAL ESTATE

-U.K. House Prices Fall Most Since at Least 2002, Rightmove Says. U.K. house prices posted the biggest annual decline in August since at least 2002 as reduced mortgage lending deepened the property slump in London, Rightmove Plc said.

The average asking price for a home fell 4.8 percent from a year earlier to 229,816 pounds ($426,929), Britain's most-used property Web site said in a statement today. On the month, home values fell 2.3 percent, the most since December, led by London.

"The lack of mortgage finance is central to the problem,'' Miles Shipside, commercial director of Rightmove, said in the statement. ``London, in particular, appears to be having its own special summer sale, with over 21,000 pounds off in a month.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aPPMVVpeaGto&refer=home

-Demand for U.K. Rental Homes Gains at Fastest Pace in a Decade. Demand for rental homes in the U.K. climbed in the second quarter at the fastest pace in at least a decade as a slump in property prices deterred homebuyers, a report by the Royal Institution of Chartered Surveyors showed.

During the quarter, 37 percent more real-estate brokers reported an increase in new rental contracts than those that said there was a drop, the London-based industry group said. RICS members also reported the largest increase in mandates to rent out properties since the survey was first carried out 10 years ago. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid=aPC4BFM1PjgQ&refer=home

-'Bloated inventory': RealtyTrac counts 750,000 foreclosed houses for sale in L.A. Read more here-http://latimesblogs.latimes.com/laland/2008/08/bloated-invento.html

-U.S. Builders' confidence holds at record low. A survey of homebuilders' assessment of the housing market shows the industry's sentiment tied the all-time low level set in July. Read more here-http://money.cnn.com/2008/08/18/news/economy/builders_confidence/index.htm

FORECLOSURES-MORTGAGES

-Foreclosures up, defaults down. ForeclosureRadar.com estimates that California homes are foreclosing at a rate of 1,300 per business day. And the drop in defaults is not very promising. Read more here-http://www.latimes.com/business/la-fi-realblog17-2008aug17,0,2442032.story

-S.F. Foreclosures smack home prices down 29.3%. Cut-rate foreclosed homes being unloaded by banks wreaked havoc on the Bay Area's median price in July, sending it down nearly 30 percent to a level not seen in more than four years. Read more here-http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/19/MNPK12DR3G.DTL

-The next wave of mortgage defaults. More borrowers with good credit are defaulting on their home loans, and that's going to make it even harder for the staggering housing market to recover. Read more here-http://money.cnn.com/2008/08/12/real_estate/prime_defaults_price_drops/index.htm

-U.S. MBA's Mortgage Applications Index Fell 1.5%. Mortgage applications in the U.S. declined last week to the lowest level since December 2000, further evidence that the housing market has yet to reach bottom, as fewer homeowners sought to refinance their loans. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aw_z0K.3pF6g&refer=home

A FILM ABOUT U.S. DEBT IOU U.S.A

-Another inconvenient truth. Fiscal Armageddon, coming to a cinema near you. David Walker, who until recently ran the Government Accountability Office, has made it his mission to get the nation to acknowledge and treat this "fiscal cancer". His efforts form the core of a new documentary, "I.O.U.S.A.", out on August 21st.

The message is simple enough: America's financial condition is a lot worse than advertised, and dumping it on future generations would be not only economically reckless but also immoral. Read more here-http://www.economist.com/finance/displaystory.cfm?story_id=11921663

-Movie website here-http://www.iousathemovie.com/ Watch movie trailer here-http://www.youtube.com/watch?v=HBo2xQIWHiM

-Buffett spotlights nation's debt crisis. Billionaire investor teams up with Wall Street luminaries to focus attention on America's ballooning budget deficit. Read more here-

http://money.cnn.com/2008/08/21/news/economy/buffett_town_hall.ap/index.htm

GEOPOLITICAL NEWS

-US refuses to sell planes to Israel, fearing strike on Iran. Read more here-http://www.jpost.com/servlet/Satellite?cid=1219218601145&pagename=JPost%2FJPArticle%2FShowFull

-Iranian claims of jet range dismissed. Iran's claim of having increased the range of its fighter jets, allowing them to fly as far as Israel and back without refueling, did not signify any new operational abilities, an arms expert said on Sunday. Read more here-http://www.jpost.com/servlet/Satellite?cid=1218710384313&pagename=JPost%2FJPArticle%2FShowFull

-Iran sparks US concern with satellite rocket launch. Iran said it had sent a rocket carrying a dummy satellite into space on Sunday, triggering fresh concern in Washington that the technology could be diverted to ballistic missiles. The launch is likely to further exacerbate tensions with the West over its nuclear drive, which Iran's arch-foe Washington and its allies claim is a cover for atomic weapons ambitions.

"The Safir (Ambassador) rocket was successfully launched. All its systems are Iranian-made," Reza Taghipour, head of Iran's space agency, told state television, adding that a "test satellite was put into orbit." "We have paved the way for placing a satellite in space in future," state television said, showing images of the pre-dawn rocket launch which was attended by President Mahmoud Ahmadinejad. Read more here-http://www.breitbart.com/print.php?id=080817202726.v33hy5pa&show_article=1

-Iran Pushes Ahead on Nuclear Power Plants With Search for Sites. Iran took a step toward building more nuclear power plants, selecting six Iranian companies to find sites for the projects. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=acZLquhZoQvE

-Fear of new Mid East 'Cold War' as Syria strengthens military alliance with Russia. Read more here-http://www.timesonline.co.uk/tol/news/world/middle_east/article4573599.ece

-Russia warns of response to US missile shield. Russia says its response to the further development of a U.S. missile shield in Poland will go beyond diplomacy. Russia's Foreign Ministry issued a statement saying the U.S. missile shield plans are clearly aimed at weakening Russia.

The U.S. says the missile defence system is aimed at protecting the U.S. and Europe from future attacks from states like Iran. The United States and Poland signed a deal Wednesday to place a U.S. missile defence base just 115 miles from Russia's westernmost fringe. Read more here-http://www.breitbart.com/print.php?id=D92M5GM81&show_article=1

The GoldBugg Report - August 26, 2008
Posted by Worldwide Precious Metals on Tuesday, August 26, 2008

The GoldBugg Report - August 20, 2008

August 20, 2008

Why Precious Metals Retreated-Silver and gold lease rates were in negative territory the last few weeks as the central banks are selling cheap silver and gold to stabilize the financial markets, notes Jurg Kiener, CEO of Swiss Asia Capital. He tells CNBC's Martin Soong & Sri Jegarajah more.

http://www.cnbc.com/id/15840232?video=826763189&play=1&__source=RSS*tag*&par=RSS

GOLD

-Citigroup forecasts $950 gold and a strong rebound 4Q in metal prices, mining equities. Is the bullish metals cycle over? Citigroup metals analysts say "no" and forecast a "strong rebound" in metals prices and mining stocks during the fourth quarter. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=59517&sn=Detail

-Gold is Oversold and Likely at Seasonal Lows. Gold' deep and lengthy consolidation since March should see a very sharp rally in gold's favoured Autumn months (as was seen last year and in nearly all years since 2000 see charts below). Correction and consolidation in any market is healthy and normal. This looks likely to be the last such sell off prior to a strong rally into the autumn as is typical. Gold seasonal patterns often result in lows in July or August prior to strong rallies into year end.

Previous years may be instructive in this regard. Last summer, gold fell some 7% from $687 on July 16th to $641 on August 13th. The $641 reached on August 13th marked the seasonal low and subsequently gold rallied strongly in August, September, October and early November. It reached $845 less than 3 months later for a return of nearly 32%.

Gold subsequently had a shallow and brief correction in November and early December prior to rallying from mid December low of $787 to its highs in March of $1003 or a return of 27%. A similar performance can be seen in previous years in this current secular gold bull market as seen in the excellent charts below which featured at the James Joyce Table in Lemetropolecafe.com. See charts here-http://news.goldseek.com/GoldSeek/1218628800.php

-Adam Hamilton of Zeal LLC recently completed another excellent research piece on gold' seasonal price movements and why they take place. His chart shows the strongest months of the year for gold are the autumn months. September is the best month for gold, followed closely by November, December and January.

As Hamilton astutely writes, "So of the six months between early August and early February, gold's massive seasonal autumn rally, fully four are gold's biggest months of the calendar year. You absolutely want to be long gold, and indeed the entire PM-complex since everything PM-related ultimately follows gold's lead, in September, November, December, and January. Seasonal-demand-driven price increases are very compelling then.

Obviously this is really exciting today since we are now on the verge of gold's biggest seasonal rally of the year. But remember that seasonals are a tailwind, a secondary indicator. So if gold was overbought today and greed abounded, the bullish seasonals could easily be overridden. But thankfully it is not, indeed just the opposite has occurred. Gold is deeply oversold today and sentiment is horrendous. Excessive levels of both fear and frustration have conspired to create an explosively-bullish sentiment mixture." Gold.ie

-Stage two of the gold bull market is just beginning. A war breaks out in the Caucasus, pitting Russia against a close ally of the United States. Inflation reaches a new peak in the euro-zone. The CPI reaches the highest in Britain since Bank of England independence. Rampant inflation sweeps the developing world.

Well, my own view is that gold bugs should start looking very closely at something else: the implosion of Europe. Gold bugs, you ain't seen nothing yet. Gold at $800 looks like a bargain in the new world currency disorder. Read more here-http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/08/12/stage_two_of_the_gold_bull_market_is_just_beginning

-Four reasons to buy gold now. Remembering that key support has been broken and that in 1974 we had a correction of almost 50% (yes, 50%) in an ongoing bull market, it is with some trepidation that I say gold is a buy down here, just above $800.

On top of all the fundamental arguments for gold, which you will all know only too well, here's why. In the short-term we are due a bounce. For gold to sell off like this for five weeks in succession, even with all the volatility of this bull market, has not been seen since May 2006. We are hugely oversold. We got a big bounce then and should get one now.

The central bank selling appears to have subsided. The dollar is hugely overbought and due a retrace. The inverse applies to precious metals. August is the best month of the year to buy gold and silver. Read more and view charts here-http://www.moneyweek.com/investments/precious-metals-and-gems/four-reasons-to-buy-gold-now-85754.aspx

-Gold Bull Seasonals. The bottom line is gold does have strong seasonal tendencies. Even though gold isn't grown like wheat, the passage of the calendar influences gold investment demand across the globe which directly impacts the gold price. Gold is deeply woven into cultures around the world and their various customs create lumpy gold investment demand. It is clustered at specific times instead of spread out evenly across the year.

Naturally investors and speculators should exploit these seasonal tendencies. The best time seasonally to go long gold and other PM-related trades is right now. From August to February gold's biggest seasonal rally of the year erupts. During this timespan, which includes gold's four best calendar months, the lion's share of its entire bull-market gains have been made. I fully expect the rest of 2008 to unfold according to this precedent. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton081108.html

-Gold is cheap says Richard Russell. My own policy, ever since the year 2000 I have kept a portion of our assets in gold with a smaller section in gold stocks. I've been adding bullion to our position periodically ever since. I don't consider this a trading position any more than I consider our home a trade.

I have always considered gold to be a store of wealth an asset that I don't worry about. That's still my position, unlike stocks or even bonds I never worry about the solvency of gold. Read more here-http://www.321gold.com/editorials/russell/russell081308.html

-In most recent Trading Thoughts we reported that the largest purchases of U.S. government debt by foreign official institutions had occurred in the prior week. Initially, reason for those purchases was a mystery. That is, until Russia decided to crush Georgia militarily.

The Russian army does not move into invasion mode without some prior preparations. Someone knew what was to happen. A massive amount of money flowed, at a $1.4+ trillion annual rate, into U.S. debt in less than a week. Those financial transactions had two ramifications.

First, a shortage of dollars was created which caused the value of the dollar to spike upward. Second, as payments for those bonds were made, a massive amount of liquidity flowed into the Street. That excessive liquidity quickly flowed into financial markets, causing a 300+ point DJIA rally. As news of the Russian mini-blitzkrieg spread, others fled to the dollar.

As this week's chart shows, the U.S. dollar spiked upward on this panic buying. The U.S. dollar is now as over bought as it has been. Note that each time dollar has spiked upward, another down leg was not too far off. Why does this happen? Most Forex trading systems are nothing more than momentum models. Some time is required to turn such models bullish. By the time they turn bullish, the move is old and they come in late.

With the U.S. dollar incredibly over bought, Gold is on the bargain table. Rarely have we witnessed Gold this over sold for this long. Investors should be buying Gold while funds are pushing dollar to unsustainable levels. With "Putin, the Terrible" running rampant in Russia and the calendar moving toward Israel's "Window of Necessity" on Iran, Gold is a must for portfolios. Ned W. Schmidt

-Gold, Oil Ratio `Out of Whack' After Declines. Gold may outperform crude oil in the next six months as buyers in India, the world's biggest consumer of gold, stock up on the metal, according to Patrick Chidley, an analyst at Barnard Jacobs Mellet USA LLC. Gold jewelry demand in India and Turkey was "extremely strong" in the past week, with sales to India the highest since this time last year as buyers took advantage of lower prices and rebuilt inventories, according to UBS AG.

Gold has dropped 16 percent from a record in March as lower oil prices eroded demand for the metal as an inflation hedge and jewelry demand waned. The "black gold ratio,'' showing how much gold it would take to buy a barrel of oil rose to 0.1538 of an ounce on June 12, the highest since at least 1950, and averaged 0.066 since 1970. Based on historical averages, if oil falls to $100, gold would go to $1,515 an ounce.

"This ratio is way out of whack,'' Chidley said from Stamford, Connecticut. ``As we've seen the oil price come off, that relationship could come back into focus and I see the relationship below 0.1 in the next six months with gold coming up. Indian jewelers have to come back to the market.'' The October-December period is the busiest season in India for jewelry sales, spurred by the wedding season and Diwali, the Festival of Light. Bloomberg

-Golden Buying Opportunity, With a Silver Lining! Gold made a bottom at $651 on August 16th 2007 before rallying to over $1025 by March 2008. The anniversary of that low is less than a week away and we suspect history is going to repeat itself as gold prepares for anther tremendous rally. This sell off in precious metals (and oil) has primarily been caused by a strengthening US dollar.

Why has the greenback been making gains? Hot air. The USD has been moving up as the Fed has been talking about inflation and the possibility of raising interest rates. We must keep in mind that the Fed hasn't actually raised rates yet, and even if they do, how far will they go? We expect any rise in interest rates to be minimal. And even if they do embark on a rate raising policy, will this stop golds accent to $2000+? Absolutely not.

The most it will do is delay gold making an inflation adjusted all time high. Remember that in 1980 gold ran to $850 in the face of double digit interest rates. So even if the Fed takes rates up to over 10%, which represent a quintupling in interest rates, this will not be enough to stop gold and silver marching onwards and upwards. Our message for this week is simple: BUY gold and silver then hold on for the ride! Sam Kirtley-Read more here-http://www.kitco.com/ind/Kirtley_Sam/printerfriendly/aug112008.html

-Why Gold Got Crushed This Week and Why It Will Roar Back. Read more here-http://www.kitco.com/ind/Litle/aug142008.html

-Going forward, gold will likely resume its up-trend due to one of two reasons:

Another spell of problems in the financial system will cause gold (and the US treasuries) to once again take the place of safe haven investments, as was the case in the second half of 2007.
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Fear of deflation and a further slowdown in the US will spread around the world. As a result, a vicious wave of competitive devaluation will cause not only price shocks (oil, food, etc.) but also spiraling monetary inflation, eventually raising long-term bond yields. This will be the beginning of a real gold bull market when gold outperforms all other major classes of assets including most hard assets. Read more here-http://www.321gold.com/editorials/sobolev/sobolev081108.html

-The US$ and the Gold Sector. The Dollar Index will probably trend higher over the next few months. If so, will this prevent gold and gold stocks from rallying? We don't think so. Why should strength in the US dollar driven by the realization that other fiat currencies are just as bad as the dollar prevent gold and gold stocks from rallying?

It is also worth noting that the best part of the 1973 rally in gold stocks occurred while the US$ was strengthening relative to other fiat currencies. Steve Saville-Read more here-

http://www.321gold.com/editorials/saville/saville081208.html

-What Made the Gold Price Drop Through $900? Read more here-http://news.goldseek.com/GoldForecaster/1218216673.php

-Got Gold Report, Gold Near a Bottom? The report looks at the gold market and lists factors which suggest that a bottom might be near. Read more here-

http://www.resourceinvestor.com/pebble.asp?relid=45229

-Gold: surviving oil and the dollar? The Bank Credit Analyst sees gold bullion likely finding support around USD 850 an ounce, with fair value in the lower USD 900's. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59470&sn=Detail

-Record gold demand by value in 2Q World Gold Council. Gold demand in dollar terms at a new record, retail investment up 29% year-on-year. Jewellery takes in increasing amount of consumer discretionary spending. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59577&sn=Detail

-Gold's choke point? India's gold bullion imports fell 48% in July; since then dozens of listed gold stocks have plunged, currently to an average 46% lower than their record highs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59376&sn=Detail update here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59705&sn=Detail

-India's rising gold demand stutters but probably temporarily. Wednesday's price recovery for gold from its near $800 low point caused a pause in the demand resurgence for gold in India, but there are plenty of orders for the yellow metal in the $805-810 range. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page34?oid=59542&sn=Detail

-Thai gold shops fear pretend gold will suppress real gold. Read more here-http://www.gata.org/node/6474

-Global gold de-hedging to slow dramatically in the second half. Analyses from two different banks, Société Générale and Fortis, put out within a few days of each other, both largely draw the same conclusion that the volume of gold dehedging will fall off substantially over the remainder of the current year.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59379&sn=Detail

-Gold Agreement Central Banks show lack of desire to sell gold. The Fortis/VM Yellow Book says the apparent reluctance of European Central Banks to sell gold is bullish for the gold price. However, central banks remain committed sellers and the prospects of a third Central Bank Gold Agreement is high. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=59125&sn=Detail

-How to Calculate Your Own Gold Price Projection. Read more here-http://www.321gold.com/editorials/casey/casey080808.html

SILVER

-The next intermediate term target for the silver price is $24.50 to $26.50, again towards late 2008 or early 2009. Troy Schwensen-Read more here-

http://www.321gold.com/editorials/schwensen/schwensen080808.html update here-http://www.321gold.com/editorials/schwensen/schwensen081408.html

-The recent price smash in silver, as well as a whole host of commodities, has created questions in every investor's mind as to what happens next. This is particularly true for potential investors in silver, both those new to silver and those in the position to add to existing holdings. The sell-off has been so severe that it demands more than just simple answers. It requires that we go back to square one; back to the start.

Let me give you advance notice. I will try to convince you, through your own common sense and an objective reading of the facts around us, that silver is a better prospective investment today than ever. And that's considering that silver has already been among the very best of investments over the past 3 to 5 years. Obviously, since I can't turn back the clock and create $5, or $7, or $12 silver, I must present a case that convinces you that the value of silver today is priced at the equivalent of $5, as it was in 2003-04.

It's all about risk, value and reward. It has been my contention for the past year or so, that investment demand would be the driving force in the price of silver. I think silver investment demand is just starting to crank up. This will be what drives the price of silver sharply higher. Value and low risk and high reward is a potent brew for the intelligent investor. It isn't about the real facts in silver becoming bullish, as it is hard to imagine them becoming more bullish than they are now.

It's simply a matter of more people becoming aware of the facts. That's unavoidable and inevitable. Please take the time and closely examine all the real facts in silver. If you do, I'm sure you will come to appreciate the spectacular risk/reward that has just been created. We're back to the start of $5 silver. Don't let it get away from you. Ted Butler-Read more here-

http://www.investmentrarities.com/08-11-08.html

-The recent dip in silver prices is nothing to worry about, and is merely a normal fluctuation in the grand scheme of things, the grand return and re-emergence of silver as money, which is a process that may take many years to play out. For those who ask me what to do in terms of short term price movements, all I can say is that I bought more physical silver today. Jason Hommel-Read more here-http://news.silverseek.com/GoldIsMoney/1218400412.php

-Despite profitable 2Q08, Apex Silver warns of liquidity crisis. Apex Silver CEO Jeff Clevenger told analysts Tuesday that the major issue for his company is "getting through the rest of 2008 and 2009" to meet mounting cash obligations. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=59516&sn=Detail

PLATINUM-PALLADIUM

-Platinum metals report for July 2008. Read more here-http://www.platinum.matthey.com/uploaded_files/monthly%20reports/prices0708.pdf

-A platinum catalyst is being used in new technology that could reduce the risk of salmonella being carried on food. The infra red drying system combines air with a platinum catalyst to create an oxidation reaction. This means a controlled level of infra red energy and minimal carbon dioxide can be created to target the moisture and dry out food.

Researchers claim that using the infra red energy on the food can kill the bugs and their larvae and ensure that no disease is carried on the food. It can do this without heating or spoiling the produce because it operates at a higher-frequency wavelength than microwaves. Read more here-http://www.platinum.matthey.com/media_room/platinum_catalyst_used_in_new_drying_technology_18725391.html

DEFINITIONS-QUOTES-QUICK HITS

-Liquidity Squeeze. When concern about the short-term availability of money causes reluctance among financial institutions to lend out money from their reserves. This hold on reserves causes the interbank market rate to rise, making it more expensive for banks to borrow from each other. Ultimately, this causes credit standards to tighten, making it more difficult and expensive for consumers to receive loans.

In order to limit the impact of liquidity squeezes, central banks will often increase liquidity by injecting more money into the economy through lower interest rates. Doing so gives financial institutions a less expensive alternative to borrowing. This process also serves to alleviate the fear of insufficient liquidity in the short run and make bank loans more accessible to consumers and businesses. Investopedia.com

-"I don't set trends. I just find out what they are and exploit them." Dick Clark

-"It would be reasonable to expect that reckless behaviour begets negative consequences. But on Wall Street, the rules are different. Especially if you are CEO Richard Syron of Freddie Mac. Financial trouble turns to disaster under your irresponsible watch, and for your efforts, you get to keep your job and earn $38 million." Bill Fleckenstein Aug 11, 2008-Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/CrybabyCapitalistsWhineForMore.aspx

-One thing you can take to the bank is that the dollar will trade at .72 , .62 and .52 USDX. Dollar fundamentals go from incredibly bad to incredibly worse, even just today. Although market quotes and value rarely meet, this dollar rally has a foundation in sand. Jim Sinclair

-The US dollar rallied fast and furious last week. The dollar rally was the biggest in 8 years vs. the Euro. This immediately brought out calls of Dollar Intervention. What the ESF did is simply sold about 10 billion Euros and bought dollars plain and simple massive intervention that virtually everyone has missed or ignored or pretended doesn't exist or whatever. Mike Shedlock-Read more and view chart here-http://globaleconomicanalysis.blogspot.com/2008/08/currency-intervention-and-other.html

-"Of course there will be corrections along the way. This is normal because no market goes straight up. That's what's happening now. But recognize that these down moves are corrections within the mega uptrends." Adens Sisters-Read more here-http://www.kitco.com/ind/nadler/aug142008a.html

-Gold will rise to $1,200 possibly 90 days later than anticipated. Gold will trade at $1,650 or more before the second week of January 2011. The US dollar will trade at .62 USDX and after great efforts to stop the decline trade at .52 USDX. Black Boxes are primarily momentum driven so keep an eye on that fact in terms of the US dollar versus the Euro. Jim Sinclair

-Jim Sinclair: European Central Bank intervention is out in the open. Read more here-http://www.gata.org/node/6487

-American Precious Metals Advisors Jeff Nichols said in an update to clients two weeks ago that gold should return to above $1000/oz later this year and could be trading in the range of $1500-$2000/oz in the next year or two. Although gold was volatile in the short term, in the long term he believed the deteriorating global economy and disruptions to supply from SA would support the price. Resource Investor

-In sum, I believe that in the next few years the returns from equities will be disappointing (short-term rallies aside), which could cause other asset classes (especially industrial commodities) also to come under pressure. When I look around, I find it hard to identify any asset that is particularly attractive at this point.

Therefore, in the absence of anything that promises far superior returns, I am still happy to accumulate physical gold. In democracies, where the leadership is afraid to ask for sacrifices from its citizens and with money printers at central banks, gold would seem to be the only sound currency. Marc Faber-Read more here-

http://www.dailyreckoning.com/Issues/2008/DR080608.html#esssay

-Nick Majendie, chief investment strategist and money manager at Canaccord Capital, noted in his report last week that the ratio between gold and oil has averaged 15 times over the past 38 years. "Any time the ratio has got down to 10 times or under, it has recovered to at least 15 times within a minimum of three years," with one exception, he said. The ratio at the time of the report was 7.4 times.

The ratio has been 7.5 times or less only three times since 1970. "What is so significant about the gold/oil ratio going below 7.5 times is the subsequent performance of gold and gold stocks over the ensuing 12 months," Mr. Majendie said. "If gold bullion rose by the same amount as in the previous two periods, the implied price per ounce would be $1,330." Globe and mail

-Oversold? Sure. Is the bottom in place? Not so sure. Will stormy sessions continue to unnerve? Absolutely sure. Liquidate core holdings out of fear? Not on your life. Holding on to 'life insurance' for your asset basket? Priceless. Jon Nadler Senior Analyst Kitco Bullion Dealers Montreal

-"Gold's fall is overdone," said Si Kannan, associate vice president at Kotak Commodity Services Ltd. "There is a good support for gold and crude around their current levels." "Global inflationary pressures are still pretty high, so one can't be bearish on gold," said an analyst at Motilal Oswal Commodities Broker Pvt Ltd. Reuters

-The percentage increases in gold from August to the end of each year for 2003 to 2007 are 17.72%, 12.78%, 18.31%, -1.02%, 25.48%. That makes an average gain from August to the end of the year, of 14.6%. Dominic Frisby

-There can be no disputing the fact that US financial assets have provided disappointing returns since the beginning of this decade. It is worth noting that even though the Dow Jones index is flat in nominal terms since 2000, it has lost more than half of its value against gold over the same period. At the turn of the millennium, the level of the Dow Jones could buy over 40 ounces of gold.

Eight years later, the level of the Dow Jones can only buy roughly 12 ounces of gold! Clearly, gold has been a much better investment than US stocks over the past 8 years. In the years ahead, I expect to see further underperformance of financial assets and maintain my position that hard, tangible assets will continue to provide superior returns. Puru Saxena-Read more here-http://www.321gold.com/editorials/saxena/saxena080808.html

-The opportunity to buy physical gold in the low $800s could very well end up being the bargain of the year. Physical interest continues to be very strong from both India and the Middle East. With no central bank sales in the offing that we are aware of, and both mine production and forward sales falling, there could be a delivery squeeze in the making. Peter A. Grant

-Kevin Kerr, editor of Global Resources Trader, thinks we may have reached bottom in gold. "The fact is that now we are getting way overdone on the downside and we could easily see this market snap back suddenly as more bad news filters in and if anymore geopolitical and currency uncertainty grows," Kerr said. Casey's Daily Resource Plus

-Gold has fallen from a high of $988 to below $810 in less than a month. The 20% sell off in less than 30 days has led to significant technical damage to gold. However, gold's fundamentals remain as sound as ever as investment demand will remain more than resilient on geopolitical risk, creeping stagflation and macroeconomic risk.

The vicious sell off has resulted in gold now being massively oversold. While bottom calling is a dangerous pursuit and the old market adage to never catch a falling knife remains appropriate, value investors and bargain hunters with longer term horizons are likely to be strong buyers at these very depressed levels. Gold.ie

-Since the start of the credit crisis, one year ago, gold remains up 27% (from $650 to $830). It has thus outperformed all major equity indices all of which are down some significantly since the start of the credit crisis. With no end in sight to the credit crisis indeed there are many indications that conditions could deteriorate even more in the coming months, investors should be mindful of gold's outperformance and continue to focus on the long term. Risk aversion and wealth preservation should continue to be pursued. Gold.ie

-Banks' Subprime Losses Top $500 Billion on Writedowns. Banks' losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types.

The writedowns and credit losses at more than 100 of the world's biggest banks and securities firms rose after UBS AG reported second-quarter earnings today, which included $6 billion of charges on subprime-related assets.

The International Monetary Fund in an April report estimated banks' losses at $510 billion, about half its forecast of $1 trillion for all companies. Predictions have crept up since then, with New York University economist Nouriel Roubini predicting losses to reach $2 trillion. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8sW0n1Cs1tY&refer=home

-Merrill Chief Investment Strategist Richard Bernstein said investors are ``significantly underestimating'' the extent of the credit crisis. Guy Moszkowski, Merrill's top-rated analyst for securities firms, downgraded Morgan Stanley, Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., his firm's three biggest U.S. rivals.

"Conditions have deteriorated significantly from July,'' Moszkowski wrote in a note today. "The typical summer slowdown has been exacerbated by renewed fear over credit, the direction of the economy, and home-price depreciation, along with the sudden about-face in the oil price and hedge-fund losses.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=adEH.n0OdYAU

-Indebted Ever After-Scared by National Deficit? You Should Be, Filmmakers Say. A private-equity billionaire, a former federal government official and a Baltimore newsletter editor have made a documentary film that they hope can do what an endless parade of policy papers has not: Persuade Americans that debt has created a looming economic crisis that would make the Great Depression look like a market correction.

The movie, "I.O.U.S.A.," debuting Aug. 21, is an 87-minute alarum on what it calls the tsunami of debt bearing down on the United States' future, caused by the rising national deficit, the trade imbalance and the pending costs of baby boomers cashing in on entitlements. Early reviewers have dubbed the film "An Inconvenient Truth" for the economy, meaning it's not exactly the feel-good movie of late summer 2008.

Except for budget wonks in love, it hardly counts as a date movie. The film's thrilling action sequence has a guy going to a refrigerator for a Tab. There are no car chases and nothing blows up. Except, possibly, for the entire economic future of the United States. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2008/08/06/AR2008080603569.html

WWW.RARECOLOREDDIAMONDS.COM

-Diamonds Attract Funds as Largest Gem Prices Surge 76% in Year. Diamonds, like art, are a commodity that is gaining attention as an alternative investment. Increases in the price of the rarest colorless and colored diamonds are attracting wealthy investors and structured funds as stock markets and real-estate values decline. The price of 5-carat gems with the potential to be sold at $1 million or more has risen 76.5 percent in the year to May 2008, according to Idexonline.com, the Web site of the International Diamond and Jewelry Exchange.

"There's a group of very savvy, tremendously wealthy people who have put a small portion of their fortunes aside to invest in diamonds,'' said Francois Graff, managing director of London- based Graff Diamonds International, in a telephone interview. ``They've made incredible returns.'' Five years ago, dealers were paying $70,000 per carat for colorless diamonds of 10 carats and more, said Graff. "Now we're paying over $200,000 per carat,'' he said. There are only about 200 highest-grade, D-flawless colorless diamonds of more than 5 carats discovered per year, according to Raymond Sancroft-Baker, Christie's International's European director of jewelry.

The annual yield of large-scale blue and pink stones is considerably smaller. "Diamonds are getting rarer. The earth just isn't giving them up,'' said Sancroft-Baker in a telephone interview. The commodity asset-management firm Diapason Commodities Management SA listed a specialist investment fund, Diamond Circle Capital Plc, on the London Stock Exchange on June 25. Full story here-http://www.bloomberg.com/apps/news?pid=20601093&sid=aKVjxYejpss0&refer=home

-Super-rich still pay dear for rare diamonds. The rapid rate of increase in wholesale prices of rare polished diamonds is unsustainable, but for now the growing number of super-rich are paying rising prices for top-tier diamond jewelry. Charles Wyndham, founder of PolishedPrices, a leading index of wholesale diamond prices, said on Friday prices of larger, rare, near-flawless gemstones had shot up by roughly 200 percent over the past 18 months. Read more here-http://www.reuters.com/article/newsOne/idUSL0416926920080705

-Demand for rarest diamonds outstrips supply. Read more here-http://www.reuters.com/article/reutersEdge/idUSL0646558820080606

COMMODITIES

-Why the commodities boom is not yet over. Continued population growth and rising incomes will continue to drive commodity demand and most of this economic growth will be driven by the rapidly expanding economies such as China. The mainland's demand for iron ore alone is expected to jump 380 percent from now until 2020.

The International Energy Agency predicts the global demand for oil products will grow by an average of 1.6 percent per annum to 2013, with China accounting for a third of the increase.

On the agricultural side, World Bank predictions are that grain production will have to rise by 50 percent to meet demand by 2030.

On oil, the IEA predicts that the world could be demanding an extra 30.5 million barrels of oil per day by 2030 over a third more than current levels. In conclusion: the commodities boom is not slowing down. It is actually gathering pace. Julian Galvin is an associate director at Tyche Group-Read more here-

http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=69908&sid=20129989&con_type=1&d_str=&fc=1

-Commodities Still Well Shy of 2006 Correction. Read more here-http://seekingalpha.com/article/90181-commodities-still-well-shy-of-2006-correction

-Consumer Driven Commodity Bull Market. Read more here-http://hk.ibtimes.com/articles/20080811/bull-market.htm

-Is the Commodities Bull Market Over? In view of the basic fundamentals of supply and demand, the market is still very tight, inventories of agriculture products are historically low, the oil supply has stayed almost the same, and the mine supply of precious metals from South Africa is dropping because of a shortage in the electricity supply.

All this brings us to the conclusion that the recent decline in commodity prices is a healthy correction to the commodity bull market that is still going on. Read more here-http://seekingalpha.com/article/90333-is-the-commodities-bull-market-over

OIL

-Oil 'could hit $200 within years'. A serious oil supply crisis is looming, which could push prices above $200 a barrel, a think tank has warned. A "supply crunch" will affect the world market within the next five to 10 years, the Chatham House report said.

While there is plenty of oil in the ground, companies and governments were failing to invest enough to ensure production, it added. Only a collapse in demand can stave off the looming crisis, report author Professor Paul Stevens said.

"In reality, the only possibility of avoiding such a crunch appears to be if a major recession reduces demand - and even then such an outcome may only postpone the problem," he said in The Coming Oil Supply Crunch. Read more here-http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/business/7549044.stm

-Oil price forecast for '09 gets a trim. Government says it now expects crude to average $124 a barrel next year, down $9 from previous forecast. Home heating bills expected to weigh on consumers. Read more here-http://money.cnn.com/2008/08/12/news/economy/EIA_energy_outlook/index.htm

-Biggest drop in U.S. oil demand in 26 years. Read more here-http://news.yahoo.com/s/nm/20080812/us_nm/usa_oil_demand_dc_2&printer=1;_ylt=Ag3LxaLvoxNjd.rAPZTpgCIXIr0F

-Oil: What the drilling advocates say. Supporters saying there could be much more oil offshore than the government predicts as they fight for access to new supplies in order to lower the price of oil. Read more here-http://money.cnn.com/2008/08/13/news/economy/offshore_drilling/index.htm?postversion=2008081312

GASOLINE

-A big surprise on gas-You may not believe it, but fuel is more affordable than it was during the early '60s. Read more here-http://www.latimes.com/news/opinion/la-oe-goklany11-2008aug11,0,1107249.story

-Petro-Canada says some of its stations in Alberta and the B.C. Interior are running out of gasoline. The shortages are the result of unexpected problems at the company's refinery in Edmonton, which had to be shut down last week. Petro-Canada vice-president Dan Sorochan says the company regerets any inconvenience and that it is working hard to minimize the impact.

The company is repairing the gasoline processing unit as safely and quickly as possible and is adjusting its distribution channels so that as much gas is available in Western Canda as possible. Petro-Canada is also using trucks to move gasoline into the area and is trying to find additional gas supply from elsewhere. Making sure essential services get their fuel has also been made a priority. Drivers will know a gas station is short on gasoline if its price signs are zeroed out. CBC

INFLATION

-U.S. Consumer Prices Rise More Than Forecast. U.S. consumer prices jumped to a 17 year high in July, reducing the scope of the Federal Reserve to lower interest rates as economic growth slows.

The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest rise since January 1991. So-called core prices, which exclude food and energy, also advanced more than projected.

The surge last month reflected energy prices that have since declined, signaling July may represent the peak in inflation. Still, increases went beyond food and fuel, including gains in clothing, airline fares and education, likely intensifying discussions among Fed policy makers about how quickly to shift toward raising rates. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid=aoOKMz5QYK9w&refer=home

-U.K. Inflation Reaches 4.4%, More Than Double Target. U.K. inflation accelerated to more than double the central bank's 2 percent target in July, making it harder for policy makers to cut interest rates as the threat of a recession looms.

Consumer prices rose 4.4 percent from a year earlier, breaching the government's 3 percent upper limit for a third month and the most since comparable records began in 1997, the Office for National Statistics said today.

-UK inflation exceeds Bank interest rate for first time since 1981. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/13/cncpi113.xml&CMP=ILC-mostviewedbox

-U.K. Producer Prices Rise by Most Since at Least 1986. U.K. producer prices increased in July at the fastest pace since records began in 1986, adding to pressure on the Bank of England to wait before cutting interest rates as the economy edges toward a recession.

Prices charged by factories rose 10.2 percent from a year earlier, compared with a 10 percent increase in June, the Office for National Statistics said in London this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a3dCUQVglsew&refer=home

-India Inflation Accelerates to 16-Year High of 12.44%. India's inflation soared to a 16- year high and may accelerate further after the government approved wage increases for civil servants. Wholesale prices rose 12.44 percent in the week to Aug. 2, after increasing 12.01 percent in the previous week, the commerce ministry said in New Delhi today. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=afddBxL8e6gk

-China wholesale prices surge. July producer price index jumps 10% the highest rate since 1996. Read more here-http://money.cnn.com/2008/08/11/news/international/china_inflation.ap/index.htm

-Nestle, Kellogg Struggle to Pass on Rising Food Costs. Nestle SA, the world's largest food company, and Kellogg Co., the biggest U.S. cereal maker, can't raise prices fast enough to sustain earnings growth after the cost of grains, dairy products and meat surged to records. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aD7YNdPKw1g4

-Drug prices up 100% or higher Spikes bring legal, political scrutiny. Drug companies are quietly pushing through price hikes of 100% or even more than 1,000% for a very small but growing number of prescription drugs, helping to drive up costs for insurers, patients and government programs. Read more here-

http://www.usatoday.com/printedition/news/20080808/1a_bottomstrip08_dom.art.htm

-The world's worst inflation. How Zimbabwe's ruler ruined an entire economy and why it will finally bring him down. Read more here-

http://money.cnn.com/2008/08/13/news/international/worlds_worst_inflation_spiers.fortune/index.htm

INTEREST RATES

-Australia Central Bank Says Room to Cut Interest Rate. Australia's central bank says it will have more room to cut interest rates because a ``significant moderation'' in domestic demand will slow inflation, cut economic growth by half and drive up unemployment.

"Economic growth will be fairly slow in the period ahead,'' the Reserve Bank of Australia said in its quarterly policy statement released in Sydney today. Gross domestic product will probably expand 2 percent this year compared with 4.3 percent in 2007 and less than the 2.25 percent forecast in May. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aOIPR8319JOI

U.S. DOLLAR

-Why the buck stops here. The dollar has had a nice run, but a soft economy is likely to cut the rally short. The dollar has sprung off its deathbed, but a swift return to ruddy good health looks like a long shot. Unfortunately, the dollar may not be much help there in coming months, because its run may be coming to an end.

Yes, it's true that European economies are struggling against a looming recession, which is bad for the euro. But the fact is that weak U.S. fundamentals particularly in the housing and finance sectors, as well as the nation's need to borrow overseas to finance current spending are likely to cap the dollar's gains.

"Nothing here is sunny," said CMC Markets currency strategist Ashraf Laidi. He likens the dollar's recent gains against the euro to a campaign between two unpopular politicians, one of whom "wins by default." Read more here-http://money.cnn.com/2008/08/13/news/buck_stops.fortune/index.htm?postversion=2008081310

-Mystery Solved. On July 15th the US Dollar Index closed at 71.87, the lowest close since reaching its record low in April. This index was in the process of breaking down, and in fact it had actually fallen out of its uptrend channel on the following chart. So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here's the proof.

In the final analysis, it is fundamental factors that determine the course of markets and the process of price discovery that results from them. Central bank intervention like fiat currency itself is ephemeral. In contrast, gold lasts throughout the ages. So what would you rather own? A sick dollar that it requires central bank intervention to prop it up? Or gold? James Turk-Read more here-http://goldmoney.com/en/commentary.php

-Guess who's buying the U.S. dollar. Read more here-http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=B42DCD7F-1871-E587-E18BDF002B0698FD

-Dollar Gain Signals Pain as Rally Prompts Exit From Bull Trade. Just because the dollar posted its biggest gain against the Euro in almost eight years doesn't mean the U.S. currency won't continue to be plagued by the nation's slowing economy, widening budget and trade deficits and negative inflation-adjusted interest rates. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9FT.fPxbjF0&refer=home

-The Case For and Against the Dollar. Read more here-http://www.merkfund.com/merk-perspective/insights/2008-08-13.html

U.S. DEBT

-Budget deficit soars to $102.8 billion in July. Deficit is nearly triple that of July 2007. Read more here-http://money.cnn.com/2008/08/12/news/economy/federal_budget.ap/index.htm

-29 states faced total budget shortfall of at least $48 billion in 2009. Read more here-http://www.cbpp.org/1-15-08sfp.htm

-The rich are not so different after all: Hamptons town struggles with $12M deficit. Read more here-http://www.newsday.com/news/nationworld/nation/wire/sns-ap-hamptons-deficit,0,4888135,print.story

-U.S. Economy: Trade Gap Narrows on Surge in Exports. The U.S. trade deficit unexpectedly narrowed in June as the biggest jump in exports in more than four years overwhelmed record imports of petroleum.

The gap shrank 4.1 percent to $56.8 billion from $59.2 billion in May, the Commerce Department said today in Washington. Shipments to Germany and the U.K. rose more than 4 percent, exports to Italy jumped 9.7 percent, and sales to Argentina and Brazil also climbed. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a0rWVG6wnNWY&refer=home

FINANCIAL-CREDIT CRISIS

-FDIC Fund Strained by Bank Failures May Have to Raise Premiums. The failure of IndyMac Bancorp Inc. and seven other banks this year may erase as much as 17 percent of a government insurance fund and raise premiums for all banks, from Franklin National of Minneapolis to Bank of America Corp.

The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.

"It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=abahg9z7p4wU

-This credit crisis is like the plague and nobody is safe yet. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/11/ccom111.xml

-Fed auctions another $25B to banks. The U.S. central bank, to provide liquidity to banks, held another auction and extended loan period to 84 days. Read more here-

http://money.cnn.com/2008/08/12/news/economy/bc.apfn.fed.creditcrisis.ap/index.htm

-ECB Lending to Spain Rises to Record 49 Billion Euros. The European Central Bank lent a record 49.4 billion euros ($73.6 billion) to Spain's banks as a worsening housing slump spurs the fastest pace of borrowing among the 15 nations sharing the euro.

ECB lending to Spain rose from 47.1 billion euros in June and 18 billion euros a year ago, according to data compiled by the Bank of Spain. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aua6yB8vGd_g

-Fed Says Banks Toughen Standards for All Loan Types. The Federal Reserve said more banks made it harder to borrow money as defaults and delinquencies on home loans soared and the economy faltered.

Most "domestic institutions reported having tightened their lending standards and terms on all major loan categories over the previous three months,'' the Fed said today in its quarterly Senior Loan Officer Survey.

Funds became scarcer for home purchases, credit card loans became tougher to get and even banks' best customers were subject to stricter scrutiny. Tighter credit may delay any recovery in economic growth, which economists forecast will slow well into next year. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=alebCtUJbRXc&refer=home

-Outside U.S., Credit Cards Tighten Grip. Read more here-http://www.nytimes.com/2008/08/10/business/worldbusiness/10card.html?_r=2&adxnnl=1&oref=slogin&partner=rssyahoo&emc=rss&adxnnlx=1218503024-WXVDny1glptZZOl4anXDDQ&oref=slogin

-Michael Price Shorts Citigroup, Sees Few Banks to Buy. Billionaire investor Michael Price is betting that Citigroup Inc. and Wachovia Corp. will keep tumbling and says he found few banks to invest in after total losses from subprime mortgages increased to almost half a trillion dollars.

"Citigroup's got more pain coming,'' said Price, who runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.

Price, 57, is selling short both stocks even after Citigroup, the biggest U.S. bank by assets, tumbled 33 percent this year and Wachovia, the fourth-largest, lost 52 percent. In a short sale, investors borrow shares and sell them on the expectation they can be purchased at a lower price before paying back the loan. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a57Gqx3lxcc4&refer=home

-Auction-Rate Costs May Rival Spitzer, Mutual Fund Settlements. Wall Street's costs to end federal and state investigations of the auction-rate bond market's collapse may wind up exceeding the sanctions from abuses of mutual funds and analyst research in the past decade.

UBS AG and Citigroup Inc. agreed last week to buy about $26 billion of auction-rate bonds from clients and pay $250 million in fines after regulators said the firms marketed the securities as safe alternatives to money-market investments. Merrill Lynch & Co. announced a plan to purchase $10 billion. Investigations of other firms that sold the debt continue, New York Attorney General Andrew Cuomo said Aug. 8.

Banks may have to write down the debt they buy from customers by $4 billion, Bank of America Corp. analyst Jeffrey Rosenberg said in a report last week. The probe of mutual-fund abuses from 2003 yielded more than $5 billion in penalties and agreements to reduce fees, while Cuomo's predecessor, Eliot Spitzer, and regulators including the U.S. Securities and Exchange Commission won $1.4 billion from 10 firms accused of using tainted research to win investment-banking deals.

"These are developments of gigantic, historic proportions,'' James Cox, a securities law professor at Duke University in Durham, North Carolina, said of the auction-rate agreements. "Never have we witnessed defendants, who created a product that isn't inherently illegal, being required to buy back such a large market.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=ap0gMzoTuptc

-Wachovia boosts loss to $9.11 bln, cuts more jobs. Read more here-http://www.reuters.com/article/ousiv/idUSN1139894220080811

-UBS AG, one of the hardest hit banks in the subprime mortgage crisis, said Tuesday that it had further losses and writedowns of $5.1 billion during the second quarter of 2008. Read more here-http://money.cnn.com/2008/08/12/news/international/ubs.ap/index.htm?postversion=2008081206

-RBS Posts First Loss in 40 Years on Credit Writedowns. Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, posted a smaller loss than analysts estimated and said the 5.9 billion pounds ($11.4 billion) of writedowns it announced in April may be sufficient for the year. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aRGu6AENJFoc

-JPMorgan Loses $1.5 Billion Since July on Debt Prices. JPMorgan Chase & Co. has had losses of $1.5 billion on mortgage-backed assets so far this quarter as the U.S. housing slump deepened amid turmoil in credit markets. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a9Mby5jLaO8s&refer=home

-Radian Loses $393 Million, Will Tap Bond Guarantor. Radian Group Inc., the third-largest U.S. mortgage insurer, lost $392.5 million as the company increased expectations for future claims. Radian will fold its bond insurance unit into the mortgage guarantor to increase capital in the primary business. Read more here-

http://www.bloomberg.com/apps/news?pid=20601208&sid=aSx4YcAx1bjg&refer=finance

BRINGING DOWN BEAR

-Bringing Down Bear Began as $1.7 Million of Options. On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street's devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.

In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.

Whoever placed the bet used so-called put options that gave purchasers the right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares for $25 apiece just nine days later, data compiled by Bloomberg show. That was less than half the $62.97 closing price in New York Stock Exchange composite trading on March 11. The buyers were confident the stock would crash.

"Even if I were the most bearish man on Earth, I can't imagine buying puts 50 percent below the price with just over a week to expiration,'' said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. ``It's not even on the page of rational behavior, unless you know something.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601109&sid=aGmG_eOp5TjE&refer=home

FREDDIE-FANNIE

-Fannie Mae fears for future after posting $2.3bn loss. Read more here-http://www.guardian.co.uk/business/2008/aug/08/subprimecrisis.useconomy1

-Fannie Mae Posts Fourth Straight Loss, Cuts Dividend. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYPqJhQUd2Wg&refer=home

-Freddie Mac's negative net worth raises questions. By Freddie Mac's own admission, it has a negative net worth the latest reported net market value of the mortgage giant's assets is negative $5.6 billion.

To some investors, that means its shares should be trading closer to zero. Bears argue that the company's bonds are a reasonable investment given the U.S. government's increasingly explicit support, but its shares are a more questionable investment. Read more here-http://www.reuters.com/article/newsOne/idUSN0625680320080807

-Paulson Says He Doesn't Plan to Add Cash to Fannie, Freddie. U.S. Treasury Secretary Henry Paulson said there are no plans to inject capital into Fannie Mae and Freddie Mac after the two mortgage companies posted combined losses of $3.12 billion last week.

"We have no plans to insert money into either of those two institutions,'' Paulson said in an interview with NBC's "Meet the Press'' broadcast yesterday from Beijing. He added that their results were "not a surprise'' and that the housing slump will last beyond this year. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aS_vDAAKi6uY

-Odds of Fannie and Freddie Bailout Better-Than-Even, Economists Say. Read more here-http://online.wsj.com/article/SB121864245359137157.html?mod=hpp_europe_whats_news

-Fannie Mae and Freddie Mac have helped defang laws that might have prevented the subprime mess. Read more here-http://www.newsweek.com/id/151722

-Freddie to Stop Buying Subprime Loans in N.Y. State. Freddie Mac, the second-largest U.S. mortgage finance company, will stop buying subprime loans issued in New York state as a new law takes effect that holds investors accountable for mortgage fraud. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a2BlE0hgjpIw

GLOBAL SLOWDOWN

-Europe Economy Shrinks as Spending, Investment Falter. Europe's economy contracted for the first time since the introduction of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.

Gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today. The year-on-year growth rate slowed for a third straight quarter, to 1.5 percent. Separate figures showed inflation held at 4 percent in July, less than initially estimated. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aLSjrZ4BIkTU

-UK economy 'worse than thought'. The CBI, the UK's largest employers' organization, has warned that the UK economy is deteriorating faster than it previously thought. There was "no doubt that the mood has darkened in the last two or three months," its director general Richard Lambert warned members in a letter.

Forecasters, including the CBI, had been "over-optimistic" about the economic outlook, he added. High inflation and slowing growth have prompted fears of a possible recession. Read more here-http://news.bbc.co.uk/2/hi/business/7552336.stm

-Bank of England Cuts Growth Forecasts, Jobless Climbs. The Bank of England cut its forecast for U.K. economic growth and held out the prospect of lower interest rates as unemployment rose the most in almost 16 years.

Governor Mervyn King said the inflation rate will fall below the 2 percent target in two years if policy makers keep the benchmark interest rate at 5 percent. Claims for jobless benefits climbed 20,100 in July to 864,700, the biggest increase since December 1992, a government report showed.

"It may still be summer but there is a feeling of chill in the economic air,'' King said at a press conference in London today. ``The British economy is going through a difficult and painful adjustment'' that "cannot be avoided,'' he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=arJeov9NjtzY

-Japan Economy Shrinks 2.4%, Signaling Recession Looms. Japan's economy contracted last quarter, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less.

Gross domestic product shrank an annualized 2.4 percent in the three months ended June 30 after expanding 3.2 percent in the first quarter, the Cabinet Office said today in Tokyo. The Nikkei 225 Stock Average fell the most in a month. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aKMCAnzivUD8&refer=home

-Slump in U.S. to Worsen as Consumers Get `Squeezed'. The U.S. economic slump will extend into 2009 as the longest expansion in consumer spending on record comes to an end, according to a Bloomberg News survey.

The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aJCMITFqrGJA

S.U.V. TRAFFIC JAM

-The market for sport utility vehicles is starting to look a lot like the housing market, spreading pain to consumers, automakers and dealers. Even the vocabulary is sadly familiar. Bloated inventories? Days spent on the market?

Well, in July, General Motors dealers had a 174-day supply of the Yukon XL/Suburban on hand, on average, up from a 92-day supply a year earlier. Inventory of the Chevrolet C/K Suburban nearly doubled over the same period, to 116 days from 63 days.

Just like hapless homeowners, countless car owners are now "underwater," driving vehicles that are worth less than the balance on their car loans. And just like desperate homeowners, the sellers of S.U.V.'s are having to painfully cut asking prices. Read more here-http://www.nytimes.com/2008/08/13/business/13auto.html?_r=1&oref=slogin&partner=rssyahoo&emc=rss&adxnnlx=1218647066-QVI9jhuyAzcu6%2029oYHOaA&pagewanted=print

REAL ESTATE

-One Third of New Owners Owe More Than House Is Worth. Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3rsglZgqmTs&refer=home

-U.S. Home Sales Fall to 10-Year Low as Prices Tumble. Existing U.S. home sales fell to a 10-year low in the second quarter and the median price for a single-family house dropped 7.6 percent as the real estate recession deepened.

The median tumbled to $206,500 from $223,500 a year earlier, the Chicago-based National Association of Realtors said today. Sales of single-family houses and condominiums fell 16 percent to 4.913 million at an annualized pace.

Prices declined in 115 of the 150 metropolitan areas surveyed as foreclosures and ``short sales,'' in which lenders agree to take a loss on a property, accounted for a third of all sales in the quarter. Bank repossessions of property almost tripled in July from a year earlier, RealtyTrac Inc., a seller of foreclosure data, said today in a separate report. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aouNA67vnvBE&refer=home

-US housing slump 'worst since 1930s'. Prices to fall 20%, says Freddie Mac chief. Mortgage group expects $2.5bn bad loan costs. Read more here-

http://www.guardian.co.uk/business/2008/aug/07/subprimecrisis.useconomy

-Housing Rebound in Cleveland Signals Bad News for U.S. Market. The good news in the worst housing slump since the Great Depression is that the market in Cleveland is recovering. That's also the bad news. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=axAqNUHb9pLI&refer=home

-25% of U.S. home sales result in loss. Values have fallen so far in many cities that sale prices don't cover what sellers originally paid. That means more hard times before markets recover. Read more here-http://money.cnn.com/2008/08/13/real_estate/sellers_suffering_huge_losses/index.htm?postversion=2008081313

-House Prices Have Crashed By 35% in Spain. Read more here-http://www.fool.co.uk/news/property-home/2008/08/11/house-prices-have-crashed-by-35-here.aspx

-U.K. Property market grinds to a halt amid mortgage drought. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4509303.ece

-Canadian Home Resale Prices Declined for Second Month. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZP8P4T6ffjo

-Lost sovereignty, oil rich fund eyeing foreclosed U.S. homes. Read more here-http://www.nypost.com/seven/08102008/business/lost_sovereignity_123879.htm

-Russian oligarch 'invader' pays record £392m for Riviera villa. A mysterious Russian billionaire has trumped his big-spending rivals and broken a world record by splashing out €500 million (£392 million) on one of the most sumptuous villas on the French Riviera. Read more here-http://property.timesonline.co.uk/tol/life_and_style/property/overseas/article4499716.ece

FORECLOSURES-MORTGAGES

-U.S. Foreclosures Rise 55%, Bank Seizures Reach High. Banks repossessed almost three times as many U.S. homes in July as a year earlier and the number of properties at risk of foreclosure jumped 55 percent as falling prices made it harder to sell or refinance. Bank seizures rose 184 percent to 77,295, the steepest increase since reporting began in January 2005, RealtyTrac Inc., an Irvine, California-based seller of foreclosure data, said today in a statement.

More than 272,000 properties, or one in 464 U.S. households, got a default notice, were warned of a pending auction or foreclosed on. "It's getting worse,'' Rick Sharga, RealtyTrac's executive vice president for marketing, said in an interview. "The number of properties that have been foreclosed on by the banks and still haven't sold is the highest we've ever seen.'' Nevada, California and Florida had the highest rates.

Total foreclosure filings rose 8 percent from the previous month to 272,171, just shy of the record 273,001 set in May, said RealtyTrac, which has a database of more than 1.5 million properties. Through July, 775,244 properties were owned by banks, compared with about 445,000 for all of 2007 and about 224,000 in 2006, Sharga said. Read more here

http://www.bloomberg.com/apps/news?pid=20601110&sid=afkIubh8tT8k

-Estimate: 1,300 foreclosures every business day in California. Read more here-http://latimesblogs.latimes.com/laland/2008/08/estimate-1300-f.html

-Foreclosure fallout: Houses go for a $1 in Detroit. Read more here-http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/808130360/&imw=Y

-Foreclosures leave California's Lathrop west side deserted. Read more here-http://sunpost.net/content/view/2089/190/

-U.K. House repossessions soar to 12-year-high. Read more here-http://www.independent.co.uk/money/mortgages/house-repossessions-soar-to-12yearhigh-888726.html

GEOPOLITICAL

-Ahmadinejad in new Israel tirade before Turkey trip. Read more here-http://www.reuters.com/article/topNews/idUSLD51432420080813?feedType=RSS&feedName=topNews&rpc=22&sp=true

-Israel ready to attack Iran without USA's permission. Read more here-http://english.pravda.ru/world/asia/01-08-2008/105968-israel-0

-US against any Israeli strike on Iran: defence minister. Read more here-http://www.breitbart.com/article.php?id=080813131833.y0fgoes4&show_article=1

-Kuwait Readying for War in Gulf? Read more here-http://www.metimes.com/International/2008/08/11/special_report_kuwait_readying_for_war_in_gulf/7724/1352~1218474001~1/

-U.S. spending on contractors in Iraq reported to reach $85 billion. The United States has reached the $85 billion mark in spending on contractors in Iraq since the invasion in 2003, according to a new government report released Tuesday, a milestone that reflects the Bush administration's unprecedented level of dependence on private companies for help in the war. Read more here-http://www.iht.com/articles/2008/08/12/america/contractor.php?WT.mc_id=newsalert

-U.S., Poland Reach Agreement on Missile Defense. The U.S. and Poland signed a preliminary accord today that will allow for 10 U.S. interceptor missiles to be based in the eastern European country, completing a defense system that Russia opposes. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aakWCWAS_u34&refer=worldwide

The GoldBugg Report - August 20, 2008
Posted by Worldwide Precious Metals on Wednesday, August 20, 2008

The GoldBugg Report - August 13, 2008

August 13, 2008

-Gold and silver seemed to have stalled out, raising questions as to whether or not the bull market is still intact. It still is! I remember during the bull market of the ‘70s when gold and silver stalled out for as much as two years with a decline of up to 30% on the way to their eventual highs of $50 silver and $850 gold. Then as now we heard a chorus of voices claiming the bull market was over, so liquidate! The fundamentals of money-supply growth were still in place, so I begged you to hang on, and we were eventually handsomely rewarded. Howard Ruff

GOLD

-Gold price could hit $1 500/oz next year, says Holland. Gold could trade as high as $1 500/oz in 2009, the head of Africa's second-biggest producer of the yellow metal said on Friday.

Gold Fields CEO Nick Holland said that the industry was operating slightly above break even at a gold price of $900/oz, not leaving room for profits.

"I don't think the gold price has really performed anywhere near where it should have done, particularly given the rise in the commodity prices in other sectors, given the rise in the oil price, and particularly given the state of the economy in the US," Holland said in a transcript of an interview posted on the company's website. "Certainly $800/oz I think is a very good floor price for gold. I don't see it going below that. And secondly, the sky is the limit. You know, $1 000/oz by the end of the year and maybe $1 200/oz to $1 500/oz during 2009, I think, is very possible," he added.

Meanwhile, presenting Gold Fields' results for the year ended June 30, Holland said that he "wouldn't be surprised" if gold were to trade at levels of around $1 000/oz to $1 200/oz, as the all-in costs of the industry had climbed to some $800/oz. "I think gold has got substantial upside," he stated, adding that he saw the metal trading at $1 000/oz by the end of the year. Read more here-http://www.miningweekly.com/article.php?a_id=139752

-Gold price may hit $US1200: Sino Gold. Gold could rise to $US1000 an ounce again by the end of this year, before moving up to $US1200, as investors seek to insulate themselve from rising global inflation, the head of Sino Gold Mining Ltd said. Gold's value natural a hedge against inflation in the current environment of financial market instability would continue to rise, chief executive Jake Klein said today.

As well, maturing gold deposits and fewer new discoveries are keeping supply tight and adding to the upward pressure on the price of the precious metal. "We closed out all of our hedges on the basis that we had an optimistic view of the gold price," Mr. Klein told journalists at the annual Diggers and Dealers conference in Kalgoorlie, Western Australia.

"I think $US1,200 an ounce seems like a reasonable target. "I'd be very surprised if we didn't see $US1,000 per ounce by the end of the year." Gold peaked over $US1,000 in March this year at $US1,030 and is currently trading about $US890 an ounce. Read more here-http://www.wabusinessnews.com.au/en-story/1/65232/Gold-price-may-hit-US1200-Sino-Gold

-Gold & Silver the August lows are upon us! Read more here-http://www.321gold.com/editorials/degraaf/degraaf080708.html

-Go for Gold-Gold is one of Leslie Phang's top picks. The head of investments at Schroders Private Clients tells CNBC's Martin Soong, Amanda Drury & Sri Jegarajah to buy the commodity, not the gold stocks. Watch video here-http://www.cnbc.com/id/15840232?video=809934675

-Gold and Silver: Safe-havens in Troubled Times? Each day we hear another piece of bad news on the banking front. It was called the sub-prime crisis, then it was the credit crunch; what we have in reality is a full blown banking crisis. Where in the past credit was easily given, full-blown consumer spending was encouraged and when it went too far, bankers saw asset values were dropping below loans against them and banks started to go bust.

We are now seeing banks sued by the New York Attorney General. Hardly an environment in which confidence in the banking and financial systems can be retained? The huge gap between the value of gold and the value of money must narrow. Whether it is through the rise in the value of gold and silver or through the fall of the value of money dictates the future of the financial system.

Either way, gold and silver will prove to be the safe-haven it has been since money was part of man's world. And the second half of this year is likely to be as dramatic as the first half but with a golden or silver sheen to it. Read more here-http://news.goldseek.com/GoldForecaster/1217948400.php

-July's gold-commodities purge offers long-term opportunity. Are we at the end of the commodity bull market or does this battered sector offer an attractive buying opportunity? Read more here-http://news.goldseek.com/GoldSeek/1217868660.php

-Hope only flickers for South African gold industry. The Fortis Yellow Book says if challenges are managed well the SA gold industry does not have die a slow death, but could rather see a graceful decline over 40 years. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=58816&sn=Detail

-An example of gold's historic role as a safe haven asset in times of economic uncertainty is seen in the following data. The industry performance of Physical Gold Versus the S&P 500 during eleven stock market declines of 15% or more in the Post-War period (since 1946). Gold.ie

SILVER

Today is the same, only more so. With government unfunded liabilities (for Social Security, Medicare and Medicaid) more than $50-trillion, and no end in sight, and government doing its ostrich act (head in the sand) hoping the pain will just go away, and their standard practice of just throwing money at every intractable problem, we have set the stage for continuing soaring inflation.

I am doing a lot of radio talk show interviews, and the hosts keep asking me "what proof do you have of future inflation?" My answer? "Haven't you been to the grocery store lately, or bought any gas? It's here now; the proof is all around you." So hang in there and be patient. Someday you will brag about buying silver below $20 and gold under $1000. Howard Ruff-Read more here-http://www.kitco.com/ind/Ruff/ruff_aug012008.html

-Another silver buying opportunity. The precious metals usually make a nice bottom at the end of summer between August and October and this year looks like it will be no exception. There should be a strong precious metals rally into the Fall and Winter 2009. Quality mining companies are great buys at current levels and gold and silver should be near a bottom.

The lowest levels I expect would be $825 for gold and $15.50 for silver. Closes much below this might indicate that we are moving into a more bearish intermediate forecast for gold and silver. For cash purchases, dollar cost average over the next few weeks and you will be quite satisfied 6 to 9 months from now. Tim Silvers-Read more and see charts here-

http://news.goldseek.com/GoldSeek/1218089220.php

-Special Got Gold Report August Silver Swoon Again. In the first two weeks of last August (2007) silver sold off strongly. So far this August the metal seems to be following the same script. Just as last year at this time, there are signs that silver is closer to a bottom than a top, but the signs are not exactly the same.

In addition to the strong demand for SLV on the street in the U.S. there is a continued scarcity of just about all silver metal products with spot silver trading in the $16 to $17 neighborhood. In a quick check of electronic silver bourses on Tuesday, August 05, 2008, all bar silver products were BID at least $0.60 the ounce over the cash market close dealer to dealer. Even the very large average 1,000 ounce heavies were bid about $0.50 the ounce over spot and there were very few offers at any price.

Bar silver is currently commanding high premiums, but customers that want to add popular coin silver have an even bigger shock coming. As of Tuesday, the best offers showing for U.S. silver eagles in quantity were close to $2.00 over spot. When even dealers are offering significantly higher than normal premiums in order to buy the metal, it means that the metal has become scarcer than usual. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=45097

If anything, the premiums for physical silver this August are considerably higher for the same metal than they were last August. High premiums are already here and they are one reason that SLV is continuing to see such strong demand in this August's silver swoon.

-Paper Selling, Physical Buying. Recent data confirm a recurring pattern in the price of silver, namely, a clash between what is occurring in the paper COMEX futures market and the physical market. To keep it simple, recent speculative selling of long positions has overwhelmed physical buying, resulting in the short term sell-off.

Of course, I have written of this repeatedly over the years, simply because it has recurred so often. I look forward to the day I can stop repeating myself. That's because the paper market should not dictate at what price the physical market should clear. I believe that day will arrive, sooner, rather than later. Ted Butler-Read more here-http://news.silverseek.com/TedButler/1217880612.php

PLATINUM-PALLADIUM

-Platinum price fall may imply otherwise, but this market's still in a deficit. Analysis of fundamentals suggests that platinum has been oversold and that the price will bounce back later in the year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=59063&sn=Detail

-Platinum Market Seen In 500,000 Oz Deficit In 08. The global platinum market is expected to remain in deficit by approximately 500,000 troy ounces during 2008, according Wednesday to diversified mining company Xstrata PLC. This is because production will remain unchanged due to the various supply disruptions, the company said, often associated with safety issues and rising costs as operations access deeper and lower grade reserves.

"Any further supply-side disruptions could result in further price increases for platinum and rhodium," Xstrata added. While Xstrata expects demand for platinum group metals to remain strong for the remainder of 2008, driven by tightening automotive emissions legislation and consequent increased demand for catalytic converters, the company noted some issues affecting growth.

For instance, current high platinum prices have negatively impacted jewelry demand, the company said, while platinum demand growth may also be tempered by substitution, driven by high prices and the price differential between platinum and palladium. At the same time, a slowdown in global economic growth is likely to dampen automotive demand for platinum group metals, which accounts for approximately 56% of platinum consumption. Dow Jones

-Anglo American says platinum a growth metal. Strong demand for platinum, used in car manufacturing, was leading to a supply shortfall, Anglo American Plc's exploration head for Africa and Asia-Pacific Ian Willis said on Wednesday. Anglo American controls nearly 40 percent of the world platinum market and competes with fellow South African Lonmin, also a top supplier of the metal.

"We see a substantial deficit in the platinum market in coming years," Willis said at a conference in the west Australian outback mining town. Willis said Anglo American was looking to expand its platinum-making arm as part of a broader push to build the company's mining activities. Read more here-http://africa.reuters.com/business/news/usnBAN625625.html

DEFINITIONS-QUOTES-QUICK HITS

-Black Box Model. A computer program into which users enter information and the system utilizes pre-programmed logic to return output to the user. The "black box" portion of the system contains formulas and calculations that the user does not see nor need to know to use the system. Black box systems are often used to determine optimal trading practices. These systems generate many different types of data including buy and sell signals. Investopedia.com

-You and I know that gold is going to $1,200 and then to $1,650 because of all the traffic going to the Begging Bowl Fed Window. This will crater the dollar, meaning gold must go to at least $1,650. Jim Sinclair

-Sprott warns of 'meltdown'. North America is the midst of a "systemic financial meltdown," Eric Sprott warned this week. "I'm not trying to be shocking to anyone, but let's face it," said Mr. Sprott, chief executive officer of Sprott Inc. "When Bear Stearns goes down, Freddie and Fannie go down, and IndyMac goes broke, we have major issues out there."

The firm will load its funds with gold and energy stocks in the months ahead while selling the financial industry short. "We're trying to position our funds to survive the difficulties," he said. "We've gone into gold on the long side because it will survive as a replacement to fiat currency and into energy stocks because of our belief in the peak oil thesis." Theglobeandmail.com

-Financial roundtable called "Making sense of the bear market." Quotes and overview below, read full story here-http://news.goldseek.com/GoldSeek/1217610000.php

-"For the next three months the US dollar should be fine. On weakness physical gold should be bought as it is the only honest currency." Marc Faber

-Gold, in my opinion, is the asset of last resort. It is no one else's liability and has shown its value in crises over the millennia. That situation remains unchanged. It is still cheap relative to oil on a historical basis and is only 40 percent of its all time high on an inflation adjusted basis.

New supplies coming onto the markets are constrained by high costs and a lack of mining skills after a generation when no new graduates entered the sector. Given the global geopolitical tensions added to the banking crisis, gold remains a superb insurance policy. Before the present cycle exhausts itself I would not be surprised to see gold reach all time highs on an inflation adjusted basis i.e., $2500.

Silver is also interesting here since it is a minor precious metal with expanding industrial applications. On an inflation adjusted basis it is even cheaper than gold. William Thomson, Chairman of Private Capital Limited, Hong Kong and adviser to Axiom Alternative Funds, London

-"A water-torture stock bear market has begun." Mark Mobius-Franklin Templeton

-Overview of roundtable. This is the worst financial crisis since the 1930s and equity prices have more room to fall. All told, the total losses could run into trillions of dollars. High inflation is likely to persist, at least for some months. Investors can seek refuge in precious metals and selected emerging markets.

Since the sub-prime mortgage crisis burst upon the US a year ago, there have been market rallies and claims that the worst is over, only to be followed by fresh plunges in values and sentiment. Are we near the bottom now, or just at the start of a long, slow meltdown? Our experts take the latter view. Where can investors find a safe haven in this sea of trouble and uncertainty? Gold is still a good refuge, suggests one expert, who expects the price go as high as $2,500 an ounce.

More fundamentally, our experts see developing markets in Asia and beyond as the promised land that will emerge relatively strong from a potentially massive destruction of wealth in the old world. The needs of these emerging markets for food and natural resources will be strong, so farmland and plantations could be good investments.

-My forecast is for silver to break above the critical 21 resistance level before gold breaks above the critical 1020 level. The heavy corrosion to the U.S. dollar is about to enter a very damaging phase. The autumn season is near, when the gold and silver bull markets realize some seasonal breakouts.

By year end, gold should be near 1200 and silver near 25. One big reason why so many shenanigans are being played with banks and the U.S. Dollar, is that the gold favourable season is near in arrival. As the U.S. Dollar is undermined during a multi-faceted corrosive process and the season arrives, gold & silver will thrive. Jim Willie CB-Read more here-

http://www.321gold.com/editorials/willie/willie080108.html

-Elliott Wave Gold Update. The gold market is in the process of completing Large wave II of Major wave THREE. Once Large II is finished, Large III of Major wave THREE will commence. As detailed in Update 20, this should be a strong upward impulsive wave that could reach to above $1,500 before it is completed. Alf Field-Read more here-

http://www.321gold.com/editorials/field/field080608.html

-At the moment, "the dollar has and continues to be the main influence on the gold price, so when today it pushed back to the upper limit of its trading range, it influenced the gold price to the downside again," wrote Julian Phillips of GoldForecaster.com. However, a prolonged gold slump seems unlikely given that the global economy still appears to be extremely troubled.

"The factors pushing the price down are not substantive enough to change the [upward] trend of the gold price," Phillips continued. "Only a sound dollar, healthy global economic growth, low inflation, confidence in the world monetary system will change this trend, but then this is the sort of thing dreams are made of." Given the slim chances that such a scenario will occur, it is only a matter of time until gold resumes its upward movement. The Daily Resource

-David Beahm of Blanchard wrote that he "continues to see distinct weakness in the U.S. economy over the long-term," and believes that gold will move "north of $1,000 during the coming months and achieving a new record high near $1,150 by the end of the year."

Mark Obyrne of Gold and Silver Instruments Ltd. agrees that there was a correction due in gold prices. He said, that "while the short-term trend remains down, we expect a summer low to have been reached or to be reached in the coming days prior to a significant move upwards in mid to late August and into gold's strong months September and October." "In the coming months we should see gold reach $1,200/oz." The Daily Resource

-According to Peter Grant of USAGOLD-Centennial Precious Metals, "inflationary pressures are going to remain stubbornly high, despite the pullback in commodity prices." He continued that "the best way to protect yourself against a weaker dollar and the resulting inflation, along with persistent risks to the banking system, is to own physical gold." Mark O'Byrne of Gold and Silver Instruments Ltd. agreed that while gold may go down in the short run, "gold's long-term fundamentals remain sound." The Daily Resource

-Governments caused credit crisis, capitalism gets blamed. Read more here-http://www.gata.org/node/6475

-U.S. Headed Toward Bankruptcy, Says Top Budget Committee Republican. The ranking Republican on the House Budget Committee said the U.S. government is headed toward bankruptcy if it stays on its current fiscal course. "We know that for a fact," Rep. Paul Ryan (R-Wis.) told CNSNews.com in a video interview. "All the actuaries, all the objective scorekeepers of the federal government, are predicting this." Watch video here-http://www.cnsnews.com/public/content/article.aspx?RsrcID=33574&print=on

-US Budget Deficit to Grow Much Worse. Read more here-http://www.caseyresearch.com/library/articles/2189/merk-market-outlook:-us-budget-deficit-to-grow-much-worse/

-McCain Embraces Deficit Critic David Walker as Truth Teller. Presidential candidate John McCain said that, if elected, he would tap former U.S. Comptroller David Walker to help balance the federal budget, calling the deficit hawk someone who could help convey the "truth'' of the nation's budget deficit to the public.

"He is the most articulate person on this issue of the debt that we've laid on future generations of Americans,'' McCain, the presumptive Republican nominee said last night. ``We've got to communicate more directly to the American people and tell them the truth.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aFi0AJthqc54&refer=home

RARE COLORED DIAMONDS

-Demand for rarest diamonds outstrips supply. Read more here-http://www.reuters.com/article/reutersEdge/idUSL0646558820080606

COMMODITIES

-Commodities bull market is not over. In what marked a significant change in investor attitude, commodity prices in July experienced on of their largest corrections since 1980. Much of it due to a fall in oil prices. Like others Danske bank sees the correction as a test of whether or not the bull market in commodities is over, taking the view while risks remain, the fundamentals are still supportive.

While an oil price of more than $140 per barrel was probably excessive, the recent correction is more the result of demand destruction, in the groups opinion. This is evidenced by U.S. gasoline demand in the past month, which is down 3% from the same time last year. The decline being mainly due to total miles driven slipping 3.7% in may from a year ago.

The weakness across the commodities sector sparked by the oil price correction may well continue over short-term, in the groups view, given it signals a change in sentiment. However longer-term market fundamentals still suggest prices can go back up. The bank has lowered it forecasts for the September and December quarters as a result, but its 2009 numbers remain essentially unchanged. Read more here-http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=95B3ACF3-1871-E587-E1D9206598239340

OIL

-Fat Prophets' Wendt Sees Oil Price at $175 by Year End. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Fat%20Prophets%27%20Wendt%20Sees%20Oil%20Price%20at%20%24175%20by%20Year%20End&clipSRC=mms://media2.bloomberg.com/cache/vorNJheJ8ap4.asf

-Home Energy Prices Are Expected to Soar. In a season of roller-coaster energy costs, the drop in oil and natural gas prices in recent days was greeted as good news. But they remain so high that experts are predicting that heating bills this winter will far exceed those of last year. Read more here-http://www.nytimes.com/2008/08/06/business/06fuel.html?ref=business&pagewanted=print

-The War for Oil. Read more here-http://news.goldseek.com/GoldSeek/1217609580.php

-Boone Pickens may be a fine man, and has played a colorful and useful role on the American stage for decades. But his "energy plan," which he's spending a fortune to promote on cable TV, is not a plan. Read more here-http://online.wsj.com/article/SB121797900578415011.html?mod=todays_us_opinion

GASOLINE

-Gas prices down 21 days in a row. The national average price for a gallon of gas slips to $3.849. Only 10 states are above $4 a gallon. Read more here-

http://money.cnn.com/2008/08/07/news/gas/index.htm

-More Americans feel gas price pain. CNN/Opinion Research poll finds high prices causing hardship for three quarters of Americans. Read more here-

http://money.cnn.com/2008/08/01/news/economy/poll_gasprices/index.htm

-Scooters, Shuttles Replace Silicon Valley Mercedes. Driving a Mercedes E500 gave Wes Richards a smooth ride to his office in Redwood City, California. Now he hops on a scooter for the 5-mile commute from his home in Atherton.

The price of gasoline trumped comfort, Richards said. He traded both his Mercedes sedan and his wife's Mercedes R350 sport-utility vehicle for a Piaggio scooter, a two-seat Smart car and a Toyota Prius.

"I don't miss having those cars,'' said Richards, 56, managing director of the Silicon Valley office of Korn/Ferry International, an executive-search firm. "Those feelings are reinforced every time I visit the pump and fill up for $28, where before it was $90.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a_i30q6xMCo0&refer=home

INFLATION

-June U.S. inflation jumps as incomes barely rise. Consumer prices jumped at the sharpest rate in more than a quarter century during June, and consumers coping with soaring costs received their smallest income gain in a year, the government said on Monday.

The Commerce Department said personal incomes edged up 0.1 percent after rising 1.8 percent in May. June's rise was the smallest since April 2007, when income was flat. On a year-over-year basis, prices rose 4.1 percent in June, up from 3.5 percent in May, for the biggest annual gain since May 1991. Read more here-

http://www.reuters.com/article/ousiv/idUSN0125539420080804

-Shadow stats alternate data on the U.S. economy. See charts here-http://www.shadowstats.com/alternate_data

-Philippine July Inflation Accelerates to 16-Year High. Philippine inflation accelerated to the fastest pace in more than 16 years in July on costlier food, oil and higher wages, adding pressure on the central bank to raise interest rates for a third month in August. Consumer prices rose 12.2 percent in July from a year earlier, the National Statistics Office said in Manila this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aEX5P2zrCURA&refer=home

-Bridgestone to Raise Tire Prices in U.S., Canada From September. Bridgestone Corp., the world's largest tiremaker by sales, will raise tire prices in the U.S. and Canada by as much as 10 percent to pass on higher rubber costs. The company will raise prices for car, truck and motorcycle tires from Sept. 1, Tokyo-based Bridgestone said in a release on its Web site today. Bloomberg

INTEREST RATES

-Fed Keeps Rate at 2% as Inflation Accelerates, Growth Stagnates. The Federal Reserve kept its benchmark interest rate at 2 percent for the second consecutive meeting as inflation accelerates and the economic slowdown shows signs of deepening. "Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee,'' the Federal Open Market Committee said in a statement today in Washington.

Chairman Ben S. Bernanke is constrained by threats to both sides of his mandate to achieve stable prices and full employment. A rate cut risks pushing inflation higher still; an increase would further tighten credit, undermine troubled banks and starve the faltering economy of investment and spending. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=auyxfYj6zV0Q&refer=home

-The fed's next move is down. Investors should expect falling worldwide interest rates. Short-term government bonds in inherently strong currencies, like Swiss Francs, remain attractive. As hyper-stagflation and acute financial stress becomes manifest, gold will likely rise significantly. Read more here-http://news.goldseek.com/GoldSeek/1218041147.php

-Mobius Says Fed Should Cut Rates to 1% to Fuel Growth. The Federal Reserve should cut its benchmark interest rate to 1 percent to boost the economy as falling oil prices reduce the threat of inflation, investor Mark Mobius said.

"With oil prices beginning to soften, there may be a chance for them to give a boost to the economy by lowering rates again,'' Mobius, 71, who oversees about $40 billion in emerging- market stocks as executive chairman at Templeton Asset Management Ltd. in Singapore, said in an interview on Bloomberg Television. "That's still in the cards, but no one really knows.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aIUC1MrJSyIc&refer=home

-BOE Keeps Rate at 5% as Economy Slumps, Prices Rise. The Bank of England kept the main interest rate unchanged for a fourth month after inflation accelerated and the economy teetered on the brink of a recession. The Monetary Policy Committee, led by Governor Mervyn King, left the bank rate unchanged at 5 percent Thursday. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8Et6pNqZOXs

-ECB Leaves Interest Rates at Seven-Year High to Fight Inflation. The European Central Bank kept interest rates at a seven-year high to fight inflation even as evidence of an economic slump mounts. ECB policy makers meeting in Frankfurt left the benchmark lending rate at 4.25 percent. The bank, which raised rates last month, will wait until the second quarter of next year to cut borrowing costs, a separate survey shows.

The ECB is concerned that the fastest inflation in 16 years will help unions push through demands for higher wages and prompt companies to lift prices. At the same time, record energy costs and the stronger euro are strangling growth. Economic confidence dropped the most since the Sept. 11 terrorist attacks in July and Europe's manufacturing and service industries contracted for a second month. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aviqt3l6EPcQ

-Rate cuts likely ahead for European Central Bank. Read more here-http://www.gata.org/node/6476

-Bank of Korea Raises Rate to 5.25% to Curb Inflation. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8OXPho716AQ&refer=home

ROUBINI-HUNDREDS OF U.S. BANKS WILL FAIL

-The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition. Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.

The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported. He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.

U.S. consumers, meanwhile, are "shopped out" and saving less, while the Federal Reserve's performance in handling the crisis has been poor, Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt. Now, Roubini told Barron's, the government is over regulating, bailing out troubled participants and intervening in every market.

"The regulators should investigate themselves for bailing out Fannie Mae and Freddie Mac the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."

He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. "In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management," Roubini told Barron's. As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.

"Of three dozen or so medium-sized regional banks, a good third are in distress," he told Barron's, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail. Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term. Full story here-http://www.reuters.com/article/marketsNews/idUSN0344130720080803

U.S. BANKING CRISIS

-IndyMac Bancorp Inc., once the second- largest U.S. independent mortgage lender, filed to liquidate its remaining assets three weeks after its bank was seized by U.S. regulators and put under other management.

IndyMac's liabilities are between $100 million and $500 million, according to the Chapter 7 filing by the bank holding company yesterday in U.S. Bankruptcy Court in Los Angeles. IndyMac said it has fewer than 50 creditors, including law and accounting firms and other banks, none of whose outstanding claims were listed.

IndyMac was seized by U.S. regulators on July 11 with its $19 billion in deposits, after a run by depositors left the mortgage lender strapped for cash. The Federal Deposit Insurance Corp. is running a successor institution, IndyMac Federal Bank, and regulators have said they intend to eventually sell the seized bank, while adding that its high risk-lending and mortgage losses make it "unattractive.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a98PghxW29do

-FDIC warns four US banks over liquidity. The Federal Deposit Insurance Corporation revealed on Friday that it had issued warnings to four small US banks that lacked sufficient reserves to cover potential loan losses.

The cease-and-desist orders issued in June said the four banks needed to raise more capital, expand their loss allowances and better oversee and diversify their loan portfolios. A fifth bank was cited for violating consumer protection laws. Losses on mortgages and other loans have helped bring down eight US banks this year, including one small Florida institution on Friday.

The banks receiving cease-and-desist orders in June were MetroPacific Bank in Irvine, California; Bank Haven in Haven, Kansas; Clarkston State Bank in Clarkston, Michigan; and Hastings State Bank in Hastings, Nebraska. Read more here-http://www.ft.com/cms/s/0/f52c86b4-6018-11dd-805e-000077b07658.html?nclick_check=1

-First Priority Becomes Eighth Failed Bank; SunTrust Buys Assets. First Priority Bank with six branches on Florida's Gulf Coast was closed by state regulators, becoming the eighth U.S. bank to collapse this year amid failed loans and writedowns linked to a slump in home prices.

First Priority, with $259 million in assets, was shut yesterday by the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corp. sold $227 million in deposits to SunTrust Banks Inc. of Atlanta, the agency said in a statement. Six First Priority branches in Bradenton, Sarasota and Venice will open Aug. 4 as SunTrust offices, the FDIC said.

The pace of bank closings is accelerating as securities firms report more than $480 billion in writedowns and credit losses since 2007, when three banks were shuttered. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a87bC3u64eTc

-Greenspan says more financial institutions may face insolvency. More banks and financial institutions are likely to face insolvency and need bailouts before the global financial crisis is over, according to former Federal Reserve chairman Alan Greenspan. Writing in the Financial Times, Greenspan called the current crisis which started a year ago a once or twice in a century event and said insolvency would only end once U.S. house prices stabilized, underpinning mortgage-backed securities.

Until then, the threat of collapse among banks and other global financial institutions would persist. "Fears of insolvency have not, as yet, been fully set aside," Greenspan wrote in an article published online on Monday. "There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments." Read more here-http://www.usatoday.com/money/industries/banking/2008-08-04-greenspan-financial-institutions_N.htm

-The Maestro Won't Face the Music. Greenspan's most brazen contention was that he had tried to warn us of the dangers that Fannie and Freddie could pose to the entire economy. Excuse me, but when exactly did he sound this alarm?

His points that Fannie and Freddie should not exist, and that the moral hazard of private profits and socialized losses is an accident waiting to happen would have been right on point had he actually made them while still Fed Chairman. Too bad Maria Bartiromo did not remind Greenspan that the accident has already taken place. Fannie and Freddie's flawed design may have rendered them destined to slip but it was Greenspan himself who supplied the banana peel. Read more here-http://news.goldseek.com/EuroCapital/1217609758.php

-Uninsured Depositors May Be 'Iceberg' for US Economy. Uninsured depositors, including company payrolls, are the next "potential iceberg" for the U.S. economy, said Larry Lindsey, CEO and president of The Lindsey Group economic advisory firm.

"All you need is one case where the uninsured depositors, the big deposits, don't get covered, and you have the potential that they start to run," he said. "To run an economy, to have a function that works, you've got to have a place where people can keep their money safely. Unfortunately, the way the Congress has structured it now, that's not the case." Read more here-http://www.cnbc.com/id/26008619

-Fallout in Financials-Insight on where banks are headed, with Meredith Whitney, Oppenheimer & Co. director, equity research. Read more here-http://www.cnbc.com/id/15840232?play=1&video=812131599

-Whitney: Credit crunch far from over. The star analyst tells Fortune magazine that housing woes will force banks to keep taking writedowns. Read more here-

http://money.cnn.com/2008/08/04/news/newsmakers/whitney_oppenheimer.fortune/index.htm?postversion=2008080408

FREDDIE-FANNIE

-Freddie Posts Loss, Cuts Dividend as Slump Deepens. Freddie Mac, the U.S. mortgage-finance company hobbled by record foreclosures, slashed its dividend at least 80 percent after posting a quarterly loss that was three times wider than analysts' estimates. Freddie doubled its reserves for future home-loan losses to $2.8 billion, signaling Chief Executive Officer Richard Syron sees no end in sight to the worst housing slump since the Great Depression.

Freddie has 22,000 properties in foreclosure, more than ever before, and it now anticipates losing 26 percent on each loan, up from 22 percent. McLean, Virginia-based Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees, prompting Treasury Secretary Henry Paulson to step in with a rescue plan.

"Neither we nor anyone else can predict when the housing market will recover and it will be folly for anyone'' to try, Syron said on a conference call with analysts today. ``There's still a large amount of inventory to work through the system and record foreclosures.''

Almost one out of every 10 mortgages in the U.S. was in trouble during the first quarter, the highest in records dating to 1979, according to the Mortgage Bankers Association in Washington. Delinquencies, or home loans with payments 30 days or more overdue, rose to 6.35 percent of outstanding mortgages and the share of homes in foreclosure rose to 2.47 percent. Freddie's properties in foreclosure are triple that of 2002. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8m_9i9.5MeE&refer=home

-Pimco's Gross Says U.S. Will Rescue Fannie, Freddie. Bill Gross, who manages the world's biggest bond fund, said the U.S. Treasury will probably be forced to buy as much as $30 billion of preferred shares in both Fannie Mae and Freddie Mac to help shore up their capital.

"By the end of the third quarter, the preferred stock in Fannie and Freddie will be issued, the Treasury will have bought it,'' Gross, co-chief investment officer at Pacific Investment Management Co., said today in an interview on Bloomberg Television. ``We'll be on our way toward a joint Treasury-agency combination.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=an9sljJCqNNk&refer=home

-Freddie's risks all too plain to see. Investors blanch at the mortgage giant's effort to reveal the risks it bears as house prices tumble. Read more here-

http://money.cnn.com/2008/08/06/news/freddie.transparency.fortune/index.htm

MORE AIG FINANCIAL TROUBLE

-AIG Plummets as Insurer Won't Rule Out Capital Raise. American International Group Inc., the biggest U.S. insurer by assets, fell the most since going public in 1969 after writing down more than $11 billion of holdings and saying it won't rule out raising capital.

"It's very hard to predict right now when and if we'll need more capital," Chief Executive Officer Robert Willumstad said today in a conference call with analysts. "Future losses can change that assumption and we're obviously dependent on the condition of the U.S. housing market."

Willumstad faces increasing pressure to turn around AIG after the insurer posted more than $18 billion in losses over the past three quarters. The second quarter's $5.36 billion loss, reported yesterday, was worse than analysts predicted and renewed concern that AIG may need to raise cash by selling shares. Willumstad called current capital "satisfactory." Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ah3fZe3a.Eqc&refer=home

NORTHERN ROCK FINANCIAL BAILOUT

-Northern Rock posts $1B loss. Nationalized British bank swings to first-half loss on mortgage defaults. Read more here-

http://money.cnn.com/2008/08/05/news/international/northern_rock_earnings.ap/index.htm

-Northern Rock Gets 3.4 Billion Pound State Injection. Northern Rock Plc, the first British bank to suffer a run in 150 years, will receive as much as 3.4 billion pounds ($6.7 billion) from the government, as house prices decline and repossessions soar. Britain's government will convert some outstanding debt and preference shares into equity in the mortgage lender after it posted a 592 million-pound loss for the first half, the Newcastle, England-based bank said in statement today.

It repaid 9.4 billion pounds to the Bank of England, about a third of its 27 billion-pound debt. Northern Rock was bailed out by the central bank last year when it ran out of funds and was nationalized by Chancellor of the Exchequer Alistair Darling in February. The bank's losses were worsened by a tripling in arrears to 1.2 percent, amid the steepest decline in house prices since 1992. "Darling assured Parliament that taxpayer loans to Northern Rock would be fully secured on mortgage assets,'' said Vincent Cable, the opposition Liberal Democrat Treasury spokesman.

"This is clearly not true. 3.4 billion pounds of the Government's loan to Northern Rock is now being converted into ordinary shares, which rank right at the bottom for repayment. Continuing losses at the bank put this money at great risk.'' Repossessions rose 67 percent to 3,710 by the end of June, Northern Rock said today. The surge ``was expected,'' Chairman Ron Sandler told journalists today. Read more here-http://www.bloomberg.com/apps/news?pid=20601102&sid=aGXJJlkdqrLw

GLOBAL RECESSION

-Japan Says Economy Deteriorating, Signals a Recession. Japan's government said the economy is ``deteriorating,'' acknowledging for the first time that the country's longest postwar expansion has probably ended.

"There is a high possibility the economy has entered a recession,'' Shigeru Sugihara, head of business statistics at the Cabinet Office said in Tokyo today. The government bases its assessment of the economy on the coincident index, its broadest indicator of economic health. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=agPMgTnteJP0&refer=home

-Party's over for jittery New York. Read more here-http://www.breitbart.com/print.php?id=080804143812.o8igyxho&show_article=1

-U.S. July Job Cuts Double Year-Earlier Level, Challenger Says. Job cuts announced by U.S. employers soared last month, led by reductions at airlines and financial firms, according to a report by a private placement firm. Firing announcements increased to 103,312 last month, up 141 percent from 42,897 in July 2007, Chicago-based Challenger, Gray & Christmas Inc. said in a statement today. That's the biggest year- over-year percentage increase since November 2001, at the end of the last official recession.

Companies are trimming payrolls as fuel prices increase and the housing slump drags on. The Labor Department last week said that the U.S. economy lost jobs for a seventh straight month in July and the unemployment rate reached the highest in more than four years.

"We have seen job cuts increase in the majority of industries that we track,'' John A. Challenger, chief executive officer of the placement company, said in a statement. ``The downturn, which was isolated to the housing and financial sectors just a few months ago, has spread throughout much of the economy.'' Companies have announced a total of 579,260 cuts so far this year, up 33 percent from the first seven months of 2007, according to the report. Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid=aLDBTCBZ6vYQ&refer=us

-Jobless claims surge to highest level in 6 years. Claims for unemployment insurance at highest point since March 2002; layoff filings worse than expected. Read more here-

http://money.cnn.com/2008/08/07/news/economy/jobless_benefits.ap/index.htm

U.S. DOLLAR-LOONIE

-What Is Money? Read more here-http://news.goldseek.com/DollarCollapse/1218142611.php

-Has The Dollar Fallen Enough? Has the dollar fallen far enough? How large are unsustainable international imbalances? This article presents new estimates of fundamental equilibrium exchange rates, concluding that the U.S. dollar has fallen enough with respect to the euro and pound but is overvalued against Asian currencies. Read more here-

http://www.resourceinvestor.com/pebble.asp?relid=45163

-India's central bank shifts slowly away from U.S. dollar. Read more here-http://www.gata.org/node/6467

-Loonie Loses Currency Wings as Canada Hurt by U.S. Currency traders are beginning to realize that for all its riches in oil, copper and lumber, Canada's economy may not be so different than the U.S. after all. While Canadians celebrated last year as the country's dollar reached parity with its U.S. counterpart for the first time since 1976, traders now predict the currency will fall as much as 17 percent through 2009.

After soaring 17 percent in 2007, the loonie, as the currency is known because of the aquatic bird on the one-dollar coin, is down 3.1 percent in 2008 amid a shrinking economy and an 13 percent drop in oil prices the past month. It's one of five of the 16 most-widely traded currencies to drop against the U.S. greenback, joining the New Zealand dollar, South Korean won, South African rand and British pound. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a_msEHNvep2k&refer=home

STOCK MARKET-BONDS

-"Long-term trend is now down." Commentary: Richard Russell has turned bearish on major trend. Richard Russell celebrated his 84th birthday last week, but he finds little to celebrate in the stock market's recent action. Russell is the editor of Dow Theory Letters, a newsletter he has been writing continuously since 1958.

That makes him the granddaddy of the investment newsletter arena; no other current investment newsletter editor has been publishing for as long and most don't even come close. In fact, many of today's investment advisers weren't even born when he inaugurated his letter. Read more here-http://www.marketwatch.com/news/story/richard-russell-now-says-stock/story.aspx?guid={E6D41CC7-402E-4409-B9A3-D3FCD6744596}&dist=TNMostRead

-Naked shorting's early critic starts to see some vindication. Over the past several years, Patrick Byrne's campaign to clean up Wall Street and end a practice that has destroyed companies and cost unwary investors billions of dollars generated plenty of publicity for him, mostly the wrong kind.

Critics labeled him nuts, a conspiracy theorist, a complete wack job. Byrne, the chief executive of the Utah-based discount online retailer Overstock.com, even found himself tagged a member of the "tin-foil hat" brigade, a reference to the flying saucer fanatics of the 1950s who adorned their heads with aluminum to ward off, or enhance, thoughts from aliens in outer space. These days, when people talk of Byrne, the word "vindication" comes up a lot. Read more here-http://www.gata.org/node/6468

-U.S. Corporate Bond Sales in July Fall to Lowest in Five Years. Sales of U.S. corporate bonds in July fell to the lowest since 2003 as borrowing costs reached the highest in six years.

General Mills Inc. and Memphis, Tennessee-based AutoZone Inc. were among companies selling $38.1 billion of debt, compared with $39.8 billion in July 2007, according to data compiled by Bloomberg.

General Mills paid a record yield, or spread, over benchmark rates to issue five-year notes, while Autozone, the largest U.S. auto-parts retailer, for the first time sold bonds that provide for a higher coupon if the company's ratings are cut. Near-record-high corporate bond spreads pushed borrowing costs to the highest since April 2002, five months after the last recession ended. Monthly sales were the lowest since August 2003.

The top five U.S. banks or brokers sold the fewest corporate bonds since December 2000, Bloomberg data show. Those companies accounted for about a quarter of all investment-grade offerings in 2007. "I just don't know that it's very economical right now to raise money unless you absolutely have to,'' said John Weaver, a portfolio manager at McGlinn Capital Management in Wyomissing, Pennsylvania, which manages $500 million.

"I don't think that Armageddon is a non-trivial risk here. This deleveraging may take longer than everyone thinks.'' The extra yield investors demand to own investment-grade bonds widened 26 basis points this month to 300 basis points, 5 basis points from the record reached March 20, according to Merrill Lynch & Co.'s U.S. Corporate Master index. That pushed average yields to as high as 6.74 percent on July 23. A basis point is 0.01 percentage point. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=amD.PUoGKY.4

TOUGH TIMES AHEAD FOR U.S.-EUROPEAN PENSIONERS

-A miserable time looms for America as the boomers become pensioners. Heaven knows, America's miserable now. With US unemployment up to 5.7 per cent in July, and with US inflation in June running at 5.0 per cent, life is no longer quite as comfortable as it used to be.

Combining these two measures generates the so-called "misery index", a gauge of the overall degree of economic distress resulting from an unfortunate combination of rising joblessness and higher inflation. According to this calculation, Americans have every right to be feeling miserable: the index has reached its highest level since the early 1990s, when another George Bush presided over an economy which, like now, was on its knees. Read more here-http://www.independent.co.uk/news/business/comment/stephen-king/stephen-king-a-miserable-time-looms-for-america-as-the-boomers-become-pensioners-884334.html

-Now Wall Street Wants Your Pension, Too. JPMorganChase, Citi, Cerberus, and Morgan Stanley are among the firms lobbying Washington to let them take over and run corporate pension funds.

The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme. Read more here-

http://www.businessweek.com/magazine/content/08_33/b4096000769608.htm?campaign_id=rss_topStories

-Europe Tries to Handle Political Fallout of Pension Cuts. Social Security is known as the "third rail" of American politics, and fiddling with retirement benefits can prove politically fatal in Europe too. Yet, in recent months and years some Europeans have tried to defuse the time bomb posed by millions of retirees receiving government benefits. Read more here-

http://www.nytimes.com/2008/08/06/business/worldbusiness/06pension.html?_r=2&oref=slogin&partner=rssyahoo&emc=rss&adxnnlx=1217998835-Mb7KRTAHZ08VLrCtZlf3yg&pagewanted=print&oref=slogin

SELLING TOXIC DEBT TO SENIORS

-Selling toxic debt to seniors. Memphis broker Morgan Keegan is under fire for allegedly failing to disclose the subprime risks of seven funds. The subprime securities that created carnage on Wall Street are bringing new pain to Main Street.

Regulators in five states are investigating whether Memphis brokerage Morgan Keegan failed to disclose the risks of seven mutual funds stuffed with toxic debt and whether it inappropriately sold them to seniors and other small investors. Six lawsuits and dozens of arbitration cases claim it did. Read more here-

http://www.businessweek.com/magazine/content/08_33/b4096024633079.htm?campaign_id=magazine_related

AUTO MAKERS

-Big Three face bankruptcy fears. After huge losses and plunging sales, experts aren't ruling out the possibility that GM, Ford or Chrysler might eventually be forced to declare bankruptcy. Read more here-http://money.cnn.com/2008/08/06/news/companies/big_three_woes/index.htm?postversion=2008080610

-Auto Makers Pull Back From Fuel-Economy Drive. The auto industry said federal regulators are pushing too far, too fast in their effort to raise fuel-mileage rules. The complaints from the industry, which had previously voiced support for tougher standards, underscore how economic hardship is affecting a major policy debate. Read more here-

http://online.wsj.com/article/SB121789813230412201.html?mod=AutosChannelMain_RelatedStories

-Chrysler Falls Short of $30 Billion Financing Goal. Chrysler Financial's failure to get all of the $30 billion in renewed funding it sought may further restrict the lending unit's ability to support auto sales to Chrysler LLC customers and its dealers.

Chrysler Financial said yesterday it obtained $24 billion from a group of lenders, 20 percent below its target. The Farmington Hills, Michigan-based lender attributed the shortfall to "conditions in the credit markets and changes in the company's retail strategy.'' The finance unit stopped offering leases on Aug. 1 because of rising borrowing costs. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=au05zqFSzI2s

-GM Has $15.5 Billion Loss on U.S. Sales Drop, Leases. General Motors Corp., the largest U.S. automaker, reported a second-quarter loss of $15.5 billion because of plunging U.S. sales and the declining value of truck leases.

The deficit of $27.33 a share marks GM's fourth straight quarterly loss and compares with a profit of $891 million, or $1.56, a year earlier. Excluding costs GM considers one-time, the per-share loss was 4 times bigger than analysts projected. Labor strikes contributed to a $9.9 billion drop in North American revenue, and sales worldwide tumbled 18 percent to $38.2 billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=apNQZDTc1VTo&refer=home

-Automakers Race Time as Their Cash Runs Low. Read more here-http://www.nytimes.com/2008/08/02/business/02gm.html?_r=1&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

-Detroit's Losses Mean Higher Car Payments for Those Who Lease. Leasing a car is about to get more expensive. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=arqlQq5DHSMs

-Chrysler, Nissan team up on midsize cars: report. The collaboration would not be the first for the two automakers. Read more here-

http://money.cnn.com/2008/08/07/news/international/bc.us.chrysler.nissan.midsize1.ap/index.htm

REAL ESTATE

-Home Values Fell in 23 of 25 U.S. Metro Areas, Radar Logic Says. Home prices fell in 23 of 25 U.S. metropolitan areas in May from a year earlier as foreclosure sales pushed down values and most areas remained mired in the housing recession. Sacramento had the biggest price drop, falling 31 percent from May 2007. Las Vegas declined 29.5 percent, San Diego 27.2 percent, St. Louis 26.9 percent and Phoenix 25.8 percent, said real estate data company Radar Logic Inc.

Sales rose in 22 areas in May from April, driven by ``motivated'' sellers including banks, the company said. ``Price declines are occurring in areas where subprime lending was heavily concentrated, and a large percentage of sales are foreclosure sales,'' Susan Wachter, professor of real estate finance at the University of Pennsylvania's Wharton School, said in an interview.

Prices for "those sales are always significantly lower than transactions that are not forced.'' U.S. foreclosure filings more than doubled in the second quarter from a year earlier as almost 740,000 properties, or one in every 171 households, was foreclosed on, received a default notice or was warned of a pending auction, according to Irvine, California-based RealtyTrac Inc., a seller of default data.

The S&P/Case-Shiller home-price index of 20 metropolitan areas dropped 15.8 percent in May, the most since at least 2001. Foreclosures led to increased sales in some areas where prices declined and ``people began to bargain hunt,'' Michael Feder, president of New York-based Radar Logic, said in an interview. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aGO27j0pZO38&refer=home

-Highest Home Supply Since '82 Seen Needing 50% Cut. Hovnanian Enterprises Inc., New Jersey's largest homebuilder, cut the number of unsold houses by more than 50 percent over the past two years after lowering prices and still had 1,500 on its books as of April. "We pretty much start a home these days when we have a contract from a buyer wanting to purchase one,'' Chief Financial Officer Larry Sorsby said in an interview from his office in Red Bank, New Jersey.

The company's sales price in the northeast for homes under contract dropped 7.4 percent in April from a year earlier. ``We don't build them and hope they come,'' he said. There are 3.9 million unsold existing single-family homes, the most since at least 1982, when the Chicago-based National Association of Realtors started compiling the data. The inventory of existing houses and condominiums must fall by almost 50 percent for prices to stabilize, said William Wheaton, an economics professor at the Massachusetts Institute of Technology in Cambridge.

There is an 11.1 month supply of existing unsold homes at the current sales pace, up from 4.6 months in September 2005, according to the National Association of Realtors data. It now takes 10 weeks to 12 weeks on average to sell a house, compared with four weeks or five weeks at the height of the five- year housing boom, said Walter Molony, a spokesman for the Realtors group. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=avPV2OxmwF9w

-Pending Home Resales in U.S. Unexpectedly Rose 5.3%. More Americans unexpectedly signed contracts to purchase previously owned homes in June, a sign that lower prices are drawing some buyers back into the market. The index of pending home resales rose 5.3 percent after a revised 4.9 percent decline in May, the National Association of Realtors said today in Washington. The gain is the third this year.

Plummeting property values, spurred by mounting foreclosures, may be helping to stabilize the market by making houses more affordable. Still, repossessions may keep growing as stricter lending rules make it harder for owners to refinance their mortgages.

"What we're getting is a little bit of foreclosures thrown in with voluntary home sales,'' John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said in an interview with Bloomberg Television. ``Although foreclosures are up, there seems to be enough of a price decline that buyers are starting to look for bargains and they're willing to purchase.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=agsjwBR2Vgtk

-U.S. house prices falling fastest for 17 years, says Nationwide. House prices are falling at the fastest rate for 17 years, according to figures from Nationwide. The average house is worth £15,000 less than last year after a 8.1 per cent annual slump. The pace of annual decline is unprecedented since the building society began its monthly house price index in 1991.

The figures follow warnings earlier this week that more than 1.6 million home owners could fall into negative equity over the next year. Read more here-

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/07/31/bcnnationwide231.xml

-Australian House Prices Fall for First Time in Three Years. Australian house prices fell in the second quarter for the first time in almost three years as the highest borrowing costs since 1996 deterred home buyers. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=amNetLGYqAC4&refer=home

-WCI, Icahn's Builder, Files for Bankruptcy Protection. WCI Communities Inc., the homebuilder whose chairman is billionaire investor Carl Icahn, filed for Chapter 11 bankruptcy protection after failing to obtain new financing and losing 90 percent of its value in the past year. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a7lktScJDc7E

-U.S. Farmland Values Reach Record on High Crop Prices. U.S. farmland values are at a record high even as the rest of the country suffers the worst housing crisis since the Great Depression, with the highest crop prices ever pushing up agricultural real estate. The value of all land and buildings on farms averaged $2,350 an acre at the start of this year, up 8.8 percent from a year earlier, the U.S. Department of Agriculture said today in an annual report. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a2FmZilSagA0

FORECLOSURES-MORTGAGES

-A second, far larger wave of U.S. mortgage defaults is building. The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is building with alarming speed. After two years of upward spiraling defaults, the problems with mortgages made to people with weak, or subprime, credit are showing the first, tentative signs of leveling off. But with the U.S. economy struggling, homeowners with better credit are now falling behind on their payments in growing numbers.

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A, or alt-A, mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time. While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

Defaults are likely to accelerate because many homeowners' monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks are tightening their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are alt-A loans, many of which were made to people with good credit scores without proof of their income or assets. Read more here-http://www.iht.com/articles/2008/08/03/business/mortgage.php

-Housing Lenders Fear Bigger Wave of Loan Defaults. Read more here-http://www.nytimes.com/2008/08/04/business/04lend.html?_r=4&th=&adxnnl=1&oref=slogin&emc=th&adxnnlx=1218049576-ulKnpwLy0aKGchPKNAfVRg&pagewanted=print

-Morgan Stanley Said to Freeze Home-Equity Credit Withdrawals. Morgan Stanley, the second-biggest U.S. securities firm, told thousands of clients this week that they won't be allowed to withdraw money on their home-equity credit lines, said a person familiar with the situation.

Most of the clients had properties that have lost value, according to the person, who declined to be identified because the information isn't public. The New York-based investment bank will review home-equity lines of credit, or HELOCs, monthly from now on, the person said yesterday.

Wall Street firms including Morgan Stanley are ratcheting back on risks after the collapse of the subprime mortgage market and ensuing credit contraction saddled banks and brokerages with almost $500 billion of writedowns and losses. Consumers fell behind on home-equity credit lines at the fastest pace in two decades in the first quarter, the American Bankers Association reported last month. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afQ0PVYvOgzI&refer=home

-Connecticut sues Countrywide. The state accuses the mortgage lender of misleading borrowers into taking on home loans they could not afford. Read more here-

http://money.cnn.com/2008/08/06/news/companies/countrywide_lawsuit.ap/index.htm

-Deutsche Bank to Foreclose on $3.5 Billion Casino. Deutsche Bank AG will foreclose on the $3.5 billion Cosmopolitan Resort & Casino in Las Vegas after developer Ian Bruce Eichner defaulted on a $760 million loan, two people briefed on the situation said.

Germany's biggest bank weighed selling the complex after Eichner's January default, said the people, who asked not to be named because the discussions are private. Deutsche Bank will take over the Cosmopolitan and is talking with companies including MGM Mirage and Hilton Hotels Corp. to help run its 80,000-square-foot casino, the people said.

Sagging commercial real estate prices, weighed down by record subprime defaults, forced banks to hold projects until prices rise or sell at a loss. The Frankfurt-based bank would oversee an 8.5-acre development with two high-rise towers, three wedding chapels, a sandy beach overlooking the Las Vegas Strip and a deck featuring ``European-style bathing.''

"Deutsche Bank wants to be engaged in banking, not running a casino,'' said Matthew Clark, a London-based analyst at Keefe, Bruyette & Woods. ``They've had to decide between selling the Cosmopolitan into a bad market or holding on for better times.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=alpUP8xoYnJE&refer=home

-More U.K. repossessions than stated, says Shelter. Thousands more homeowners are having their houses repossessed than official figures suggest, a leading housing charity has said as the City watchdog prepares to publish repossessions data for the first time this week. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4460989.ece

-U.K. home repossessions are soaring in the credit crunch according to a shock new report with one desperate family forced to live in a pigeon shed. Read more here-

http://www.thesun.co.uk/sol/homepage/woman/real_life/article1519444.ece

-Sir James Crosby's report predicts mortgage market paralysis for three years in U.K. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4426026.ece

GEOPOLITICAL

-Olympic Terrorism Threat Video. An Islamic group has threatened attacks against the Olympics in China and urged Muslims to stay away from events there. The threat, attributed to the Turkistan Islamic Party (TIP), is contained in a new video which shows a burning Olympics logo and an explosion imposed over a venue to be used for the Beijing Games. It claims the communist regime's alleged mistreatment of Muslims justifies holy war. Watch video here-http://www.liveleak.com/view?i=13a_1218125381&p=1

-Iran Heads Toward Nuclear `Breakthrough,' Israel Says. Iran is on a path toward a ``major breakthrough'' in its nuclear program that is ``unacceptable,'' Israeli Deputy Prime Minister Shaul Mofaz told a Washington audience today. "It is an existential threat,'' Mofaz said at a forum on Iran at the Washington Institute for Near East Policy. "We have to make sure we are prepared for every option.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=auec_5cG.5k0&refer=home

-Israel mulls military option for Iran nukes. Israel is building up its strike capabilities amid growing anxiety over Iran's nuclear ambitions and appears confident that a military attack would cripple Tehran's atomic program, even if it can't destroy it.

Such talk could be more threat than reality. However, Iran's refusal to accept Western conditions is worrying Israel as is the perception that Washington now prefers diplomacy over confrontation with Tehran. Read more here-http://news.yahoo.com/s/ap/20080806/ap_on_re_mi_ea/israel_striking_iran&printer=1;_ylt=AiLuamzhUqnpGoZVZvgDJe8UewgF

-Iran's Rebuff of Incentives May Bring More Sanctions, U.S. Says. The U.S. and its international partners will pursue further sanctions against Iran if it doesn't respond to an offer to suspend uranium enrichment in exchange for economic benefits.

The permanent five members of the United Nations Security Council, plus Germany "are disappointed that we've not yet received a response from Iran as requested in Geneva on July 19th,'' State Department spokesman Gonzalo Gallegos said today in Washington. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ayczmPcCPcYk

-US: Iranian response on nukes unacceptable. Read more here-http://www.breitbart.com/print.php?id=D92C9MC81&show_article=1

-Iran threatens to shut Gulf shipping lanes. Iran has warned it is ready to shut down the shipping lanes of the Gulf as it boasted of a new missile system designed to "prolong" war at sea. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/iran/2497782/Iran-threatens-to-shut-Gulf-shipping-lanes.html

-Iran Tests Anti-Ship Weapon, Repeats Stance on Hormuz. Iran's military tested a new anti- ship weapon, the commander of the Islamic Revolutionary Guards Corps said as he repeated a warning that his forces could respond to any attack by closing the Strait of Hormuz, an oil transit point. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8ij5RBCP3gA&refer=home

-GCC chief slams Iran for attacking Arab monarchies. Read more here-http://www.breitbart.com/article.php?id=080807173815.y7383v74&show_article=1

-Book Claims White House Forged War Intel. Ron Suskind's "The Way Of The World" Alleges U.S. Faked Letter That Linked Iraq With 9/11. Read more here-

http://www.cbsnews.com/stories/2008/08/05/earlyshow/main4321003.shtml

-Iraqis: Deal close on plan for US troops to leave. Iraq and the U.S. are near an agreement on all American combat troops leaving Iraq by October 2010, with the last soldiers out three years after that, two Iraqi officials told The Associated Press on Thursday. U.S. officials, however, insisted no dates had been agreed. Read more here-

http://apnews.myway.com/article/20080807/D92DKUJG2.html

-Iraq isn't spending oil windfall on infrastructure. U.S. says about 1% of $80 billion goes to roads, bridges. Read more here-

http://online.wsj.com/article/SB121798557456515563.html?mod=hps_us_whats_news

-High oil prices giving Iraq up to $79 billion in surplus cash. Read more here-http://www.iht.com/articles/2008/08/05/mideast/surplus.php

-Pakistan, Afghanistan Need to Build More Trust, Gilani Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aKLdgYmGB6WY&refer=home

The GoldBugg Report - August 13, 2008
Posted by Worldwide Precious Metals on Wednesday, August 13, 2008

The GoldBugg Report - August 05, 2008

August 5, 2008

-"With a weaker dollar and continuing and possibly worsening inflation in prospect worldwide, the bullish case for Precious Metals remains unchanged and therefore silver is regarded as a buy at current levels and on any further short-term weakness, which is likely to be limited due to the strength of nearby support." Clive Maund

-"We're never going to see $850 gold again or be this close to it, so now is the time to buy." James Turk

-TSX Forecast Cut-Surviving The Storm-Stock Market

GOLD

-Gold market update from Clive Maund. The US Fed and the US government have made it clear with their recent actions in respect to Fannie and Freddie, and before that Bear Stearns via J P Morgan, that the largest hogs will be able to push their snouts squarely into the trough, so that their ears are flapping above their eyes, assured that the faucet will be kept wide open with a limitless supply of electronically created feed.

In other words, if they are big enough to bring down the system down should they fail, they will be hooked up to the "taxpayer life-support system", socialist style, regardless of whether they end up nearly killing their hosts. This is what is meant by the term "too big to fail". What this must inevitably mean is a lot more dollars flying around, as if there aren't enough already, and alot more inflation, neither of which are renowned for causing the price of gold to fall. Read and see charts here-http://news.goldseek.com/CliveMaund/1217199390.php

-Gold options point to $1,200. Heavy bets in deep out-of-the-money calls and other bullish plays in the gold options market indicate that bullion has a shot at rallying to an all-time peak of $1,200 an ounce by the end of the year.

Gold has soared furiously a few years ago the metal was trading at $250 an ounce as investors poured into the market due to inflation fears, a weakened dollar, and market turmoil. "There are a lot of people who think that by the end of the year we'll be trading $1,200 to $1,500. They are not very expensive options, so people are buying them," said John Bilello, COMEX gold options floor trader.

Bilello said that many option investors were currently adjusting positions after gold's sharp fall but he saw recent strong volume of December $1,000 calls, bull call spreads between $1,200 and $1,300, and the selling of put options all of which are betting that gold will rise further. A bull call spread involves buying a lower strike price call and selling a higher strike price call, and profits are maximized when prices rise above the higher strike price. Read more here-http://www.gata.org/node/6452

-Is gold's big season in sight? Analysts at RBC Capital Markets look for gold bullion to consolidate, and then make another run at $1,000 an ounce in September-October 2008. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=58021&sn=Detail

-Gold council set to launch ETF in Dubai. Read more here-http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2008/August/business_August13.xml&section=business&col=

-Biggest gold ETF lists today on Hong Kong stock exchange. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=58322&sn=Detail

-More jewellery, gold converted into cash High price and slow economy turn owners into sellers. Read more here-http://www.columbusdispatch.com/live/content/business/stories/2008/07/30/old_gold.ART_ART_07-30-08_C8_AQASMT8.html?sid=101

SILVER

-Silver market update from Clive Maund. With a weaker dollar and continuing and possibly worsening inflation in prospect worldwide, the bullish case for Precious Metals remains unchanged and therefore silver is regarded as a buy at current levels and on any further short-term weakness, which is likely to be limited due to the strength of nearby support. Read and see chart here-http://news.silverseek.com/CliveMaund/1217199530.php

-Confessions of a Silver Optimist. Read more here-http://news.goldseek.com/RichardDaughty/1217311320.php

-Silver and Monetary Considerations. Read more here-http://news.silverseek.com/SilverInvestor/1217482877.php

-Ted Butler silver commentary. Big news recently is the world record loss in crude oil trading, taken by SemGroup, of Tulsa, Oklahoma, a large but mostly unknown oil pipeline, storage and trading company founded in 2000. To my knowledge, the reported $3.2 billion loss is the second largest commodity debacle ever, only behind the $6 billion loss recorded by Amaranth Advisers two years ago in natural gas.

What is remarkable is how little has been written about SemGroup's loss. I realize that we have become numb to reports of multi-billion dollar losses, thanks to the mortgage and credit disaster. But it is still amazing to me that more attention has not been placed upon this oil trading loss, because it explains so much about the recent volatility in the price of oil. If there's one concern ahead of the mortgage and credit crisis, it has to be the price of crude. Read more here-http://news.silverseek.com/TedButler/1217265595.php

-Physical silver outperforms silver stocks. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=58141&sn=Detail

-Precious metals summer doldrums. If your expectations are properly set heading into summer, then you won't suffer any psychological damage from the typical lackluster grind. Prudent PM investors and speculators write off most of the summer, accepting the near inevitability of the drift. Then in late August they start buying aggressively in anticipation of the usual autumn gold rally driven by Asian buying.

Most of these PM bulls' gains have accrued between September and February, the highest-probability-for-success time to be long. The bottom line is the precious-metals realm virtually never does well during the summer months, even within the strongest of secular bulls. For a variety of global supply-and-demand reasons, gold tends to drift sideways in June, July, and August. Since gold's behavior heavily colors sentiment for everything PM-related, silver and the PM stocks parallel the yellow metal in lackluster summer consolidations.

But if you expect these PM summer doldrums, and trade accordingly, you can be really well-positioned for the big autumn rallies spawned by a surge in gold buying out of Asia. Managing one's PM summer expectations down to low levels is crucial for PM traders' psychological well-being during these slow months. Thankfully this slowest time of the year seasonally is followed by the best seasonal time. Adam Hamilton-Read more here-http://www.zealllc.com/2008/pmdold.htm

PLATINUM-PALLADIUM

-Platinum faces near term pressure, but has support for the long run. Platinum prices could come under more pressure as the slowing global economy threatens to curb consumption of the precious metal, which is heavily reliant on a healthy car industry to sustain demand.

But, analysts said, prices will be firmly supported over the longer term by a persistent supply deficit, as output from South Africa, which produces 80 percent of world supply of the metal, continues to suffer from power constraints. Read more here-http://www.iht.com/articles/2008/07/30/business/invest.php

DEFINITIONS-QUOTES-QUICK HITS

-Write-Down. Reducing the book value of an asset because it is overvalued compared to the market value. This is usually reflected in the company's income statement as an expense, thereby reducing net income. Investopedia.com

-"In this present crisis, government is not the solution to our problem, government is the problem. It's no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government." Ronald Reagan

-Last Wednesday, the U.S. House passed a bill that essentially creates another $800 billion worth of U.S. dollar funny money out of thin air by raising the national debt ceiling to $10.6 trillion from $9.815 trillion. James West-Read more here-http://news.goldseek.com/GoldSeek/1217259929.php

-"We're never going to see $850 gold again or be this close to it, so now is the time to buy." James Turk

-Gold loves inflation. As you know, inflation is great for gold and the other precious metals. In fact, the overall environment couldn't be better for metals, resources and energy looking out to the years ahead. That's why we've consistently recommended buying and holding for the long-term. Even though these markets will be volatile, moving up and down, by riding this mega uptrend over the long haul you'll do very well. Aden Sisters-Read more here-http://www.kitco.com/ind/Aden/aden_jul252008.html

-Other reasons why gold is rising. Then there's the ongoing government spending, which isn't going to change either and that too is one of the primary factors fueling inflation. Massive spending means more money is needed, and more money means more inflation. Again, it's that simple. Currently, the U.S. is in debt to the tune of over $500,000 per household, taking future liabilities like Social Security into account.

The defense budget is at a post World War II record, and the list goes on. These are the fundamental, primary reasons propelling prices, inflation and gold higher, and the housing rescue bill will provide an even more solid base for the long-term bull market in gold. Aden Sisters

-The Fed is flooding the market with nearly a trillion dollars of liquidity, which is why I believe gold under $1,200 an ounce and silver under $30 an ounce are bargains. Gold and silver should peak and decline before 2020, completing two 20-year cycles. My exit is to sell silver around 2015. I plan to hold onto gold, income-producing real estate, oil wells, and stocks.

Robert Kiyosaki-Read more here-http://finance.yahoo.com/print/expert/article/richricher/95198

-I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional. Robert Kiyosaki

-During my trip to China, I had an opportunity to speak to several high level executives of a global investment company. After I finished talking about the global demand and supply factors that would push commodity prices higher, they asked me a question that shocked me. In short, they wanted to know some "other factors" for rising commodity prices. They already knew the basic supply/demand story for rising commodity prices, but it seemed that the story was getting quite old and boring. They wanted to hear something different and exciting.

Unfortunately for them, the reasons for why oil is eventually going to be above $200/barrel, why gold prices will reach over $2000/ounce, and why the commodity bull market has at least another 5 years of upward movement remain the same. There is no new exciting development to report. And if investors have not quite yet grasped the magnitude of this commodity bull market, they probably never will. As for me, I continue my longer-term view of higher commodity highs. Emanuel Balarie-Read more here-

http://www.321gold.com/editorials/balarie/balarie072808.html

-Smart money remains risk averse and the wise old market adage to "never catch a falling knife" has never been more appropriate. The collapse of the world trade talks in Geneva is another bearish factor confronting the already slowing global economy and has serious ramifications for both the developed and developing world economies. Gold.ie-Read more here about trade talks-http://news.bbc.co.uk/2/hi/business/7531099.stm

-"What has suffered most is the credibility of the most sophisticated financial systems in the world." "It is both the credibility and viability of the most sophisticated financial system that is at stake now as most of this financial and banking system is on its way to substantial and formal insolvency and bankruptcy." Mohamed El-Erian co-CEO of Pimco

-"I am officially scared," GMO investment manager Jeremy Grantham told professionals from as far away as Abu Dhabi and Malaysia. "In 2000, we had a technology bubble. But this is massive, a massive credit crisis and a bubble in global housing, global equity and global land." He confessed to the group that "I bought my first gold last week, and I hate gold.

It doesn't pay a dividend. I would only do it if I was desperate." When asked by a money manager what he would buy now, Grantham said, "long mattresses" jesting about the stereotypical nervous behavior of hoarding cash. He seriously suggested: "Put money into something incredibly safe. Read more here-http://www.chicagotribune.com/business/yourmoney/chi-tue-gail-jul29,0,1843564,print.column

-Grantham Reverses Call, Says Emerging Markets Now Too Risky. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aiOrSeRIBCPw

-John Williams, an economic consultant who publishes the monthly newsletter "Shadow Government Statistics," calculates that "inflation is actually running at an annualized rate of 9.95 percent in the U.S." Gold.ie

-Sir John Major, the ex Prime Minister of the UK says that inflation in the UK is running at multiples of the official government figures and he believes inflation is actually at over 10%. Just two weeks ago Major warned that true annual rate of inflation is as much as 10 per cent and that changes to the way inflation is calculated had been "extremely misleading", with increasing food prices and heating bills not reflected by the official statistics on the cost of living. Gold.ie

-The Fed's rate dilemma. Interest rates likely on hold for a while as worries about economic weakness and inflation leave central bank with few good options. Read more here-

http://money.cnn.com/2008/07/31/news/economy/fed_outlook/index.htm?postversion=2008073116

-Juice economy again? It's a tough call. Top Democrats are calling for more measures to stimulate the economy. But experts say it's too soon to tell whether another round of stimulus is a good idea. Read more here-http://money.cnn.com/2008/07/31/news/economy/stimulus2/index.htm

-U.K. Beer sales 'lowest since 1930s'. Rob Hayward, chief executive of the British Beer and Pub Association, said: "Beer sales in pubs are now at their lowest level since the Great Depression of the 1930s down seven million pints a day from the height of the market in 1979." An ongoing decline has been steepened by tightened spending, the group said. Read more here-http://news.bbc.co.uk/2/hi/uk_news/7528858.stm

RARE COLOURED DIAMONDS

-World rough diamond production is likely to drop by 10 million carats to 138 million carats in 2008 but an average 13% price increase should boost the total sales value to US$14.3bn from $12.6bn in 2007.

That's according James Allan of corporate finance advisory firm Allan Hochreiter who said the main drop would come from Australia where production will be 6 million carats down this year with Canada showing a 2 million carat drop. Russia and Botswana will both show drops of one million carats while South African production would be 0.3 million carats lower. Read more here-http://www.miningmx.com/diamonds/686521.htm

-Demand for rarest diamonds outstrips supply. Read more here-http://www.reuters.com/article/reutersEdge/idUSL0646558820080606

OIL

-CIBC dismisses recent dive in oil prices as mere trifle. CIBC World Markets says oil prices will resume their uptrend, despite the commodity's 15% drop from a peak of above US$147 on July 11. Jeff Rubin, chief economist at CIBC World Markets, has been one of the Street's biggest oil bulls forecasting it would hit US$150 by 2010 and US$200 by 2012 on a wave of emerging market demand and a shrinking supply of politically stable sources. Read more here-

http://network.nationalpost.com/np/blogs/fpposted/archive/2008/07/25/cibc-dismisses-recent-dive-in-oil-prices-as-mere-trifle.aspx

-Iran says oil could reach $500 on dollar, politics. Iran's OPEC governor said world oil prices could reach as high as $500 per barrel in a few years' time if the dollar falls further and political tension worsens, an Iranian weekly said.

"If the dollar's value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500," Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday. He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years. Read more here-

http://news.yahoo.com/s/nm/20080726/ts_nm/iran_oil_price_dc_2&printer=1;_ylt=Aml2Ne.aD7zTKPw7OVEOfCVg.3QA

-Hayward Sees Oil, Gas Prices Staying `Stronger,' Telegraph Says. Tony Hayward, chief executive officer of BP Plc, said the long-term trend for gas and oil prices is likely to cause difficulties for consumers, the Daily Telegraph reported. He said there was ``an increasing likelihood that oil and gas prices will be stronger for longer,'' according to the newspaper, citing Hayward speaking yesterday.

While earlier this year the CEO said the era of cheap energy was at an end, yesterday he said events are ``playing out even faster than any of us expected,'' according to the Telegraph.

Separately, BP rejected suggestions it may sell its alternative energy unit, run by Vivienne Cox, or arrange to sell shares in the division, the newspaper said. Bloomberg

-OPEC chief: Oil prices may fall to $70. Read more here-http://www.chinadaily.com.cn/world/2008-07/27/content_6880213.htm

GASOLINE

-Why Does Gasoline Cost So Much? Gas prices are a product of supply and demand. This article attributes recent gas price increases to stagnant oil supplies and growing global demand from emerging Asian economies not speculators. Additional shocks to the U.S. refining capacity further tightened gas prices in the U.S. These forces will likely keep gas prices high for the foreseeable future. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=44879

-U.S. Motorists Cut Driving in May for Seventh Month. U.S. motorists, paying record prices for gasoline, drove less in May for a seventh consecutive month, the Federal Highway Administration said. Vehicle-miles traveled fell 3.7 percent from a year earlier, the Washington-based agency said in a report today.

The 9.6 billion-mile decline came in a month in which the average U.S. retail gasoline price reached a then-record of $3.98 a gallon on May 31, according to motoring group AAA. The price rose as high as $4.11 on July 15 before sliding to $3.96 this week. The north central U.S., which includes Chicago, had the biggest percentage drop in driving, down 4.5 percent. Travel fell in all five regions for which the agency reports results. Bloomberg

-Fuel Subsidies Overseas Take a Toll on U.S. To understand why fuel prices in the United States have soared over the last year, it helps to talk to the captain of a battered wooden freighter here. He pays just $2.30 a gallon for diesel, the same price Indonesian motorists pay for regular gasoline. His vessel burns diesel by the barrel, so when the government prepared for a limited price increase this spring, he took to the streets to protest.

"If the government increases the price of fuel any more, my business will collapse totally," said the boat captain, Sinar, who like many Indonesians uses only one name. From Mexico to India to China, governments fearful of inflation and street protests are heavily subsidizing energy prices, particularly for diesel fuel. But the subsidies estimated at $40 billion this year in China alone are also removing much of the incentive to conserve fuel. Read more here-http://www.nytimes.com/2008/07/28/business/worldbusiness/28subsidy.html?_r=2&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

INFLATION

-Inflation in Europe reported at 16-year high. Inflation in Europe accelerated to the fastest pace in more than 16 years in July, restricting the European Central Bank's room to bolster the economy even as unemployment starts to increase.

The inflation rate for the 15-nation euro region rose to 4.1 percent from 4 percent in June, the European Union statistics office in Luxembourg said today. The rate, the highest since April 1992, matched the median estimate of 36 economists in a Bloomberg News survey. A separate report showed unemployment was 7.3 percent in June, exceeding the 7.2 percent median forecast. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afAiVyGGAmpM&

-U.S. inflation to hit 6%. Heavily subsidized energy in the Middle East will help drive the inflation rate in the United States to 6 per cent within six months, and prompt the U.S. Federal Reserve Board to go on a rate-hiking frenzy, CIBC chief economist Jeff Rubin predicts. Despite the recent fall in oil prices, U.S. gasoline prices will resume their rise because of unabated demand for energy in OPEC countries, Mr. Rubin argues.

"As more and more of OPEC's oil is diverted to meet soaring power demands throughout the Middle East, American pump prices will continue to rise," he says in his most recent paper that examines the consequences of his forecast for rising oil prices.

"From the world's largest indoor ski hill in Dubai, to the world's largest desalination plants in Saudi Arabia, dirt cheap energy makes anything possible in the Middle East today." He predicts that oil will end the year at about $130 (U.S.) a barrel, rising to the $150 range next year, despite a drop in U.S. demand for gasoline. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080730.wcibcrubin0730/GIStory/

-As costs rise, inflation's next front is retailers. Coming to a store near you: Even higher prices. Most inflation this year has come from food and fuel, as retailers resisted passing along to strapped consumers the higher prices manufacturers charged them, but coming increases from companies such as Johnson & Johnson and Hasbro Inc. may leave them with no choice.

"While these increases have not for the most part been passed on at the retail level, it is inevitable that they will be at some point," said Dean Baker, co-director of the Center for Economic and Policy Research. "Car dealers and other retailers cannot continue to absorb rising costs at the wholesale level and not pass some of these increases on to consumers."

Sherwin Williams Co. on July 17 announced its third price increase in eight months. The company has been having "difficult discussions" with retailers, Chris Connor, chairman and CEO, said on its quarterly conference call. The price increases are "well supported with facts in terms of why the company needs them," he said. "Our customers, to the best of their ability, are passing them on." Read more here-http://www.gata.org/node/6455

-Zimbabwe knocks 10 zeros off currency. Central bank devalues currency in bid to fight hyper-inflation. Zimbabwe's central bank governor says he is knocking 10 zeros off the country's hyper-inflated currency to make 10 billion dollars become one dollar.

Zimbabwe suffers the highest inflation rate in the world. Governor Gideon Gono says that high rate is constraining operations of the country's computer systems. Computers, electronic calculators and automated teller machines at banks have not been able to handle basic transactions in billions and trillions of dollars.

Just last week Gono introduced a new 100 billion-dollar note that is not enough to buy a loaf of bread. Gono said on Aug. 1 the bank will issue a 500-dollar bill equivalent to 5 trillion dollars at the current rate. Cnnmoney.com-Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080730.wzimbabwe0730/GIStory/

U.S. RECESSION

-U.S. May Be in `Very Long' Recession, Harvard's Feldstein Says. The U.S. may now be in a ``very long'' recession that will drive the unemployment rate higher, with little that the Federal Reserve can do to help, said Harvard University Professor Martin Feldstein.

"I don't see recovery'' on the horizon, Feldstein, who headed the National Bureau of Economic Research until June and serves on the group's recession-dating panel, said in an interview with Bloomberg Radio. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=azUho7KDltW4

-Where Is the Economy Going in the Next 6 Months? While history may find we are too pessimistic at this point in time, in our view it is far better to prepare for a worsening crisis and hope that it does not materialize, than to expect business as usual. Bud Conrad-Read more here-http://www.321gold.com/editorials/casey/casey072508.html

Short Term Projections.

1. The housing decline is not yet done, because we will need another year to unwind foreclosures in the pipeline. In addition, the exuberance shown by appraisers at the height of the housing bubble still has a long ways to go to fully deflate. What is that house on the market down the road really worth? At this point, no one knows... and no one will know until it and many others are bought by willing buyers (as opposed to unwilling lenders taking them onto their books in a foreclosure).

2. Consumers in the U.S. are not able to expand credit and are increasingly concerned about the outlook for the economy, so they will slow spending both at home and on imports.

3. The financial/banking system is weaker than understood. The complexity of the global system and the ubiquitous presence of interlocking financial and credit instruments and literally trillions of dollars in derivatives has left the world's banks teetering on the edge.

Adding a push from behind, we have broadly rising inflation and soon the persistently higher interest rates that are the bane of fixed-income investors and financial institutions in general. As the dollar continues its fall, and the banks continue to come under pressure, the lack of confidence in these keystones of the modern financial system will deepen. Already, the Sovereign Wealth Funds that rushed in early in the credit crisis to prop up the big investment houses are now signaling that, at least for the time being, they are going to step back and watch how things shake out.

4. A slowing economy recession coupled with inflation, creates a condition often referred to as stagflation, presenting much bigger policy challenges for the government than one or the other alone.

5. The food crisis. Shortages of food production come from rising energy and fertilizer costs. Rising demand comes from a shift in diet, especially in emerging markets, where increasing prosperity leads the citizenry to add more protein to their diets. Important shortages in grains have arisen that don't allow for a bad crop year. Most concerning is that these shortages are occurring despite good crop production last year, an occurrence that can be blamed, in part, on the diversion of some agriculture production for ethanol and bio-diesel.

These food shortages have already contributed to a doubling and tripling in the price of grains over the last two years. But even these elevated prices have not been sufficient to offset the higher costs of the energy required to produce the crops. And, despite today's higher prices, agriculture still lags the price increases seen in many other commodities.

-U.S. Recession May Have Begun in Last Quarter of 2007. The U.S. economy may have slipped into a recession in the last three months of 2007 as consumer spending slowed more than previously estimated and the housing slump worsened, revised government figures indicated.

The world's largest economy contracted at a 0.2 percent annual pace in the fourth quarter of last year compared with a previously reported 0.6 percent gain, the Commerce Department said today in Washington. Growth for the period from 2005 through 2007 was also trimmed. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=axADxPkA6IA8&refer=home

-U.S. Economy: Growth Fell Short of Forecasts in Second Quarter. The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than many investors and analysts had thought. "We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. "It's going to widen, it's going to deepen.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aAa5DTryVKLc&refer=home

-U.S. banks sharply reduce business loans. Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.

Two vital forms of credit used by companies commercial and industrial loans from banks, and short-term "commercial paper" not backed by collateral collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001. Read more here-http://www.iht.com/articles/2008/07/28/business/28credit.php

-Brazilian President Lula: United States made a casino of its economy. The President of South America's largest economy, Brazil's Luiz Inacio Lula da Silva accused the United States and others of making "a true casino" out of their economies, during an official two-day visit to Colombia over the weekend, leading Argentine daily Clarin reported.

Lula was addressing an estimated 1,000 Colombian and Brazilian businesspeople in Bogota when he said that many of the world's recent problems including rising food prices were caused more by the international crisis than by issues inherent to the economies of the region. Lula blamed "the few banks and rich countries that made a true casino of their economies, as was the case of the sub-prime [mortgage] crisis in the United States."

He said the weight of this international crisis should therefore not fall "on our shoulders" and demanded that international financial institutions do something. "Otherwise we run the risk of frustrating the dreams of growth and development of countries such as Argentina and others," he was quoted as saying. Story here-http://news.bn.gs/article.php?story=20080722112611304

-Restaurant Chains Close as Diners Reduce Spending. Read more here-http://www.nytimes.com/2008/07/30/business/30restaurant.html?_r=1&oref=slogin&ref=business&pagewanted=print

-Bennigan's, Steak-and-Ale Chains Seek Bankruptcy. Bennigan's and Steak-and-Ale restaurant chains, owned by Metromedia Restaurant Group, sought permission to liquidate under bankruptcy court protection. The chains listed assets totaling as much as $550 million and debt of as much as $150 million on 38 separate Chapter 7 petitions filed today in U.S. Bankruptcy Court in Sherman, Texas. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=apX7FLLJ1Scg

U.K. RECESSION

-Fears of recession grow as Britons stop spending and sales slump. Read more here-http://business.timesonline.co.uk/tol/business/economics/article4393541.ece

-Nationwide warns of recession as house price drop doubles. Nationwide, the UK's biggest building society, today gave warning that a recession could be on the way after the average house price in the year to July plunged to a three-year low of £169,316.

The average price of a home is now £15,000 lower than in July last year, after prices declined by 8.1 per cent - the fastest decline since 1991 during Britain's last recession. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4433925.ece

U.S. DEBT GROWS

-U.S. Deficit to Hit Record $490 Billion in 2009, Official Says. The U.S. budget deficit will increase to a record of about $490 billion in fiscal 2009, an administration official said, leaving deep budget problems for a new president. The projected deficit for the spending year that begins Oct. 1 is far higher than the $407 billion forecast by President George W. Bush in February.

The official also confirmed a report in USA Today that the deficit this year will be less than the $410 billion estimated in February. The deficit for next year may reflect an economic slowdown and the cost of payments distributed under the $168 billion economic stimulus package. A Bloomberg survey of 28 analysts completed July 25 showed the average estimate for the deficit at $447 billion next year and $407 billion this year. Bloomberg

-U.S. Borrowing to Rise to $171 Billion This Quarter. The U.S. Treasury predicted it would borrow 53 percent more this quarter than initially forecast as increases in spending and sluggish economic growth swell the budget deficit. Borrowing needs will rise to $171 billion in the three months to Sept. 30, $59 billion more than predicted in April, the Treasury said in a statement in Washington. That total, if realized, would be the second-largest ever after a record $244 billion was borrowed in the first three months of this year.

After improving for three straight years, the U.S. budget is deteriorating as a slowing economy hurts tax revenue and spending increases. The Bush administration, which entered office in 2001 with a $127 billion budget surplus, earlier today predicted the next president faces a record deficit totaling $482 billion in 2009. "The economic slowdown and increased expenditures associated with slower growth and with the stimulus has had an effect on the federal budget,'' Phillip Swagel, the Treasury's assistant secretary for economic policy, said in a statement.

In the final three months of the year, the Treasury said borrowing would reach $142 billion. The Treasury predicted three months ago it would pay down $35 billion in marketable debt in the April-June quarter and have a cash balance June 30 of $45 billion. While the government often runs a surplus in the second quarter as individuals pay annual income taxes by the April 15 deadline, that didn't happen this year. Bloomberg

-Paterson: State Deficit Up $1.4B Over Last 90 Days. Governor Says Damage On Wall Street 'Infecting' State. Special Legislative Session Called For Aug. 19. New York Governor David Paterson says the New York state budget deficit has gone up $1.4 billion in the last 90 days. The governor delivered the troubling economic news during a live broadcast message shortly after 5 p.m. Tuesday. Read more here-http://wcbstv.com/cbs2crew/david.paterson.budget.2.782422.html

-The Grand Summary: Our Empire of Debt Is Collapsing. Read more here-http://www.oftwominds.com/blogjuly08/empire-debt7-08.html

CREDIT CRISIS-BONDS

-More Than a Helping Hand. One of the basic functions of a central bank is to act as the 'lender of last resort'. This facility is used to keep banks liquid during a period of distress. For example, if a bank is experiencing a run on deposits, it will borrow from the central bank instead of trying to liquidate some of its assets to raise the cash it needs to meet its obligations.

In other words, the central bank offers a 'helping hand' by providing liquidity to the bank in need. The following chart is from the Economic Research Department of the St. Louis Federal Reserve Bank. Here is the link: http://research.stlouisfed.org/fred2/series/BORROW. This long-term chart illustrates the amount of money banks have borrowed from the Federal Reserve from 1910 to the present. James Turk-Read more here-http://goldmoney.com/en/commentary.php

-Fed Extends Emergency Loan Programs Through January. The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still too weak to go without a backstop from the central bank. The Fed also plans to give securities dealers options for tapping one of the loan programs to ensure financing through the ends of quarters, when funding needs can jump.

Commercial lenders will be able to borrow from the central bank for a longer period, and the Fed boosted its swap line with the European Central Bank. Today's announcement reflects continued turmoil in financial markets, after three U.S. banks failed in as many weeks. It's the latest step in officials' efforts to combat the yearlong credit crisis, after the Fed's rescue of Bear Stearns Cos. in March and the Treasury's backstop plan for Fannie Mae and Freddie Mac this month.

"The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system,'' said Allen Sinai, chief global economist at Decision Economics in Boston. "There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=alHyxZMMFKAw&refer=home

-Fed auctions another $75B in loans. Central bank says commercial banks paid 2.35% for 28-day loans, in the latest auction to assist banks gripped by credit problems. Read more here-http://money.cnn.com/2008/07/29/news/economy/fed_auction.ap/index.htm

-Foreign treasuries just starting to notice U.S. debt catastrophe. Last Thursday the Kuwait Investment Authority, the world's sixth-biggest sovereign wealth fund, received a call from the US embassy to reassure them that bonds issued by Fannie Mae and Freddie Mac were sound, according to one person with knowledge of the matter. The call came after Kuwait's minister of finance announced that the KIA was not planning to invest in Fannie Mae and Freddie Mac debt in future. Read more here-http://www.gata.org/node/6449

-Merrill Sells $8.55 Billion of Stock, Unloads Money-Losing CDOs. Merrill Lynch & Co., the third- biggest U.S. securities firm, sold $8.55 billion of stock and will liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6IfH7HIhBmg&refer=home

-US credit crisis spreads to wealthier. The US financial crisis is spreading from subprime borrowers, with evidence mounting that more affluent people are failing to pay mortgages and credit card balances. Growing concerns over the financial health of richer borrowers are prompting banks and card issuers to tighten lending practices in moves that could further damp consumer confidence.

Banks such as JPMorgan Chase and credit card groups such as American Express have clamped down on lending to customers who have traditionally been seen as among the safest and most profitable borrowers. "The crisis is just starting to spread beyond the middle class," said Curtis Arnold, founder of CardRatings.com. "Even folks with good credit-ratings scores are [not] immune from adverse actions from their card -issuers." Read more here-http://www.ft.com/cms/s/0/51b8f5be-5d05-11dd-8d38-000077b07658.html?nclick_check=1

-McCain Says Wall Street `Villain' in Subprime Crisis. Senator John McCain put the blame on Wall Street for the home mortgage credit crisis that has roiled financial markets around the world. "Wall Street is the villain in the things that happened in the subprime lending crisis and other areas where investigations and possible prosecution is going on,'' McCain said during a taped appearance on ABC's ``This Week'' program. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVLF68kNBUgA

-Pain in Spain Falls Mainly on Trichet with Toxic Debt. Spain's housing collapse is becoming European Central Bank President Jean-Claude Trichet's economic crisis as delinquent home-loans rise amid a slowing economy.

Spanish lenders, once the most prudent on the Continent, have almost tripled borrowings from the Frankfurt-based ECB in the past year to 47 billion euros ($74 billion), pledging bonds backed by assets, including mortgages, as collateral. That's the fastest increase in Europe, overtaking Italy, Ireland and the Netherlands, according to data from the countries' central banks.

"There are some worrying parallels between the Spanish and U.S. mortgage markets, including their rapid growth in recent years,'' said Rui Pereira, head of Spanish structured finance at Fitch Ratings in Madrid. "Banks had relaxed lending standards in recent years due in large part to the booming housing market and abundant liquidity.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601208&sid=adT5HilcKtGE&refer=finance

-Spain's Inflated Home Values Infect Mortgage Bonds. Jose Maria Gonzalez is struggling to unload a four-bedroom apartment in Madrid so he can pay for the 480,000-euro ($750,000) house he now lives in. His problem may wind up hurting investors in Rome and Hong Kong he's never met. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ausjYI1GPoYM

-Crumbling bond market sounds distress alarm. Corporate bond investors are bracing for growing defaults and record company bankruptcies starting in 2009 as the volume of distressed debt climbs past $184 billion, an all-time high. More corporate debt is now trading at distressed levels than in 2002, when there was $165 billion of distressed corporate debt following the last bankruptcy boom, according to Moody's Investors Service data. Read more here-http://www.reuters.com/article/reutersEdge/idUSN2828966520080729

-Four big banks to kick-start covered bond market. Appearing alongside Treasury Secretary Henry Paulson, representatives of the four largest U.S. banks agreed Monday to kick-start a market for covered bonds an alternative way to provide mortgage loans in the United States. Read more here-http://www.marketwatch.com/news/story/four-big-banks-agree-kick-start/story.aspx?guid={91AC7737-BDEC-4179-B208-8345B0F1F741}&tool=1&dist=bigcharts

FANNIE-FREDDIE RESCUE

-Bush signs housing rescue law. President enacts controversial measure that aims to help borrowers, bolster the housing market and provide a fail-safe for Fannie and Freddie. Read more here-http://money.cnn.com/2008/07/30/news/economy/housing_bill_Bush/index.htm?postversion=2008073011

-Fannie, Freddie rescue won't be cheap. Experts say if the mortgage finance giants need to be bailed out, a government takeover would cost taxpayers far more than current estimates of $25 billion. Read more here-http://money.cnn.com/2008/07/30/news/economy/fanniefreddie_rescue/index.htm?postversion=2008073007

-'Stealth' Housing Bailout: It's Bigger Than You Think. With Congress on the eve of passing a historic bill that would give the Treasury a blank check to lend money to Fannie Mae and Freddie Mac, it's worth looking at how much money the government has already pumped into the system during the housing crisis.

The numbers are staggering and likely to get much larger. What we have here is, through a variety of programs, a stealth bailout where more than a trillion dollars of taxpayer guarantees have been extended to the housing market, both to keep it going and to clean up the mess from the past.

I looked at the changes over the past year to the balance sheets of four governmental and quasi-governmental agencies the Federal Reserve, the Federal Home Loan Banks, the Federal Housing Administration and Fannie Mae and Freddie Mac. The objective was to see how much additional financing they have provided to the housing market. The total: $1.43 trillion. Read more here-http://www.cnbc.com/id/25851253

-SEC Extends Ban on Shorting Fannie, Freddie. The U.S. Securities and Exchange Commission extended an emergency limit on short sales in shares of Freddie Mac, Fannie Mae and 17 brokerages as it prepares broader rules to thwart stock manipulation. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a2TrS9t34oao&refer=home

-Jim Rogers Speaks the Truth about Fannie Mae and Freddie Mac. Watch video here-http://www.youtube.com/watch?v=KY5cy7w6seY&eurl=http://goldismoney.info/forums/showthread.php?t=287292

-Ron Paul on the Housing Bill, "The Mother of All Bailouts." Three items of note, National Debt Ceiling Moved up $800 Billion, it was buried in the bill, mortgage industry workers "will now have to be fingerprinted" and All credit card transactions will now be reported to the IRS. Watch video here-http://news.goldseek.com/RonPaul/1216926862.php

FDIC-MORE U.S. BANK FAILURES-LAWSUIT

-FDIC takes over 2 more banks, closing 28 branches. The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators. The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.

The FDIC said the takeover of the failed banks was the least costly resolution and all depositors including those with funds in excess of FDIC insurance limits will switch to Mutual of Omaha with "the full amount of their deposits." The FDIC also said accountholders can access their funds during the weekend by writing checks or using ATM or debit cards. Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action "is a reflection of the times for the banks. It's a poor economy." Read more here-

http://apnews.myway.com/article/20080726/D925G0B00.html or http://www.iht.com/articles/2008/07/26/business/26banks.php

-Russia Wields RICO Law Against U.S. Bank. Racketeering Law Applied In Moscow Court In $22.5B Lawsuit Against Bank Of New York Mellon. Read more here-

http://www.cbsnews.com/stories/2008/07/27/business/main4297568.shtml?source=RSSattr=Business_4297568

CITIGROUP MAY WRITEDOWN ANOTHER 8 BILLION

-Citigroup Markdowns May Rise $8 Billion, Analyst Says. Citigroup Inc. will probably write down the value of collateralized debt obligations by $8 billion in the third quarter, Deutsche Bank AG analyst Mike Mayo said, after Merrill Lynch & Co. said it will sell CDO holdings for 22 cents on the dollar.

Citigroup values the securities, mortgage-related bonds at the heart of the credit crisis, at 53 cents, Mayo wrote in a report to clients today. Citigroup has $22.5 billion of CDOs and it may have another $7 billion in writedowns to come, Mayo said. That could force it to raise more money, as Merrill did today, he said.

"The decision about raising new capital may be closer than we previously thought,'' Mayo said in the report. He also expects the bank to write down an additional $1 billion because of its $2 billion in exposure to so-called monoline insurance companies. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=au3hN1sUwXUw&refer=home

AUSTRALIAN FINANCIAL CRISIS

-Australia faces worse crisis than America. The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region.

Financial shares were pummelled in Sydney on Tuesday of this week after investor flight forced National Australia Bank (NAB) to slash a £400m bond sale by two thirds.

The retreat comes days after the Melbourne lender shocked the markets by announcing a 90pc write-down on its £550m holdings of US mortgage debt, an admission that it AAA-rated securities are virtually worthless. In New Zealand, Guardian Trust said it was suspending withdrawals from its mortgage fund owing to "liquidity difficulties in the market".

Hanover Finance the country' third biggest operator - last week froze repayments to investors. The company said its "industry model has collapsed" as the housing market goes into a nose dive. Some 23 finance companies have gone bankrupt in New Zealand over the last year. Read more here-

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/30/cnoz130.xml&CMP=ILC-mostviewedbox

CANADIAN GDP SLOWS

-Economy shrinks by 0.1% in May. Economic activity in Canada retreated in May, as the country's gross domestic product for the month saw a surprising contraction of 0.1 per cent, Statistics Canada said Thursday. Economists had been looking for growth of 0.2 per cent for the month.

"Overall, this result is a clear disappointment, especially since almost all preliminary indications for the month pointed to modest growth," said BMO Capital Markets economist Douglas Porter. "The widespread nature of the weakness underlines the fact the economy is swimming upstream," he said. Read more here-

http://www.cbc.ca/money/story/2008/07/31/may-gdp.html

PETER SCHIFF COMMENTARY

-Peter Schiff "America is finished." When Dr. Doom speaks, we should listen. He has two words for Canadian investors thinking now is a good time to shop for bargain-priced U.S. stocks: "Stay away." Read more here-http://www.theglobeandmail.com/servlet/story/LAC.20080729.RHEINZL29/TPStory/Business

-CNBC once nicknamed me "Dr. Doom", but compared to what I see coming now, they should have then called me "Dr. Sun Shine." Peter Schiff

-With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie "bailout" bill is now sailing through Congress. In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion. Who says that politicians don't plan ahead? Read more here-http://www.321gold.com/editorials/schiff/schiff072808.html

-Peter Schiff on The Glenn Beck Show. Watch video here-http://www.youtube.com/watch?v=aHIM0Sp5epY

MAX KEISER PREDICTIONS

-Predictions. Read full story here-http://www.huffingtonpost.com/max-keiser/the-black-scholes-atomic_b_114197.html?view=print

1) The price of gold and the Dow Jones will reach parity between 4,000 and 5,000 (i.e., gold will trade between $4 - 5,000 as does the Dow Jones Industrial Average).

2) America's sovereignty, as defined as percentage ownership of American financial assets, principally U.S. government bonds (soon to no longer be rated AAA), will be mostly in the hands of foreigners.

3) China will buy Fannie Mae and Freddie Mac and in so doing become America's biggest land lord.

4) Very few of the current Bush administration, family, and close associates will be living inside U.S. borders within 6 months after leaving office.

5) The Presidential election in November will be delayed due to a global financial crisis.

6) The U.S. military in Iraq and Afghanistan will start to run out of money and be left to get out on their own resulting in American mercenaries hiring groups like the Taliban to escort them out of the region, with Bin Laden getting a commission on each deal.

7) Russia will emerge as the new power broker in a post-America world restoring financial order between America, the largest debtor in the world and China, the largest creditor in the world.

TSX FORECAST CUT-SURVIVING THE STORM-STOCK MARKET

-CIBC's Jeff Rubin cuts TSX forecast. CIBC cuts its forecast for the Toronto Stock Exchange's main index Monday, saying the waning economy coupled with high inflation in the United States will challenge "large swaths" of Canadian stocks, particularly in the automotive and transportation sectors. "The auto component of consumer discretionaries looks particularly vulnerable," said CIBC's chief strategist Jeff Rubin in a report from CIBC World Markets.

"We are also reducing our exposure to industrials, and, in particular, airlines." The "increasingly stagflationary environment" in the U.S., where inflation continues to gain pace despite anemic economic growth, led CIBC to cut its forecast for the S&P/TSX composite index to 14,300 from 15,200 to end the year. CIBC's 2009 target was also cut to 15,250 from 16,200.

Rising interest rates in the U.S. coupled with soaring energy costs and falling home values "will deal a lethal blow to the hopes for a fast bounce back in growth," in the U.S., Mr. Rubin said, adding that the American economy will continue to "walk the fine line" between growth and recession "for a fair bit longer. "That will, in turn, take a toll north of the border," he said. Nationalpost.com

-U.S. stocks and bonds haven't hit the trough yet, analysts say. For several years, Clément Gignac, chief economist and strategist at National Bank Financial, was regarded as a pre-eminent resident of the bear camp when it came to North American stocks. He edged out of that camp in January, and now after the recent pullback, he has moved even deeper into neutral territory on the U.S. stocks. However, he remains cautious on Canadian issues.

He and his associates feel that the U.S. stock and bond markets have already priced in a great deal of bad news, but at the same time, they think that "some of the ingredients of a sustainable rally are still missing." As such, he said they aren't ready yet to become "cheerleaders for U.S. equities." They maintained their 12-month target of 12,800 for the S&P/TSX composite index. Read more here-https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080718/RGIGNAC18

-Economic trends: Surviving the storm. A new theme in investment advice seems to be that markets will be volatile in the decade ahead. The reason? A restructuring of the world order, as the United States recedes in terms of geopolitical and economic power, even as the rest of the world especially Brazil, India, China and Russia expands its footprint.

This readjustment will come at the same time as large numbers of baby boomers retire. No wonder almost no one is predicting sunny days ahead for the stock market. Read more here-

http://www.canadianbusiness.com/markets/stocks/article.jsp?content=20080818_198704_198704&page=1

-Carlyle to Shutter Blue Wave Hedge Fund After Losses. Carlyle Group, the world's second- largest private-equity firm, is liquidating its Blue Wave hedge fund after assets fell by a third during the credit-market collapse. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=asKGk..VAOx0&refer=home

CAR BIZ

-Plummeting Resale Values Lead Chrysler to End Leases. Chrysler plans to drop leasing business. A source says the automaker plans to get out of the leasing business due to losses on sport utility vehicles and pickup trucks. Read more here-http://money.cnn.com/2008/07/25/autos/chrysler_leasing.ap/index.htm or http://www.nytimes.com/2008/07/26/business/26auto.html?_r=1&partner=rssyahoo&emc=rss&pagewanted=print&oref=slogin

-GMAC Reports $2.5 Billion Loss as Auto, Housing Slump. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aaHfTZybFsV8&refer=home

-Wagoner May Say GM Lost $2 Billion on Leases for SUVs. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1TUqyJPPdgM

-GM Plans to Keep Incentives in August on U.S. Leases. General Motors Corp. said it plans to provide auto leases with incentives in the U.S. next month through lender GMAC LLC after the finance company said it will end the offers in Canada. The so-called incentivized leases will be offered on 2008 and 2009 models in August, GM North American sales chief Mark LaNeve said in an e-mail to dealers late yesterday.

"Over the last few years and months, lease vehicles have become a smaller percentage of our sales, and we do see this trend continuing due to the relative high cost and risk'' compared with traditional incentives such as cash or discounted loans, LaNeve wrote in the memo. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=axoRD2z7LfH8&refer=home

-GM slashes another 117,000 vehicles. Latest production cuts bring General Motors' total reductions to just below the 300,000 units officials had hoped for this year. Read more here-

http://money.cnn.com/2008/07/28/news/companies/GM-cuts.ap/index.htm

STARBUCKS NOT HOT

-Starbucks Reports First Loss Since 1992, Predicts Slower Growth. Starbucks Corp., in the midst of closing 600 cafes, posted its first loss in 16 years as a public company and said it will shutter more U.S. stores than it opens next year. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZxrjcNWyi5Q

-Starbucks Cuts 1,000 Jobs; Makes Executive Changes. Starbucks Corp., the world's largest chain of coffee shops, said it was cutting almost 1,000 jobs and making additional executive changes. Martin Coles, the chief operating officer, will take over as president of Starbucks Coffee International, the Seattle based company said today in a statement released by Business Wire.

Jim Alling, the previous international chief, is leaving the company, Starbucks said. Starbucks founder Howard Schultz resumed the position of chief executive officer in January to revitalize the chain's cafes after U.S. customer visits declined and sales at existing locations slowed.

Earlier this month, he announced plans to close 600 stores in the U.S. and eliminate as many as 12,000 positions, or 7 percent of the company's workforce. Earlier today, the coffee-shop chain said it will shut three-fourths of its 84 stores in Australia within the next five days, backing away from a market it entered eight years ago. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=amz3uMc1UToQ&refer=home

-Starbucks closing 61 stores in Australia. Only 23 of the coffee retailer's cafes will remain open after the closures. Read more here-

http://money.cnn.com/2008/07/29/news/companies/starbucks_australia/index.htm

-Las Vegas's Gambling Slump Shows Why Starbucks Bubble Lost Air. The Starbucks index is pointing down in Las Vegas. The Nevada city's gambling-driven growth in the 1990s proved irresistible to Starbucks Corp., the world's largest coffee-shop chain. Las Vegas, which had no Starbucks outlets before 1995, has about 155 now, according to the store locator on the company's Web site.

Starbucks, stung by a slowdown in sales as strapped consumers shy away from $4 lattes, is staging the biggest retreat in its 37-year history, closing 600 of 11,168 U.S. company-owned and licensed stores. Las Vegas is taking the biggest hit, losing 16 of the once-trendy cafes, including in North Las Vegas, or 10 percent of its total. Los Angeles will lose just two of about 56 and New York City 10 of more than 200. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aMgeyqL6FESs&refer=home

REAL ESTATE

-Greenspan Says Housing Prices Not Yet Near Bottom. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aq_FnETHl1gM&refer=home

-IMF Says U.S. Housing Slump End `Not Visible,' Credit to Worsen. The International Monetary Fund said there's no end in sight to the U.S. housing recession and warned that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth. "At the moment, a bottom for the housing market is not visible,'' the IMF said in its Global Financial Stability Report, released today in Washington.

"Stemming the decline in the U.S. housing market is necessary for market stabilization as this would help both households and financial institutions to recover.'' The IMF, which a year ago failed to foresee the depth of the subprime mortgage collapse, stood by its April forecast for about $1 trillion in losses stemming from the U.S. mortgage crisis. While U.S. policy makers have helped contain the financial losses, ``credit risks remain elevated'' and banks need to raise more capital. Worldwide asset writedowns and losses have totaled $469 billion in the past year and $345 billion has been raised.

The Washington-based lender in the report said the Federal Reserve's decisions to expand lending to Wall Street firms ``have succeeded in containing systemic risks.'' Still, weakness in housing threatens to extend the slump. "The growing concern is that, with delinquencies and foreclosures in the U.S. housing market rising sharply, and house prices continuing to fall, loan deterioration is becoming more widespread,'' the IMF said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a3LJHMF_2I0c

-S&P/Case-Shiller May 20-City Home-Prices Fall 15.8%. Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, indicating the three-year housing slump has not stabilized, a private survey showed today.

The S&P/Case-Shiller home-price index dropped 15.8 percent from a year earlier, the biggest decline since records began in 2001, after decreasing 15.2 percent in April. The gauge has fallen every month since January 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a1ikgtmfigTw&refer=home

-America's house price time bomb. With the American housing market in its worst crisis since the Great Depression of the 1930s, President Bush is authorising new legislation to pave the way for massive new government intervention designed to slow the slide. The intervention would come as a little known quirk of US law threatens to drive down house prices even faster.

Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages. In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California with money borrowed from her bank.

By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase. "I thought 'this is crazy'," Ms Trainer says. "It just does not make financial sense." Read more here-http://news.bbc.co.uk/2/hi/business/7529277.stm

-Hamptons Home Prices Fall on Wall Street Jobs, Economic Outlook. Home prices in the Hamptons, the summer haven of New York financiers and socialites, fell almost 12 percent in the second quarter from a year earlier as Wall Street firms cut jobs and the economy teetered near a recession.

Sales dropped 26 percent and the median price slid to $970,000 in the resort towns on the East End of Long Island, New York-based broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. said in a report today. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aMsrvDd4XcBg&refer=home

-U.K. Hometrack House Prices Fall the Most Since 2001. U.K. house values fell by the most in at least seven years in July and the property slump will continue for months, Hometrack Ltd. said. The average cost of a residential property in England and Wales slipped 4.4 percent from a year earlier to 168,500 pounds ($336,000), the London-based research company said today in a statement.

That's the biggest annual drop since the index started seven years ago. Prices fell 1.2 percent from June. "With no immediate end in sight to the current uncertainty, activity levels are likely to remain suppressed with prices remaining under pressure into the autumn,'' said Richard Donnell, director of research at Hometrack, in an e-mailed statement. Prices "are now back to levels last seen in October 2006.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=akr15Ku2eia8&refer=home

-Housing Slump Hits Northern Ireland Economy Harder Than Bombs. Jim Kingham says the credit crunch is hurting his Belfast-area moving company more than the violence that ravaged Northern Ireland for 35 years. Kingham has fired nine of his 12 workers at A1 Shortnotice, based in Newtownards, as house prices plunge and sales dry up.

"You can take me back to the days of the bombings,'' says Kingham, who has run A1 for 40 years. "Business was better then. Five of my six lorries haven't left the yard for months.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aATDeqyvwJkc&refer=home

FORECLOSURES-MORTGAGES

-Foreclosure filings up 120%. 220,000 homes were lost to bank repossessions in the second quarter, and the annual forecast for 2008 will have to be revised upward. Read more here-

http://money.cnn.com/2008/07/25/real_estate/foreclosure_figures_up_again/index.htm?postversion=2008072508

-U.S. Foreclosures Double as House Prices Decline. U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.

One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=adFFhHtUhCLY&refer=home

-California's Discount Foreclosure Sales Point to Housing Bottom. Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aAL047pyn7t4&refer=home

-Mortgage applications hit 2008 low. The number of new mortgages applied for fell 14.1%, according to a weekly survey from the Mortgage Bankers Association. Read more here-

http://money.cnn.com/2008/07/30/real_estate/mortgage_apps.ap/index.htm

GEOPOLITICAL

-U.S. Intel: Iran Plans Nuclear Strike on U.S. Iran has carried out missile tests for what could be a plan for a nuclear strike on the United States, the head of a national security panel has warned.

In testimony before the House Armed Services Committee and in remarks to a private conference on missile defense over the weekend hosted by the Claremont Institute, Dr. William Graham warned that the U.S. intelligence community "doesn't have a story" to explain the recent Iranian tests. Read more here-

http://www.newsmax.com/timmerman/iran_nuclear_plan/2008/07/29/117217.html

-U.S. Headed for 'Heightened Alert' Stage. Exclusive: Major Events on the Horizon Prompt a Surge in Anti-Terror Efforts. Read more here-http://abcnews.go.com/TheLaw/story?id=5420514&page=1

-Obama to House Dems: If Sanctions Fail, Israel Will Likely Strike Iran. Read more here-http://blogs.abcnews.com/politicalpunch/2008/07/obama-to-house.html

-Khamenei Says Iran Will Pursue `Peaceful' Atomic Work. Supreme Leader Ayatollah Ali Khamenei said Iran will pursue its nuclear program, days before the expiry of a deadline for the Persian Gulf country to respond to an incentives proposal in return for suspending uranium enrichment. "Iran will pursue its peaceful nuclear energy,'' state television cited Khamenei, the nation's highest authority, as saying today. ``No one can undermine the nation's attempt to progress.''

European Union and U.S. diplomats discussed the international dispute over the atomic work with an Iranian delegation in Geneva on July 19, and gave Iran two weeks to respond to the offer of economic and diplomatic incentives. It was the highest-level meeting between American and Iranian officials since the 1979 Islamic revolution. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aWhgXVQb.Apw

-Iran Not Building Nuclear Bomb, Ahmadinejad Tells NBC. Iranian President Mahmoud Ahmadinejad told NBC News that Iran isn't developing nuclear weapons and the country would respond positively to a new approach from the U.S. "We are not working to manufacture a bomb,'' NBC's Brian Williams quoted Ahmadinejad as saying following an interview with the president in Tehran. "Nuclear weapons are so 20th century,'' NBC cited him as saying. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=agN336SOksKw

-Ahmadinejad Condemns World Powers for Atomic Arsenals. Iranian President Mahmoud Ahmadinejad criticized the world's most powerful countries for expanding their atomic arsenals while attempting to stop the progress of other nations toward "peaceful nuclear energy.''

"The expansion of nuclear arms by oppressing powers is continuing and other nations" peaceful nuclear activities are being condemned by these very countries through accusations that they are being aimed at constructing nuclear weapons,'' Ahmadinejad said in a speech aired live on state television. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=axm30fxCXRgc

-Iranian president: 'Big powers' going down. Read more here-http://ap.google.com/article/ALeqM5hyEZXokcOdqqOX2Ci-Xrp8xvORqAD927H0D00

-Syria Wants Peace Deal With Israel, Ambassador Says. Syria is serious about seeking peace with Israel in exchange for the return of the Golan Heights, said its U.S. ambassador, the strongest signal of Syrian interest in reaching a deal with its enemy of six decades. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ae38guTvSBE0

The GoldBugg Report - August 05, 2008
Posted by Worldwide Precious Metals on Tuesday, August 05, 2008

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