Newsroom
The GoldBugg Report - September 30, 2008
September 30, 2008
-Bailout plan rejected. House leaders scramble for support for controversial Wall Street plan.
-"You can't afford to not own gold," Jim Cramer told viewers of his "Mad Money" TV show Monday. After advising viewers to sell 20% of their portfolios last Friday, Cramer said it's time to put that money into gold.
-Gold/Silver Market Updates from Clive Maund.
GOLD
-"You can't afford to not own gold," Jim Cramer told viewers of his "Mad Money" TV show Monday. After advising viewers to sell 20% of their portfolios last Friday, Cramer said it's time to put that money into gold.
Cramer told viewers that they simply "must own gold" in times of uncertainly. With the fate of Treasury Secretary Henry Paulson's financial bailout plan still uncertain in Congress, he said he cannot endorse a portfolio that does not include a gold stock.
Cramer said owning gold makes sense whether the Paulson plan succeeds or fails. If it fails, he said, the financial system will completely freeze up, leaving gold as the only safe harbor. In a market where treasuries and cash pay almost nothing, gold will be the only trustworthy place to store value, he said.
On the flip side, Cramer said if the Paulson plan does pass Congress, investors need to be concerned about inflation. With the government issuing so much new currency, inflation will be inevitable and gold will perform well. Either way, he said, gold is where investors will want to be.
Cramer said the fundamentals for gold are strong, with worldwide demand for gold still increasing across the globe. Cramer said even in the worst case situation, gold stocks will still make investors money although they may underperform the market. "Gold makes sense when nothing makes sense," said Cramer. Read and see more here-http://www.thestreet.com/story/10438718/1/cramers-mad-money-recap-finding-refuge-in-gold.html?puc=googlen&cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA
-Bailout will discredit all currencies, help gold, Tocqueville's Hathaway says. Gold will be the main beneficiary as concern about the U.S. government's Wall Street bailout triggers a plunge in the U.S. dollar, said Tocqueville Asset Management LP's John Hathaway.
"The dollar's crossed the Rubicon. It's the point of no return," Hathaway said Monday in an interview in New York, where the fund is based. "It's just loss of confidence in paper currency of whatever brand it is." Read more here-http://www.gata.org/node/6663
-Barrick Sees 'Large-Scale' Gold Buying on Bailout. Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by ''major, major'' holders of dollars who fear the effects of the U.S. government's bailout plan on the currency.
Central banks or sovereign wealth funds are among those likely to buy gold to diversify their investments and hedge against the risk of a weaker dollar, given the government's $700 billion plan to support the banking system, Munk said today.
"That impact on holders of U.S. dollars in China or Russia or Abu Dhabi or Kuwait is that they're going to say, 'What is that going to mean for the U.S. dollar, and what alternative are we going to have?''' Munk said in an interview in New York. ''So gold is going to have very powerful support.'' Munk, 80, founded Toronto-based Barrick in 1983 and made it the world's largest gold producer. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=akxP2wBxQwK0&refer=canada
-Citigroup metals analysts ask why gold is not already at $2,000/oz. As the United States wades through a deep and murky morass of financial uncertainty and turmoil, Citigroup suggests that gold is entering a powerful new investment demand phase tied to safe-haven and monetization.
Citigroup asserts that gold will benefit from both the "gloom & doom" and "muddle-through & monetization" scenarios, possibly regaining $1,000 per ounce at year-end and even doubling or tripling in the long term. "Frankly, we're surprised, that gold is not already at $2,000 an ounce," declared Citigroup analysts John H. Hill and Graham Wark. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=62900&sn=Detail Read Citigroup report here-http://www.gata.org/files/CitigroupGoldReport-09-17-2008.pdf
-Eveillard Says Gold May Surge as Investors Seek 'Insurance.' Jean-Marie Eveillard says he has stashed $1 billion in gold in a vault near Times Square as insurance against ''extreme outcomes,'' like a market collapse or unintended consequences of the U.S. plan to avert one.
Eveillard keeps as much as 8 percent of his $22 billion First Eagle Global Fund in bullion or gold-mining stocks. He occasionally visits the vault in a building about 12 blocks from his Midtown Manhattan office, he said.
"Gold is insurance,'' Eveillard said in an interview yesterday. ''In most of those instances where things would get bad enough so you would get into equity bear markets, where economic and financial circumstances would be bad for a year or two or three,'' gold prices will rise. Read more here-
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8L00oInO1YM&refer=home
-Dennis Gartman 'Joining the Gold Bugs' on Outlook for Inflation. Dennis Gartman is ''joining the gold bugs'' and betting on higher prices after the U.S. Federal Reserve and Treasury proposed plans to revive financial markets. "Gold tends to rally during inflationary cycles, and we see the Fed as embarking in precisely that sort of thing,'' Gartman wrote in his daily letter today.
"The Fed shall have to buy Treasury securities from the dealers to make certain that very high-powered money is made available to them, and in the process, it shall reflate the economy.'' "Selling is ill advised,'' Gartman wrote. He sold the metal in mid-July, according to the letter. Bloomberg
-Gold can still live above $1000. Analysts believe that the price of gold could shoot back above the $1,000 mark despite the price plunging today as governments unveiled a battery of measures restore confidence in the financial system. Read more here-http://www.telegraph.co.uk/finance/3054378/Gold-can-still-live-above-$1000.html
-Gold could hit $1,500 and Beyond. The current gold prices are amazingly cheap, presenting an outstanding opportunity for long-term investors, opines Aaron Smith, MD at Superfund Financial. He tells CNBC's Maura Fogarty & Sri Jegarajah that gold can hit $1,500/oz in the next 2 to 3 years. Read more here-
http://www.cnbc.com/id/15840232/site/14081545/?video=859511496&play=1
-Forget stocks, gold is back! Watch video here-http://edition.cnn.com/video/#/video/business/2008/09/19/boulden.uk.flight.safety.gold.oil.cnn?iref=videosearch
-Lusting for gold. As stocks plunge, more investors are moving their money to gold, causing its price to soar. Watch more here-
http://money.cnn.com/video/#/video/news/2008/09/18/news.091808.gold.cnnmoney
-U.S. Secretary of the Treasury & Free Lunches has done Gold investors an incredible favor. While not benefiting immediately as did those owning bank stocks, we will over time. With the U.S. government now assuming responsibility for financial assets of dubious value, it has committed itself to nearly unlimited funding of U.S. housing market, and every other industry with political clout. One consequence may be that the Federal Reserve loses control of monetary policy. Will the Federal Reserve now need to monetize U.S. government debt in unlimited fashion?
This week's chart is of the year-to-year change in Federal Reserve credit, essentially the asset side of Fed's balance sheet. When it buys securities or makes loans to banks, those claims become assets of the Federal Reserve. In recent years, the Federal Reserve has had the luxury of relying on foreign central banks to finance the U.S. economy. The Federal Reserve Credit grew slowly, as did core inflation.
With foreign investors now balking at financing doubtful U.S. financial assets, that financing burden will now belong to the Federal Reserve. The recent spike in that chart is the first round of the uncontrolled financing of the bank stock holder bailout plan. The Federal Reserve credit growth rate had already been on a rising trend as the Federal Reserve began financing the questionable assets of the U.S. financial system.
With the Federal Reserve now forced to monetize vast quantities of U.S. government debt, Federal Reserve credit will grow rapidly. As that is base from which money is created, the quantity of dollars will grow. As the quantity of dollars rises, the value, or price, of those dollars will decline. As that happens, the dollar value of Gold will rise. The U.S. financial bailout plan in essence puts a rising floor under the dollar price of Gold. Gold may indeed benefit more from the financial bailout plan! Ned W. Schmidt
-John Embry commentary, U.S. on cusp of its biggest bailout ever. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf
-Gold May Regain Luster for World's Central Banks. Turmoil, Weak Dollar. Raise Metal's Profile; Chinese 'Nibbling'? Read more here-
-China's Exposure to US Debt. They will start buying gold. Watch video here-http://www.cnbc.com/id/15840232?video=865880359
-India gold demand spike may make up for weak year. Read more here-http://in.reuters.com/article/businessNews/idINIndia-35591420080922
-Indian women know that gold will never cheat them. Read more here-http://www.gata.org/node/6650
-Vietnam discovers that there's gold and 'gold'. Read more here-http://www.gata.org/node/6660
-World Gold Council asserts gold is not a volatile asset. The World Gold Council suggests that, despite the increase in volatility associated with the rally of recent years, the perception that gold is a volatile asset is not correct. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=63245&sn=Detail
-Welcome to the World's Largest Gold Vault. Just a Few Blocks From the Bustle of Wall Street Sits $200 Billion in Gold. Read more here-http://abcnews.go.com/print?id=5835433
SILVER
-Ted Butler silver commentary, time out or about time? This week I received an e-mail from a Swiss money manager, a friend and trusted source. He informed me that a very large and conservative Swiss bank had informed a number of their clients that they would no longer be offered paper gold or silver certificates in the bank's name.
It seems the bank had previously granted the accounts because it was able to protect itself against an upside move with a derivatives contract with another financial institution. Due to the financial turmoil, the bank was no longer comfortable with the counterparty risk from the other financial institution. Instead, the Swiss bank informed its clients, all paper transactions had to be converted to physical or physical ETF positions (There are Swiss ETFs for gold and silver).
My friend informed me that other Swiss banks were likely to follow this bank's lead. As long-time readers know, the issue of bank silver certificates that were not backed by real metal is one I have written about frequently. Read more here-http://news.silverseek.com/TedButler/1222191582.php
-Gold/Silver Market Updates from Clive Maund. Read more here-http://www.321gold.com/editorials/maund/maund092208.html
-The Bailout Plan, what does it mean? Especially for gold and T Bonds from Clive Maund. Read more here-http://news.goldseek.com/CliveMaund/1222029052.php
-Got Gold Report, Gold, Silver ETFs Add Metal on Strong Buying. Investors flooded back into gold exchange traded funds and continued adding silver ETFs over the past week on heightened fears about the banking sector and inflationary government actions to save it. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=46334
-Buffett buys into Goldman, will he buy silver again? Read more here- http://news.goldseek.com/GoldSeek/1222260503.php
-Gift From the World's Central Banks By John Rubino & Michael Maloney.
DC: Your silver chapter was flat-out exciting. Why is silver such a great story?
MM: The exchange rate of gold and silver used to float, which maintained a supply/demand equilibrium to keep both in circulation. Gresham's Law says that when two currencies are fixed against each other, the lower value money will get spent into circulation and the higher value money will be hoarded. Bad money chases out good. There used to be about 12 times more silver than gold. But lately that's been changing.
This is the third time in history when the general public became buyers of silver. The first time it forced the U.S. government to abandon silver in its coinage because it failed to keep the price below $1.29 in the mid-1960s. In 1979, the government tried to suppress both gold and silver by selling the metals into the markets. It failed and both rocketed. Since then, governments around the world have continued selling, getting rid of what used to be enormous stockpiles.
This has depressed the price to the point that through the '90s I don't think there was a single primary silver producer that made a profit. They all survived by issuing stock. A few are starting to show a profit at this price, but the vast majority can't. The U.S. government has unintentionally made everyone think silver should be cheap when in fact it should have been in the $20 range all through the '90s and there would have been enough supply coming to the market to balance things out.
So we've come to this critical juncture where the above ground supplies of silver have dwindled to just a fraction of what they once were. There's about a tenth as much silver available for investors to buy as there was in 1980, and currently there's less silver than there is gold, all courtesy of the U.S. government manipulating the price, causing us to think silver should be cheap.
Now we're about to have a gold and silver rush, and for the first time in human history the amount of silver available for investors is less than the amount of available gold, probably about one-fifth the amount. Yet silver's price is currently 1/60th the price of gold. The markets will bring back an equilibrium, and that will require silver to outperform gold for an extended period of time. It's a buying opportunity, a gift from the world's central banks and the commercial banks that are manipulating these markets. As Jesse Livermore used to say, be right and sit tight. Read more here-http://news.goldseek.com/DollarCollapse/1222100841.php
-David Morgan: Investment Demand, Fundamentals Favorable For Silver. "For the remainder of the year, I think you're going to see a wide trading range, but mostly upward progress for both of the metals (gold and silver)," Morgan said. He looks for gold above $900 an ounce at the end of the year and silver back into the $15 region.
Morgan said he expects gold and silver to have an "extremely strong" first quarter in 2009, with gold climbing to the $1,200 to $1,300 area and silver to the $20 to $25 region. "Beyond that, I think the metals are going to go extremely high in paper terms, but it's going to be at the end of the cycle when we get into a panic or mania phase," he said.
This may not occur until 2010 to 2011. But whenever it happens, it may well be in the last six months of the cycle, when an "extreme move" may occur such as the recent real-estate bubble or dot-com stock bubble several years ago. Read more here-http://silverblogspot.blogspot.com/2008/09/morgan-investment-demand-fundamentals.html
-Silver prices might be well down from the 27-year highs hit in March, but executives of the mining companies themselves remain upbeat about the metal's longer-term prospects. Officials with companies either based in Coeur d'Alene, Idaho, or there for the annual Silver Summit late this past week, cited continually growing industrial uses plus investment demand for precious metals particularly amid the crisis in the country's financial sector as factors likely to prop up silver again during the coming months and years.
Mining executives cited a disconnect during recent weeks in which physical metal became hard to obtain despite a sharp slide in silver futures. "At some point, that will come back into line," with silver likely to move higher, said Phillips S. Baker Jr., president and chief executive of Hecla Mining Co. Silver fell with other commodities, and mining stocks also plummeted, late in the summer and into early September.
There was a "cascade effect" from a long-liquidation phase, said Bradford Cooke, chairman and chief executive with Endeavor Silver Corp. Most-active December silver futures on the Comex division of the New York Mercantile Exchange fell from $21.55 an ounce on March 14 and $19.705 on July 15 to low of $10.31 on September 11. But on September 18 as the summit opened December silver was up 27 percent from the recent low to a high of $13.065.
That elicited smiles from many of the mining executives and investors at the Summit hoping for higher prices. On Monday, silver was even higher, with December trading at $13.340 an ounce. Most CEOs appeared confident of further gains. While Cooke said his company was reworking longer-term business plans to deal with the possibility of $10 to $12 silver, he also expressed doubt they will be needed. "This is indeed a buying opportunity," he said.
"It's got a great future," said Ross J. Beaty, chairman of Pan American Silver Corp. the second-largest primary silver-producing company in the world. "Its price is dirt-cheap right now." Several of the CEOs said they looked for further investment demand due to the ongoing financial crisis. Investors often turn to gold and silver as a safe haven in times of uncertainty and worries about other markets. "We've had the huge success of the silver ETF, which remarkably this year hit 200 million ounces of silver," said Dennis E. Wheeler, chairman, president and CEO of Coeur d'Alene Mines Corp.
"So we've had strong growth in investor interest." The iShares Silver Trust launched by Barclays Capital nearly 2 1/2 years ago hit 200 million ounces for the first time in July. And it stood at 216.3 million ounces Friday, meaning buyers have stayed the course despite the retreat in prices. But the executives emphasized that silver has more going for it than just investment demand. They also cited industrial usage. At one time, photography accounted for roughly one-half of all silver demand, Baker explained.
But with the advent of digital cameras, this now only amounts to 15 percent. But the slack has been picked up by industrial/consumer demand that has been rising by 6 percent per annum over the last five years and now accounts for 54 percent of total demand, Baker explained. Much of this is due to constantly developing electronics technology. "Because [silver is] so good at conducting electricity, it doesn't create the heat load that other metals create," Baker said. "As a result, you can use less of it, and it takes up less room than other metals.
But more importantly, you don't have to cool it as much." Thus, silver demand is growing for products such as laptop computers and cell phones. "Silver is a whole new metal compared to what it was," Baker said. "If we had been talking five years ago, we would have been talking about how the outlook for silver is terrible because of this decline in photographic use. "What people didn't realize is there is going to be even more silver used in these electronic devices, including the digital camera."
Wheeler said he views silver as a "technology metal." Already, he said, silver has more applications than any other metal and is even used by the healthy-care industry for bandages and dressings due to its anti-bacterial qualities. "New uses are being found all of the time," Wheeler added. On top of this, jewelry and silverware also remain significant uses for silver. Above-ground silver stockpiles have been run down after years in which global demand exceeded mined output, Wheeler said.
And discoveries of new deposits are becoming more infrequent, he added. "Silver reserve bases are shrinking," Wheeler said. Robert A. Archer, president and chief executive of Great Panther Resources Ltd. described silver as a "very complex metal." It often tracks gold, yet tends to be more volatile since it is a much smaller market, he said.
Roughly three-quarters of silver is a byproduct of mining for other metals. While bought by many for investment purposes, it also has the many industrial uses. He suspects that as investment demand picks up, the market will become still tighter. And as investors see silver shortage, more will want to buy it. "We're bullish on the longer-term silver price," he said. Dow Jones
-CFTC relents and probes silver market. Read more here-http://www.gata.org/node/6672
DEFINITIONS-QUOTES-QUICK HITS
-Panic of 1907. Read more here-http://en.wikipedia.org/wiki/Panic_of_1907
-Savings and loan crisis. Read more here-http://en.wikipedia.org/wiki/Savings_and_Loan_crisis
-Subprime mortgage crisis. Read more here-http://en.wikipedia.org/wiki/Subprime_Crisis
-Short-Sale Rule. A Securities and Exchange Commission (SEC) trading regulation that restricted short sales of stock from being placed on a downtick in the market price of the shares. Short sales could only be permitted on upticks (last trade higher than the one before) or zero-plus ticks (last trade is the same as previous, which was an uptick).
The regulation was passed in 1938 to prevent selling shares short into a declining market; at the time market mechanisms and liquidity couldn't be guaranteed to prevent panic share declines or outright manipulation.
This regulation was rescinded in July 2007 by decree of the SEC; as a result short sales can occur (where eligible) on any price tick in the market, whether up or down. The short sale rule was also known as the "plus-tick rule", "tick-test rule", or "uptick rule". Investopedia.com
-"By some estimates, five hedge funds fail for every bank that goes under," said a report that came with a buy recommendation on BCE published last Friday by Scotia Capital telecom analyst John Henderson. Scotia Capital
-Greenspan was considered a master, now we must ask ourselves whether he is not, after (Osama) bin Laden, the man who hurt America the most. It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis. Giulio Tremonti, Italian Finance Minister
-Longtime gold bugs have always pointed out that gold is the only asset that is not simultaneously someone else's liability, which entails "counterparty risk," i.e. the risk that the other guy will go broke, default, whatever. Counterparty risk is what is bringing down investment banks and the whole derivatives market.
Thus James Turk, of Goldmoney.com, can confidently predict that gold will reclaim its place as the ultimate safe harbor "as this financial crisis continues to deepen because people become reluctant to have their wealth dependent on counterparty risk." Casey Daily Resource
-.72, .62, and then .52 on the USDX. Gold is going to $1200 and then on to $1650. Jim Sinclair
-I have a feeling that right now we're putting in a double bottom and that by this time next year you'll see gold at $1,200 an ounce. Michael Maloney
-"As the U.S. dollar moves back to the receiving end of its own 'misdemeanors' and its July rally-leg teeters dangerously, it's less likely that global central banks, frantic to exit huge U.S. dollar reserves, will act with the same former restraint and co-ordination. In fact, we could see a mad dash for the U.S. dollar fire escape and potential "moon-shot" for gold!" Harry Schultz-Read more here-http://www.marketwatch.com/news/story/radical-gold-bugs-gloating-guarded/story.aspx?guid={8EAA71DF-6A83-4650-833B-DAB0730F9F3D}&print=true&dist=printMidSection
-I'm lowering my original target for the DJIA from 10,000 (it still will be a support level for a while before it breaks) and believe sometime in the next 12-24 months the DJIA can fall to 7,500-8,000. I now believe we will have one of the worst recessions in U.S. history in this time frame as well.
I see the U.S. Dollar Index hitting 60 and gold $1,300-$2,000 (depending how bad things get). Look for a super bull run in metal stocks sometime in this timeframe as well. Do all you can to get out of debt and lower your lifestyle as it's going to be greatly lowered for most Americans, anyway. Peter Grandich
-"A portion of everybody's portfolio should be gold. Every bank has tonnes and tonnes of gold in their vaults. Gold is finite. It's a safe haven asset. It's the reserve currency of central banks and, as proven throughout history, gold goes up when property and stocks go down,'' says Mark O'Byrne, director of Gold and Silver Investments in Dublin.
O'Byrne insists that investments could fall as well as rise and that no one should put all their eggs in one basket. "It is crucial that all investors and savers are diversified, now more than ever, and thus every portfolio should have a minimum allocation of 10% to 20% gold in order to protect and hedge against geopolitical, macroeconomic and systemic risk." Read more here-http://www.tribune.ie/business/news/article/2008/sep/21/crash-hails-a-golden-era-for-irish-investors-even-/
-U.S. Mint suspends sales of yet another coin, the American Buffalo 1-oz gold coin. A troubled U.S. economy has prompted such a surge in bullion coins and other gold products that the U.S. Mint is having a tough time keeping up with their production. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=63341&sn=Detail
-A run on the dollar is becoming less unthinkable especially in the light of the massive US trade and current account deficits and the prospect of a $1 trillion ($1,000 billion) federal deficit next year. Also, we have seen many retail, mortgage and investment banks be taken over, nationalised and go bankrupt and more are soon to follow.
And now even "safe haven" assets such as US money market funds are suffering from massive redemptions as investors grow increasingly fretful regarding paper assets, preferring finite, hard and tangible assets such as gold and the precious metals. Gold.ie
RARE COLORED DIAMONDS
-Nearly 500-carat flawless diamond found in Lesotho. Lesotho miners have discovered one of the world's largest diamonds at the Letseng mine, which has already yielded four of the world's 20 largest rough diamonds. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=63012&sn=Detail
-Diamonds, Antiques Become Investor Haven. Forget the uncertainty of the stock exchange and the housing market would-be investors are being urged to consider putting their money into diamond jewelry and antiques, which is considered the nearest relation to a 'sure thing' in a downturn economy. Colin Weldon of Weldons Antiques in Dublin revealed that people have recently begun to put a lot of money into fine diamonds because their value is so solid. Diamonds.net
-Christie's auction, Jewels and Watches The Dubai Sale, takes place at the Jumeirah Emirates Towers Hotel on October 29, 2008 at 7 p.m. The sale will include jewelry from leading contemporary designers, natural pearls, rare vintage Cartier, and antique Indian jewels. The sale is expected to realize between $20 million and $25 million.
The Dubai sale includes 12 lots of fine diamond jewelry from an important private European collection with a combined estimate of $6 million to $8 million. The highlights from this collection include a yellow diamond necklace, earring and bracelet suite, divided into 3 lots, with a combined estimate of $1.25 million to $1.65 million. The largest diamond in the sale is a radiant-cut 57.02 carat fancy intense yellow diamond ring estimate: $2 million to $2.5 million. Diamonds.net
-De Beers Says Asia Will Compensate for Weaker U.S. Gem Demand. De Beers, the world's biggest diamond company, said gem sales in Asian markets will help compensate for stagnant or reduced U.S. demand caused by the credit crisis.
"If somebody said they weren't concerned about the States, they'd be smoking something,'' Jonathan Oppenheimer, head of the chairman's office at De Beers and a director of its Diamond Trading Co., said yesterday in an interview in New York. "There may be a balance in terms of the U.S. being similar to last year, maybe a little bit weaker, and China picking up some of the slack, India picking up some of the slack.'' Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTlEf0tAGdOY
COMMODITIES-OIL-GASOLINE
-Commodities Bottom as Speculators Vanish After Slump. The worst may be over for commodities after the steepest rout since at least 1956 drove out speculators and the U.S. government unveiled a plan to end the worst credit-market seizure since the Great Depression.
The Standard & Poor's GSCI Index of commodities had the biggest three-day gain in 18 years, surging 8.4 percent through Sept. 19, the day U.S. Treasury Secretary Henry Paulson said the government will spend ''hundreds of billions'' to cleanse banks of mortgage-related assets. Crude oil rose 6.8 percent that day, while wheat and copper gained 3.6 percent.
"What the government just did is the end game, and it's going to mean a good rally for commodities,'' said Michael Pento, a senior market strategist who helps oversee $1.5 billion at Delta Global Advisors in Holmdel, New Jersey. ''Six weeks ago, I thought it was prudent to exit most commodities. Now you want to own these things. I'm jumping in twice with both feet.''
Commodities, which had the best first half in 35 years, tumbled so far this quarter as the combination of slowing economic growth and the strengthening U.S. dollar popped the speculative bubble that drove prices to record highs. The Reuters/Jefferies CRB Index of 19 raw materials is down 22 percent since June 30, heading for the biggest quarterly loss since at least 1956, data compiled by Bloomberg show. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aCgKM.VHTfB0&refer=home
-Here comes $500 oil. If Matt Simmons is right, the recent drop in crude prices is an illusion and oil could be headed for the stratosphere. He's just hoping we can prevent civilization from imploding. Read more here-http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index.htm?postversion=2008092213
-The prospects for oil prices for the rest of the year remain uncertain. However, OPEC should be able to defend a price of $80 to $100 per barrel. Nevertheless, there is uncertainty over what the floor price is likely to be. For most OPEC members, $80 is too low. Oxford Analytica-Read more here-http://www.theglobeandmail.com/servlet/story/RTGAM.20080922.woxfoanalytica0922/BNStory/energy/home
-Exxon's Cash Hoard Fuels Worst Stock Drop in 27 Years. Exxon Mobil Corp., the world's most valuable company, has never been richer. Shareholders think its cash a sign of weakness. With petroleum output falling at the fastest pace in a decade and shares tumbling the most in 27 years, growth prospects are evaporating.
The world's biggest oil company is piling up cash faster than it can be spent, thanks to crude prices above $100 a barrel. Exxon Mobil's $39 billion in cash amounts to 15 percent of assets, almost six times the average of the company's 10 biggest peers, according to data compiled by Bloomberg.
That hasn't helped investors, as Exxon Mobil fell 14 percent in New York trading this year, heading for the worst drop since 1981. While Royal Dutch Shell Plc, BP Plc and ConocoPhillips boost spending to acquire reserves, Irving, Texas-based Exxon Mobil is shelling out more money to buy back stock than for drill bits, pipelines and related investments in its operations, said William Andrews of C.S. McKee & Co.
"They don't have much growth potential,'' said Andrews, who holds Shell shares among the $7.8 billion he helps manage at C.S. McKee in Pittsburgh. ''If you don't have enough growth opportunities, then you've got to do something else with the money, but buybacks don't necessarily add anything.''
Exxon Mobil, whose market value of $420 billion is larger than any other company, earned a record $40.6 billion last year. At the same time, the company's capital spending as a percentage of sales was the lowest in the industry. Its stock is dropping despite $80 billion in buybacks since December 2005. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aUTo2SySKkJ8
-Oil skyrockets, hits $130. Futures spike as much as $25 on the bailout plan, the falling dollar and as the October front-month contract expires. Read more here-
http://money.cnn.com/2008/09/22/markets/oil/index.htm?postversion=2008092215 or http://www.bloomberg.com/apps/news?pid=20601087&sid=aMSdh.rgPmx0&refer=home
-U.S. gasoline inventories lowest since 1967. U.S. gasoline inventories shrunk to the lowest level since 1967 after Hurricanes Gustav and Ike shut Gulf Coast oil refineries, but the Bush administration said there is still no need to ask for emergency fuel supplies from European allies.
The drop in fuel stocks has caused long lines at service stations in southern cities. Retail outlets, including those in Atlanta and Memphis and as far away as Ohio, have run out of fuel. Read more here-http://www.reuters.com/article/domesticNews/idUSTRE48N85320080924
-Scooter sales skyrocket 66%. With pain at the pump still real, Americans are jumping on those two-wheeled get-ups that Europeans have been riding for generations. Read more here-
http://money.cnn.com/2008/09/23/pf/scooter_popularity/index.htm?postversion=2008092314
-Gas mileage is higher priority. Study of why consumers reject cars finds record increase in those citing inadequate mileage; more considering Asian brands. Read more here-
http://money.cnn.com/2008/09/24/autos/gas_mileage.ap/index.htm
FINANCIAL CRISIS-BAILOUT
-Bailout plan rejected. House leaders scramble for support for controversial Wall Street plan. http://money.cnn.com/2008/09/29/news/economy/bailout/index.htm?postversion=2008092914
-Lawmakers Agree on 'Principles' of Economic Rescue. Congressional negotiators said they reached an agreement in principle on a $700 billion financial- rescue package to inject fresh capital into paralyzed credit markets.
The lawmakers agreed that a plan to let Treasury buy the troubled assets of financial firms should contain provisions strengthening oversight, limiting executive pay and preventing foreclosure, Senate Banking Committee Chairman Christopher Dodd said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=abBzxfFh5lM0&refer=home
-FDIC May Need $150 Billion Bailout as More Banks Fail. Read more here-http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=amZxIbcjZISU
-$5 Trillion Cash Pool Needed to Stop Rout, Ohmae Says. Treasury Secretary Henry Paulson's $700 billion plan to buy devalued assets from financial companies is ''a joke'' because it doesn't go far enough to calm markets, said Kenichi Ohmae, president of Business Breakthrough Inc.
Ohmae, nicknamed ''Mr. Strategy'' during his 23 years as a McKinsey & Co. partner, called for a $5 trillion ''international facility'' to be made available to financial institutions. The system could be modeled on one used by Sweden during its banking crisis in the early 1990s, he said.
"This is a liquidity crisis,'' Ohmae said at an investor forum hosted by CLSA Asia-Pacific Markets, the regional broking arm of Credit Agricole SA, in Hong Kong yesterday. ''The liquidity has to be so big that people won't get panicky.'' Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8DIq9yO0vzY
-Asia fears panic selling of U.S. debt, Chinese adviser says. Read more here-http://www.gata.org/node/6673
-Bailout: No cure for recession. If done right, the White House's plan can only limit the damage, not avoid it, according to one economist. Even if the Bush administration's $700 billion bailout works, the United States still faces the longest and most severe economic stretch since the Great Depression, according to one economist.
"The recession train has already left the station," said Nouriel Roubini, professor of economics at NYU's Stern School of Business during a conference call Wednesday. "What this plan can avoid is a Japan-like, L-shaped recession," where the economy sinks and stays sunk, "that could last a decade or more." Read more here-http://money.cnn.com/2008/09/24/news/economy/Roubini_on_bailout/index.htm?postversion=2008092412
-China banks told to halt lending to US banks-SCMP. Read more here-http://www.reuters.com/article/marketsNews/idUSPEK16693720080925
-Recapitalize Financial Institutions Rather than Bail Out Debt. Read more here-http://www.321gold.com/editorials/merk/merk092508.html
-Bailouts will lead to rough economic ride according to Ron Paul. Read more here-http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
ï‚· Ron Paul: Too much government meddling in economy caused crisis
ï‚· Paul says the bailouts are another case of excessive intervention in economy
ï‚· The government isn't letting the market adjust prices to lower levels, Paul says
ï‚· Paul: Bailout will only increase financial instability in the long run
-Jim Rogers Calls Paulson's Plan 'Welfare for the Rich'. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Jim%20Rogers%20Calls%20Paulson%27s%20Plan%20%60Welfare%20for%20the%20Rich%27&clipSRC=mms://media2.bloomberg.com/cache/vbGb5KNYrBKo.asf
-The crisis: A timeline. A shocking series of events that forever changed the financial markets. Read more here-http://money.cnn.com/galleries/2008/news/0809/gallery.week_that_broke_wall_street/index.html
-Crisis will impact most Americans poll. CNN/Opinion Research survey shows most won't take action on stocks, money markets any time soon. Read more here-
http://money.cnn.com/2008/09/23/news/economy/poll_financial_crisis/index.htm
-Bailout rewards bad behavior poll. Eight out of ten say the economy could deteriorate further if government action is not taken, according to poll, but similar percent also worry bailout rewards bad behavior. Read more here-http://money.cnn.com/2008/09/22/news/economy/bailout_survey/index.htm?postversion=2008092307
-Goldman's O'Neill Says Brown Should Mull U.K. Mortgage Rescue. Prime Minister Gordon Brown should weigh whether to follow the U.S.'s lead and pursue a government- backed rescue of the U.K. mortgage market, Goldman Sachs Group Inc. chief economist Jim O'Neill said.
The British government should consider "doing something to take over the activities of all those institutions that are just not in a position to lend here any more, because it's going to end up causing significant economic weakness in the U.K.,'' O'Neill said in an interview on Bloomberg Television. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=axzErERmpI.Y
-Chart of the Day. In an attempt to put the current financial crisis into perspective, today's chart illustrates the 10 largest Chapter 11 bankruptcies in US history. As the chart illustrates, the bankruptcy of Lehman Brothers earlier this week dwarfs all previous US bankruptcies.
The US government has taken the approach that some companies are 'too big to fail' as failure could have devastating systemic effects. In the case of Lehman Brothers, however, the bar as to what is too big has been raised considerably. Chartoftheday.com
U.S. MAY FIND PAINFUL PARALLELS IN NORDIC BAILOUT
-U.S. May Find Painful Parallels in Nordic Bailout. If Henry Paulson and Ben S. Bernanke want to know what happens when central banks and governments bail out financial institutions, they should be ''learning Swedish.'' That's the suggestion of Charles Dumas, a director at Lombard Street Research in London. He says the effort by Finland, Sweden and Norway to save troubled banks in the early 1990s is the closest parallel to the market-rescue plan being engineered by the U.S. Treasury secretary and Federal Reserve chairman.
The Nordic effort similar in speed and scope to what the U.S. is planning now, though smaller in size did manage to end the financial crisis. At the same time, it didn't prevent a deeper recession and surging unemployment in all three countries. "In the long term, there were benefits, but it took half a decade before they began to show in the economy,'' said Esko Ollila, a member of the Bank of Finland board from 1983 to 2000.
With the U.S. financial markets in tumult, Paulson is seeking to implement a $700 billion plan that will allow the U.S. to purchase illiquid assets such as mortgage-related securities from banks. Last week, the government and Fed pledged to insure money-market funds, seized control of New York-based insurer American International Group Inc. and intervened in the markets for commercial paper and short-term debt for Fannie Mae, Freddie Mac and other agencies. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=au3.PKtIo9oM
JACK WELCH SAYS U.S. FACES DEEP DOWNTURN
-Former General Electric Co Chairman and Chief Executive Officer Jack Welch said the U.S. economy faces a deep downturn in coming quarters, and he supports a proposed $700 billion government rescue package for the financial sector. "I now believe we are in for one hell of a deep downturn," Welch told the World Business Forum in New York on Wednesday, adding that the first quarter of 2009 will likely be "brutal."
Until recently, Welch said, he had believed the U.S. economy could avoid recession, but he has changed his mind. "I am now caving," he said. "Get ready for real tough times. They're coming. There is no credit available." Welch said mortgage lenders, legislators, investment bankers and others are all to blame for the crisis, which stemmed from easy credit and investors' appetite for yield.
"The problem was money didn't cost anything," Welch said. "People took swings." He likened the crisis to Agatha Christie's "Murder on the Orient Express," in which all the suspects turn out to be guilty; but he singled out the role of investment banks in the crisis. "We have to look at the damn investment bankers," he said. "They're playing with other people's money. The only penalty was a cut in their bonus, not their head." Read more here-http://www.reuters.com/article/businessNews/idUSTRE48N74H20080924?feedType=RSS&feedName=businessNews&rpc=23&sp=true
U.S. TO LOSE FINANCIAL SUPERPOWER STATUS
-Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.
In some of the toughest language since the crisis threw Wall Street banks into financial disarray earlier this month, German Finance Minister Peer Steinbrueck told parliament the turmoil would leave "deep marks" on both sides of the Atlantic, but called it primarily an American problem.
"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the centre-left Social Democrats (SPD), told the Bundestag lower house. "The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar," he said. Read more here-http://www.cnbc.com/id/26881273
BUFFETT BUYS INTO GOLDMAN SACHS
-Buffett Buys into Goldman Sachs Amid 'Economic Pearl Harbor'. Billionaire investor Warren Buffett, likening the market turmoil to an "economic Pearl Harbor,'' said his $5 billion investment in Goldman Sachs Group Inc. is a vote of confidence in the Treasury's $700 billion bank rescue plan.
"I am betting on the Congress doing the right thing for the American public and passing this bill,'' Buffett said on CNBC today. "I certainly have a vote of confidence in Goldman and vote of confidence in Congress.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aRhG15OZUpzE&refer=home
-Buffett's "time bomb" goes off on Wall Street. On Main Street, insurance protects people from the effects of catastrophes. But on Wall Street, specialized insurance known as a credit default swaps are turning a bad situation into a catastrophe. When historians write about the current crisis, much of the blame will go to the slump in the housing and mortgage markets, which triggered the losses, layoffs and liquidations sweeping the financial industry.
But credit default swaps complex derivatives originally designed to protect banks from deadbeat borrowers are adding to the turmoil. "This was supposedly a way to hedge risk," says Ellen Brown, the author of the book "Web of Debt." Read more here-http://www.reuters.com/article/newsOne/idUSN1837154020080918
-Goldman, Morgan Stanley Bring Down Curtain on an Era. The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp. "The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. "It's too bad.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoDmO_d0IJSU&refer=home
12th BANK FAILURE IN U.S.
-12th bank failure of the year announced. Regulators close down Ameribank Inc., a West Virginia-based-bank with total assets of $115 million. Read more here-
http://money.cnn.com/2008/09/19/news/companies/ameribank_closure/index.htm
RUN ON HONG KONG BANK
-Depositors line up as Hong Kong bank tries to quell panic. Hundreds of customers descended on branches of Hong Kong-based Bank of East Asia on Wednesday to demand their deposits back after the bank was hit by doubts about its stability.
In one of the first bank runs in Asia since the current international financial crisis began, customers lined up outside BEA offices across the territory. The mid-sized lender insisted that "malicious" rumours spread by cellphone text messages in recent days have no basis in fact.
"The Bank of East Asia is not suffering from financial difficulties. We have enough cash to handle the needs of depositors," deputy chief executive Joseph Pang told reporters. He declined to specify how much money customers have withdrawn, but said it was not a large amount and no major clients had pulled their money. Read more here-
http://www.cbc.ca/money/story/2008/09/24/hongkong.html or http://www.bloomberg.com/apps/news?pid=20601080&sid=aII1tgrPIB.s&refer=asia
-SocGen issues China alert as fears mount on banks. Société Générale has advised clients to dump shares of banks exposed to the Far East. Read more here-
500 TRADES AWAY FROM A MELTDOWN
-Almost Armageddon, markets were 500 trades from a meltdown. The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.
Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level a 22 percent decline! while the clang of the opening bell was still echoing around the cavernous exchange floor.
According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning. Read more here-http://www.nypost.com/seven/09212008/business/almost_armageddon_130110.htm
U.S. DOLLAR
-Dollar May Get 'Crushed' as Traders Weigh Up Bailout. Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
"As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aGBXzUuCWbUE&refer=home
-US dollar set to be major casualty of Hank Paulson's bailout. "This may prove to be the dollar's epochal moment the moment historians look back at as its major turning point." Read more here-http://www.telegraph.co.uk/finance/economics/3062121/US-dollar-set-to-be-major-casualty-of-Hank-Paulsons-bailout.html
-Ambrose Evans-Pritchard: Does U.S. face a run on its currency?
AS THE US PRINTING PRESS STARTS
Taking Stock
* Treasury buying mortgage-related assets: $700 billion.
* Potential supplementary stimulus package favoured by Democrats: $100 billion.
* Insuring money market funds: $50 billion.
* Treasury fortifying the Fed's balance sheet: $100 billion.
* Expansion of temporary swap lines with central banks: $180 billion.
* Loan to AIG: $85 billion.
* Fed purchase of agency discount notes abd ABCP: amount not specified.
* Fed loans through the Primary Dealer Credit Facility: $20 billion through Sept. 17.
* Fed's discount window: $33 billion balance.
* Treasury purchase of GSE MBS this month: $10 billion.
* Potential cost of Fannie/Freddie bailout: $200-$300 billion.
* Financing the current account deficit: priceless.
Investment implications: Sell the U.S. dollar.
"The fiscal cost to the United States is likely to be enormous. Speculation will intensify on a possible US government paper downgrade. US policy-making and credibility have been put into question. The safety of US assets has been put into question.
We remain concerned with the repercussions that this crisis will have on the financial flows into the United States against the context of a still large current account deficit." Alex Patelis, global strategist at Merrill Lynch-Read more here-http://www.gata.org/node/6665
U.S. DEBT
-Paulson Plan May Push National Debt to Post-World War II Levels. Treasury Secretary Henry Paulson's $700 billion proposal to stabilize the banking system may push the national debt to the highest level since 1954, threatening an erosion of foreign appetite for U.S. bonds.
The plan, which asks Congress for funds to buy devalued securities from financial institutions, would drive the debt above 70 percent of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year, economists estimated.
"This is sobering, absolutely sobering, even to someone who doesn't drink,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=anJ4Egj1nXS8&refer=home
-A default by the US government is no longer unthinkable. So, here we are the start of a new world order. After the tumultuous events of the last fortnight, the global economic landscape will never look the same again. Read more here-http://www.telegraph.co.uk/finance/comment/liamhalligan/3023967/A-default-by-the-US-government-is-no-longer-unthinkable.html
-Bailout can't hide it; the country is busted. Read more here-http://www.gata.org/node/6674
-House approves $630B spending bill. The Pentagon will receive a record $488B budget; automakers get $25B in loans; offshore drilling ban lifted. Read more here-
http://money.cnn.com/2008/09/24/news/economy/house_bill.ap/index.htm
U.S. JOBS
-Jobless claims soar near 7-year high. First economic report since financial meltdown shows initial unemployment claims rose by 7%, boosted by Hurricanes Gustav and Ike. Read more here-http://money.cnn.com/2008/09/25/news/economy/jobless_claims/index.htm
-Credit crunch freezes hiring, expansion. When small businesses can't get loans, job growth and economic expansion stall. Read more here-http://money.cnn.com/2008/09/24/smallbusiness/small_biz_credit_freeze.smb/index.htm
INTEREST RATES
-Bernanke Moves Closer to Rate Cut as Risks to Economy Intensify. Federal Reserve Chairman Ben S. Bernanke moved closer to cutting interest rates, signaling that risks to U.S. growth are greater than policy makers saw them just last week.
The "intensification'' of the financial crisis in recent weeks is curbing Americans' access to borrowing, making the outlook for consumer spending ''sluggish at best,'' Bernanke told lawmakers in Washington yesterday. While he noted that risks to inflation remain, the Fed chief's testimony focused on ''grave threats'' to the banking system.
"It opens the door a bit further for rate cuts, although it doesn't signal that the committee is at that point already,'' said former Fed researcher Brian Sack, now senior economist at Macroeconomic Advisers LLC in Washington. ''It still seems like it would take a further deterioration in financial conditions or in the data to prompt a rate cut.''
Bernanke's assessment reflected further disruptions to money markets since the central bank met Sept. 16, when the Federal Open Market Committee left the benchmark rate at 2 percent. The three-month London interbank offered rate, or Libor, a benchmark for confidence in the banking system, jumped the most in eight years today.
Traders increased bets on a quarter-point rate cut at or before the FOMC's Oct. 28-29 meeting, sending the probability implied in futures contracts to 80 percent yesterday from 58 percent the previous day. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=atrFxuL1keJ4&refer=home
INFLATION
-Canada Inflation Quickens to Fastest Since '03 on Gas. Canada's annual inflation rate rose to the highest in more than five years in August as prices for gasoline and food surged. Consumer prices rose 3.5 percent from a year earlier, the biggest jump since March 2003, Statistics Canada said today in Ottawa. That matched the median forecast of 19 economists in a Bloomberg survey. Prices fell 0.2 percent from July, also matching economists' predictions.
The Bank of Canada this month signaled borrowing costs would stay put for the foreseeable future, citing energy-driven inflation. Still, economists such as Sal Guatieri at BMO Capital Markets in Toronto say the bank may need to cut interest rates sooner than expected to kick start growth as a financial market crisis crimps the U.S. economy.
"The Bank of Canada is less worried about inflation than about the economy and its concerns about the economy can only have increased in light of growing distress in global credit markets,'' Guatieri said. ''The odds of a Bank of Canada rate cut are rising.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aD4.xqXiuM.4&refer=canada
FBI PROBING SUBPRIME COLLAPSE
-FBI Probing Fannie, Freddie, AIG, Lehman in Subprime Collapse. The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and American International Group Inc. in its probe of the collapse of the subprime-mortgage market, according to a senior law-enforcement official.
Those companies are among 26 being reviewed by the Federal Bureau of Investigation for possible accounting misstatements, said the official, who asked to remain unidentified. The investigations are preliminary, the official said late yesterday.
The FBI has come under pressure to hold companies responsible as the loan crisis rocked Wall Street and led to the biggest housing slump since the Depression. Financial companies worldwide have reported more than $500 billion in losses and writedowns stemming from the subprime collapse.
Housing lenders Freddie Mac and Fannie Mae, as well as insurer AIG, were all taken over by the government earlier this month. Lehman filed for bankruptcy. The crisis has led the Bush administration to ask Congress to approve a $700 billion bailout for the financial industry. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_oZZHsX.QIM
WEAK HOLIDAY SALES COMING
-Weakest holiday sales since '02 seen. Retail group expects just a 2.2% increase, about half the 2007 rate, which would be the slowest growth in six years. Read more here- http://money.cnn.com/2008/09/23/news/economy/retail_sales_forecast/index.htm
REAL ESTATE
-U.S. Housing Prices Tumble on Home Mortgage Scarcity. U.S. home prices tumbled in July as the credit crisis that led to this month's toppling of Lehman Brothers Holdings Inc. tightened mortgage standards and slashed real estate lending.
Home purchase prices dropped 5.3 percent, seasonally adjusted, from a year earlier, the Office of Federal Housing Enterprise Oversight said today in a report. The one-month decline from June was 0.6 percent, said Washington-based Ofheo. Eight out of nine U.S. regions showed declines for the year as lenders tightened requirements after banks posted $523 billion in mortgage-related losses and writedowns worldwide. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=a2Qi1uG1DJIk&refer=home
-U.S. New-Home Sales Fell in August to 17-Year Low. Sales of new homes in the U.S. fell in August to a 17-year low, signaling the housing market suffered another setback even before the latest turmoil in financial markets.
Sales dropped 11.5 percent, more than forecast, to an annual rate of 460,000, the fewest since January 1991, the Commerce Department said today in Washington. The median sales price dropped to a four-year low. A financial meltdown that prompted the government this week to ask Congress for $700 billion in emergency funding to buy up troubled bank assets may continue to clog the flow of credit to homebuyers and businesses. Shrinking credit availability threatens to extend the three-year housing slump and deepen the economic downturn.
"The market is looking particularly depressing,'' said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia, whose sales forecast was the closest. ''Construction activity has to fall further than it has, as do prices,'' to reduce a glut of unsold homes. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a_zAnYoBrQsg&refer=home
-Home Resales in U.S. Fall 2.2% to 4.91 Million Pace. Sales of previously owned U.S. homes fell more than forecast in August and prices dropped the most on record, a sign the market remained in a slump heading into the latest financial meltdown.
Sales of existing homes dropped 2.2 percent to an annual rate off 4.91 million units from 5.02 million the prior month, the National Association of Realtors said today in Washington. The median price declined 9.5 percent from August 2007 and the number of properties fell from a record.
The collapse in lending that brought down American International Group. Inc. and Lehman Brothers Holdings Inc. this month may also make mortgages more difficult to get. A lack of credit raises the odds sales will again slump after hovering around a 10-year low this year, even as borrowing costs drop.
"The headwinds facing housing have intensified,'' Peter Kretzmer, a senior economist at Bank of America Corp. in New York, said before the report. ''Delinquencies and foreclosures continue to rise while credit conditions remain tight.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aqZOHUemgX8M&refer=home
-Home values plunge in Southern California. Median home price fell 34% in August from last year, sales up 10% during period but many driven by foreclosures. Read more here-
-U.K. Housing Market 'on Its Knees,' Rightmove Says. U.K. house prices fell for a fourth month in September as the global credit crisis intensified, locking out homebuyers and forcing the sale of the country's biggest mortgage lender, a report by Rightmove Plc showed.
"The housing market is on its knees and will remain so until financial institutions address the disastrous state of the mortgage funding markets,'' said Miles Shipside, commercial director at Rightmove. ''While this market provides a good opportunity to trade up, it requires a degree of bravery.'' The average asking price for a home fell 1 percent from August to 227,438 pounds ($414,000), Britain's most-used property Web site said today. From a year earlier, prices fell 3.3 percent.
The property market may face further weakness in coming months, provoking a ''painful'' adjustment for many families, Bank of England Chief Economist Spencer Dale said last week. HBOS Plc agreed to a takeover by Lloyds TSB Group Plc after plunging home values and the financial market crisis destroyed the value of the company and added to the threat of a recession. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=azW3KAyxhvvw&refer=home
-Home buyers: On or off the fence? The government is bailing as fast as it can to try to stabilize foundering housing markets. How will home buyers respond? Read more here-
http://money.cnn.com/2008/09/22/real_estate/blood_on_Wall_Street/index.htm?postversion=2008092312
-Can't anyone afford my home? Prices have dropped. A lot, but it's still surprisingly hard to find buyers. Read more here-http://money.cnn.com/2008/09/19/real_estate/afford_myhome.moneymag/index.htm?postversion=2008092210
FORECLOSURES
-August foreclosures hit another high. There were 304,000 homes in some stage of default last month, and 91,000 families lost their homes. Read more here-
http://money.cnn.com/2008/09/12/real_estate/foreclosures/index.htm?postversion=2008091815
GEOPOLITICAL NEWS
-In video, Al Qaeda vows more U.S. attacks. Read more here-http://www.cnn.com/2008/WORLD/meast/09/19/alqaeda.sept11.tape/index.html
-Spies Warn That Al Qaeda Aims for October Surprise. Intercepted Messages Asking Local Cells To Be Prepared for Imminent Instructions. Read more here-
http://www.nysun.com/foreign/spies-warn-that-al-qaeda-aims-for-october-surprise/86326/
-Pakistan hunts Al-Qaeda cell after hotel blast: officials. Read more here-http://www.breitbart.com/article.php?id=080922071642.p3ngmby5&show_article=1
-What Is the U.S. 'Secret Weapon' in Iraq? Read more here-http://blog.wired.com/defense/2008/09/whats-the-milit.html
-Chief inspector: Iran may be hiding secret nukes. Read more here-http://news.yahoo.com/s/ap/20080922/ap_on_re_mi_ea/eu_nuclear_iran&printer=1;_ylt=Ao3s.v_M.aJyKZsX9C2WlfwUewgF
-Military intelligence: Iran halfway to first nuclear bomb. Read more here-http://www.jpost.com/servlet/Satellite?cid=1222017348428&pagename=JPost%2FJPArticle%2FShowFull
-Iran's Ahmadinejad: US 'empire' nears collapse. Read more here-http://apnews.myway.com/article/20080924/D93COK780.html
-Iran president blames Wall Street turmoil on U.S. 'military engagement'. Read more here-http://www.latimes.com/news/nationworld/world/la-fg-iran23-2008sep23,0,2913574.story
-Iran vows to block any attack, says sanctions failed. Read more here-http://asia.news.yahoo.com/080921/3/3pcjv.html
-North Korea Expels UN, to Re-Activate Nuclear Plant. North Korea expelled United Nations atomic inspectors from its Yongbyon nuclear plant and pledged to reintroduce nuclear material into the facility, which is capable of making plutonium for bombs. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aFEJKKcsVVCI
-Russia Offers Venezuela $1 Billion to Buy Arms as Chavez Visits. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=auPHMMVXYA80
-Russia may launch nuclear cooperation with Venezuela: Putin. Read more here-http://news.yahoo.com/s/afp/20080925/wl_afp/russiavenezueladiplomacynuclear_080925192759
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report - September 30, 2008
Posted by Worldwide Precious Metals on Tuesday, September 30, 2008
The GoldBugg Report - September 23, 2008
September 23, 2008
-U.S. IN "ONCE IN A CENTURY FINANCIAL CRISIS"
-Why Wall Street Hates Gold and Silver?
-"Gold is acting like it is supposed to on a flight-to-safety move.
GOLD
-Update, Gold fundamentals still pointing towards $2000+. Read more here-http://news.goldseek.com/EricHommelberg/1221231600.php
-Gold Coins, Bullion Sales Go 'Gangbusters' as AIG, Lehman Fall. While TV camera crews staked out American International Group Inc.'s Wall Street headquarters following its takeover by the U.S. government, Jules Karp was quietly trading gold coins in "unbelievable'' numbers from his basement dealership across the street. Karp, 61, has traded physical gold, including one-ounce Canadian Maple Leafs, American Eagles and South African Krugerrands, since 1974. Demand has "hit a crescendo,'' he said this week while an assistant prepared
the special packages used to send gold coins to a growing list of mail-order customers. "People are panicking right now,'' said Karp, who also sources coins for the clients of Wall Street's largest banks. "They're afraid for their money.'' The interest in bullion appears widespread. Gold sales to new clients at Blanchard & Co., the largest U.S. precious-metal retailer have jumped more than sixfold in the past three days as investors responded to the financial turmoil. "People are looking for answers,'' said David Beahm, a vice president at New Orleans-based Blanchard.
"People want to protect their wealth and their assets, and gold is the best way for them to do that.'' Suppliers of coins and bullion have been struggling to keep pace with the surge in demand from investors. "We're having a hard time'' making enough coins, Michael White, a spokesman for the U.S. Mint in Washington, said yesterday in an interview. "There's very high demand across the market for gold.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=awFy4i6wSdmg&refer=home
-John Embry: "When the gold's all gone, the market will go nuts." Read more here-http://www.theaureport.com/cs/user/print/na/1624
-Gold the innocent bystander to the hurricane. A leading US precious metals analyst predicts gold will jump back as fast as it has come down and reach $1,000 again this year or early next and perhaps $2,000 in the next few years. Jeffrey Nichols of American Precious Metals Advisors said, "Long-term price prospects remain as bright as ever and nothing in the recent market performance has changed our forecast of record high prices in the next few years.
We still expect to see gold back over $1,000, if not late this year, then almost certainly in the first quarter of 2009. With the right confluence of economic and geopolitical developments we could see gold as high as $1,500 or even $2,000 an ounce in the next few years and a buying frenzy, such as is often seen late in the price cycles of financial and commodity markets, could briefly take the metal much higher." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=62705&sn=Detail
-Gold Will Recover from David Chapman. So with almost a crisis de jour more drastic action will be taken. Maybe another rate drop and more liquidity adding games. All of it does threaten the potential for hyper inflation. And all of that of course is positive for gold. Gold is currency. It has been for 3000 years.
The US Dollar has only been a reserve currency for 63 years and the past 37 years it hasn't even had gold backing it. It is just paper. Would you rather own US$ a possibly bankrupt piece of paper or Gold. Protect your assets and this sell off gives you the opportunity to pick it up cheaply. Of course many will deride this. The US debt is still not a problem.
One wag said it has lots of assets so you have to net it and once you net it the debt/GDP ratio is only around 40%. Reasonable. But without the netting it is now 115%. With Britain at the level in the early 1990's they pounded the British Pound almost into oblivion. So again would you rather own US$ or Gold. Over the past month they have been trying to tell us to own US$. Well we are not buying that dance. Read more here-http://news.goldseek.com/UnionSecurities/1221256555.php
-Gold, Sticking to a longer-term perspective buying and holding and, if resources allow, buying more on the dips is the way to go. David Galland-Read more here-
http://news.goldseek.com/GoldSeek/1221241539.php
-Gold May Rise to $950 an Ounce as Miners Lower Output. Gold may rise to $950 an ounce by the end of year as central banks and miners hold back sales and investors buy the metal as a haven against falling stock prices, London-based researcher GFMS Ltd. said.
Central bank sales will drop 46 percent in 2008, while mine supply will decline for a third year, a GFMS report showed today. Demand from investors worldwide will soar 38 percent to 778 metric tons, with purchases in east Asia more than doubling.
"We're expecting gold to stage a powerful rally in the fourth quarter,'' GFMS Chairman Philip Klapwijk said at a conference in London today. There will be ''significant declines in stocks, which compete with gold.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=abv6J3EnBf7s&refer=commodities or http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=62744&sn=Detail
-Don't buy gold and silver ETF's. ETF Securities products plummet up to 50% on AIG fear. Shares in ETF Securities products, which are backed by AIG, were down as much as 50% this week after US insurer was downgraded by credit agencies S&P and Moody's. ETFS Precious Metals dropped 50.68%, ETFS All Commodities dropped 54.7%.
On its website ETF Securities says it has assets of $7.65bn under management in exchange traded commodities. These products track commodity prices using financial instruments mainly provided by AIG-FP which are backed by AIG. Read more here-http://www.investegate.co.uk/invarticle.aspx?id=58393
-India August ETF gold collections up at 5.712 tonnes. Read more here-http://in.reuters.com/article/domesticNews/idINBOM7216720080916?rpc=401
-Contrite Sprott blames U.S. actions. But country's best-known hedge fund manager isn't giving up on his belief that oil and gold are headed inexorably higher.
-In emirates, people are buying gold 'as if it's free.' Read more here-http://www.gata.org/node/6605
-Venezuela's central bank may buy 15 metric tons of gold a year to develop gold investment products including coins, said Eli Sanchez, head of the gold department at Venezuela's central bank. "Part of our function is to increase participation in the gold market," Sanchez said in an interview in London today. "The point is, in Venezuela you don't have the opportunity to invest in gold at this moment."
The coins would be similar to Krugerrands in South Africa and Eagle coins in the U.S., he said, adding that Venezuela also has about 10 tons of the metal that may be used. Gold is a "very important part" of Venezuela's monetary reserves and there are no plans to sell the metal, Sanchez said. "Gold is very correlated to the price of oil." Venezuela holds 356 tons of gold, or about 30 percent of reserves, he said. Bloomberg
-Dr. Martin Murenbeeld of Dundee Wealth Economics in Toronto supports a bright future for gold. Read more here-http://www.jsmineset.com/cwsimages/Miscfiles/6583_DrMartinMurenbeeld.pdf
-Listen to Las Vegas conference debate on gold price manipulation. Al Korelin of the Korelin Economics Report moderated the debate on gold price manipulation between GATA Chairman Bill Murphy and Resource Investor's Tim Wood at the Hard Assets Investment Conference in Las Vegas last Wednesday, and now audio of the debate has been posted at the GATA site here-http://www.gata.org/node/6607
SILVER
-Why Wall Street Hates Gold and Silver? There is no best-case or worst-case scenario in which I can conceive of gold and silver being losers. You can mortgage the kids and bet the farm!
Howard Ruff-Read more here-http://www.kitco.com/ind/Ruff/ruff_sep162008.html
-India's silver imports seen surging on lower prices. Read more here-http://in.reuters.com/article/businessNews/idINIndia-35478020080915
-Jeff Christian, managing director of metals research firm CPM Group, has produced a video, posted today at Kitco, to dispute complaints that the silver market is manipulated. These complaints, Christian says, are all just unsubstantiated conspiracy stuff, and what appear on the commodities exchange as incredibly concentrated short positions are just hedges of long positions taken in other markets. Read and watch more here-http://www.gata.org/node/6617
DEFINITIONS-QUOTES-QUICK HITS
-Derivative. In finance, a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Because derivatives are just contracts, just about anything can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.
Derivatives are generally used to hedge risk, but can also be used for speculative purposes. For example, a European investor purchasing shares of an American company off of an American exchange (using American dollars to do so) would be exposed to exchange-rate risk while holding that stock. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion back into euros. Investopedia.com
-Credit Default Swap (CDS). A swap designed to transfer the credit exposure of fixed income products between parties. The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product.
By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap. For example, the buyer of a credit swap will be entitled to the par value of the bond by the seller of the swap, should the bond default in its coupon payments. Investopedia.com
-Ted Spread. The price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars having identical expiration months. The Ted spread can be used as an indicator of credit risk. This is because U.S. T-bills are considered risk free while the rate associated with the Eurodollar futures is thought to reflect the credit ratings of corporate borrowers.
As the Ted spread increases, default risk is considered to be increasing, and investors will have a preference for safe investments. As the spread decreases, the default risk is considered to be decreasing. Investopedia.com-Money-Market Rate Jumps, TED Spread Soars on Credit Squeeze-Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aO1crPsEJ9MA
-"The government solution to a problem is usually as bad as the problem. In the case of nationalization, the government solution will only prolong the problem." Milton Friedman
-About $2.8 trillion of market value was erased from global stocks this week. Casey Daily Resource
-"Gold is acting like it is supposed to on a flight-to-safety move. We have a global financial crisis and nobody has a clear answer. Therefore stocks, currencies and debt are being questioned and nobody wants to own a 'paper' asset." Amaury Conti, of investment adviser Austin Calvert-Flavin
-"Physical demand is breaking records, mining supply continues to fall, and the economic environment is, of course, promoting safe-haven demand. The shorts are covering, the funds are buying back in, and everyone wants the safety of gold." Brien Lundin, editor of Gold Newsletter
-"I continue to believe gold is the real money for the 21st century and think by spring 2009 we can be back above $1,000 if not sooner." Peter Grandich
-"At this time more than any other," John Reade, of UBS in London points out, "investors should have a proportion of their assets in gold as an insurance policy against systemic risk or governments inflating their way out of trouble. This does not mean that the gold price will necessarily go up. Gold could fall and still be a good hedge if everything else falls by more." Casey Daily Resource
-"When you see financial contagion creeping through the system people are not confident and are going to gold,'' said Jonathan Barratt, managing director of Commodity Broking Services Ltd. in Sydney. Bloomberg
-"When you're perhaps facing a catastrophe in the U.S. financial market, investors are thinking: 'Screw it. I'm jumping back into the old faithful'," said Joel Crane, a metals strategist at Deutsche Bank in New York. And, "Gold's relative value is cheap compared with the dollar," he added. Casey Daily Resource
-"Gold after the fall may be tarnished but fundamentally nothing has changed about the metals increasingly supportive supply-demand situation," says Jeffrey Nichols, managing director of American Precious Metals Advisors. Suggesting shaken confidence in financials should benefit gold once the selling of financial assets and commodities has run its course. "Don't be surprised if gold's upward ascent is just as fast and furious as has been its recent decline." Nationalpost.com
-"There are going to be more banks that will fail,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. "This is the time when people want to buy gold.'' London-based researcher GFMS Ltd. said gold may rise to $950 by the end of the year as central banks and mining companies hold back sales and investors buy the metal as a haven against falling equities.
Since the second quarter of 2007, banks worldwide have posted $515.5 billion in losses and writedowns related to investments in subprime mortgages. The Fed has also engineered $200 billion in takeovers for Fannie Mae and Freddie Mac, the biggest providers of financing for U.S. homes. Bloomberg
-Fund manager Charles Oliver is still bullish on gold. "I continue to think that if you go out a year from now, you'll see gold at a much higher price than where it is today," said the manager of the Sprott Gold & Precious Metals Fund. "I wouldn't be surprised to see it go through $1,000 an ounce within the next 12 months. My call still stands that, in four years, it will be at $2,000 an ounce," he said at a media briefing. Read more here-http://www.reportonbusiness.com/servlet/story/RTGAM.20080916.wrsprott16/BNStory/SpecialEvents2/home
-Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response. "We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices." Read more here-http://www.chicagotribune.com/business/chi-wed_oilsep17,0,4833605.story
-The bailout of AIG has exposed more than just the collapse of Casino Capitalism. It exposes the governmental system to be as much a sham as our economy has been! How is it that $85 billion can just materialize to bail out this one insurance company (insuring for the most part, opaque, enormously complicated and risky investments) without so much as a session of Congress? Where is the appropriations committee in this matter? Where were they when the Bear, Stearns/JP Morgan deal went down on a Sunday? Read more here-
http://www.smirkingchimp.com/thread/17202
RARE COLORED DIAMONDS
-Christie's Jewels the New York Sale will offer diamonds, colored diamonds and gemstones, and together with a collection of signed jewels (Superb 20th Century Jewels from an American Collection) will include 273 lots and an expected sale of more than $35 million.
Colored diamonds rings in the sale are highlighted by a cut-cornered modified rectangular-cut fancy intense blue diamond, weighing approximately 7.02 carats, and set with a pavé-set pink diamond two-tiered surround (estimate: $3.5 million to $5 million) and a pear-shaped fancy intense purplish pink diamond, weighing approximately 5.60 carats, flanked on either side by a pear-shaped diamond (estimate: $2.6 million to $3 million.)
Jewelry from the Collection of Giselle Bündchen includes a diamond ring by Sabbadini set with a cut-cornered modified square-cut yellow diamond weighing approximately 3.35 carats, flanked on either side by a trillion-cut diamond (estimate: $15,000 to $20,000,) and a circular-cut diamond pendant weighing approximately 6.01 carats (estimate: $120,000 to $150,000.) Diamonds.net
-Add to Wedding Bill: Diamond Prices Up 9% in '08. Procrastinating on popping the question may turn into a more expensive proposition. The price of diamonds continues to rise as demand outpaces supply. Top-quality half-carat diamonds that's about the average size of a nice engagement-ring stone are up 9% year-to-date, according to a study by diamond-market specialist Martin Rapaport, founder and chief executive of Rapaport Group.
In dollar terms, that top rock will now have an asking price of about $2,500. But that's just the wholesale price. A would-be fiancé needs to head to a jewelry retailer to get it set in a ring. At the high end of the high end, the price increase is even sharper. Prices for five-carat diamonds are ahead more than 40% over the same period and have more than doubled since the beginning of last year.
Such a boulder can cost about $400,000. Again, that's without the ring. Mr. Rapaport has been studying the economics of the diamond market for three decades. What he sees coming is what can only be described as a surge in demand while the supply response will be weak.
Global demand for polished diamonds is expected to almost double by 2016 to more than $40 billion, vastly outstripping growth in mine production, which is forecast to grow about 50% to around 20 million carats, according to Mr. Rapaport's projections. "We have seen a historic shift in wealth oil wealth," says Mr. Rapaport. "We have more wealthy people than ever before." And they want diamonds, he says. Read more here-http://online.wsj.com/article/SB122126459968330631.html?mod=DMN
-Damien Hirst Bucks Financial Slump in Record Art Sale. Damien Hirst's ''The Golden Calf'' kept alive a 10-year bull run in the art market last night as collectors vied for the British artist's works at Sotheby's, even as global stock markets collapsed.
Hirst's "Beautiful Inside My Head For Ever'' auction in London took 70.5 million pounds ($126.6 million) with fees, led by the 10.3 million-pound preserved Charolais calf with 18-carat gold horns. The total was a record for a sale of works by one artist, said Sotheby's, which had estimated the evening would fetch as much as 62.4 million pounds. All but two of the 56 lots sold. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a.RlnxYprUKQ
COMMODITIES-OIL-GASOLINE
-As commodities unwind, BMO says 'sustained commodity bust is unlikely'. Despite the current financial crisis, bulk commodity pricing continues to remain strong. In fact, BMO suggests that the correction of some metals commodities may be overdone. BMO Capital Market's Global Commodity Strategist Bart Melek said, "For many metals and bulk commodities, global
demand is expected to grow as much as 40-50% over the next decade. Since supply is constrained, the sector is projected to operate at very high utilization rates and in an elevated cost environment. As such, metals and bulk commodity prices are very well supported over the long term. In fact, BMO sees the risk to be tilted to the upside." Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=62701&sn=Detail
-Commodity stocks will become "even greater out-performers" after economic downturn BMO's Coxe. When financials roll over, "gold and gold mining stocks should move swiftly back into favor. Inflation remains above central bank target levels in the U.S. and in many other countries across the world. Any return to pronounced weakness among the bank stocks will be strongly bullish for gold." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=62319&sn=Detail
-IEA warns high oil prices could trigger global recession. Read more here-http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/09/17/bcnoil117.xml
-Commodities and Oil from Adam Hamilton. Read more here-http://www.321energy.com/editorials/hamilton/hamilton091208.html?print=on
-Skills shortages could force up oil prices. Runaway costs and an acute shortage of skilled workers are putting future oil developments at risk and could keep upward pressure on the oil price, the chief executive of Total said yesterday.
Christophe de Margerie said that key projects planned by the French oil multinational could fall below acceptable rates of return if oil prices continued their sharp decline. The soaring cost of offshore contracting and materials and a desperate lack of engineers have forced up sharply the price per barrel at which an investment in deep-water oil and gas production becomes profitable.
In only four years the cost per barrel of big installations has tripled, according to the French company's figures, raising questions about the viability of future large investments in the event of a continuing decline in the oil price.
According to Total, the price at which oil achieves a return of 12.5 per cent has risen from less than $20 a barrel in 2004 to $70 a barrel today. "We need a price of $70 per barrel to make it work in Angola," Mr de Margerie said. "For heavy oil, it is not far off $90 per barrel." Read more here-
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article4735902.ece
-Gas prices, voters' No. 1 concern. The high price of gasoline tops the list of economic concerns held by U.S. consumers, according to a CNN poll. Read more here-
http://money.cnn.com/2008/09/12/news/economy/econ_poll/index.htm
U.S. IN "ONCE IN A CENTURY FINANCIAL CRISIS"
-The United States is mired in a "once-in-a century" financial crisis which is now more than likely to spark a recession, former Federal Reserve chief Alan Greenspan said Sunday. The talismanic ex-central banker said that the crisis was the worst he had seen in his career, still had a long way to go and would continue to effect home prices in the United States.
"First of all, let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event," Greenspan said on ABC's "This Week." Asked whether the crisis, which has seen the US government step in to bail out mortgage giants Freddie Mac and Fannie Mae, was the worst of his career, Greenspan replied "Oh, by far." "There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go," Greenspan said. Read more here-
http://www.breitbart.com/print.php?id=080914181841.fsmkqu8s&show_article=1 or http://www.bloomberg.com/apps/news?pid=20601110&sid=amVkrOCQNBQs
CENTRAL BANKERS SAW CRISIS COMING
-In his first interview since retiring from Bank of Canada, David Dodge says many central bankers recognized that trouble was afoot as early as 2003, but Wall Street and other regulators didn't listen. Read more here-http://www.theglobeandmail.com/servlet/story/RTGAM.20080912.wrdodge12/BNStory/Business/
WHO BAILS OUT THE U.S.A-FED PUMPS MORE MONEY INTO SYSTEM
-Who'll Bail Out Uncle Sam? The U.S. National Debt, And Who Picks Up the Tab. The federal government may seem like a financial knight on a white steed riding to the rescue of big companies in trouble. The irony is that Uncle Sam's got enormous money problems of his own.
The government is far deeper in debt than any of the companies it's bailing out. As of this morning, the national debt stands at over $9.634 trillion. That's trillion with a "T." And that's nearly $4 trillion more than it was on the day President Bush took office. This year alone, it's costing taxpayers more than $230 billion just to pay the interest on the national debt. Read more here-http://www.cbsnews.com/stories/2008/09/17/notebook/main4455247.shtml
-New York Mayor Michael Bloomberg warned Wednesday a "next wave" of financial pain may come from overseas if foreign entities stop buying U.S. debt. Read more here-
http://news.yahoo.com/s/ap/20080917/ap_on_bi_ge/economy_bloomberg
-The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the aftermath of the 1929 Wall Street crash. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=asIS6b3aIbDo&refer=home
U.S. HEADED FOR DEPRESSION
-US Heading for a Depression? The economic slowdown in the US could lead to national bankruptcy as the government can not afford all the bailouts, and the stock markets will not bail out the US government as they are already facing a funding crisis, Martin Hennecke from Tyche said last week. Watch video here-http://www.cnbc.com/id/15840232?video=851879191&play=1
AIG RESCUE
-Fed Takes Control of AIG With $85 Billion Bailout. The U.S. government took control of American International Group Inc. in an $85 billion bailout to prevent the bankruptcy of the nation's biggest insurer and the worst financial collapse in history.
The Federal Reserve will provide a two-year loan, take 79.9 percent of the New York-based company's stock and replace its management because "a disorderly failure of AIG could add to already significant levels of financial market fragility,'' according to a statement by the central bank late Tuesday. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAkvusf5Ld7M&refer=home
-Cerberus' Snow Says Markets Almost 'Frozen,' AIG 'Huge Blowup'. Former U.S. Treasury Secretary John Snow said credit markets are almost ''frozen'' and called the government takeover of American International Group Inc. a ''huge'' failure of risk management and regulation.
Snow, chairman of private-equity firm Cerberus Capital Management LP, said today in a telephone interview that capital markets are on the verge of seizing up. "Our debt markets are close to frozen'' he said. ''Unless we get this fixed pretty soon, we're in for a big, big, deep slowdown.'' The economy faces a ''a tough year'' in 2009 followed by a "good upward swing'' in 2010, he said.
Snow said insurance companies such as AIG are so complicated and their businesses so expansive that state-by- state regulation is inadequate to oversee them. "This is a huge blowup of the risk management system,'' he said. ''How could a New York regulator possibly have a vision of all the systemic risk of that company?'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=axkBHAtF70vQ&refer=home
-Greenberg, His Firms Lost $5.8 Billion in AIG Shares This Month. American International Group Inc. former Chief Executive Officer Maurice "Hank'' Greenberg saw the value of the AIG stake he controls plunge by about $5.8 billion this month as the insurer struggled to survive. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=abhhuiP.7wW4&refer=home
-Kraft replaces AIG in Dow. Read more here-http://www.reportonbusiness.com/servlet/story/RTGAM.20080918.wkraft/BNStory/SpecialEvents2/home?cid=al_gam_mostview
LEHMAN GOES BANKRUPT
-Lehman Creditors, Shareholders May Lose Billions. Lehman Brothers Holdings Inc.'s bankruptcy filing this week is as much as 15 times larger than any other Chapter 11 case in history and may leave creditors with tens of billions in losses, lawyers said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aX7xlKcjqYmM
-Lehman Employees Worldwide Clear Desks, Weep After Bankruptcy. Lehman Brothers Holdings Inc.'s employees worldwide are clearing their desks, waiting to hear if they'll be paid, and starting to look for work after the investment bank filed for the biggest bankruptcy in history.
"Everyone's talking on their cell phones, talking to headhunters,'' said Duo Ai, a bespectacled 26-year-old employee in fixed income quantitative research, as he stepped outside Lehman's Canary Wharf offices in London today. ''It's kind of chaotic. The only question remaining is whether we will get this month's pay check.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aZFrkhKYGuzQ
BANK OF AMERICA TO BUY MERRILL
-Bank of America to Acquire Merrill as Crisis Deepens. Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America's oldest financial companies.
Bank of America will pay $29 a share for New York-based Merrill in stock, 70 percent more than the Sept. 12 closing price, the company said in a statement this week. Merrill, battered by $52.2 billion in losses and writedowns from subprime-mortgage- contaminated securities, has plunged more than 80 percent from its peak of $97.53 at the start of last year.
The takeover ends 94 years of independence for Merrill and gives Charlotte, North Carolina-based Bank of America a sales force with 16,690 brokers who manage $1.6 trillion for customers. Merrill, led by Chief Executive Officer John Thain, was in danger of becoming the next subprime casualty after Lehman Brothers Holdings Inc. filed for bankruptcy court protection earlier this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a9O9JGOLdI_U&refer=canada
MONEY MARKET FUND STUNNER
-Reserve Primary Money Fund Falls Below $1. Reserve Primary Fund became the first money-market fund in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers Holdings Inc. The fund, whose assets plunged more 60 percent to $23 billion in the past two days, said the Lehman losses forced the net value of its assets below $1 a share, known as breaking the buck.
Primary Reserve, the oldest money fund in the nation, fell to 97 cents a share and redemptions were suspended for as long as seven days. Money-market funds are considered the safest investments after cash and bank deposits, and Reserve Primary's losses come as confidence in financial markets has been shaken by the collapse of subprime mortgages, the failure of 11 U.S. commercial banks and Lehman's bankruptcy yesterday.
The only other money-market fund to break the buck was the $82.2 million Community Bankers Mutual Fund in Denver, which liquidated in 1994 because of investments in interest-rate derivatives. "This is uncharted territory,'' said Peter Crane, president of Crane Data LLC in Westborough, Massachusetts, which tracks money-market funds. "That's certainly a stunner.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aycQDd9pEdCA
-Putnam Investments LLC closed its $12.3 billion institutional Putnam Prime Money Market Fund yesterday and plans to return all cash to investors. The fund, which was valued yesterday at $1 a share, experienced "significant redemption pressure,'' the Boston based company said in a statement.
A drop below $1 a share, known as breaking the buck, would have exposed investors to losses. The fund had no exposure to securities issued by Lehman Brothers Holdings Inc., Washington Mutual Inc. or American International Group Inc., the company said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ayP4a6epihhU
-A money manager advises that the ultimate flight to quality is under way, and he cannot find Treasury bills to buy. He told me that he had to go out to December to find a T-bill that he could purchase with any yield at all, and that was well under one-tenth of a percentage point. The others, if they could be purchased at all, were available only for the amount they will be worth when they mature.
What is going on here? I suspect there is a run on money market funds, or at least the ones that do not own only super-safe assets. With the money going into Treasury funds, they must find very-short-term Treasuries to buy. Read more here-http://www.gata.org/node/6629
FED BANK INSURANCE FUND DWINDLING
-Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort. The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.
Treasury has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns to J.P. Morgan Chase & Co. Eleven federally insured banks and thrifts have failed this year, including Pasadena, Calif.-based IndyMac Bank, by far the largest shut down by regulators.
Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC's insurance fund, said Brian Bethune, U.S. economist at consulting firm Global Insight. "We've got a retail bank run forming in this country," said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics. Read more here-http://www.gata.org/node/6618
1,000 BANKS WILL CLOSE IN U.S.
-In an exclusive interview with CNBC.com, Wilbur Ross, chairman and CEO of WL Ross & Co., says he sees possibly as many as a thousand bank closures in the coming months. And this will create opportunities for investors. "I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s," Ross said. Read more here-
http://www.cnbc.com/id/26710362
IN 1932 THESE BIG BANKS DIDN'T GO BANKRUPT
-Economists and market players react to the crisis sweeping Wall Street, citing compensation for top bankers and the measures taken by policymakers.
I called this one, but I didn't think that all these banks, and the biggest insurance company and the largest mortgage companies would go bankrupt. Even in 1932, these big banks didn't go bankrupt. When you have about 15 years without a recession, thanks to Alan Greenspan, there's no brake on greed. Normally, if you have a four-year cycle, the fear reduces the amount of greed.
But if you don't have that, greed goes to an absolute excess, because everybody starts feeling there won't be any more recessions. I certainly don't see it getting much better unless there is inflation, because the only thing that can reinforce the values of real estate is inflation. But how do you get inflation into something everybody is selling and nobody wants to buy? The only way to do it is to print so much money that you just swamp the world with money. Stephen Jarislowsky, founder and chairman of money manager Jarislowsky Fraser Ltd., Montreal-Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080915.wquotes0915/GIStory/
PRIVATE EQUITY NEXT TO GO?
-Private-equity boom from 2006 and 2007 is the real time bomb silently ticking away in the mind of every executive of a major bank. In those two years, inexperienced thirtysomethings with inflated egos and overblown salaries scoured the globe buying businesses about which they knew nothing, with borrowed money, at grossly inflated prices.
It was an unprecedented debt binge that drove global stock markets in those years, and the fallout has yet to impact on the banking system. Figures compiled by Thomson Financial show that in the year to June 30 last year, private equity firms spent $US1.06 trillion snapping up businesses. The idea was to gut them, load them up with debt and sell them into a booming stock market in 2009 and 2010 and repay the loans. That's never going to happen now. Read more here-
http://business.smh.com.au/business/the-next-big-bang-is-private-equity-20080915-4h1g.html#
CHINA WANTS NEW WORLD FINANCIAL ORDER
-Threatened by a "financial tsunami," the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
The commentary in the overseas edition of the People's Daily said the collapse of Lehman Brothers Holdings Inc. "may augur an even larger impending global 'financial tsunami.'"
The People's Daily is the official newspaper of China's ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper. Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai's Tongji University suggested considerable official alarm at the strains buckling world financial markets. Read more here-http://www.gata.org/node/6620
-Crisis Exposes Flaws in U.S. Economy, Tarnishes Image. The rapid-fire rescues of financial firms may end up tarnishing America's free-market reputation as the moves expose defects in the U.S. economy, undermining its standing with foreign buyers of the dollar and U.S. Treasury securities.
The government's actions might add hundreds of billions to a budget deficit already expected to hit a record next year. The salvage operations, which include Tuesday's takeover of American International Group Inc., also raise questions about the U.S. commitment to a free-market economy that, until recently, was the envy of the world. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aXRPsaQU9ybY
INTEREST RATES
-Fed Keeps Rate at 2%, Rebuffing Call for Reduction. The Federal Reserve left its main interest rate at 2 percent, rebuffing calls by some investors for a cut after Lehman Brothers Holdings Inc.'s bankruptcy shook markets worldwide.
"Downside risks to growth and the upside risk to inflation are both of significant concern,'' the Federal Open Market Committee said in a statement in Washington. ''The committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=anYN2nKRb5G4&refer=home
-China Cuts Rates as U.S. Turmoil Adds to Global Risks. China cut interest rates for the first time in six years and allowed most banks to set aside smaller reserves as worsening credit-market turmoil and weakening export demand dimmed the outlook for economic growth.
The People's Bank of China reduced the one-year lending rate to 7.20 percent from 7.47 percent, effective Tuesday, and lowered the reserve ratio at the nation's smaller banks by 1 percentage point. The changes were in a statement on the central bank's Web site Monday. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid=aPOjpkRwklGQ&refer=home
U.S DOLLAR
-China may cut its dollar holdings-CICC. China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation's biggest investment banks. Read more here-
http://www.chinadaily.com.cn/china/2008-09/12/content_7020656.htm
-Last Gasp of a Doomed Currency from Peter Schiff. Read more here-http://www.321gold.com/editorials/schiff/schiff091508.html
S&P 500 PLUNGE ERASES 50% OF GAINS DURING STOCK BULL MARKET
-S&P 500 Plunge Erases 50% of Gains From Bull Market. The Standard & Poor's 500 Index's 26 percent drop since its October peak erased half of the gains from the five-year bull market and may signal more declines. The benchmark index for American equities, which doubled to 1,565.15 on Oct. 9, 2007, from 776.76 five years earlier, plunged 4.7 percent yesterday after the collapse of Lehman Brothers Holdings Inc. and the government takeover of American International Group Inc. pushed credit costs higher.
The drop to yesterday's close of 1,156.39 may point to more losses, because so-called retracements of 50 percent typically precede further declines, according to some traders who look at historical prices and charts to make decisions. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=azMWSh4H1nuY&refer=home
RUSSIAN STOCK MARKET ROUT
-Russian Emergency Funding Fails to Halt Stock Rout. Russia poured $44 billion into its three largest banks and halted stock trading for a second day in a bid to stem the most severe financial crisis since its devaluation and debt default a decade ago.
The Finance Ministry extended the repayment period on loans available to OAO Sberbank, VTB Group and OAO Gazprombank to three months from one week. The benchmark Micex stock index plunged as much as 10 percent, taking its three-day decline to 25 percent, and brokerage KIT Finance said it's in talks with investors to sell a stake after failing to meet some obligations.
Russia's markets are facing the biggest test since the government defaulted in 1998. The decade-long economic boom is fading, foreign investors have pulled at least $35 billion from the nation's stocks and bonds since the five-day war in Georgia last month, and the collapse this week of Lehman Brothers Holdings Inc. and American International Group Inc. prompted a flight from emerging markets.
"I will tell my clients today to continue to abstain from buying Russian assets'' until economic problems are solved, said Zina Psiola, who manages a $1 billion Russian equities fund at Clariden Leu AG in Zurich. The cost of lending has soared to a record, with the MosPrime overnight rate reaching 11.1 percent Wednesday, deterring speculative bets in equities. Russian stocks have lost more than $425 billion in value since reaching an all-time high May 17. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ahdY8lggMSbE&refer=home
THE DEATH OF DERIVATIVES
-Wall Street crisis: Is this the death knell for derivatives? On page 62 of last year's accounts, under the heading "off balance sheet arrangements" Lehman had derivative contracts with a face value of $738bn. If this is the death of Wall Street as we know it, the tombstone will read: killed by complexity.
Derivatives in their baffling modern forms collateralized debt obligations, credit default swaps and so on lie at the heart of the failure of Lehman, Bear Stearns, Fannie and Freddie, and even our own Northern Rock.
The philosophy that underpins the growth of derivatives is the idea that risk can be transferred to institutions more able to take the strain. In theory, it's a terrific scheme - the weak can get rid of risks they can't handle, and the financial system should be stronger as a result. Read more here-http://www.guardian.co.uk/business/2008/sep/15/lehmanbrothers.wallstreet
SUBPRIME CRISIS TIMELINE
-Subprime crisis: A timeline. Hints of turmoil in the subprime mortgage market began to surface less than 2 years ago. Read more here-
http://money.cnn.com/2008/09/15/news/economy/subprime_timeline/index.htm
FED CAN BUY ALL BAD MORTGAGES
-Senate Banking Committee Chairman Christopher Dodd said the Federal Reserve can act as an "effective Resolution Trust Fund" to buy and dispose of bad debt stemming from the subprime mortgage crisis. "The Fed has the authority to move in this area," Dodd told reporters in Washington today.
Creating a separate agency to take on bad debt, akin to the Resolution Trust Corp. set up in 1989 to absorb losses from savings and loan associations, would take about a year, he said. Instead, the Fed should use its own authority to act. "Debating whether or not you're going to set up some new agency or bureaucracy in government is a nice point, but I don't think we have the luxury of waiting another year," Dodd said.
Establishing a new government bureaucracy might distract officials from addressing housing as the underlying cause of the financial crisis, Dodd said. Congress in July enacted legislation creating a Federal Housing Administration program to insure as much as $300 billion in refinanced mortgages for 400,000 borrowers at risk of losing their homes. Read more here-
HUGE OUTFLOW OF FOREIGN CAPITAL FROM U.S. IN JULY
-The Treasury international capital flows data was released yesterday detailing the numbers for July. While I was expecting some lousy data, I was stunned by just how bad it was. As you may know, they now have two ways of measuring the flows one includes long-term securities and the other includes shorter-dated instruments.
The number for the long-term securities was $6.09 billion. The number if one includes the short-term securities was a negative $74.79 billion! What makes this significant is that the trade deficit for July was -$62.198 billion.
No matter which way one measures the flows, long-term only or short-term inclusive, flows were insufficient to fund the deficit. We will have to watch this to see if a pattern develops, especially because the weak numbers were a result of widespread selling of U.S. agency debt, corporate debt, and equities. Read more here-
REAL ESTATE-FORECLOSURES
-U.S. Builders Began Work on Fewer Homes Than Forecast. Builders in the U.S. broke ground on fewer houses than forecast in August, signaling the worst housing recession in a generation will continue to weigh on growth in coming months.
Housing starts fell 6.2 percent in August to an annual rate of 895,000, the fewest since January 1991, from a revised 954,000 pace in July, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.9 percent to an 854,000 pace.
Builders are scaling back as stricter lending and record foreclosures swell the number of properties on the market. The housing and credit meltdowns that led to the collapse of Lehman Brothers Holdings Inc. may continue to subtract from economic growth for the rest of the year and into next.
"The home-construction industry is still in a deep recession and will remain there probably for the rest of the year,'' said Patrick Newport, an economist at Global Insight Inc. in Lexington, Massachusetts, who forecast a decline to 893,000. "There are just too many houses on the market.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aOzf3j.mw1V0&refer=home
-U.S. Foreclosures Hit Record in August as Housing Prices Fell. U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said. Owners of 303,879 properties, or one in 416 U.S. households, got a default notice, were warned of a pending auction or foreclosed on last month. That was the most since reporting began in January 2005.
Filings increased 27 percent from a year earlier, about half the annual pace of previous months, because of high default totals in August 2007, the Irvine, California- based seller of foreclosure data said in a statement today. "The chickens have come home to roost,'' Jim Croft, founder of the Mortgage Asset Research Institute in Reston, Virginia, said in an interview.
"Real estate inflation bailed out an awful lot of bad loans.'' The worst housing slump since the 1930s shows little sign of abating. Home prices in 20 U.S. metropolitan areas declined 15.9 percent in June from a year earlier, according to the S&P/Case- Shiller index. Prices may fall another 10 percent through the end of 2009, according to analysts at Lehman Brothers Holdings Inc. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aWKdjgdwQZQI&refer=home
-Alt-A Mortgages Next Risk for Housing Market as Defaults Surge. For Dean Nessen, the choice of a mortgage was easy. By agreeing to pay only interest for three years, the self-employed salesman didn't have to show proof of income and landed a rate of 6.25 percent.
Now, four years later, Nessen's industrial coatings business has gone belly up and his rate has jumped to 10.6 percent. He can't afford the payments and may have to move his family out of their home in Commerce Township, Michigan. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=arb3xM3SHBVk&refer=home
-Gunnar Hjalmarsson, a 43-year-old journalist from Iceland's capital Reykjavik, can't bear to look at his mortgage statements any more. He borrowed 14.3 million kronur ($173,334) to buy a house in an inflation-linked loan four years ago and now owes 18 million kronur after consumer prices soared. "It's like having the Mafia cut off a finger,'' he says. ''Maybe it'll be an arm when they adjust my interest rate next year.''
Hjalmarsson is typical of many consumers on the Atlantic island, where the third-highest interest rates in Europe and soaring inflation are forcing Icelanders to slash spending. That's pushed the economy close to recession after a four-year boom. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aQRrb_mC18pw&refer=exclusive
GEOPOLITICAL NEWS
-US a step closer to Iran blockade. The United States government has imposed new sanctions on Iran, this time targeting its shipping industry, by blacklisting the main shipping line and 18 subsidiaries, accusing the maritime carrier of being engaged in contraband nuclear material, a charge vehemently denied by Iran. Read more here-
http://www.atimes.com/atimes/Middle_East/JI13Ak01.html
-Iran boasts its forces can control the Gulf. Read more here-http://www.breitbart.com/article.php?id=080916143106.poyzy127&show_article=1
-Iran Refuses to Cooperate on Atomic-Weapons Probe. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aSRLCHJmQyvA&refer=home
-Ahmadinejad Says U.S. in Decline, Israel Near its End. Iranian President Mahmoud Ahmadinejad said the power of the U.S. is waning and the state of Israel will fail. "The oppressive power of the U.S. is on the decline,'' Ahmadinejad said today at a news conference in Tehran, broadcast live on state television.
Ahmadinejad, who has repeatedly denied Israel's right to exist, added, "The regime of Israel, which is the core of aggression, is nearing the end.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aE9.5X8DKjBE&refer=home
-Ahmadinejad Says Iran Will Press on With Atomic Work. President Mahmoud Ahmadinejad said Iran will pursue its nuclear program, defying demands to curb the work three days after the United Nations said the country isn't cooperating with a probe into possible weapons development. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aK_RFK5p_hLQ
-Ahmadinejad: Israel perpetrating holocaust on the Palestinians. Read more here-http://www.jpost.com/servlet/Satellite?cid=1221489072087&pagename=JPost%2FJPArticle%2FShowFull
-Ahmadinejad: Iran will support Hamas until collapse of Israel. Read more here-http://www.haaretz.com/hasen/spages/1020630.html
-Russia threatens to seize swathe of Arctic. Read more here-http://www.telegraph.co.uk/news/worldnews/europe/russia/2976009/Russia-threatens-to-seize-swathe-of-Arctic.html
-Russia ratchets up US tensions with arms sales to Iran and Venezuela. Read more here-http://www.timesonline.co.uk/tol/news/world/europe/article4781027.ece
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report - September 23, 2008
Posted by Worldwide Precious Metals on Tuesday, September 23, 2008
The GoldBugg Report - September 16, 2008
September 16, 2008
In our Memo of September 10th, 2008, we addressed several issues which led to the downward spiral of all commodities.
Over this past weekend we have witnessed the Bankruptcy of Lehman Brothers and seen Bank of America cut a deal to purchase Merrill Lynch. As we write this Memo the whole world is watching with Fear and High Anxiety that AIG may declare Chapter 11 Bankruptcy tomorrow if they are unsuccessful in securing a 70 Billion to 75 Billion Bridge loan.
AIG is the Largest Insurance Company in the World with 74 Million Customers in 130 Countries.
The failure of AIG, should this happen, and it looks like it will, will have a TIDAL WAVE Effect on the financial markets worldwide. The unfortunate part about this is that no one can predict how many companies and Banks will suffer the consequences and become insolvent overnight.
One thing is certain - Paper Assets are deteriorating and doing so with unprecedented speed.
We are still seeing liquidations in Commodities and as it relates to Gold & Silver, this is due to liquidations for cash, by all those affected by the Paper Armageddon.
These prices levels should not hold and a sharp reversal to the upside should reveal itself in the very near future as those with cash should be expected to seek out the only "Safe Harbour".
Gold & Silver
Just remember, be pro-actively conservative and don't overextend - This is a time to be patient, eliminate the emotions of Greed & Fear.
Trading Department - Precious Metals International, Ltd
GOLD
-Goldcorp's chief executive said on Wednesday gold prices should rebound soon, and could nearly double to $1,500 an ounce over the next two years. "We're going to see gold over $1000, I like to say $1500 gold over the next 18-24 month period," Kevin McArthur, CEO of the Canadian gold senior, said at the Denver Gold Forum. McArthur said tight global supply will push gold higher soon again.
He said he was surprised at the depth of the metal's 22 percent retreat over the past two months. "We believe we're in a correction. We just are surprised by the quickness and amplitude of this correction," he said. "We're going to see gold over $1,000, I like to say $1,500 gold over the next 18-24 month period." Read more here-
http://www.reuters.com/article/mergersNews/idUSN1044387820080910?rpc=401
-Kinross CEO Burt fires up gold investors in Denver. Tye Burt: "This is the gold business. It is cyclical. The demand fundamentals are strong. The supply fundamentals have never been better for our metal." In a good news/bad news pep talk, Burt exhorted analysts, institutional investors, and his mining peers to "do not lose hope." "This is the gold business. It is cyclical. The demand fundamentals are strong.
The supply fundamentals have never been better for our metal." "Not only are major mines in Peru, South Africa and the United States slowing. Not only are new mines not coming into production whether they're in Argentina, in Alaska, in Romania and in Venezuela. But it's never been tougher to permit, build and finance a new gold mine." "Global mine production in gold has been in decline for the last nine or 10 years," Burt said. "We don't see that stopping any time soon."
"To me that's symptomatic of an industry that is going to be in severe supply constraint in the not too distant future," Burt declared. While it may be hard "to explain the difference between Comex and physical demand today," Burt asserted that "it isn't hard to look into the future and see a world of dramatically constrained gold production and gold supply." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=62207&sn=Detail
-London's Standard Chartered Bank says it expects most precious metals "to recover some ground in the weeks ahead," maintaining their view that "gold prices will trend higher over the medium term." Nevertheless, Standard Metals Analyst Dan Smith has revised down his gold forecast from $925/oz in the fourth quarter to $850/oz, and reduced his 2009 forecast from $944/oz to $875/oz.
As the gold market is being buffeted by oil and a stronger dollar, Standard expects gold prices "to trend broadly sideways through late 2008 and early 2009. Further upside is expected in late 2009." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=61862&sn=Detail
-Investec: favourable long-term outlook for gold. Despite the gold price slipping to around $750 and gold shares appearing increasingly vulnerable, the long-term outlook for gold is favourable, according to Daniel Sacks, portfolio manager at Investec Asset Management.
In the short term, Sacks sees gold finding a floor at around $750 - a level below which mine closures could be expected. Longer term, he is bullish, reasoning that the factors that have propelled gold for the past 5 years remain firmly in place, while policy prescriptions for the credit crisis appear to be reflationary.
He concluded: "We believe gold will be well positioned into the final quarter of the year, when fabrication tightens the market. This does not map directly to gold prices, but prepares the ground for macro catalysts to enter. While these are impossible to forecast, with systemic financial stresses intensifying in the US and spreading to Europe and emerging markets, the probabilities favour gold." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=62015&sn=Detail
-Deutsche Bank fund unit favours gold, metals, energy, agriculture. The Singapore based DWS Investments fund unit of Deutsche Bank reckons gold "incredibly important" and agribusiness a "no-brainer" for an inflation busting investment portfolio. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=62279&sn=Detail
-Panicking out of Gold is not the answer. We have been told for the longest time that gold is a horrible investment since it pays no interest. I don't know about you, but I will take no interest over negative interest rates any day of the week and twice on Sunday.
We therefore continue to believe that gold and silver, as well as oil and natural gas, offer the best protection against the current economic climate. When the markets finally come to their senses, those brave enough to have stuck it through should be richly rewarded. Christopher G Galakoutis-Read more here-http://news.goldseek.com/GoldSeek/1220975228.php
-Arabian investors snap up bargain gold and silver. No central bank can print gold or silver. The supply is fixed against annual production levels. And it is not hard to see that as paper currencies are destroyed by unavoidable and necessary new government borrowing then gold and silver will rise in value.
Of course, when people really understand what is going on there will be a rush into precious metals, and gold and silver will hit the roof. This last happened in the late 1970s and followed a similar cycle of a tripling of the oil price, money supply growth, inflation, a housing bust and financial collapse. History does not always repeat itself but it looks like Arabian investors have got the message right this time. Read more here-http://news.goldseek.com/GoldSeek/1220621640.php
-It is important to remember that gold's fall in recent months is primarily a fall in terms of the recently strengthening US dollar. Gold has remained quite firm in euros and sterling as seen in the charts below. Indeed since the start of the credit crisis gold remains up some 10% in euro terms and by nearly 26% in sterling terms.
The sharp selloff in gold continues and there is increasing informed speculation that leveraged hedge funds are dumping positions in equity and commodity markets after incurring significant losses in recent weeks.
The short term trend in gold remains down but as the carnage in the financial system deepens, gold's safe haven qualities will again come to the fore. While gold has fallen in recent weeks it is important to remember that it has fallen by far less than equity markets and property markets and has vastly outperformed those markets over the medium to long term. Gold.ie
-James Turk: Thinking like 'Fat Tony'. Read more here-http://www.dollarcollapse.com/iNP/view.asp?ID=75
-John Embry Sept gold commentary. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf
-Hang Tough from Howard Katz. I am a strange bird and hard to classify. I was a gold bug starting in 1965 and held on, calling the top nicely in January 1980. Then I became a stock bug in 1982 and remained grand cycle bullish on stocks until 2007.
Meanwhile I became a gold bug again in 2002. That is what I expect to be for the foreseeable future, but when we do come to the ultimate top in gold, I think I can claim to have the best chance to call it in the market of the future as I did in the market of the past. Read more here-
http://www.kitco.com/ind/katz/printerfriendly/sep082008.html
-It's no conspiracy: Gold is just priced right. Read more here-http://www.reportonbusiness.com/servlet/story/RTGAM.20080905.wtakingstock0906/BNStory/SpecialEvents2/home
-CFTC acknowledges possible off-market commodity price manipulation. Read more here-http://www.gata.org/node/6581
-The gold price suppression scheme made it on to worldwide television today thanks to CNBC and Martin Hennecke, senior manager of private clients at Tyche Group in Hong Kong. At about the seven-minute mark of an 8 1/2-minute interview, Hennecke began to talk about precious metals, remarking that their recent decline resulted in part from the general
deleveraging of commodity and dollar-short positions and in part from central bank efforts to suppress the gold price. Hennecke specifically cited the report published a year ago this month by Citigroup market analysts John H. Hill and Graham Wark, who wrote that central banks were "clearly" capping the gold price.
You can find that Citigroup gold report here-http://www.gata.org/files/CitigroupGoldReport092107.pdf
You can watch Hennecke's interview with CNBC here-http://www.cnbc.com/id/26656750/site/14081545/
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
SILVER
-Gold and silver remain very oversold, especially after last week's fall in prices. Both are now screaming buys on value terms. Silver particularly so - however it has suffered significant damage technically and may fall further in the short term. The gold to silver ratio has risen sharply and is now at extremely high levels ($750-$10.50=71). Thus investors can now buy 65 ounces of silver with every one ounce of gold which is leading to a continuation in very robust and unprecedented investment demand for silver. Gold.ie
-What's the Price of Silver? By Jason Hommel. Read more here-http://silverstockreport.com/2008/price.html
-Silver commentary from Theodore Butler & Israel Friedman. Read more here-http://news.silverseek.com/TedButler/1220986679.php
-The Rebirth of Gold and Silver from Roland Watson. Right now, the US Dollar index is pushing former support at 80. Plenty of traders and investors are selling gold and silver in anticipation that the mighty dollar gets back above 80 and back to its old ways. They may be right, but don't bet on another dollar bull ruling the herd again.
Wave one of the 30 year silver bull is over and the wave two correction is now in force. Expect wave three to set a new all time record for silver prices. Read more here-http://news.silverseek.com/SilverSeek/1221053420.php
-One Last Decline, then the Rebound for silver and gold. Read more here-http://www.321gold.com/editorials/nichols/nichols091008.html
DEFINITIONS-QUOTES-QUICK HITS
-U.S. Treasury. Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. Mint, Bureau of the Public Debt, and the Alcohol and Tobacco Tax Bureau.
Generally speaking, the U.S. Treasury is responsible for the revenue of the U.S. government, but here are some other key functions:
- Printing of bills, postage, Federal Reserve notes, and minting of coins
- Collection of taxes and enforcement of tax laws (through the IRS)
- Management of all government accounts and debt issues
- Overseeing U.S. banks-Investopedia.com
-Federal Reserve System FRS. The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States.
You can divide the Federal Reserve's duties into four general areas:
1. Conducting monetary policy
2. Regulating banking institutions and protecting the credit rights of consumers
3. Maintaining the stability of the financial system
4. Providing financial services to the U.S. government-Investopedia.com
-Freddie-Fannie Bailout like a pillow in front of a bulldozer. John Heinzl-Globe and Mail
-Staying the course isn't easy in "very challenging markets," although the rewards can be substantial. Eric Sprott
-"We are experiencing a massive hedge fund panic into the dollar, and that hurts gold," said Ned Schmidt, editor of the Value View Gold Report. "This situation today is the capitulation of hedge funds on commodities." Marketwatch.com
-We believe the bizarre action in the markets during July and August does not portend of a new trend. In our opinion, oil, gold, and other real assets shall remain in a bull market and the faux-rally in financials will die the death of a thousand cuts. We believe the visible hand (and not so visible hand) are everywhere trying to phony up the markets.
Apparently there is too much at stake to let the free markets decide. But logic, and history, dictates that decide they ultimately will. Eric Sprott-Read more here-http://www.sprott.com/pdf/marketsataglance/MAAG.pdf
-Gold bar shortage in Singapore and Hong Kong. Physical dealers reported a shortage in gold bars in Singapore and Hong Kong as jewellers stepped up purchases ahead of religious festivals in India, the Middle East and Southeast Asia.
Many weddings take place during the festive season in India which peaks in October with Diwali, the Hindu festival of lights. Gold jewellery forms an important part of dowry as parents prefer to give gold to their daughters for financial security. Read more here-http://www.gata.org/node/6578
-"Our upside gold targets are still valid, as soon as the currency/metal/oil corrections exhaust themselves, as all storms do." My upside target is $1,600 in fairly short order. Harry Schultz
-Historically the only safe haven for assets during these times of economic trouble has been gold and silver. In the last 40 years silver has been considered more to be an industrial rather than a monetary metal. Thus, gold has been considered more the asset of safety.
When we broke over $850 gold we pierced the old 1980 high of $850 an ounce, we began stage 2 of a 3 or perhaps 4 stage bull market. Gold attained $1,033 in March and due to government intervention we have tested the $775-$800 range three times putting in what we see as a trading bottom. At these levels it is probably the best time to invest because you should be able to buy cheaper than in this current zone.
This could be the last inexpensive train out of the station. The current debt-based, fiat-money global economy is in the process of collapse. This monetary abomination and its accompanying manipulation will soon come to an end. No fiat currency has ever survived and when it does collapse it will be catastrophic. Bob Chapman
-"U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation." Ben Bernanke
-The real oddity is that at the same time the futures markets have been taking down gold, and especially silver, demand for the physical metals at the retail level has blown through the roof. Shops are unable to keep one-ounce coins on their shelves and no one is selling back to them, both the U.S. and Canadian mints have either suspended or severely rationed output,
India is reporting massive shortages as it heads into prime buying season, and long delivery delays for buyers of coins and small bars are universal. This is a major disconnect. So what's going on? For the most part the mainstream pundits are ignoring this story. Casey Daily Resource
-"We are experiencing a massive hedge fund panic into the dollar, and that hurts gold," said Ned Schmidt, editor of the Value View Gold Report. "This situation today is the capitulation of hedge funds on commodities." That seems to be true pretty much across the board. The Reuters/Jefferies CRB Index of 19 raw materials dropped for a ninth straight session Wednesday, and is down 24% from its record high reached only a few weeks ago in July.
"Surprisingly, people have not flocked to gold as a flight to quality," said said Matt Zeman, of LaSalle Futures Group in Chicago. "Gold is not acting like it normally would. People's risk appetite is very low. No one is willing to step in and buy at this moment." Actually, as we pointed out above, investors in physical metal are piling into the market, but it remains to be seen when that high level of demand begins to counter funds' paper liquidations. Casey Daily Resource
-Michael Kosares: Six situations to monitor for the rest of 2008. Read more here-http://www.usagold.com/amk/usagoldmarketupdate090908.html
-The 65 mpg Ford the U.S. Can't Have. Ford's Fiesta ECOnetic gets an astonishing 65 mpg, but the carmaker can't afford to sell it in the U.S. Read more here-
http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=rss_topStories_ssi_5
RARE COLORED DIAMONDS
-Diamond professionals consider the shortage of rough supply as the most important challenge facing the diamond industry during the next five years, according to a survey conducted by Rio Tinto Diamonds. Diamonds.net
-Investment Fund Looks for Top End Diamonds. David Linsley wants Nelson Mandela to make money for him. His purchase of a 24-carat black stone named after the former South African president and Nobel laureate was the first for a specialized diamond fund his investment company will start next year, writes Michael Bleby in the Financial Times.
The "Madiba diamond," named after Mr. Mandela's title as a clan elder, is a rare and hard stone. Mr. Linsley fails to reveal how much he paid for it, but says it will be part of the fund his company, Sirius Investment Management, will start next year, comprising top-end diamonds each worth more than $1 million.
The fund, which he expects to give an annual return of 15-20%, will benefit from the growing pockets of very wealthy individuals in countries such as China, Russia and India. "It's got to be the top end. That market is growing," Mr. Linsley says. Whether Guernsey-based Sirius can make money out of an investment that has a history of disappointing has yet to be seen.
A push to invest in diamonds in the late 1970s and early 1980s drove prices to great highs and then collapsed. Even though pricing is more transparent than it was then, investors remain wary. In June, Isle of Man-based Diamond Circle Capital set out to raise $400 million in a publicly listed fund of diamonds above $1m. In July it postponed the sale without giving a reason and subsequently listed in London with a market capitalization of about $75m.
Concerns remain about liquidity of the small range. "If you target at too narrow a range of rough or polished, it inevitably creates a bubble," says Charles Wyndham, a diamond consultant. "If you base a fund on much more bread-and-butter type articles, for example 1-carat or 50-pointer diamonds, then what you're doing is investing in the commodity.
"If you start investing in (top quality and color diamonds), you're investing in the halo of the commodity and not the commodity itself. You're burnishing the halo, but with this huge potential for downside," Mr Wyndham says. Mr. Linsley says his fund will start small, with about $20 million, and build up gradually to avoid creating a bubble. But he says a crash like that seen two decades ago is unlikely.
"You can never say it won't happen again. But I would have thought that the demand you see out of Russia, India, China and those economies is a fundamental global shift. This is huge. These are not listed equities. You're not going to have a whole bunch of global distressed sellers of 5-carat and 10-carat diamonds, are you?" Israelidiamond.co.il
COMMODITIES-OIL
-Leverage Hedge Funds are Major Drag on Commodities. Leveraged hedge funds are selling billions of dollars worth of commodities investments to meet their redemption demands, and this is another severe short- term factor driving down prices. Our funds own similar stocks, and thus we are caught up in this powerful force that some have described as a "mechanical sell-off" by hedge funds and banks that need liquidity.
Adding to the downward pressure are other rumors that "rogue" hedge funds are attacking like sharks when blood is in the water. These predators are allegedly aggressively short-selling the stocks that are in the portfolios of their vulnerable peers, which sends prices even lower. These hedge fund sharks don't care about fundamentals or portfolio turnover; they're just short-term traders hungry for a quick profit. Read more here-http://news.goldseek.com/GoldSeek/1221074991.php
-Study blames speculation for oil's rise. Investors put $60B into oil futures during the first five months of the year as prices jumped as high as $145 by July, since then withdrew $39B. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a2iltjOtTeaw
-Index Traders Cut Oil Positions This Year, CFTC Says. Commodity index traders accounted for 13 percent of Nymex oil trading, with their positions declining by 45,000 contracts in the first six months of the year, U.S. regulators said.
The data, the first on swap dealers published by the Commodity Futures Trading Commission, may call into question claims that index investors have pushed prices to records this summer. In response to the report, the agency is calling for new classification of certain speculators, new reporting from over the-counter markets and greater transparency in the markets. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aIA.U.WwSJsY&refer=home
-OPEC agrees to curb oil overproduction. Ministers of oil producing nations announce that they will cut back 520,000 barrels a day in overproduction of crude to avoid more energy turmoil. Read more here-http://money.cnn.com/2008/09/10/news/economy/bc.opecmeetingtops.ap/index.htm
-Oil analyst sticks with $200 target Growing world demand backs prediction. Read more here-http://www.canada.com/edmontonjournal/news/business/story.html?id=d97bdc53-706f-4574-a2d7-30529bfc7868
-Global oil demand to fall lowest in 6 years, IEA predicts. Read more here-http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/06/10/bcniea110.xml
DON COXE-COMMODITY SELL OFF NO ACCIDENT
-To hear Donald Coxe tell it, the commodity selloff ripping through Canada's stock market is no accident. It is the result of a deliberate, brilliantly executed plan hatched at the highest levels of the U.S. Federal Reserve and Treasury. To understand why commodities are plunging now you have to go back to mid-July, when the U.S. Federal Reserve and Treasury announced steps to support mortgage giants Fannie Mae and Freddie Mac.
The move, which led to the Treasury taking control of Fannie and Freddie this week, touched off a chain-reaction of market events that culminated with the wrenching decline in commodities. According to Mr. Coxe, the Fed's goal was to trigger a rally in financial stocks, which would, in theory, help banks hammered by the credit crisis raise fresh capital and repair their balance sheets.
To accomplish this, the decision to support Fannie and Freddie was deliberately announced on a Sunday, which had the effect of maximizing the reaction from thinly traded financial stocks on overseas markets. Because many hedge funds were using massive leverage to short financials and go long on commodities, when North American markets opened and banks initially rallied, the funds were forced to cover their short positions. At the same time, the U.S. dollar was rallying because the risk of holding Fannie and Freddie paper had diminished.
The rising dollar, in turn, made commodities less attractive, giving funds that were already scrambling to cover their financial shorts another reason to dump oil, grains, and other commodities. The losses were swift and dramatic. On the Friday before the July 11 announcement, crude oil closed at $145.18 a barrel. Over the following five days, it plunged 11 per cent. "Leverage was being unwound dramatically," Mr. Coxe said on a conference call last week.
"We had a true panic." As oil and other commodities were tumbling, fears about the slowing global economy were mounting, giving resources another push downhill. This was also in keeping with the Fed's wishes, because lower commodity prices would help quell fears about inflation. Mr. Coxe has no proof that the Fed and Treasury acted in concert to boost financials and sink commodities.
He is basing his assertions on conversations with hedge fund managers and on years of watching financial markets. "There's no doubt whatever in my mind" about what happened, he says. The future is less certain, however. Now that Freddie and Fannie have been nationalized, the credit crisis is still very much alive and financial stocks are looking as shaky as ever. As for commodities, once the current storm passes, Mr. Coxe is confident they will recover. Read more here-http://www.gata.org/node/6574
FANNIE-FREDDIE RESCUE
-U.S. Takeover of Fannie, Freddie Offers `Stopgap'. The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is aimed at keeping the companies going into 2009, while leaving the next president and Congress to decide their long-term structure. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aWg_UqhhCrYU&refer=home
-Hank Paulson's effort to prop up Fannie Mae and Freddie Mac has various beneficiaries but few gain more than foreign investors. Read more here-http://www.gata.org/node/6568
-China frets at US risk after Fannie/Freddie bailout. The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is good news in the short term for China, the biggest holder of the giant mortgage lenders' debt, but Beijing's huge U.S. exposure still poses a serious risk, a prominent government researcher said on Monday. Read more here-
http://www.guardian.co.uk/business/feedarticle/7781955
-Taxpayers take on trillions in risk in Fannie, Freddie takeover. Read more here-http://www.usatoday.com/money/economy/housing/2008-09-07-fannie-freddie-plan_N.htm
-Fannie Raises $7 Billion in Largest Single Debt Sale. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aF1ppB.rPlMo
-The Bill Gross-managed Pimco Total Return fund reaped a $1.7 billion payday following the US government takeover of home loan giants Fannie Mae and Freddie Mac. Read more here-http://www.gata.org/node/6571
U.S. POISED TO GRAB MORE FINANCIAL REINS
-While the government takeover of Fannie Mae and Freddie Mac represents the most powerful federal intervention in financial markets in decades, there are likely to be further government moves ahead. Federal officials are looking at how to tighten regulation of the credit-card industry and whether to double loans to bail out the auto industry to $50 billion.
In the coming years, they will examine how to regulate greenhouse-gas emissions from industries across the economy and how to remake the mortgage giants so they no longer can run up enough debt to threaten the economy.
The latter could involve creating yet another government entity to carve up Freddie's and Fannie's assets and sell them to investors. "Freddie and Fannie have been de-facto nationalized, at least for a while," said former Federal Reserve official Ted Truman. "But we don't know what will replace them." Read more here-http://www.gata.org/node/6561
LEHMAN BROTHERS-WASINGTON MUTUAL
-Lehman suffers nearly $4 billion loss. Wall Street firm reveals major restructuring: spin-off of commercial real estate assets and plan to sell stake in investment management division. Read more here-http://money.cnn.com/2008/09/10/news/companies/lehman/index.htm
-Lehman Shares Plummet After Analysts Cite Rating Risk. Lehman Brothers Holdings Inc., this year's worst-performer on the Standard & Poor's 500 Index, fell as much as 46 percent after four analysts said they cut their recommendations because the firm's credit rating may be lowered. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=alIffXk3Sb2I
-Lehman Said to Be in Discussions About Potential Sale. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5UcJOBnEwT0&refer=home
-Soros Loses at Least $120 Million From Lehman Stake. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aZr03EdAhuqg
-Washington Mutual tumbles 30 percent to 17-year low. Read more here-http://news.yahoo.com/s/nm/20080910/bs_nm/washingtonmutual_dc
-Ladenburg Thalmann banking analyst Richard Bove expects Washington Mutual will lose $40 billion on its loan portfolio over the next three years and continues to include WaMu on his list of top 12 banks and thrifts at greatest risk of failing. "The future of the company is questionable" if the economy continues to weaken, Bove told The Wall Street Journal. Read more here-http://moneynews.newsmax.com/streettalk/washington_mutual/2008/09/09/129155.html
-WaMu Sees $4.5 Billion Loan-Loss Provision in Quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ab7A9dOdzUGY&refer=home
VOLCKER SAYS FINANCIAL SYSTEM IS BROKEN
-Volcker Says Finance System `Broken,' Losses May Rise. Former Federal Reserve Chairman Paul Volcker said the U.S. financial system, dependent upon securitization rather than traditional bank loans, is broken, and may contribute to the weakest expansion since the 1930s.
"This bright new system, this practice in the United States, this practice in the United Kingdom and elsewhere, has broken down,'' Volcker said today at a banking conference in Calgary. "Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation.''
The former Fed chief projected ``a lot'' more losses from the collapse in the mortgage-backed debt market, after the more than $500 billion tallied so far, should the U.S., European and Japanese economies fail to pick up. He urged changes in financial regulations, echoing calls among sitting officials and legislators.
"It is the most complicated financial crisis I have ever experienced, and I have experienced a few,'' said Volcker, who has endorsed Democratic presidential candidate Barack Obama. Volcker ran the Fed from 1979 to 1987, and engineered an increase in interest rates to 20 percent to quell inflation that exceeded 10 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=auKCKTSSU7yE&refer=home
U.S. SENATOR SAYS PAULSON SHOULD RESIGN-JIM ROGERS SAYS BAILOUT MAKES U.S. COMMUNIST COUNTRY
-Senator Bunning Says Paulson Acts Like Socialist, Should Resign. Senator Jim Bunning said Treasury Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac, is acting like China's finance minister and both Paulson and Federal Reserve Chairman Ben S. Bernanke should step down. "I sincerely believe that Henry Paulson and Ben Bernanke should resign,'' said Bunning, a Republican from Kentucky on the Senate Banking Committee. ``They have taken the free market out of the free market.''
Paulson and the federal regulator for Fannie and Freddie placed the two largest U.S. mortgage-finance companies in a government-operated conservatorship on Sept. 7, ousting their chief executives and eliminating their dividends. Treasury also may purchase up to $200 billion of stock in the firms to keep them solvent.
"We no longer have a free market in the United States, we have a government controlled free market,'' Bunning said in an interview. Paulson, a former chief executive officer of Goldman Sachs Group Inc., ``is acting like the minister of finance in China.'' Bunning, 76, criticized Paulson's successful effort in July to obtain congressional authority to pump unlimited amounts of money into Fannie and Freddie to keep them afloat.
"When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turned out it was socialism here in the United States,'' he told Paulson at a July 15 Senate Banking Committee hearing. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=alpUsTv3.upI&refer=home
CEO: Fannie/Freddie Bailout Makes America 'More Communist than China' Rogers Holdings chief tells CNBC Europe U.S. brand of socialism is meant only for the rich. Read more here-http://businessandmedia.org/articles/2008/20080908171808.aspx
U.S. BANKS THAT HAVE GONE BUST
-Banks That Went Bust. The credit turmoil and other factors have led to an increase in bank failures this year. Below, a table of banks that have been shut down by federal regulators. Read more here-http://online.wsj.com/public/resources/documents/info-Failed_Banks-sort.html
-FDIC chief says banks face more hard days. Read more here-http://www.heraldtribune.com/article/20080905/ARTICLE/809050330/-1/newssitemap
-Regulators last Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development. It was the 11th failure this year of a federally insured bank.
Nevada regulators closed Silver State and the Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Henderson, Nev. It had $2 billion in assets and $1.7 billion in deposits as of June 30. Read more here-http://news.yahoo.com/s/ap/20080906/ap_on_bi_ge/bank_closure_silver_state_6&printer=1;_ylt=AiU8jjSAYBMDzbtAhgwDIC9v24cA
-More `Chaos' Ahead for U.S. Banks, Investor Jim Rogers Predicts. U.S. financials face more ``chaos'' as the credit market worsens, investor Jim Rogers predicted. "Balance sheets of many of these financial institutions are still terribly impaired and there are more problems to come,'' he said during a Bloomberg Television interview.
"We had the worst credit bubble in the history of the world. You don't clean that out in a year or two or three.'' The chairman of Singapore-based Rogers Holdings said he's still betting against U.S. investment banks, even after ending his short sale of Citigroup Inc. a few weeks ago because the bank's stock fell too low.
Citigroup shares closed at $14.56 on July 15, the lowest since 1997. The world's largest bank by assets has rallied 25 percent since then. Rogers also called the government takeover of Fannie Mae and Freddie Mac "outrageous'' and said the largest U.S. mortgage finance companies should have declared bankruptcy. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=avO28IC.6pa4&refer=home
-Fed auctions $25B to banks. The sale of the 84-day loans is the Fed's latest attempt to help squeezed banks recover from credit stresses. Read more here-
http://money.cnn.com/2008/09/10/news/economy/fed.ap/index.htm
U.S. FISCAL-TRADE DEBT
-America's out of control, drowning in debt, gorging: $75 trillion and getting worse. Now we're dumping Fannie and Freddie on America's balance sheet. Every year we pile trillions more on future generations. Read more here-http://www.marketwatch.com/news/story/75-trillion-fright-fest-8/story.aspx?guid={1E95D857-7CB8-46AD-B26C-D3732D93FD06}&dist=TNMostRead&print=true&dist=printMidSection
-Uncle Sam: $407 billion in the hole. Deficit up by $246 billion in a year. Federal agency cites 'substantial increase in spending' and 'halt' in tax revenue growth. Also says it will add Fannie and Freddie to future estimates. Read more here-http://money.cnn.com/2008/09/09/news/economy/cbo_budget_update/index.htm
-Federal budget deficit rises in August. Treasury Department says deficit at all-time high through first 11 months of the budget year. The federal budget fell further into the red in August, pushing the deficit with one month left in the budget year to an all-time high.
The Treasury Department reported Thursday that the deficit through the first 11 months of this budget year totaled $483.4 billion, up 76.2% from the same period a year ago. While that set an all-time high for a budget deficit through the first 11 months of a budget year, analysts say a surplus in September will push the deficit slightly below the current record-holder for an entire year, a $413 billion deficit set in 2004. Cnnmoney.com
-U.S. Considers Bringing Fannie, Freddie on to Budget. The Bush administration is considering whether to fold Fannie Mae and Freddie Mac's $5.2 trillion in debt into the federal budget, the White House budget office and the U.S. Treasury Department said. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=adr.czwVm3ws&refer=home
-U.S. government spending explosion. Read more here-http://online.wsj.com/article/SB122100742173517529.html?mod=rss_opinion_main
-U.S. Highway Fund Needs $8 Billion Bailout This Month. A U.S. trust fund that finances highway construction needs $8 billion from Congress by the end of next week to cover a shortfall as a drop in driving shrinks fuel-tax receipts, Transportation Secretary Mary Peters said.
The federal government will have no money in the fund by month's end and may need to cut payments to states should Congress fail to act, Peters told reporters today on a conference call. "The cash-flow problem we face is serious,'' Peters said in Washington. A "significant, precipitous drop-off'' in highway travel boosted the shortfall beyond expectations, she said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=akBu3zFzAN9g
-U.S. Trade Deficit of $62.2 Billion Exceeds Forecast. The U.S. trade deficit widened more than forecast in July as oil imports soared to a record, overshadowing gains in exports. The gap grew 5.7 percent to $62.2 billion, the largest in 16 months, from a revised $58.8 billion in June that was bigger than previously estimated, the Commerce Department said today in Washington. Total imports and exports were the highest ever. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a0_DSyFjdC_M&refer=home
U.S. DOLLAR
-Investor Jim Rogers Says Dollar Recovery Has ‘Ways to Go." Read more here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Investor%20Rogers%20Says%20Dollar%20Recovery%20Has%20%60Ways%20to%20Go%27&clipSRC=mms://media2.bloomberg.com/cache/vaaN1oL6QNro.asf
-Brazil, Argentina drop dollar for bilateral trade. Read more here-http://www.iht.com/articles/ap/2008/09/07/business/LA-Brazil-Argentina.php
INTEREST RATES
-Bank of Korea Leaves Rate at Eight-Year High of 5.25%. The Bank of Korea kept interest rates unchanged at an eight-year high today, saying inflation is likely to remain high for a "significant period.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aG6ZDunLsgwg&refer=home
-New Zealand's central bank cut its benchmark interest rate by a half point to 7.5 percent, more than expected by most economists, saying the economy is in a recession and inflation will slow. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYEb3kBSAB4k&refer=home
-Fed's next move could be to lower rates. The central bank is likely to keep its key interest rate at 2% at its September 16 meeting but expectations are growing for a rate cut before year's end. Read more here-http://money.cnn.com/2008/09/10/news/economy/fed_outlook/index.htm?postversion=2008091014
U.S. UNEMPLOYMENT
-U.S. Economy: Payrolls Drop, Unemployment at 6.1%. The U.S. lost more jobs than forecast in August and the unemployment rate climbed to a five- year high of 6.1 percent, a sign that the economic slowdown is worsening two months before Americans elect their next president.
Payrolls fell by 84,000 in August, and revisions added another 58,000 to job losses for the prior two months, the Labor Department said today in Washington. The increase in the jobless rate sent the misery index, which adds unemployment to inflation, to 11.7 percent, the highest level since 1991. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=a974fas33tuI&refer=home
REAL ESTATE-FORECLOSURES-MORTGAGES
-Fannie, Freddie rescue won't end housing woes. Bailout of Fannie and Freddie might lower mortgage rates but it's unlikely to lead to a quick turnaround for the troubled housing market. Read more here-http://money.cnn.com/2008/09/08/news/economy/fannie_freddie_housing/index.htm
-U.S. Economy: Pending Home Resales Decline More Than Forecast. Fewer Americans signed contracts to purchase previously owned homes in July as harder-to-get financing kept would-be buyers from taking advantage of lower prices.
The index of pending home resales fell 3.2 percent after rising 5.8 percent in June, the National Association of Realtors said today in Washington. A separate report showed inventories at U.S. wholesalers piled up twice as fast as forecast in July as their sales slid. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aZFgAxUK63y8
-Home sales at lowest for 30 years. The slump in the UK property market continued in August, with some estate agents selling fewer than one home per week in the past three months.
The Royal Institution of Chartered Surveyors (Rics) said sales were at their lowest level since its monthly survey started in 1978.
It said the fall in prices slowed, for the fourth month in a row, but they were still much lower than a year ago. Rics said the continued shortage of mortgage funds was "stifling" buyers. Read more here-http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/business/7604592.stm
-Ex-BOE's Julius Opposes U.K. Home Market Intervention. Former Bank of England policy maker DeAnne Julius said Prime Minister Gordon Brown shouldn't try to shore up Britain's housing market even though property prices are likely to fall further.
"It would be counterproductive at this point for the government to step in and try to prevent that correction from continuing,'' said Julius in an interview with BBC Radio 4's Today program today. Home values ``will probably have to fall further.''
Brown's government is considering proposals on how to revive the country's mortgage market as falling house prices erode support for the ruling Labour Party. A Treasury-commissioned report said in July that the Bank of England could extend its Special Liquidity Scheme helping banks hurt by the credit crisis, or Brown could guarantee mortgage-backed securities. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=amK71YKZ3bmU
-U.S. Mortgage Foreclosures, Delinquencies Reach Highs. Foreclosures accelerated to the fastest pace in almost three decades during the second quarter as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn't refinance or sell. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMA9irftpUpI&refer=home
-Senators Ask Fannie Mae, Freddie Mac to Freeze Foreclosures. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afVQ3hywqvhE&refer=home
GEOPOLITICAL NEWS
-Israel asks U.S. for arms, air corridor to attack Iran. Read more here-http://haaretz.com/hasen/spages/1019989.html
-Russia threatens to target US missile shield sites: reports. Read more here-http://www.breitbart.com/article.php?id=080910093546.ixowy7j5&show_article=1
-Dubai plans $200bn canal to bypass Strait of Hormuz. Read more here-http://business.timesonline.co.uk/tol/business/markets/the_gulf/article4710599.ece
-North Korea ‘uses doubles to hide death of Kim'. Read more here-http://www.timesonline.co.uk/tol/news/world/asia/article4692472.ece
-Report: N. Korea officials deny leader Kim is ill. Read more here-http://apnews.myway.com/article/20080910/D933PLHO0.html
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report - September 16, 2008
Posted by Worldwide Precious Metals on Tuesday, September 16, 2008
Update
September 12, 2008
Dear clients of Worldwide Precious Metals,
In light of the last tortuous weeks for all, we thought you would like to read the comments sent from our clearing house, Precious Metals International Ltd, as we all try and make sense of recent events.
With best regards,
John P. Downes President jdownes@wwpmc.com
The recent downturn in all commodity prices has been the result of the following.
1) US Government intervention into the private sector, spearheaded by the Fed Reserve and US Treasury. Their purpose: to force commodity prices down creating a false or synthetic PPI and CPI and to boost the US Dollar against other foreign currencies. This takes pressure off of the Federal Reserve to raise Interest Rates.
2) Preparation for Nationalization of Fannie Mae & Freddie Mac (An event that has now happened) in a "bandaid" effort to stabilize the Credit Crisis.
3) Massive liquidations by Hedge Funds as they unwind their highly leveraged Long positions in Commodities. Don't be surprised to see one announcement after another about various Hedge funds closing their doors and returning to their Customers whatever piddling amount of funds they have left.
4) The extensive Government influenced media stressing a downturn in China's GDP which would mean a slowing in their demand for commodities such as Copper, Oil, Aluminum, Iron, Ore, etc.
5) A well kept and secret intentional manipulation of the Silver Market conducted by two US Banks. This is discussed in Mr. Ted Butler's Articles and bears our serious attention.
To Understand Mr. Butler's theory one must have an understanding of the Commodity Futures and Options contract Market and the Regulatory Authority of the Commodity Futures Trading Commission (CFTC).
Relative to Futures Contracts the CFTC has reporting requirements of participants which are designed to prevent "Control" (which equals the ability to manipulate price) by any one or collective group of participants.
As these relate to Silver, the Reporting requirement is 150 Contracts (long or short) (750,000 oz).
Position Limits are 1500 Contracts [7,500,000 oz) Remember these Regulatory requirements are designed to prevent "Market Control and Price Manipulation"]
Mr. Butler has uncovered information (unfortunately too late) that on or about August 5th, 2008 - Two unnamed US Banks placed short sell contracts to sell just short of 170,000,000 oz of Silver. That's the equivalent of 34,000 Contracts (226.66 times the Reporting Requirement) and 23 times the Position Limits.
Clearly these positions were designed to "control and manipulate" the price of Silver. Yet the CFTC did nothing and to our knowledge is avoiding requests for investigations into the matter.
It would not be surprising should the truth ever be discovered, to learn that the Banks were heavily exposed to their Silver Depository Customers, but that's a discussion for another day.
The Big Question is how this could happen - Why and How was it kept secret and why the CFTC did nothing.
In our opinion all of these actions have been orchestrated, and are as they relate to Commodity prices, only temporary as the fundamentals of supply and demand have not changed. Nothing has changed in terms of short supplies for Gold and Silver and the reasons to own them have become even more compelling.
What we are experiencing is the equivalent of putting a "Bandaid" on the Titanic. US Banks are failing and the more the Government comes to their aide the more money has to be printed. That's inflationary, pure and simple.
The One thing we can say is that relative to where prices of Gold and Silver are projected to go over the next several years - these current prices represent an excellent opportunity for purchasing, cost averaging and being conservatively Pro-Active.
Due to increased volatility that can be expected, Investors should stay away from the Futures and Options Markets and Concentrate on Ownership of the Physical product.
Ownership of actual physical Precious Metals provides a flexibility that can not be found in any other investment product. They are the only hard asset that can be instantly sold or financed regardless of Market activity.
Over the next several weeks look for prices to stabilize, but don't be disappointed or surprised with fast moving price swings. Accumulation of Gold and Silver during this period should yield exceptional returns in the years ahead. Just remember not to overextend yourself and be patient.
Trading Department - Precious Metals International Ltd.
© 2009, Worldwide Precious Metals.
www.wwpmc.com
Update
Posted by Worldwide Precious Metals on Friday, September 12, 2008
The GoldBugg Report - September 10, 2008
September 10, 2008
-Gold demand soars. Price falls. What's going wrong? Physical demand for gold is surging but the price keeps taking serious knocks. What's happening. Sooner or later gold will react positively. The dollar will stabilize or fall back again as perception of the true state of the U.S. economy returns.
-4 reasons why this may be the worst crisis since the 1930s and 4 projections for what's going to happen.
-GLOBAL SLUMP JUST STARTING
-SUPER RICH MOVING INTO CASH-BANKS MOVE FUNDS FROM U.S. TO EUROPE
GOLD
-Gold demand soars. Price falls. What's going wrong? Physical demand for gold is surging but the price keeps taking serious knocks. What's happening. Sooner or later gold will react positively. The dollar will stabilize or fall back again as perception of the true state of the U.S. economy returns.
There will be more serious fallouts from the ongoing credit crisis with more bank failures on the horizon, while growing global sabre rattling suggests some uncomfortable political times ahead. All positive for gold. At some stage the big money which drives all investment will recognise this and precious metals will benefit. It is only the timeframe which seems to be in doubt. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=61431&sn=Detail
-Eric Hommelberg-Gold fundamentals still Pointing Towards $2000+. Read more here-http://news.goldseek.com/EricHommelberg/1220359803.php
-Jeff Clark-What I Tell Myself When Gold Sells Off. What do I tell myself? "The dollar's ills haven't been cured. In fact, we haven't seen the worst of the currency's decline." I interviewed Doug Casey earlier this month and heard the textbook description of a contrarian investor. Doug was reminiscing about how hard it was to get clients to buy gold and gold stocks in the mid-'70s, how a client even refused to pay for gold stocks he'd just bought, and how the prospects for gold looked bleak to nearly everyone.
What did one of the greatest speculators of all time advise? "You don't make money buying when you're optimistic. You have to actually run completely counter to your own emotional psychology. It's easy to talk about being smart in theory, but extremely tough to apply in practice when it's real money and you're scared. But what am I doing now? I'm buying." What do I tell myself? "$800 gold is nothing but a buying opportunity. Read more here-http://www.321gold.com/editorials/casey/casey090108.html
-Gold Production and Reserves. After weathering the PM summer doldrums, the smart investors aware of gold's fundamentals know to look past the hype and avoid the capitulation that is inflicting their comrades. Though the word bubble has been loosely tossed around in the same sentence as gold, this commodity is nowhere near bubble status.
And when gold does eventually inflate into a bubble, it will be accompanied by uncontrollable greed and a popular mania. Gold has not been popular yet. It is still a contrarian play and should greatly reward those faithful that stick with it. Read more here-http://www.321gold.com/editorials/wright/wright082908.html
-Gold at $1,000/ounce soon, but downside risk in 2 year timeframe Walker. GFMS CEO Paul Walker says there are different signs that the broader economic backdrop is starting to turn away from gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=61219&sn=Detail
-Will gold now move separately from the US dollar and euro? For the past six months gold has risen in value when the dollar has weakened and vice-versa, while the relationship with the euro has been the reverse.
But increasingly precious metals are being regarded as a currency in their own right, and that should mean a decoupling from the dollar and euro as gold is not governed by inflationary central banks. Read more here-http://news.goldseek.com/GoldSeek/1220021744.php
-Demand for bullion in Dubai is soaring, with imports showing signs of revival on the back of falling gold prices, rising inflation and the start of the wedding season, traders and industry experts said on Tuesday.
A surge in gold prices to multi-year highs earlier this year put off buyers in many parts of the world and pulled down the Gulf Arab emirate's first-half imports by 4.7 per cent to 265 tonnes. The precious metal dropped to a nine-month low of about $773 an ounce in mid-August before bouncing back, but it is still trading far below its all-time high of $1,030.80 an ounce, hit in March.
"Many here jumped into the market because either they believe gold will rise further later and want to make profit or they are concerned about inflation and they want to hedge their risk," said Pradeep Unni, a senior analyst at Richcomm Global Services. Read more here-
-Gold output in Australia sank to an 18-year low last financial year and not even a better fourth quarter could avert the poor result. Read more here-
http://www.theaustralian.news.com.au/story/0,25197,24271507-643,00.html
-South African gold production still well down on a year ago. South African gold production declined 10.4% year-on-year in the second quarter compared to a 16.8% drop in the first quarter. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=61600&sn=Detail
-Dark Times are a Good Omen for Gold. Joanne Nova-Read more here-http://www.321gold.com/editorials/nova/nova090308.html
-Peter Brimelow: Radical gold bugs say manipulation will fail. Read more here-http://www.gata.org/node/6547
SILVER
-Years ago Warren Buffett asked an amusing question in one of his annual letters to the shareholders of Berkshire Hathaway. He noted that he was perplexed by people's mood swings in relation to stock prices. He wondered why people were happy when the stock market was high and somber when it was low because he believes it should be the other way around.
To explain his point he asked the following question. If you ate only hamburgers your entire life, would you want the price of hamburgers to be high or low? Clearly, you would want the price to be low because in that way you would obviously maximize the purchasing power of your dollars. So too with stocks. When their price is low, you get more stocks for your dollars.
I believe that this insight also applies to gold and silver. When their price is low, you are able to exchange more overvalued dollars for undervalued gold and silver. Consequently, my approach to the precious metal markets over the past several years has been based on one simple premise. Namely, continue to accumulate the precious metals month after month after month. Some months the price will be high; some months the price will be low. But consistently take that portion of your income you save every month and save sound money. Don't save dollars; save gold and silver instead.
Then by the time this bull market finally ends, you will have accumulated a meaningful amount of physical metal because gold bull markets span decades. Importantly, with this simple strategy you will have avoided the emotional roller-coaster ride that can come from looking at the market day-to-day and from reading newspaper headlines. Leave the daily, weekly and monthly price swings for the professional traders to worry about, and instead be a wealth accumulator, buying the precious metals month-in and month-out.
I mention this point purposefully because we all know from the newspapers and watching TV that gold and silver were 'trashed' in August, with gold dropping -9.3% in the month while the ever volatile silver fell -23.3%. However, these news accounts ignore that gold is up 23.2% over the past twelve months while silver has climbed 12.8% during this same period. The charts appended below show that the major uptrend of the precious metals remains intact against the world's major currencies.
In short, in spite of what happened in August, gold and silver continue to be among the world's best performing asset classes. It is a distinction the precious metals have held throughout this decade, regardless of the occasional bumps along the road like the one this past month - and interestingly, like the one just a year ago. My alert on August 17, 2007 referred to and quoted an alert I had written back on October 5, 2003 recommending to "stay the course. Continue to accumulate gold, as declines like the one seen on [October 3, 2003] enable you to get more metal for your dollars. And given the growing uncertainty about the dollar and its bleak prospects, gold is still the place to be."
Only time will tell whether August 2008 will mark an important turning point for gold this year just as August 2007 did last year. But regardless, the problems with fiat currency are getting worse. Inflation, banking problems, trade imbalances, etc. are symptoms of a global monetary system on the brink, which is a reality that makes gold and silver ever more important. So continue to accumulate the precious metals because saving sound money makes good sense. James Turk-Read more here-http://goldmoney.com/en/commentary.php
-Ted Butler silver commentary, Fact versus Speculation. Read more here-http://news.silverseek.com/TedButler/1220376924.php
-Silver Stats that Will Make You Salivate from Richard Daughty. Read more here-http://news.silverseek.com/SilverSeek/1220357161.php
-Got Gold Report Firestorm Erupts Over U.S. Banks' Gold, Silver Shorting. A very few and very large banks seemed to have positioned very well ahead of the plunge in prices for gold and silver, but in the process they may have bought more than they bargained for possible class-action lawsuits.
As silver and gold investors lick their wounds from the recent harsh plunges in the prices of precious metals, one focus is tuned to the extraordinarily large price drops which seemed to ignore a growing scarcity of physical supplies.
By almost all accounts available on the web as of this week, the paper futures contract dominated spot price has disconnected from the popular physical silver and gold bullion markets. To most investors it seems odd indeed that the spot price has moved so far down that bullion dealers are forced to charge double digit percentage premiums for some silver bullion products and up to 5% premiums for gold bullion items. That's if customers can actually find a dealer that has any products in stock to sell.
Bullion dealers also report a very dramatic drop in scrap purchases over the past several weeks. "I'm only buying about $50,000 a week in scrap now," says one Houston dealer. "Last month I was buying more than $150,000 of scrap per week and more," he added. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=45789
-UBS says metals commodities could see high prices over next several quarters. The UBS team's outlook for gold, silver and PGMs were all positive. "With a solid floor around $800-820/oz we believe gold will trade towards $900/0z over the next month or two and could trade much higher still."
The team suggested that "silver has sharply underperformed gold over the past two months, evident when looking at the gold: silver ratio which increased to the highest seen since late 2006 at about 62. We believe speculative and investor selling was behind this move and silver is likely to outperform gold on any rally in precious metals. But this is only due to speculative buying."
"We have seen much less fundamental demand in silver than gold so our review that silver will out-perform gold is not a high conviction call. Silver is a more volatile metal than gold, especially during corrections and investors should be aware of this," they added.
Now that the disinvestment pressure has eased for PGM, UBS expects platinum and rhodium to recover some lost ground, "although neither is likely to capture the euphoric highs of about $2300 and $10,000/oz, at least not this year. Palladium will probably trade higher in sympathy, although the metal is less supported by supply and demand fundamentals and more by investment demand." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=61168&sn=Detail
QUOTES-QUICK HITS
-"All truth passes through three stages: First, it is ridiculed; second it is violently opposed; and third, it is accepted as self-evident." Arthur Schopenhauer (1788-1860)
-"Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear." Harry S. Truman, 33rd US President (1884-1972)
-Concerns regarding the outlook for corporate profits internationally and for the health of the global economy are weighing on stock markets and should lead to safe haven demand for gold as it did in the first year of the credit crisis. Also, soaring inflation internationally and particularly in the Middle East and India is leading to the surge in international. Gold.ie
-Gold has been in a range and consolidating between $775 and $845 for more than 3 weeks. A daily and weekly close above $845-$850 will be needed in order to rectify some of the serious technical damage done in recent weeks and to confirm the gold bull market remains in full effect. Gold.ie
-Gold Fell Some 50% in Middle of 1970s Bull Market, Prior to Rising 800%. Gold would have to fall by some 50% to massive long term support at $550 in order to signal the end of the bull market. In 1974, gold had risen from $35 in 1971 to some $200 (December 1974) prior to sharp falls to nearly $100 (August 1976).
Given the extent of international demand it is extremely unlikely that gold could fall a similar amount today. Indeed, it is estimated that the average production cost for gold mining companies to produce one ounce of gold has now surged to over $750 per ounce. Which will lead to a floor being put under the gold price at these levels.
Many heralded the falls in the mid 1970s as the end of the bull market when in fact it was just a long correction. Subsequently gold rallied from some $100 (August 1976) to over $800 in January 1980. While an eight fold increase in gold from today's prices seems outlandish it is not beyond the realms of possibility and the inflation adjusted high of $2,400/oz looks increasingly likely in the coming months. Gold.ie
-4 reasons why this may be the worst crisis since the 1930s and 4 projections for what's going to happen. Bud Conrad-Read more here-
http://www.321gold.com/editorials/casey/casey090408.html
-In the Eye of the Storm. Don't be lulled into a false sense of security and start buying U.S. equities at seemingly knockdown prices. We are in the eye of the hurricane. Beware of the second leg! John Browne-Read more here-http://www.321gold.com/editorials/browne/browne090408.html
-Technical Update on Broader Market. Roy Martens-Read more here-http://news.goldseek.com/GoldSeek/1220540400.php
RARE COLORED DIAMONDS
-Rio Tinto Launches Annual Argyle Pink Diamond Tender. Rio Tinto launched its 24th annual Argyle Pink Diamond Tender this past week in Perth, Australia, the company confirmed Monday. The Perth event, which took place August 21-22, was the first of six to be held around the world featuring "65 of the world's rarest pink diamonds from the Argyle mine in Australia."
The remaining five showings include in New York from September 2-5, London (September 9- 11,) Hong Kong (September 15 -20,) Tokyo (September 24-26,) and finally in Sydney (October 1-2.) Successful bidders will be notified in October. "The pink diamond jewelry market has grown in popularity and is now worth hundreds of millions of dollars as the desire to own the rarest has sent prices skyrocketing," said Raj Kandiah, general manager Argyle Pink Diamonds.
"Pink diamonds are worth approximately 20 times the cost of the same size white diamond. However, the sky is the limit when it comes to Rio Tinto's Argyle Signature Stones each diamond is so unique that it warrants an individual price tag." Rio Tinto said the exclusivity of the Argyle diamonds was enhanced by the limited life span of the Argyle mine, which is expected to be depleted by 2018.
The first pink diamonds were recovered from Argyle in 1985. Among this year's collection, Rio Tinto is presenting "a captivating heart shaped pink diamond" for the first time in seven years. There are also a number of highly sought after purplish reds, intense and vivid pinks and three rare violets that add to the vibrancy of this collection. Rio Tinto has named two "hero" stones from the collection for the first time this year: ‘Aphrodite,' a 1.01 carat round purplish red, which takes its name from the Greek Goddess of love and passion; and ‘Ocean Seer,' a 1.41 rare violet stone, which symbolizes ancient wisdom and serenity.
In total, the collection showcases 62.46 carats of diamonds with 30 diamonds more than one carat in size. Attendance to the Pink Diamond Tender will be restricted to approximately 100 key clients, who will view the diamonds in secret locations in Sydney, Tokyo, London, Hong Kong, New York or Perth, the company explained. Due to the high security required for the tender, the exact location is not revealed to bidders until the very last minute. Bids are confidential and the names of successful bidders and the values achieved are not disclosed, Rio Tinto added. Diamonds.net
-Diversified mining group Rio Tinto mined a total of 7.853 million carats of diamonds in the first half of 2008, down 31 percent from 11.446 million carats in 2007. Despite the drop in production volume, diamond revenues were up, a result of rising rough diamond prices. Read more here-
http://www.idexonline.com/portal_FullNews.asp?id=31035
-Sotheby's Hong Kong will conduct its Magnificent Jewels and Jadeite 2008 Autumn Sale at the Hong Kong Convention and Exhibition Centre on October 7, 2008. Some 320 lots will be offered with an estimated total value of HKD500 million ($64 million.) The highlight of the sale is a fancy vivid yellow diamond necklace with an estimated value of $7.4 million to $9.5 million, featuring a 102.56-carat fancy vivid yellow diamond (pictured.)
It has a flower pendant that can be detached from the necklace and worn as a brooch. Quek Chin Yeow, deputy chairman and head of jewelry at Sotheby's Asia, said, "The diamond is the largest fancy vivid yellow diamond ever to be offered at auction anywhere in the world; this extraordinary diamond, with its impressive size and auspicious golden yellow color, will be a major attraction." Another highlight of the sale will be a colored diamond butterfly brooch by Carvin French.
The center of the brooch is set with one fancy vivid blue diamond and two fancy intense blue diamonds, weighing 5.53 carats in total. Complementing the blue hues are the vibrant yellow and pink diamonds mounted on the wings of the butterfly. (Estimated value $3.8 million to $4.6 million.) With strong demand for top quality diamonds weighing more than 15 carats, an impressive 34.07 carat cushion-shaped D, IF, diamond ring will undoubtedly attract much attention. (Estimated value $6 million to $7 million.)
Sotheby's Hong Kong will present a pair of ruby and diamond earrings (pictured) by James de Givenchy for Taffin. The two unheated, natural rubies, weighing 10.02 and 10.91 carats respectively, are well-matched in both color and shape. Each surrounded by eight rose-cut pink and eight colorless round diamonds, these rubies show a fiery red hue with dazzling brilliance fascinating all connoisseurs. (Estimated value $3.8 million to $4.5 million.)
Also featured among the colored stones is a pair of star rubies, alexandrite and diamond earrings. The rubies, weighing 19.45cts and 22.13cts each, are remarkably matched in both color and shape, and boast intense hues and fine clarity. (Estimated value $666,000 to $871,000.) A further highlight is a Colombian emerald and diamond ring without any oil treatment. This natural 10.09 carat emerald boasts high clarity and a saturated color. It is embellished by 10 round diamonds, emphasizing the magnificence of the noble green color. Diamonds.net
OIL-GASOLINE
-OPEC to Pump Record Amounts as $109 Oil Stunts Growth. OPEC, the supplier of 40 percent of the world's oil, will probably keep producing at a record pace as $109-a-barrel crude squeezes the global economy. The 13-nation Organization of Petroleum Exporting Countries will reject calls from Venezuela and Iran to trim supplies at its Sept. 9 meeting in Vienna, according to 29 of the 32 energy analysts surveyed by Bloomberg.
"They want to prevent a build-up of crude stocks, which rules out an increase, but don't want to send prices skyrocketing by announcing a cut,'' said Mike Wittner, head of oil research at Societe Generale SA in London. "OPEC won't take any formal action.''
Oil plunged $38 a barrel, or 26 percent, from its record $147.27 on July 11 as economies slowed, the dollar halted a three-year slide against the euro and Hurricane Gustav caused almost no damage to drilling platforms and refineries in the Gulf of Mexico. Demand for crude will increase 1 percent in 2009, the slowest growth in seven years, according to an Aug. 15 OPEC forecast.
Record oil prices spurred European inflation to 4 percent in July and contributed to the first quarterly contraction in the region's economy since the euro was introduced almost a decade ago. In the U.S., gasoline demand fell for 19 consecutive weeks, according to MasterCard Inc., with fuel now near $3.70 a gallon. The world economy is "precariously close'' to a recession in 2009, UBS AG said last month as it cut next year's global growth forecast to 2.9 percent. It considers a 2.5 percent rate as one that is consistent with a recession. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKiA9hHBv7yY&refer=home
-Marc Mobius, sees oil higher, commodities. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Mobius%20Recommends%20S.%20African%2C%20Turkish%20Stocks%2C%20Palladium&clipSRC=mms://media2.bloomberg.com/cache/v5sYzsK2FgB8.asf
-Iran calls for production cuts as oil price plummets. Read more here-http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article4663676.ece
-Winter heat crisis looms, little relief seen. High fuel prices and the weak economy could make heating a luxury this winter. And the government's low-income assistance plan may not suffice. Read more here-http://money.cnn.com/2008/08/29/news/economy/LIHEAP/index.htm?postversion=2008090205
-Why cheaper oil signals trouble. Inflation appears less menacing, but the U.S. export boom could soon face strong headwinds. Read more here-
http://money.cnn.com/2008/09/03/news/exports_commodities.fortune/index.htm
-Gas guzzling temptation as prices fall. With prices at the pump continuing to slip, will memories of the summer's gas crunch fade, tempting drivers to fall off the conservation wagon? Read more here-http://money.cnn.com/2008/09/03/news/economy/gas_price_prediction/index.htm?postversion=2008090412
GLOBAL SLUMP JUST STARTING-ECONOMIC NEWS
-Morgan Stanley's Roach Says Economic Slump Has Only Just Begun. The global economic downturn has only just begun, with the U.S. near a "recession trajectory'' and the impact of the credit crunch still to be fully felt, said Stephen Roach, Morgan Stanley's Asia chairman. "There's more to this macro event than just the credit- market contagion itself,'' Roach said in an interview with Bloomberg Television in New York today.
"Maybe two thirds of that is behind us, but the impacts on the real side of the U.S. economy and the global economy are at an early stage.'' Expansion in the U.S., the world's largest economy, is likely to weaken in the in the second half after a stronger-than-expected second quarter as consumers rein in spending. That will slow European and Asian exports and hamper global growth, Roach said. "We're in the early stages of the downturn in the U.S. and global business cycle,'' he said.
"As the U.S. consumer goes into post-bubble funk, Asian exporters will feel it. That's certainly evident now in China and its spreading through developing Asia.'' As the world economy cools, the dollar may continue to rise and commodities such as oil and base metals may decline, he said. Equity markets will trade "sideways to lower'' until at least early 2009. "Investors, especially in equities, have to be wary about being too optimistic on the earnings implications of what could be a long and drawn out multi-year adjustment for the U.S. consumer,'' Roach said. Bloomberg
-Fed: Economy struggles, prices remain high. Federal Reserve expects economic troubles to persist into 2009. Read more here-
http://money.cnn.com/2008/09/03/news/economy/beige_book.ap/index.htm?postversion=2008090315
-Fed's Yellen Sees 'Substantial' Risks to U.S. Growth. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a0854s35XhGE
-Fed official sees 'anemic' growth. Dallas Federal Reserve president says housing and credit market troubles could linger for the next few quarters. Read more here-
http://money.cnn.com/2008/09/04/news/economy/fed_fisher.ap/index.htm
-Gustav hits U.S. economy. Storm is weaker than Katrina three years ago. But it hits an economy that is at greater risk. Read more here-
http://money.cnn.com/2008/09/01/news/economy/gustav_economy/index.htm?postversion=2008090115
-Britain is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected, Alistair Darling, the chancellor, tells the Guardian today.
In the government's gravest assessment of the economy, which follows a warning from a Bank of England policymaker that 2 million people could be out of work by Christmas, Darling admits he had no idea how serious the credit crunch would become. Read more here-http://www.guardian.co.uk/politics/2008/aug/30/economy.alistairdarling
-Bank of England Gives Lenders Estimated $354 Billion. U.K. banks probably have tapped the Bank of England for more than 200 billion pounds ($354 billion) less than two months before its emergency funding plan is scheduled to end, according to UBS AG analysts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aRgxCzc4X_lg
-Barclays May Face 7.5 Billion-Pound Capital Shortfall. Barclays Plc, the U.K.'s third- biggest bank, may need to raise as much as 7.5 billion pounds ($13.3 billion) to bring its capital ratio in line with investment banking peers, Royal Bank of Scotland Group Plc said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=afJCfp9K68Zw
-Money Market Disruption to "Continue,'' BIS Says. The strains in the global money markets that pushed relative borrowing costs higher will probably persist "for some time'' as financial institutions struggle to raise cash, according to the Bank for International Settlements. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=az9BUc2nrqMM
-ECB Will Tighten Lending Rules to Stop Bank Abuse. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=asOWb76COKPY
-Personal income in largest drop in 3 years. Consumers are spending more even though they have less cash in their pockets as the stimulus wave passes, according to a government report. Read more here-http://money.cnn.com/2008/08/29/news/economy/consumer_spending/index.htm
U.S. NEEDS TO PREVENT FINANCIAL TSUNAMI
-U.S. Must Buy Assets to Prevent 'Tsunami,' Gross Says. The U.S. government needs to start buying assets to stem a burgeoning "financial tsunami,'' according to Bill Gross, manager of the world's biggest bond fund. A process of delevering, where banks are shrinking and cutting off lending, is sapping demand for bonds, real estate, stocks and commodities, driving down assets of even "impeccable quality,'' Gross said.
"Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami,'' Gross of Newport Beach, California-based Pacific Investment Management Co. said in commentary posted on the firm's Web site today. "If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury.''
The government needs to replace private investors who either don't have the money to buy new assets or have been burned by losses, Gross said. Pimco, sovereign wealth funds and central banks are now reluctant to fund financial firms after losing money on more than $400 billion in capital raisings, Gross said. Banks and brokerages are retreating after more than $500 billion in writedowns and credit losses since the credit seizure began last year.
Treasury should support not only mortgage finance providers Fannie Mae and Freddie Mac, but also "Mom and Pop on Main Street U.S.A.," through subsidized home loans guaranteed by the Federal Housing Administration and other government institutions, Gross said. A new version of the Resolution Trust Corp., which bought assets from failing institutions during the savings-and-loan crisis of the 1980s, may also work, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a73wGszFuxtA&refer=home
BANK FAILURE-MUST BE ALLOWED TO FAIL
-Integrity Bank Becomes 10th U.S. Failure This Year. Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression. Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp. Regions Financial Corp., Alabama's biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc.
The failed bank's five offices will open on Sept. 2 as branches of Regions, the FDIC said. "Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance,'' the FDIC said. Banks are being closed at the fastest pace in 14 years as financial companies report more than $505 billion in writedowns and credit losses since 2007.
California lender IndyMac Bancorp Inc., which had $32 billion in assets, was closed July 11 in the third-largest bank seizure, contributing to a 14 percent drop in the U.S. deposit insurance fund that had $45.2 billion at the end of the in the second quarter. Regions will buy about $34.4 million in assets and will pay the FDIC a premium of 1.01 percent to assume the failed bank's deposits, the FDIC said. The FDIC estimates the cost of the Integrity failure to its deposit-insurance fund will be $250 million to $300 million. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a7dn3iRmUDCQ&refer=home
-Fed's Hoenig Says Institutions Must Be Allowed to 'Fail'. Federal Reserve Bank of Kansas City President Thomas Hoenig said for economies to work best, institutions must be allowed to 'fail.' Economies must "find a balance between financial stability and a stable price environment and in doing so must be able to allow individual institutions to fail,'' Hoenig said in a speech today in Buenos Aires.
Turmoil in financial markets has persisted, even after the Fed started and expanded emergency programs to lend to commercial and investment banks. Changes in financial markets combined with the subprime-mortgage crisis have "raised anew questions about the role of central banks in maintaining financial stability,'' he said.
The subprime-mortgage collapse has taken a toll on banks and other financial companies, which have reported $514 billion of writedowns since the start of 2007. The Fed rescued Bear Stearns Cos. from bankruptcy in March, facilitating the firm's merger with JPMorgan Chase & Co. by lending against $29 billion of Bear securities.
"Financial crises will occur despite our best efforts to prevent them,'' Hoenig said in prepared remarks at an event hosted by Argentina's central bank. "The 'Too Big to Fail" issue will only grow in importance as the consolidation of the financial industry grows in both size and scope in future decades.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aPUUANG5h4G0
SUPER RICH MOVING INTO CASH-BANKS MOVE FUNDS FROM U.S. TO EUROPE
-HSBC says super-rich clients moving into cash. Many of the world's wealthiest people have moved their money out of stocks and bonds and into cash, the head of HSBC's (HSBA.L) Swiss private banking unit said on Monday. "The first half of 2008 has seen a notable change in client expectations and investment choices," said Peter Braunwalder, chief executive of HSBC Private Bank (Suisse), the British-based bank's main affiliate catering to the ultra-rich.
"Faced with inflation worries, volatile asset prices and sudden changes in exchange rates, a majority of investors have reduced their transaction volumes in equities, bonds, and structured products," he told a news briefing in Geneva. This was particularly true for clients from Asia, whose demand for complex investment tools such as equity derivatives has "drastically decreased" in response to recent financial market upheaval, said Braunwalder.
Concurrently, most clients increased their cash allocation and, for some, their leverage," he added. Investors worldwide have been scrambling to find a safe place for their savings this year in the face of a global economic slowdown, a credit crisis that has spooked markets, and an energy price spike spurring concerns about inflation. Alexandre Zeller, who will replace Braunwalder as HSBC Private Bank (Suisse) chief on October 1, said that concerns about inflation would dominate many investing decisions ahead.
"My worry is that a lot of liquidity has been injected in the markets by central banks to solve the (credit) crisis," the former head of Banque Cantonale Vaudoise said, raising concerns about how that liquidity will be removed from the market, and whether interest rates would have to rise as a result. Read more here-http://news.yahoo.com/s/nm/20080901/bs_nm/hsbc_swiss_dc_1&printer=1;_ylt=AomtFKM534CyjW.AOoXdcSGb.HQA
-Banks shift funds out of U.S. to Europe: BIS. Read more here-http://www.reuters.com/article/businessNews/idUSWEL25769220080901?feedType=RSS&feedName=businessNews&rpc=23&sp=true
HUGE STOCK DECLINE AHEAD
-Tice: Huge Stock Decline Ahead. David Tice has made himself famous for successfully shorting stocks. Now the investment manager sees a bear market for the next five years, with share prices dropping 50 percent to 70 percent over the next 18 months. That would put the Dow Jones Industrial Average somewhere between 3,425 and 5,708.
"We believe stocks have benefited from an unbelievable credit bubble" that is now bursting, Tice told Bloomberg TV. "Policymakers and central bankers have perpetuated a bubble like we've never seen before, with mortgage financing that has put government sponsored enterprises (Fannie Mae and Freddie Mac) in trouble," he says.
"The whole structure of the financing mechanism, where foreigners bought all these [mortgage] securities, has broken down. Institutions and foreigners no long trust our structure, insurance, ratings, etc." As a result, Tice says, "We're in big trouble."
Tice says it's difficult to predict when the market's plunge will begin. "Who knows what will happen to the market until the end of the year?" he asks rhetorically. "The market is like boiled frog. You drop a frog into pot of boiling water, and it jumps out. In this environment, he's staying in because the heat is gradually rising."
Tice's Prudent Bear Fund returned 9.9 percent in the year ended July 31, compared to an 11.09 percent drop by the S&P 500 over that period. Technology stocks represent the next sector ready to plunge, according to Tice. "Tech is very dependent on the economy," he says. Story here-http://moneynews.newsmax.com/streettalk/stocks/2008/09/02/126965.html
-U.S. Stocks at 25.8 Times Profit Means Rally May End. The best already may be over for the U.S. stock market this year. The Standard & Poor's 500 Index, which had the worst first half since 2002, added 0.2 percent this quarter, the only gain among the world's 10 biggest markets in dollar terms. Shares in the benchmark index for American equity climbed to an average 25.8 times reported profits, the highest valuation in five years. The last time that happened, the S&P 500 fell 38 percent.
Money managers at Federated Investors Inc., Russell Investments and Morgan Asset Management, which oversee a combined $600 billion, said the gains won't last because corporate profits will fail to meet analysts' estimates. Wall Street forecasters, who were too optimistic about earnings for the past four quarters, predict income at America's biggest companies will grow by a record 62 percent in the final three months of 2008, according to data compiled by S&P.
"The market is pricing in the expectation of a good quarter, but we just don't see it,'' said Philip Orlando, who helps manage $350 billion as chief equity market strategist at Federated in New York. "The fundamentals are going to be poor, earnings are going to be bad, and there are going to be more huge writedowns. We think stocks probably need to work 5 to 10 percent lower over the next month or two.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aBgaQ4tuM8Xo&refer=home
U.S. DOLLAR-FOREIGN CURRENCY
-U.S. Dollar: Misery Finds Company. Many analysts predict a recovery in the U.S. dollar based more on a disbelief in how far the greenback has fallen than on fundamentals. But other currencies are now showing the same signs of stress and a change in direction could be close. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=45841
-Iran considers lopping zeros off currency. Iran is considering lopping three to four zeros off its currency, a top official said Monday, in an apparent effort to fight out-of-control inflation that many critics blame on the country's hardline president.
The governor of the Central Bank of Iran, Tahmasb Mazaheri, told state run radio that monetary experts are studying three options: Cutting three zeros off the rial, cutting four zeros, or boosting each rial's value to one-hundredth of a gram of gold, or about 2,500 rials at current rates.
"We are studying all these three options," Mazaheri said on state-run radio. The Iranian rial is now traded at 9,600 rials to one US dollar. That compares to 70 rials against the dollar in 1979, the year an Islamic revolution toppled the pro-Western Shah Mohammad Reza Pahlavi. Jpost.com
INTEREST RATES
-Canada Keeps Key Rate at 3%, Says It's "Appropriate." The Bank of Canada left its key lending rate unchanged, saying it remains "appropriately accommodative" amid slower-than-expected economic growth. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aO2C_g5mGzc0
-Sweden Raises Key Rate to 4.75% as Prices Accelerate. Sweden's central bank raised its benchmark interest rate to a 12-year high to head off faster inflation and said it expects to keep rates steady for the remainder of the year as the economy slows. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aiYj7KOnuB8g
-ECB, Bank of England Keep Rates Unchanged on Inflation Concern. The European Central Bank and the Bank of England kept interest rates unchanged to fight inflation as their economies teetered on the brink of a recession.
ECB policy makers meeting in Frankfurt kept the benchmark lending rate at 4.25 percent, a seven-year high. The U.K. central bank's Monetary Policy Committee left the bank rate at 5 percent today in London.
The euro-region economy contracted in the second quarter. Growth stalled in Britain, which may face the worst conditions since World War II, according to U.K. Chancellor of the Exchequer Alistair Darling. The Bank of England has still refrained from cutting borrowing costs and the ECB raised its rate in July on concern higher pay demands may entrench faster inflation.
"They're both inflation-fighting central banks and inflation is well above their targets,'' said Stewart Robertson, an economist at Morley Fund Management in London, which manages the equivalent of $271 billion. "Growth has weakened a lot and is likely to stay weak. The Bank of England seems to have owned up to this but the ECB hasn't quite yet.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid=aP6CeFzRiB8Q&refer=home
-Why the Fed cuts haven't worked. One of the Federal Reserve's staunchest proponents of its rate-cutting spree explains why lower rates haven't helped boost the economy. Read more here-http://money.cnn.com/2008/09/04/markets/thebuzz/index.htm
FANNIE-FREDDIE
-Fannie Mae and Freddie Mac: A Damage Report. Amid the buzz surrounding a potential bailout, BusinessWeek asks how much the mortgage giants' fall from grace has cost market players and what losses lie ahead. Read more here-http://www.businessweek.com/investor/content/aug2008/pi20080828_330540.htm
HEDGE FUND TROUBLES
-New York-based hedge fund Atticus Capital has lost over $5 billion so far this year, as its funds have been hit by plummeting financial stocks, a person familiar with the situation told Dow Jones Newswires Monday. The activist investor saw its Atticus European fund fall 32.9% in value from the start of the year to the end of August, while its Atticus Global fund was down by around 25%. Read more here-http://www.marketwatch.com/news/story/atticus-capital-said-have-lost/story.aspx?guid={45A0D0A4-F8C7-4620-8B4E-29A434DAB933}&siteid=yahoomy
-Ospraie to Close Flagship Hedge Fund After 38% Loss. Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year because of bad bets on commodity stocks.
The New York-based Ospraie Fund fell 26.7 percent in August after a "substantial sell-off'' in energy, mining and resource equity investments, Anderson said in a letter to investors this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aIVvdfesmczQ
AUTO MAKERS-AIRLINES
-Big Three bailout may be around corner. Automakers seek $50 billion in low-interest loans to convert plants from trucks to fuel efficient cars; presidential election could help their chances. Read more here-http://money.cnn.com/2008/09/04/news/economy/automakers_Congress/index.htm?postversion=2008090411
-Auto lenders feel squeezed. Rising loan delinquencies and declining car and truck sales have many lenders feeling the pinch. Read more here-
http://money.cnn.com/2008/09/04/news/companies/auto_finance/index.htm?postversion=2008090410
-Auto sales plunge. Despite a slide in gas prices, sales fall 15.5% from a year ago for the worst August in 10 years, led by lower demand for pickups and SUVs. Read more here-
http://money.cnn.com/2008/09/03/news/companies/autosales/index.htm?postversion=2008090318
-Airline Industry May Suffer $5.2 Billion Annual Loss. Airlines may report combined losses of about $5.2 billion this year, almost $3 billion higher than forecast in June, as economies slow and fuel costs erode earnings, the International Air Transport Association said.
The net loss will fall short of the $6.1 billion worst-case- scenario the industry body envisaged in the last forecast because of a recent drop in oil prices, Chief Executive Officer Giovanni Bisignani said today in Montreal. Traffic growth will be lower than predicted as an economic slowdown spreads, he said.
IATA lifted the annual loss estimate for a fifth time in 12 months after passenger growth slumped to a five-year low in July and the number of carriers grounding planes or going bankrupt this year passed two dozen. Airlines had a profit of $5.6 billion in 2007, the first since the 2001 attacks on the U.S. The industry has lost more than $36 billion since 2001.
"We're still in a perfect storm of rising costs and falling demand,'' Bisignani said on a conference call. "When we made our last forecast we knew the situation was bad, but we didn't know how bad it would get. Profitability deteriorated dramatically in the first half.'' The group, whose members account for 93 percent of international air traffic, based its loss estimate on an average oil price this year of $113 dollar a barrel, it said in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ancsHQ47sXpE
REAL ESTATE
-Let's Get Real about Real Estate from Peter Schiff. Once again, real estate market watchers have pounced on a shred of seemingly positive news to proclaim that the long sought "bottom" is in sight. The routine is becoming extremely stale, but somehow the media never seems to tire of it.
This time the "good" news was that the percentage declines in national home prices (according to Case Shiller) in July were not as large as they were in June. Although the report contained many other negative data points, including increased inventories and a spike in foreclosure sales, it was the slowing declines that got spotlight.
Talk about grasping at straws. The truth is that real estate has been grossly overvalued for years, and the adjustment process back to realistic pricing has only just begun. The problem is few among us seem to appreciate the magnitude of this adjustment and its implication for an economy dependant on inflated assets values. Read more here-http://www.321gold.com/editorials/schiff/schiff082908.html
-House price crash goes global. The property crash that began in the US is spreading across the globe, according to international estate agents Knight Frank, which said today that steep declines are now taking place across Europe and into Asia.
The country recording the sharpest fall is Latvia, where house prices have plummeted 24.1% over the past year. New Zealand, Denmark and Lithuania have all seen falling prices, along with Malta, Germany, Ireland, Estonia, Britain and the US. Even countries where prices have not fallen are witnessing a rapid deceleration in price growth. Read more here-
http://www.guardian.co.uk/money/2008/sep/02/houseprices.property?gusrc=rss&feed=networkfront
-House prices in double digit fall. UK house prices recorded an annual fall of 10.9% in August - the first double digit drop since 1983 says the Halifax. The lender said that property prices dropped 1.8% in August compared with July, leaving the cost of an average home in the UK at £174,178.
It said market conditions would remain "challenging" in the months ahead, despite government help for buyers. House prices dropped across the UK, but some surveys have shown the Scottish market to be the most resilient. The figures show that the average price of a home in the UK was at the same level in August 2008 as it was in February 2006. Read more here-
http://news.bbc.co.uk/1/hi/business/7597520.stm
-U.K. Suspends Homebuyer Tax in Moves to Reverse Slump. Prime Minister Gordon Brown suspended a tax on buying some homes for the first time since 1991 and brought forward 1 billion pounds ($1.8 billion) of spending in an effort to revive the U.K. economy.
Residential properties costing less than 175,000 pounds will be exempt from stamp duty for a year under plans announced by the Treasury today. The government also will help 16,000 people struggling to meet mortgage payments and another 10,000 to buy their first home. Banks approved 33,000 mortgages in July, a quarter of the level of a year ago, after a worldwide credit crunch dried up funding for loans.
"Until more funding is available we are still some way from restoring long-term stability to the housing and mortgage markets,'' said Michael Coogan, director general of the Council of Mortgage Lenders, which represents banks making home loans. "There are no easy solutions to some of these problems." Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid=aoXOiSMZDApg&refer=home
-London Luxury-Home Prices Post First Drop Since 2003. Luxury-home prices in central London, the world's most expensive location for prime real estate, had their first annual decline in five years as buyers were deterred by the prospect of a recession.
The average price of houses and apartments in London's nine most expensive neighborhoods fell 1.6 percent in August from a year earlier, according to an index compiled by Knight Frank LLP. Property values declined 1.3 percent from July, the fourth straight drop, the property broker said. The index includes homes valued at about 1 million pounds ($2 million) or more.
Homebuyers were affected by "pessimism in the financial- services sector, particularly relating to the size of this year's bonuses,'' Liam Bailey, Knight Frank's head of residential research, said in a statement.
Demand from the 300,000 bankers and others employed in financial services, which has underpinned the luxury London housing market, has dropped because of job cuts triggered by the collapse of the subprime mortgage market. Knight Frank said prime residential sales in London are down 46 percent from last year. Read more here-
http://www.bloomberg.com/apps/news?pid=20601213&sid=a77Zr2.dxrGE&refer=home
-Mansion Price Drops $7 Million; Bentley Offered on Luxury Homes. The U.S. housing crisis arrived on July 14 at Stonebrook Court, the 26,000-square-foot Tudor-style home of California venture capitalist Kelly Porter. On that day, four months after putting the house on the market, he cut the price by $7 million.
The mansion sits on 7.5 acres in Los Altos Hills, a Silicon Valley town where Yahoo! Inc. co-founder and Chief Executive Officer Jerry Yang also lives. It boasts a wine cellar, Venetian- inspired ballroom, Italian statuary and swimming pool. At the reduced price of $38 million, the property is a bargain, the owner says.
"It's worth every bit of $45 million, and I reduced it reluctantly,'' said Porter, 45, a partner at Woodside Capital Partners LLC in Palo Alto, in an interview. "We touched up every square inch.''
The pain of the worst housing slump in a quarter century is reaching the highest end of the market as owners of luxury homes from California to Florida, New York and Connecticut slash list prices by millions. In the broader market, home sales plunged to a 10-year low in the second quarter and median house prices fell 7.6 percent, according to the National Association of Realtors.
"The upper end is not immune to this decline,'' said Kenneth Rosen, chairman of the University of California's Fisher Center for Real Estate and Urban Economics in Berkeley. A worsening economy means "these people will have less wealth and they will spend less.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=alVIa8zYKQPQ&refer=home
-Homebuyers turn screws on desperate sellers. It's a buyer's market, and many are trying to take full advantage of it by demanding major home repairs, warranties on home appliances, and even tax rebates. Read more here-http://money.cnn.com/2008/08/29/real_estate/sellers_concessions_in_buyers_market/index.htm?postversion=2008082903
FORECLOSURES-MORTGAGES
-U.K. Mortgage Approvals Decline to Lowest Since 1999. U.K. mortgage approvals fell for a 12th month to the lowest since at least 1999 in July as financial institutions curbed lending and the property slump deepened.
Banks granted 33,000 loans for house purchase, compared with 35,000 in June and the fewest since comparable data began nine years ago, the Bank of England said in London today. Economists predicted 35,000, according to the median of 27 estimates in a Bloomberg News survey.
Home-loan approvals are at less than a third of the level a year ago as Britain teeters on the brink of a recession. Bank of England policy makers will probably keep the key interest rate at 5 percent this week as they battle the fastest inflation in more than a decade while Prime Minister Gordon Brown announces a package of measures to shore up the economy.
"The data are still showing a very gloomy picture,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. "There's no signs of a bottoming out in the housing market.'' The value of home loans rose to 3.23 billion pounds ($5.83 billion) in July from 3.14 billion pounds in June. The figure is down from 9.35 billion pounds in July 2007.
Hometrack Ltd. said today the average cost of a residential property in England and Wales slipped 5.3 percent from a year earlier in August. A recovery in prices is "still some way off,'' said Richard Donnell, director of research. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a5bsLwIqjY7Y
-GMAC Mortgage Unit to Dismiss 5,000, Shut 200 Offices. GMAC LLC and its Residential Capital LLC home loan unit plan to dismiss 5,000 employees, or 60 percent of the unit's staff, and close all 200 GMAC Mortgage retail offices because of weak real estate markets. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=abppYTSY8r.A&refer=home
GEOPOLITICAL NEWS
-Dutch intel: US to strike Iran in coming weeks. The Dutch intelligence service, the AIVD, has called off an operation aimed at infiltrating and sabotaging Iran's weapons industry due to an assessment that a US attack on the Islamic Republic's nuclear program is imminent, according to a report in the country's De Telegraaf newspaper on Friday.
The report claimed that the Dutch operation had been "extremely successful," and had been stopped because the US military was planning to hit targets that were "connected with the Dutch espionage action." The impending air-strike on Iran was to be carried out by unmanned aircraft "within weeks," the report claimed, quoting "well placed" sources. Read more here-http://www.jpost.com/servlet/Satellite?cid=1220186494776&pagename=JPost%2FJPArticle%2FShowFull
-Report: Israel won't allow a nuclear Iran. Israel will not allow Iran to attain nuclear capability and if time begins to run out, Jerusalem will not hesitate to take whatever means necessary to prevent Iran from achieving its nuclear goals, the government has recently decided in a special discussion. Read more here-
http://www.jpost.com/servlet/Satellite?cid=1219913194872&pagename=JPost%2FJPArticle%2FShowFull
-Iran warns any attack would start 'world war'. A senior Iranian military commander has warned that any US or Israeli attack on the Islamic republic would start a new world war, the state news agency IRNA reported on Saturday.
"Any aggression against Iran will start a world war," deputy chief of staff for defence publicity, Brigadier General Masoud Jazayeri, said in a statement carried by the agency.
Iran is under international pressure to halt uranium enrichment, a process which lies at the core of fears about Iran's nuclear programme as it can make nuclear fuel as well as the fissile core of an atom bomb.
"The unrestrained greed of the US leadership and global Zionism... is gradually leading the world to the edge of a precipice," Jazayeri said, citing the unrest in Afghanistan, Iraq, Sudan and Georgia. Read more here-http://www.breitbart.com/article.php?id=080830094819.pcrrm00f&show_article=1
-Sarkozy Says Iran May Provoke Israeli Attack, Causing Disaster. French President Nicolas Sarkozy said Iran's nuclear program may provoke an attack by Israel, urging the Islamic republic to accept international inspections. "Iran is taking a major risk in continuing its process of obtaining nuclear weapons, which we are certain is happening,'' Sarkozy said today in Damascus, Syria.
"One day, whatever the Israeli government is, we can imagine ourselves one morning with an Israel that would have attacked. That would be a disaster.'' Sarkozy is using the meeting with Syrian President Bashar al-Assad, an Iranian ally, to press efforts to convince Tehran that it should cease its uranium-enrichment program and give full access to international inspectors. The French president is trying to deepen France's political influence in the Middle East and renewed Europe's ties with Syria after Assad's help in ending an 18-month-long political deadlock in Lebanon in May.
The "fallout would be disastrous'' from any military strike against Iran, Assad said last night in a press conference with Sarkozy. Iran denies seeking nuclear weapons and says it's only developing civil nuclear energy. Israel had no immediate reaction to Sarkozy's statement, Andy David, a Foreign Ministry spokesman, said by phone from Jerusalem. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=avJBlYVxrO5Y
-Cheney Condemns Russian 'Invasion,' Supports Georgia. U.S. Vice President Dick Cheney condemned Russia's "invasion'' of Georgia and delivered a message of "solidarity'' with the Black Sea country. Cheney, the highest-level U.S. official to visit Georgia since its armed conflict with Russia over South Ossetia, called Russia's incursion last month "an invasion of your sovereign territory and an illegitimate, unilateral attempt to change your country's borders by force.''
The vice president said he assured Georgian President Mikheil Saakashvili of U.S. support for the country's territorial integrity after Russia recognized the independence of South Ossetia and another breakaway region, Abkhazia. He spoke to reporters after meeting with Saakashvili in the capital Tbilisi.
Under Saakashvili, Georgia has become a staunch U.S. ally in Russia's backyard. It's the third-largest member of the allied coalition in Iraq and a vital link in a U.S.-backed "southern energy corridor'' that connects the Caspian Sea region with world markets, bypassing Russia.
Georgia's economy incurred more than $1 billion in economic damage as a result of Russia's military incursion, Prime Minister Lado Gurgenidze said yesterday. President George W. Bush responded with a pledge of $1 billion to help Georgia recover from the fighting. The International Monetary Fund agreed to a U.S.-backed proposal to lend Georgia $750 million to replenish its foreign-currency reserves. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=acg5nmddUURU
-US confirms ground assault inside Pakistan. American forces launched a raid inside Pakistan on Wednesday, a senior U.S. military official said, in the first known US ground assault in Pakistan against a suspected Taliban haven. The government condemned the attack, saying it killed at least 15 people.
The American official, speaking on condition of anonymity because of the sensitivity of cross border operations, told The Associated Press that the raid occurred on Pakistani soil about one mile from the Afghan border. The official didn't provide any other details. Read more here-http://sify.com/news/fullstory.php?id=14751849
-Pakistan reacts with fury after up to 20 die in 'American' attack on its soil. Read more here-http://www.guardian.co.uk/world/2008/sep/04/pakistan
-Power cuts fuel Pakistan's power struggle. The assassination attempt on the Prime Minister is the latest twist in a complex battle for influence. Read more here-
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4669574.ece
-The perils of Pakistan. Read more here-http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/09/04/dl0402.xml
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report - September 10, 2008
Posted by Worldwide Precious Metals on Wednesday, September 10, 2008
The GoldBugg Report - September 2, 2008
September 2, 2008
-Special Got Gold Report, Silver Investors Sucker Punched by Two U.S. Banks. Once the evidence now coming to light reaches the mainstream Wall Street press, just about everyone will likely conclude that silver investors worldwide were just sucker punched by two, very well-funded U.S. banks.
If silver really was just taken down by a couple of very big U.S. banks to irrationally low levels, it won't be long before the laws of supply and demand reassert themselves. Got silver? Read more here-http://www.resourceinvestor.com/pebble.asp?relid=45611
-Gold to scale new peaks as mining costs grow.
-Gold, the Dollar and Inflation. The best way to view this latest correction in the price of gold is as a temporary setback of no real consequence from an investment perspective (unless you use it as a buying opportunity). David Galland
GOLD
-Tyche group senior manager Martin Hennecke Sees `Huge Upside' for Gold, Price at $6,000. See video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Hennecke%20Sees%20%60Huge%20Upside%27%20for%20Gold%2C%20Price%20at%20%246%2C000&clipSRC=mms://media2.bloomberg.com/cache/vbWY9m2tQ2b4.asf
-The Bull Is Still In Charge. As we write, gold is indeed back above $820, signalling that the major bull market that started seven years ago remains intact. That's the big picture and it's most important. Mary Anne & Pamela Aden-Read more here-http://news.goldseek.com/AdenResearch/1219940738.php
-Mint to ration gold coins as it resumes taking orders. The U.S. Mint said it will resume limited distribution of its 1-ounce American Eagle gold coins a week after suspending sales because investors and collectors depleted the supply.
In a memo today to authorized dealers, Cathy Laperle, a Mint official, said the coins will be allocated "on a weekly basis until we are able to meet demand." The Mint will resume taking orders Aug. 25, Laperle said.
Citing "unprecedented demand," the Mint halted sales Aug. 15. Gold prices soared over the past year, with the most active gold futures reaching a record $1,033.90 an ounce on March 17. Prices have since declined. American Eagle coins are available in other weights as well as in silver and platinum, the Mint said. Bloomberg
-U.S. gold coin demand suggests Asian-style physical metal hoarding spreading to the West. The problems the U.S.Mint has had in servicing demand for the popular one ounce Gold Eagle coins suggest that physical gold is again becoming a key store of value for the man in the street in Western economies too. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=60798&sn=Detail
-Frank Barbera: Precious Metals Heading to All-Time Highs. In my opinion, the broad range of support for gold between $760 and $800 will hold. In the case of silver, the price action for silver is also likely to base out in this $12 to $14 area and we'll probably see silver prices moving right back up towards $16 to $17 in the weeks ahead.
Looking out two or three years, I'm confident we'll see gold prices above $5,000 an ounce. I'm confident we'll see silver prices above $100 an ounce. So I'd say the best is still in front of us as far as precious metals investing goes. I think right now you're in about the second or third inning of what is still a nine-inning game and this is an excellent opportunity for long-term capital coming into the market. Read more here-http://seekingalpha.com/article/92863-frank-barbera-precious-metals-heading-to-all-time-highs
-Gold to scale new peaks as mining costs grow. Gold prices are likely to scale new peaks as market fundamentals tighten because producers need at least a 20 percent rise in bullion prices just to make new investment viable, a leading fund manager said this week.
"Gold mining is a very complicated and expensive business and you really need to see the gold price a lot higher before you see any increase in gold production," Ian Henderson, who manages around $5 billion at JP Morgan's Global Natural Resources fund, told Reuters.
"Gold should have a sustained price level of over $1,200 an ounce before we see any significant new mine build," he said. His concerns over miners' margins echoed those of Gold Fields chief executive Nick Holland, who told Mining Weekly the company would need to see a gold price of $2,000 an ounce to replace its infrastructure. "We love gold. We have a substantial part of our portfolio in gold mining companies," added Henderson. "I think the gold price will surpass its previous peak." Reuters
-Buy Gold says UBS we already are say investors. The necessary conditions have been satisfied and it is time to invest in gold once more; while ETC flow suggest interest in commodities has returned. UBS Commodity Strategist John Reade has put out a note today Thursday 28th August 28th urging clients to "Buy Gold".
He is recommending that investors buy gold with an initial target of $850 (the fix on the morning of 28th August was $833.50), which is also the UBS one-month forecast price, with further gains expected "towards $900 and beyond." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=60904&sn=Detail
-Newmont's O'Brien Says Gold May Reach New Records in a Year. Newmont Mining Corp. Chief Executive Officer Richard T. O'Brien said gold prices ``probably'' will reach records in the next year as investors seek a buffer against accelerating inflation. Gold has declined 20 percent since credit market losses and a weak dollar drove the price to an all-time high of $1,033.90 an ounce in March.
Investor interest in the metal may be revived as inflation reduces the value of other assets, O'Brien said yesterday in an interview from Denver, where the company is based. Newmont is the largest U.S. gold producer. O'Brien's view that inflation will accelerate contradicts that of Federal Reserve Chairman Ben S. Bernanke, who said last week that price increases may slow later this year as oil declines and the dollar strengthens. Higher energy and food costs pushed consumer prices to the steepest gain in 17 years in the 12 months through July, government figures show.
"People are starting to get a whiff that inflation will not be as bad as they thought a month or two ago that is not what I believe,'' said O'Brien, 54. "We continue to see the potential for worldwide inflation, and gold continues to offer a place for investors that is uniquely positioned.'' The metal has gained for seven straight years. Reduced production and increasing jewelry purchases outside the U.S. also may boost prices later this year, O'Brien said. Bloomberg
-A Rough Projection of Gold and Silver Prices. Read and see more charts here-http://libertyvalley.com/rough_projection_gold_and_silver_prices
-Gold Will Start Shining Again: An Interview with Rob McEwen. The cost of producing an ounce of gold is going up. In 2001, the average price to produce an ounce was $160. Today, the cost is over $400. And that's in the space of six years, seven years. Gold is a monetary metal, and therefore it plays a very different role than most of the other metals that are produced, which are industrial.
Gold is a store of value, and at certain times, such as we're in right now where there's a great deal of financial uncertainty, people will seek to protect capital by using gold, as a place to put their money. And I can see much, much higher prices than we have today coming out of that concern about the financial system imploding on itself right now.
I believe that by the end of 2010, we'll be seeing $2,000 gold, and before the gold cycle is out, it will go up and touch $5,000, and that will be the end of the mania phase. I don't believe that we're out of the woods on the financial problems, and the economy has quite a bit to shake off before it will start to look good. And there will be more people looking for answers where to put their money so they can protect it. Gold will start shining.
The annual production of gold expands the world supply by about 1% a year, whereas the money supply has been expanding at better than 8% a year around the world, so gold is in short supply. And as we talked about at the beginning, the cost of producing an ounce of gold is going up, and it's going up rapidly while annual production is going down. It's harder to find gold; it's more expensive to produce gold; and it takes longer to build new mines, yet more people want to buy it. Read more here-http://www.theaureport.com/pub/na/1570
-Is Gold About To Decouple From The € and Rise With The $? Read more here-http://news.goldseek.com/GoldForecaster/1219849200.php
-Delusional seems to be mental state of investment community as September approaches. Nonsensical talk of the U.S. dollar having put in place a secular, or long-term, bottom is widespread. That EU economic growth rate might slow somewhat is interesting, but may be no more than statistical noise. That growth rate of Chinese economy might slow from "11+%" to "9%" is interesting, but is hardly a "dramatic" slowing.
Western economies would love to achieve that level of growth over two years. This week's chart shows U.S. economy collapsing into recession. As largely a measure of momentum of a number of real economic activities, it is not distorted by questionable inflation measures. With the U.S. financial system near dysfunctional, a further slide into recession is the only reasonable expectation.
Momentum chasing traders are pushing the U.S. dollar to another long-term top. With Putin, The Terrible flexing his military might, Pakistan moving slowly toward a hard line government in control of nuclear weapons, and Israel facing a "Window of Necessity" on Iran after the November U.S. election, many reasons exist to own Gold. Some investors around the world are no doubt looking at this situation and are moving funds out of local institutions into dollar deposits.
However, to look at the abysmal fundamentals of the U.S. economy and then to prognosticate a longer term bullish outlook for the U.S. dollar is pure fantasy. $Gold has put in place the 2008 bottom on the current dollar fantasy. Investors, now, need to turn their thinking to potential for a new high in the future. Given all the factors, adding to your Gold holdings at current bargain prices is imperative. Remember, many of the dollar bulls of today were FNM & FRE bulls of yesterday. Ned W. Schmidt
-Gold, the Dollar and Inflation. The best way to view this latest correction in the price of gold is as a temporary setback of no real consequence from an investment perspective (unless you use it as a buying opportunity). David Galland-Read more here-http://www.321gold.com/editorials/casey/casey082208.html
-Greg Peel: The great U.S. gold shortage. Read more here-http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=FC7CEB81-1871-E587-E1AEF23473328901
-John Lee on gold coin rationing: Where there's smoke, there's fire. Read more here-http://www.gata.org/node/6524
-The Strange Case of Dr. GLD & Mr. Bullion. Read more here-http://seekingalpha.com/article/92191-the-strange-case-of-dr-gld-mr-bullion
-Bundesbank says gold reserves gaining importance. Read more here-http://www.gata.org/node/6513
-The Kondratieff Winter Is Upon Us. In an exclusive interview with Long Wave Analyst Ian Gordon, Resource Investor learns that the Kondratieff Winter is upon us, that the future looks very grim and that there is only one haven gold. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=12400
-Gold-Plated Church Windows Purify Air. Medieval stained-glass windows colored in gold nanoparticles help purify air when lit by the sun, a new study finds. Read more here-http://www.livescience.com/health/080821-church-windows.html
-A landlord can enforce a clause in 1912 lease requiring that rent be paid in gold coin for a landmark building in Cleveland, a federal appeals court ruled Wednesday. A three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati sent the case back to a U.S. District Court in Cleveland to determine the equivalent rent that S&R Playhouse Realty Co. would owe for the Halle building with the "gold clause" enforced. The lower court also must address any remaining defenses by S&R.
The building is owned by 216 Jamaica Avenue LLC, which filed a breach-of-contract lawsuit in 2006 against S&R demanding rent equivalent to the value of 35,000 1912 gold coins. S&R has paid $35,000 annually in U.S. currency since assuming the lease in 1982 and balked at paying what would be a much higher amount. The lower court, finding for S&R, refused to enforce the gold clause. Read more here-http://www.gata.org/node/6536
SILVER
-Special Got Gold Report, Silver Investors Sucker Punched by Two U.S. Banks. Once the evidence now coming to light reaches the mainstream Wall Street press, just about everyone will likely conclude that silver investors worldwide were just sucker punched by two, very well-funded U.S. banks.
If silver really was just taken down by a couple of very big U.S. banks to irrationally low levels, it won't be long before the laws of supply and demand reassert themselves. Got silver? Read more here-http://www.resourceinvestor.com/pebble.asp?relid=45611
-The Usual Suspects after All. Read more here-http://news.silverseek.com/SilverSeek/1219962959.php
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1219417468.php
-Silver Arbitrage from David Morgan. Read more here-http://news.silverseek.com/SilverInvestor/1219384768.php
-Once-upon-a-time, in 'never-never' land, there were two competing silver prices. Read more here-http://www.321gold.com/editorials/degraaf/degraaf082708.html
-Gold/Silver Market Updates from Clive Maund. Read and see charts here-http://www.321gold.com/editorials/maund/maund082608.html
-Richard J. Greene: Amateur hour in the precious metals markets. Read more here-http://news.goldseek.com/ThunderCapitalManagement/1219350515.php
-Gold and silver outlook both seen as gloomy, but some glimmers of brightness. The precious metals analysis in the latest Metals Market report for Fortis Bank from the VM Group is generally gloomy on the current outlook for gold, silver and platinum group metals, but does recognize some more positive pointers. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=60617&sn=Detail
PLATINUM-PALLADIUM
-The platinum market is looking "fantastic" says Ian Henderson, who manages around $5 billion at JP Morgan's Global Natural Resources fund. Prices have slipped by more than a third since they struck a record high of $2,290 an ounce in March, leading a number of analysts to suggest the precious metal may have been oversold. "The platinum market is going to be in deficit until probably 2010 and that means prices will continue to be high," said Henderson.
Fears over the outlook for the automotive sector, which consumes around a third of the world's platinum each year for use in catalytic converters, may have been overstated, he said.
"The changes in emission legislation for buses and commercial vehicles within Europe is going to be rolled out across the planet," he said.
Meanwhile global production, which is expected to be curbed this year by an ongoing power shortage in major producer South Africa, is expected to remain under pressure. Power shortages in the country, which produces four out of every five ounces of the world's platinum, will not be resolved until 2012, he said. Reuters
-Platinum deficit shrinks dramatically. Read more here-http://www.miningmx.com/platinum/729654.htm
-Palladium is providing an alternative to platinum for automakers looking to reduce costs in developing automotive catalysts. While platinum is still used in the diesel sector, palladium is becoming increasingly used in petrol catalysts to reduce costs. "Automakers have replaced most platinum with palladium," said David Jollie, Johnson Matthey precious metals market analyst.
Figures from Johnson Matthey indicate that the demand for palladium autocatalysts increased by ten per cent during 2007. Mr. Jollie told Mining Weekly that rhodium is now being carefully used in standard automotive catalysts because of its record price.
While it still remains an important metal in controlling nitrogen oxide emissions, automakers can only reduce their rhodium usage by a certain amount. Mr. Jollie said that the price of rhodium had dropped by $1,000 during July because of a slowdown in the automotive market in the US. The price was also influenced by the increase in rhodium production in South African mines and revealed that the market was more vulnerable to daily price movement than platinum. Platinum.matthey.com
DEFINITIONS-QUOTES-QUICK HITS
-Federal Deposit Insurance Corporation FDIC. The U.S. corporation insuring deposits in the U.S. against bank failure. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
The FDIC will insure deposits of up to US$100,000 per institution as long as the bank is a member firm. Before opening an account with a financial institution, be sure to check that it is FDIC insured. Investopedia.com
-Canadian Deposit Insurance Corporation CDIC. A crown corporation owned by the Canadian government that insures bank deposits up to C$100,000 per personal account held in member Canadian banks in they event that the financial institution fails. The corporation was formed under the Financial Administration Act and Canada Deposit Insurance Corporation Act in 1967. The CDIC is similar to the Federal Deposit Insurance Corporation in the United States.
Between 1967 and 2008, Canada experience the failure of 43 financial instutions, all of which were CDIC member banks. When using a bank in either in the United States or Canada, FDIC or CDIC membership is important to consider, as it provides depositors with some insurance against losing their savings. Investopedia.com
-"Oil prices have fallen lately. We include this news for the benefit of gas stations, which otherwise wouldn't learn of it for six months." William D. Tammeus
-"If gold goes to $1,500, silver can go to $40." John Embry Sprott Asset Management-BNN Aug 28 2008
-Physical demand remains very robust in the US, India, the Middle East and Asia. Reuters reports that dealers in Singapore and Hong Kong are also experiencing tight supply for gold bars. The large international refiner, Johnson Matthey has recently had an 8-10 week delay for 100 ounce silver bars and now they are no longer taking orders.
Clearly, this is about a lot more than blanks for coins and this is very important and should not be downplayed and underestimated. The bottom line is that this lack of supply and huge demand will result in materially higher prices in the coming weeks otherwise these supply/demand issues will become even sharper and the lack of availability of certain smaller bullion products will likely spread to other bullion products and may "move up the value chain" and affect the larger bar market as well. Gold.ie
-World's Largest Gold Refiner Runs Out of Krugerrands. Rand Refinery Ltd., the world's largest gold refinery, ran out of South African Krugerrands after an ``unusually large'' order from a buyer in Switzerland.
The order was for 5,000 ounces and it will take until Sept. 3 for inventories to be replenished, said Johan Botha, a spokesman for Rand Refinery in Germiston, east of Johannesburg. He declined to identify the buyer.
Coins and bars of precious metals are attracting investors as a haven against a sliding dollar and conflict between Russia and its neighbor Georgia. The U.S. Mint suspended sales of one- ounce "American Eagle'' gold coins, Johnson Matthey Plc stopped taking orders for 100-ounce silver bars at its Salt Lake City refinery and Heraeus Holding GmbH has a delivery waiting list of as long as two weeks for orders of gold bars in Europe.
"A lot of people are worried about the dollar, they're worried about inflation and now we have geopolitical risk with what's happening in Russia,'' said Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. O'Byrne said his company's sales are up fourfold this year, heading for a record since its founding in 2003. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=acH4WhPh1WJ0
-Lacking any real change in fundamentals, such abrupt changes in sentiment following extreme price swings are as bullish a sign as I have ever seen. There is absolutely no basis for a significant dollar rally, or further weakness in gold, oil, or other commodities.
The U.S. is the focal point of the world's financial turmoil. We convinced creditors around the globe into loaning us trillions of dollars. Now that it's becoming increasingly apparent we cannot pay the money back, Wall Street has concocted a scenario where our shell shocked creditors respond by loaning us even more. More alarming is that many brain dead investors see this as a likely development.
The fact is that the outlook for the dollar has never been bleaker and the prospects for gold and other commodities have never been brighter. The rationale for a new dollar bull market, or bear markets in commodities, is just as flawed as those used to justify investments in internet stocks and subprime mortgages. Interestingly enough, it's mostly the same suspects advancing the arguments. Peter Schiff-Read more here-http://www.321gold.com/editorials/schiff/schiff082208.html
-Results of Absolute Auction in Tesoro Preserve. Postponed by tropical storm, Fay, the sale was held last night. Palm Coast, Florida-August 27, 2008-An absolute auction of a building lot in Tesoro, Bobby Ginn's private golfing community in Port St. Lucie, was scheduled for August 19th. Tropical storm, Fay, caused a delay. The rescheduled auction was held on-site last night under threatening skies.
In an absolute auction, the highest bidder wins, regardless of price. Eight bidders registered for the sale. They were joined by a handful of spectators. Bidding began at $25,000, jumped to $30,000, then to $35,000 when the bidding increment dropped to $1,000. It finally stopped at $49,000. A 10% buyer's premium (to pay the auction company) brought the sale price to $53,900. This Tesoro Preserve lot was originally purchased for $245,150. Elliot Paul & Company was the auctioneer. Jsmineset.com
RARE COLORED DIAMONDS
-Rio Tinto Launches Annual Argyle Pink Diamond Tender. Rio Tinto launched its 24th annual Argyle Pink Diamond Tender this past week in Perth, Australia, the company confirmed Monday. The Perth event, which took place August 21-22, was the first of six to be held around the world featuring "65 of the world's rarest pink diamonds from the Argyle mine in Australia."
The remaining five showings include in New York from September 2-5, London (September 9- 11,) Hong Kong (September 15 -20,) Tokyo (September 24-26,) and finally in Sydney (October 1-2.) Successful bidders will be notified in October. "The pink diamond jewelry market has grown in popularity and is now worth hundreds of millions of dollars as the desire to own the rarest has sent prices skyrocketing," said Raj Kandiah, general manager Argyle Pink Diamonds.
"Pink diamonds are worth approximately 20 times the cost of the same size white diamond. However, the sky is the limit when it comes to Rio Tinto's Argyle Signature Stones each diamond is so unique that it warrants an individual price tag." Rio Tinto said the exclusivity of the Argyle diamonds was enhanced by the limited life span of the Argyle mine, which is expected to be depleted by 2018.
The first pink diamonds were recovered from Argyle in 1985. Among this year's collection, Rio Tinto is presenting "a captivating heart shaped pink diamond" for the first time in seven years. There are also a number of highly sought after purplish reds, intense and vivid pinks and three rare violets that add to the vibrancy of this collection. Rio Tinto has named two "hero" stones from the collection for the first time this year: ‘Aphrodite,' a 1.01 carat round purplish red, which takes its name from the Greek Goddess of love and passion; and ‘Ocean Seer,' a 1.41 rare violet stone, which symbolizes ancient wisdom and serenity.
In total, the collection showcases 62.46 carats of diamonds with 30 diamonds more than one carat in size. Attendance to the Pink Diamond Tender will be restricted to approximately 100 key clients, who will view the diamonds in secret locations in Sydney, Tokyo, London, Hong Kong, New York or Perth, the company explained. Due to the high security required for the tender, the exact location is not revealed to bidders until the very last minute. Bids are confidential and the names of successful bidders and the values achieved are not disclosed, Rio Tinto added. Diamonds.net
-Diversified mining group Rio Tinto mined a total of 7.853 million carats of diamonds in the first half of 2008, down 31 percent from 11.446 million carats in 2007. Despite the drop in production volume, diamond revenues were up, a result of rising rough diamond prices. Read more here-
http://www.idexonline.com/portal_FullNews.asp?id=31035
-The world's most expensive streets. Every city has one a retail thoroughfare that houses the most exclusive stores. Real estate slowdown or not, these luxury corridors are still thriving. Read more here-http://money.cnn.com/galleries/2008/fortune/0808/gallery.right_address.fortune/index.html
COMMODITIES-OIL
-Commodities Hint of Bottom on Mine Closings, Supplies. Corn and soybeans have rebounded as reduced crop yields push U.S. stockpiles to near five-year lows. Oil has reversed on U.S.-Russian tensions. Nickel has turned after Xstrata Plc closed a Dominican Republic plant.
The worst rout in the history of commodities may be ending, signaling a replay of the 2006 tumble that preceded a doubling of prices in the next 17 months as measured by the Standard & Poor's GSCI index. Only this time, the driver is supply cuts rather than increasing demand.
Supply constraints are ``coming more and more to the fore'' and that "will separate the performance of individual commodities,'' said Alan Heap, global commodity analyst at Citigroup Inc. in Sydney. "We're still looking for higher prices next year and in some cases the year after.''
Commodities are in their seventh year of gains, fueled by demand led by China and India and disruptions to mine and farm supplies. A rebound in raw materials from four-month lows may boost profits at BHP Billiton Ltd., raise costs at Nestle SA and stoke inflation, limiting the ability of central bankers Ben S. Bernanke and Jean-Claude Trichet to cut interest rates and revive growth in the U.S. and Europe. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aYfqSdetquJ8
-Some reasons not to expect a collapse in raw-materials prices. Read more here-http://www.economist.com/finance/displayStory.cfm?story_id=11993243&source=features_box_main
-Jim Rogers Forecasts Oil Price Rises to Extend Over Next Decade. Jim Rogers, who in April 2006 correctly forecast the oil price would reach $100 a barrel and gold $1,000 an ounce, said he expects oil to continue to increase over the next decade.
"Over the course of time, it's a bull market,'' the chairman of Rogers Holdings said today after at an investor conference in Kuala Lumpur. While the oil price could fall to $75 or rise to $175, the market will continue to increase over the next 10 years, he said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aW2b1ZBusAlo
-Oil drillers scramble for workers. As the oil biz booms, filling jobs that often require living in the middle of the ocean for extended periods of time is getting more difficult, and more expensive. Read more here-http://money.cnn.com/2008/08/26/news/economy/oil_workers/index.htm?postversion=2008082613
U.S. BANK FAILURES
-US regulators shut Kansas bank. Columbian Bank of Topeka, reported $92 million in delinquent loans in the second quarter. Read more here-
http://money.cnn.com/2008/08/23/news/companies/kansasbank_closure/index.htm or http://www.bloomberg.com/apps/news?pid=20601087&sid=a9iX_1ShWWAs&refer=home
-Problem bank list keeps growing. FDIC says list of troubled banks in 2nd quarter grows to 117 with $78 billion in assets up from 90 banks, $26 billion in assets in 1st quarter. Read more here-http://money.cnn.com/2008/08/26/news/economy/fdic_banks/index.htm?postversion=2008082615 or http://www.bloomberg.com/apps/news?pid=20601087&sid=aOaSmPh0G3QU&refer=home
-What the 'problem bank' list doesn't say. More banks are in trouble nowadays, but some experts wonder just how accurate a picture the FDIC's list paints of the industry. Read more here-http://money.cnn.com/2008/08/28/news/companies/fdic_banks/index.htm?postversion=2008082813
-FDIC Urges U.S. Banks to Improve Their Liquidity Measurements. The Federal Deposit Insurance Corp. today urged U.S. banks to develop contingency plans that will ensure they have sufficient capital to weather unforeseen events such as the loss of a large depositor.
"Some institutions have underestimated the difficulty of obtaining or retaining funding sources during times of financial distress,'' the Washington-based insurer of U.S. deposits said in guidelines released to banks. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=au5Swzu04zJs
-Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. Ms. Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold. Read more here-http://www.gata.org/node/6530
-FDIC gets ready for bank failures. Regulator, insurer boosts its staff and provisions as it faces its biggest challenge in decades. Read more here-
http://www.statesman.com/business/content/shared/money/stories/2008/08/fdic_0824_1.html
-FDIC Adds Office Space in Dallas, Ready for More Bank Failures. The Federal Deposit Insurance Corp. is preparing to sign a five-year lease to add five floors of space at its Dallas regional office as the agency prepares to increase scrutiny of failing and troubled U.S. banks. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4CHPudHiwIs&refer=home
-U.S. Bank Earnings Plunge to Second-Lowest Level Since 1991. U.S. bank and thrift earnings from April through June tumbled to the second-lowest level since 1991, as lenders added to their reserves for mounting loan losses, the Federal Deposit Insurance Corp. said.
FDIC-insured lenders reported net income of $4.96 billion, down from $36.8 billion in the same quarter a year ago, the agency said today in its quarterly report on the banking industry released in Washington. The agency reported 117 "problem banks'' in the period up from 90 in the first quarter.
"By any yardstick, it was another rough quarter for bank earnings,'' FDIC Chairman Sheila Bair said in a statement. ``But the results were not unexpected as the industry coped with financial market disruptions, the housing slump, worsening economic conditions and the overall downturn in the credit cycle.''
The world's largest banks and securities firms have announced more than $500 billion in asset writedowns and credit losses since 2007 linked to declines in mortgage-backed securities.
Nine banks have failed this year, including California- based mortgage lender IndyMac Bancorp Inc., the third-largest federally insured institution to be seized by U.S. regulators. The FDIC is running a successor institution, IndyMac Federal Bank FSB, while it seeks a buyer. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aP.J6oKGB21s
-It's more than Fannie and Freddie, U.S. banking system in trouble. Read more here-http://news.goldseek.com/MillenniumWaveAdvisors/1219614778.php
SUBPRIME LOSSES HIT 506 BILLION
-Banks' Subprime Market-Related Losses Reach $506 Billion. The following table shows the $506.1 billion in asset writedowns and credit losses at more than 100 of the world's biggest banks and securities firms as well as the $352.6 billion capital raised to cope with them. See table here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=aDmQ66OoJbfw
FREDDIE-FANNIE
-Fannie Mae and Freddie Mac, the two largest mortgage finance companies, "don't have any net worth,'' billionaire investor Warren Buffett said. "The game is over'' as independent companies said Buffett, the 77-year-old chairman of Berkshire Hathaway Inc., in an interview on CNBC today. "They were able to borrow without any of the normal restraints. They had a blank check from the federal government.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aTMSz3VoUqu0&refer=home
-Billionaire investor Warren Buffett said Friday he believes mortgage giants Fannie Mae and Freddie Mac are too big to fail, but shareholder equity in those companies could be wiped out. During a live appearance on CNBC, Buffett predicted the federal government eventually will have to step in to help because the troubles of Fannie Mae and Freddie Mac seem to be growing and feeding on themselves.
"They're looking for help, obviously. And the scale of help is such that I don't think it can come from the private sector," Buffett said. Though the timing was not clear, Buffett acknowledged that he had been approached by the government-sponsored enterprises for help and passed on getting involved. Read more here-
-Freddie, Fannie Failure Could Be World `Catastrophe,' Yu Says. A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.
"If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. "If it is not the end of the world, it is the end of the current international financial system.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601080&sid=aslo2E01QVFI&refer=asia
-Fannie, Freddie Attract Buyers to Short-Term Debt. Fannie Mae and Freddie Mac sold $3 billion of short-term notes at yields that suggest the largest U.S. mortgage-finance companies are still capable of financing their businesses without government assistance. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alj9yV4EiQUk
-Fannie Replaces Top Managers Amid Capital Concern. Fannie Mae Chief Executive Officer Daniel Mudd replaced three top managers at the beleaguered mortgage-finance provider as the company struggles to convince investors it has enough capital to weather the housing slump.
Financial chief Stephen Swad, 47, Chief Business Officer Robert Levin, 52, and head of risk management Enrico Dallavecchia, 46, will all leave, according to a statement today by the Washington-based company. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqNRdniRRX_4
-JPMorgan Says Fannie, Freddie Investment Declined. JPMorgan Chase & Co., the second- biggest U.S. bank, said the value of a $1.2 billion investment in Freddie Mac and Fannie Mae shares has declined by half so far this quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aCs8thOoVAHw&refer=home
U.S. BANKRUPTCY
-Bankruptcy filings surge to 1 million up 29%. Number of bankruptcy filings in recent 12-month period rises to nearly 1 million.
http://money.cnn.com/2008/08/27/news/economy/bankruptcy/index.htm
-Alabama County Prepares for Bankruptcy in Debt Crisis. Jefferson County, Alabama, officials told their lawyers to prepare a bankruptcy filing if the county can't reach an agreement with creditors over how to escape from $3 billion of bonds with soaring interest rates.
The Jefferson County Commission voted unanimously this week to have the law firm Bradley, Arant, Rose and White LLP and the county attorney take over negotiations with creditors led by JPMorgan Chase & Co. and draw up bankruptcy papers should talks falter. The two replace bankers and advisers including Citigroup Inc., whose proposals failed to win support.
U.S.-U.K. RECESSION-FINANCIAL CRISIS
-Buffett: We're still in a recession. Billionaire investor says financial crisis will continue in the near term as credit market continues to drag on financial industry. Read more here-
http://money.cnn.com/2008/08/22/news/economy/buffett.ap/index.htm
-U.K. Economic Growth Stagnated in Second Quarter. The U.K. economy stagnated unexpectedly in the second quarter, ending the nation's longest stretch of economic growth in more than a century.
Gross domestic product was unchanged from the previous quarter, the Office for National Statistics said, compared with a previous estimate for growth of 0.2 percent. Economists had expected a 0.1 percent expansion, according to the median estimate of 34 economists. Growth was 1.4 percent from a year earlier, the weakest since 1992. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1XgwRQPudug&refer=home
-The economic growth mirage. Sure, the economy grew at a decent clip in the second quarter. But economists say the gain may be temporary and warn of tougher times ahead. Read more here-http://money.cnn.com/2008/08/27/news/economy/economy_outlook/index.htm
-Economy gets big stimulus boost. U.S. gross domestic product grew by 3.3% in the second quarter much more than previously stated. Economists say the economic stimulus package contributed to the rise. Read more here-http://money.cnn.com/2008/08/28/news/economy/gdp/index.htm
-U.S. view of economy is getting worse poll. Three out of four Americans believe the economy is in bad shape, CNN/Opinion Research Poll shows. Read more here-
http://money.cnn.com/2008/08/25/news/economy/cnn_poll/index.htm?postversion=2008082510
-The Perfect Storm of a Global Recession by Nouriel Roubini-Read more here-http://www.project-syndicate.org/commentary/roubini7
-Bernanke: Financial storm not yet over. Fed chief suggests problems in credit markets not yet over and are a threat to economy; encouraged by lower oil prices. Read more here-
http://money.cnn.com/2008/08/22/news/economy/bernanke/index.htm?postversion=2008082211
-Financial crisis enters new, uncertain stage. Losses expected to double, while Fed remains under microscope. The financial crisis has entered a new phase and will likely bring total credit losses above $1 trillion, according to a leading academic who has been studying the turmoil since its beginning a year ago. Read more here-
-Financial Crisis Is Absent From Agendas of Parties, Candidates. The U.S. is facing the worst financial crisis since the Depression. You would never know that from the Democrats' platform in Denver or its Republican counterpart, or from listening to Barack Obama or John McCain.
While both candidates have bemoaned the ravages of the subprime crisis, they have yet to spell out steps for tackling it, such as using taxpayer money to shore up banks and housing.
"They fail to come to grips with the biggest danger that is going to hit the next president in his first few months in office: the crisis in the capital markets,'' said David Smick, a Washington-based consultant to hedge funds and author of ``The World is Curved: Hidden Dangers to the Global Economy.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601070&sid=a.7OGRdxkXSE&refer=home
-The box office indicator. When times get tough, consumers beeline to the movies. Read more here-http://money.cnn.com/2008/08/21/news/companies/Movies.fortune/index.htm
U.S. ENTITLEMENT DEBTS
-Boomers won't bust us Health care will. As the general election campaign heats up, you'll hear more about a looming entitlements crisis. And there is a real problem.
http://money.cnn.com/2008/08/26/pf/bottom_line.moneymag/index.htm
U.S. DOLLAR
-Dollar rescue plan was drawn in March, Japanese paper says. he United States, Europe, and Japan had planned to intervene and rescue a weak U.S. dollar in March, business newspaper Nikkei reported on Wednesday.
Officials from the U.S. Treasury Department, Japan's Finance Ministry, and the European Central Bank reportedly drew up a currency contingency plan to be undertaken over the March 15-16 weekend, Nikkei reported, citing sources familiar with the situation.
The monetary officials also agreed on a framework for coordinating dollar-buying intervention, the report said. The officials did not specify an exchange rate for initiating the dollar rescue plan, but in the event of a free-fall, they all agreed to aggressively buy the greenback and sell yen and euros, according to Nikkei. Read more here-http://www.gata.org/node/6532
-Criminals dumping weak US dollar for euro. The weakened US dollar has fallen out of favor with organized crime groups to pay for drug shipments or to settle scores, a Canadian government report said Friday.
And if the greenback continues its slide in 2008, as expected, more and more criminals are likely to exchange euros for illicit goods, said Criminal Intelligence Service Canada in its annual report. "The US dollar weakened significantly against other major currencies in 2007 and according to some economists, is expected to depreciate further in 2008," said the report.
"As a consequence, other currencies particularly the euro are poised to weaken the US dollar's dominance as the currency of choice for international remittances and payments," it said. "This trend could also drive an increase in observed instances of bulk-cash transfers denominated in currencies other than Canadian and US dollars," the report added. Read more here-
-Beijing swells dollar reserves through stealth. China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy.
A study by HSBC's currency team in Asia has concluded that China's central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/26/ccchina126.xml
-Gulf states remain wedded to dollar. As oil prices soared and the value of the U.S. dollar plunged, a chorus of academics and policy experts took up the cry that Saudi Arabia and neighbouring Gulf countries should abandon their currency peg to a depreciating dollar to help combat the social ravages of inflation that were spreading across the region. Read more here-http://www.iht.com/articles/2008/08/25/business/gulfeconomy.php?page=1
INTEREST RATES
-Fed Policy Makers Agree Next Move on Rates Will Be an Increase. Federal Reserve policy makers agreed this month that their next change in interest rates will be to raise them, while reaching no conclusion on the timing of such a decision.
"A number of participants worried about the possibility that core inflation might fail to moderate next year unless the stance of monetary policy was tightened sooner than currently anticipated by financial markets,'' according to minutes of the Federal Open Market Committee meeting released today. At the same time, officials agreed that the timing of any move will depend on economic and financial developments. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=arn0BWk.Hj08
-Lockhart Says Fed Rate Consistent With Inflation Drop. Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank's interest-rate stance is ``consistent'' with slowing inflation, while signaling readiness to raise borrowing costs if needed.
"Current Fed policy is consistent with an easing in overall inflation given the dynamics of the economy,'' Lockhart said in a speech today in Atlanta. At the same time, ``I am mindful of today's elevated risks and am prepared at any point to change tactics to ensure inflation expectations do not become unanchored.''
Policy makers agreed on Aug. 5 that their next change in rates would be an increase, according to minutes of their meeting released yesterday. A number of officials concerned at rising risks of inflation favored an increase earlier than traders expected, the minutes also showed. Lockhart will vote on rates for the first time in 2009. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid=a65YCR7xG1m8
-Weber Says Higher Rates May Be Needed After Recovery. European Central Bank council member Axel Weber said there's no room for interest-rate cuts and policy makers may need to raise borrowing costs once the economy emerges from its slump.
"Monetary policy at the moment is roughly where it should be and I think the discussion about declining rates in Europe is premature,'' Weber, 51, said in an interview in his office in Frankfurt yesterday. ``If the economic outlook brightens somewhat again towards the end of the year and next year, which I still expect, we'll have to see if action is necessary.''
Europe's economy contracted in the second quarter and may not recover in the third, raising the risk of the region's first recession since the euro was introduced in 1999. Weber said the ECB, which increased its benchmark rate by a quarter point to 4.25 percent in July, remains focused on fighting inflation. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayYHUgl5LQZs&refer=home
INFLATION
-US Federal Reserve chairman Ben Bernanke has said the inflation outlook for the country is "highly uncertain". And he said that rising prices, coupled with the effects of the credit crunch, had given the US economy a battering.
Mr. Bernanke, speaking to a Kansas City Federal Reserve Bank conference in Jackson Hole, Wyoming, said Fed policy makers had to preserve price stability. US prices rose by 5.6% in the year to July, the fastest inflation rate since 1991, recent figures showed. Read more here-http://news.bbc.co.uk/2/hi/business/7577357.stm
-Economists: Inflation threat growing. Survey of top economists finds inflation concerns closing fast on credit market woes as top threat to economy. Read more here-
http://money.cnn.com/2008/08/25/news/economy/nabe_survey/index.htm?postversion=2008082505
-Price vs. Value in the Inflation/Deflation Debate by James Turk. Read more here-http://www.kitco.com/ind/Turk/turk_aug262008.html
WORKING HARDER TO TAKE HOME LESS
-Work harder, take home less. From 2000 to 2007, worker productivity rose significantly in the United States, but real income fell for middle-class families, a group of economists says. Read more here-http://money.cnn.com/2008/08/27/news/economy/state_of_working_america/index.htm
-Canadians earn more, lose buying power, statistics suggest. Read more here-http://www.cbc.ca/money/story/2008/08/27/payroll-earnings.html
REAL ESTATE
-Home prices plummet in a new record. National prices fell 15.4% in past 12 months. Las Vegas was the worst-hit city, while Denver and Boston saw the biggest price increases. Read more here-http://money.cnn.com/2008/08/26/real_estate/Case_Shiller_home_price_report/index.htm?cnn=yes or http://www.bloomberg.com/apps/news?pid=20601110&sid=ahhmUgCw1IO8
-Housing Rebound Unlikely Before 2009, HUD Chief Says. A recovery in the U.S. housing market from the worst slump since the Depression is unlikely until ``well into 2009,'' Housing and Urban Development Secretary Steve Preston said today.
"I think we're right in the middle of it, and I think we have a ways to go before we start seeing a turnaround,'' Preston said today in an interview at the agency's Washington headquarters. "We'll be well into 2009 before we see some real energy in this market.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a4nfoY47rBfo&refer=home
-New-Home Sales in U.S. Rose From 17-Year Low, Inventory Plunged. New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades.
Sales increased 2.4 percent to a 515,000 annual pace that was lower than anticipated after a downwardly revised 503,000 rate in June, the Commerce Department said today in Washington. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=ar.KdCVQw3wc&refer=home
-U.S. Existing Home Sales Rose 3.1 Percent in July. Sales of previously owned homes in the U.S. rose in July from a 10-year low, while the gain wasn't enough to reduce the supply of properties on the market.
Resales rose 3.1 percent, more than forecast, to an annual rate of 5 million from 4.85 million in June, the National Association of Realtors said today in Washington. The median price dropped 7.1 percent from July 2007, and the number of homes for sale jumped to a record.
Record foreclosures have pushed property values down even more, luring some bargain hunters into the market. Still, stricter lending rules, rising unemployment and a glut of unsold houses signal the outlook for residential real estate remains grim.
"It'll be a while before we get a real recovery in housing,'' Stephen Gallagher, chief U.S. economist at Societe Generale in New York, said before the report. ``These things take time to work through. Prices have come off, so that's helping home sales a little.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aPQQLAXTQnWg&refer=home
-U.K. House Prices Drop Most Since 1990, Retail Index Plunges. U.K. house prices declined at the fastest annual pace in almost two decades and an index of retail sales plunged to a 25-year low in August as Britain's economy edged closer to a recession.
The average value of a home fell 10.5 percent to 164,654 pounds ($301,500), the biggest drop since the final quarter of 1990, Nationwide Building Society said today. A gauge of retail sales fell to minus 46 from minus 36 the previous month, the Confederation of British Industry said in a separate report. That's the lowest since its survey began in July 1983.
Today's reports indicate Britain is heading for its first recession since the early 1990s after stagnating in the second quarter as higher living costs hurt spending and the credit squeeze ripples through the economy. As the outlook worsens, economists at banks including Societe Generale SA and Bank of America Corp. now forecast the Bank of England will be forced to set aside inflation concerns and cut interest rates this year.
"The big issue is how long and how severe'' the U.K.'s recession is going to be, said Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. ``We're in it. It shouldn't be news anymore.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a5skYtM7P168
-London Real Estate Shakeout Means REITs Lose 50% on Attrition. London developers are adding the equivalent of 160 trading floors of office space in the main financial district in the next two years. Their timing couldn't be worse.
Prices for offices in the City of London have plunged 25 percent since last August, the biggest drop since 1992, according to Investment Property Databank Ltd., and rents are declining for the first time in four years, said CB Richard Ellis Group Inc., which estimates rents may drop by a quarter by the end of next year. The commercial property market won't recover until at least 2013, said Mike Prew, a real estate analyst at Lehman Brothers International Europe in London.
U.K. property stocks have fallen by more than half since Britain introduced real estate investment trusts in January 2007. The shares may fall by another 23 percent by the end of 2009 as building values decline and the country slides into a recession, said Morgan Stanley analyst Martin Allen. He has the lowest price target of any analyst covering British Land Co., the biggest landlord and developer in the City.
"We don't have a supply problem, we have a demand problem,'' said Patrick Sumner, head of real estate securities at Henderson Global Investors in London, which owns 1 billion pounds of property stocks. ``Tenants are not going to take big decisions until things are clearer than they are now.'' Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPm0gEaUR6SM&refer=home
FORECLOSURES
-2 million troubled borrowers avoid foreclosure. The Hope Now coalition reports that it completed a record number of mortgage workouts in July - but that was outpaced by the increasing rate of foreclosures. Read more here-http://money.cnn.com/2008/08/26/real_estate/Hope_now_hits_two_million/index.htm
-Mortgage fraud still soaring. A crackdown on underwriting has failed to halt an explosion of fraudulent home loans. Read more here-
http://money.cnn.com/2008/08/25/real_estate/soaring_mortgage_fraud/index.htm?postversion=2008082606
GEOPOLITICAL NEWS
-Iran's Ahmadinejad in new verbal attack on Israel. Iranian President Mahmoud Ahmadinejad renewed his verbal attacks on arch-foe Israel on Saturday, accusing it of dragging the world into turmoil and predicting its demise. "About 2,000 organised Zionists and 7,000 to 8,000 agents of Zionism have dragged the world into turmoil," Ahmadinejad told a rally in the central Iranian city of Arak carried live on state television.
He said that if the West does not restrain Zionism, "the powerful hand of the nations will clean these sources of corruption from the face of the earth," without specifying which nations.
Iran does not recognise the Jewish state and Ahmadinejad has drawn international condemnation by repeatedly saying since his election in 2005 that Israel is doomed to disappear. Read more here-http://www.breitbart.com/print.php?id=080823205825.ys8eb6lz&show_article=1
-Iranian cleric blasts Ahmadinejad. An Iranian cleric accused President Mahmoud Ahmadinejad of betraying the people and called on reformers to unite to defeat him in next year's elections, according to an interview in a German newspaper quoted by Reuters, Wednesday. Read more here-
http://www.jpost.com/servlet/Satellite?cid=1219572137344&pagename=JPost%2FJPArticle%2FShowFull
-Dimitri Medvedev raises spectre of new Cold War. Russia put the West on alert for a new Cold War that the Kremlin is ready to fight, its President said yesterday. President Medvedev set tensions soaring when he recognized the independence of two breakaway republics inside Georgia.
"We are not afraid of anything, including the prospect of a Cold War," he said. Hours earlier he had ordered his Foreign Ministry to start establishing diplomatic ties with the secessionist regions of South Ossetia and Abkhazia.
The move brought instant condemnation from the United States, Britain, France, Germany and other Western countries. President Bush appealed to the Kremlin to "reconsider this irresponsible decision". David Miliband, the Foreign Secretary, said that it was "unjustifiable and unacceptable". Read more here-http://www.timesonline.co.uk/tol/news/world/europe/article4615158.ece
-Russia may cut off oil and gas to Europe. Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of European Union sanctions and NATO naval actions in the Black Sea.
Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets. Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert. Read more here-http://www.gata.org/node/6537
-Putin accuses U.S. of orchestrating Georgian war. Read more here-http://www.cnn.com/2008/WORLD/europe/08/28/russia.georgia.cold.war/index.html
-Story Highlights
-Russian Prime Minister Vladimir Putin accuses U.S. of plotting conflict
-Putin says U.S. did it to help one of the presidential election candidates
-Russia fails to win support of Asian security alliance over Georgia
-Russia had appealed to the Shanghai Cooperation Organization for backing
-N Korea's Kim died in 2003; replaced by lookalike, says Waseda professor. Read more here-http://www.japantoday.com/category/kuchikomi/view/north-koreas-kim-died-in-2003-and-was-replaced-by-lookalike-says-waseda-profesor
-US accuses North Korea of violating nuclear accord. Read more here-http://afp.google.com/article/ALeqM5hYUtAGMYu76LWa_Lsay0yNl3Hasw
© 2009, Worldwide Precious Metals.
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The GoldBugg Report - September 2, 2008
Posted by Worldwide Precious Metals on Tuesday, September 02, 2008
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