Newsroom

The GoldBugg Report - November 25, 2008

November 25, 2008

WORLD FINANCIAL REPORT ON RADIO NOV 21 2008 SHOW

-What does the $3.5bn Saudi gold rush in two weeks mean?

-Silver ETF for Dubai as they fly in bullion for the Hunts of Arabia.

-Gold at $1200 then $1650. The US dollar at .72, .62 and then .52. It cannot be averted. Jim Sinclair

GOLD

-$3.5bn Saudi gold deal huge against $6.5bn consumer record. The revelation of the purchase of $3.5 billion worth of gold by a group of Saudi Arabian investors over the past month is a huge gold deal when you consider that total record third quarter spending on gold by consumers was $6.5 billion. Read more here-http://news.goldseek.com/PeterCooper/1227191136.php

-What does the $3.5bn Saudi gold rush in two weeks mean? Read more here-http://news.goldseek.com/PeterCooper/1226868993.php

-Iran says its reserves have been put into gold. Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July. Read more here-http://www.gata.org/node/6877

-Cabinet minister contradicts Iranian gold claim. Iran is not converting reserves into gold, a cabinet minister said in remarks published on Wednesday, contradicting comments by an aide to the country's president. "It is not correct that Iran is transferring its reserves to gold," Economy Minister Shamseddin Hosseini was quoted as saying by the business daily Poul. Read more here-http://www.gata.org/node/6895

-Governments can't handle global run on gold coins. There's a worldwide run on gold coins. Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders. A spokesperson for the US Mint tells me that gold coins in this country, for the past month, "are being allocated because of an increased demand."

And the price that the government charges coin dealers has recently been increased by as much as 10 percent for a 10-ounce coin. Robert Mish, a coin dealer in Menlo Park, Calif., says customers who want to purchase 200 gold coins often have to wait up to two weeks. Six months ago, he said, a purchase that size could have been filled immediately.

Someone who recently tried to purchase 100 one-ounce American Eagle gold coins in the New York City area was turned away, even though he'd uneventfully made purchases before through the same dealer. And even when gold coins are available, dealers report that customers are paying a bigger premium than they would have just a few months ago.

Previously, American Eagle coins were going for 5 percent over the market price of gold on the Commodity Exchange (Comex). Now the premium can be anywhere from 10 percent to 15 percent, even though the US Mint raised its price to dealers by just 3 percent for an ounce coin. Read more here-http://www.gata.org/node/6886

-World Gold Council says gold remains a safe haven amid volatility. Gold will remain a safe haven for investors while other markets fluctuate, although gold bullion prices have fallen nearly 20% since October. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=73166&sn=Detail

-Safe haven buying produces record dollar demand for gold. Buying up by 45% over the previous dollar record as 'identifiable investment demand' which includes ETFs, bars and coins, showing a 56% gain year-on-year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=73404&sn=Detail

-Gold Demand Rose 18% in Quarter as Price Lured Buyers, WGC Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=aTyN07fDbZYw&refer=commodities

-Why Gold Is Down, But You Can't Get Your Hands on Any. Read more here-http://www.foxbusiness.com/story/markets/commodities/gold-hands/ or

http://www.gata.org/node/6888

-Gold ETF holdings remain robust and silver could outshine gold ScotiaMocatta. Despite the flood of asset liquidations, ScotiaMocatta notes that long-term investors are holding on to their gold holdings and the long term remains bullish for the precious metal, while silver and platinum are also favored. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=73233&sn=Detail

-Got Gold Report Gold, Silver Premiums Highest in Years. A lack of physical bullion supply at the same time of extremely strong demand for popular small bullion items coupled with artificially low futures dominated spot prices for gold and silver resulted in extraordinarily high premiums for virtually all bullion products in October. The very high premiums continue and availability remains tight. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47994

-Gold a safe haven despite volatility. Gold bullion has dropped nearly 20 percent since October after a recent wave of fund selling, but still offers the diversity and value which investors will be looking for in a climate of high risk, said Rozanna Wozniak, investment research manager with industry body the World Gold Council.

"Even at around $700 gold is higher than it was about two years ago," Wozniak said. "Gold has been keenly sought after, reflecting its perception as a safe haven and store of value. There is no risk of it being affected by defaults." Wozniak added that the strong buying by investors in gold as a safe haven had been offset by speculative investors taking profits.

"A significant proportion of this selling has reflected gold's better performance relative to other assets," Wozniak said. "These investors bought gold as their insurance policy and, during times of significant market turmoil and large falls in asset prices, have been able to make a claim against that policy." Read more here-http://services.inquirer.net/print/print.php?article_id=20081116-172577

-Gold market update from Clive Maund. Read more here-http://news.goldseek.com/CliveMaund/1227197920.php

-The Six Biggest Myths about Gold. Read more here-http://news.goldseek.com/GoldSeek/1227164640.php

-Gold: Is there a valid bearish argument? The superficial signs of an inflation problem will almost certainly subside over the next 12 months, but this should not create a significant headwind for gold as long as the rate of monetary inflation continues to rise.

As discussed in the past, the reason is that savvy speculators will likely accumulate positions in gold in anticipation of the eventual/inevitable effects of the monetary inflation. We only have to go back to 2001 for a historical example of what we are referring to. Gold's long-term bull market began in April of 2001 a time when the FIG was at a multi-year low and in freefall. Steve Saville-Read more here-http://www.321gold.com/editorials/saville/saville111808.html

-Russian Officials Weighing Gold-Backed Ruble. Read more here-http://chinaconfidential.blogspot.com/2008/11/russian-officials-weighing-gold-backed.html

-For gold, a tussle between two groups of investors. Retail-based demand jumps even as institutions undergo a massive exodus. Read more here-http://www.gata.org/node/6894 or

http://www.marketwatch.com/news/story/Demand-gold-hits-a-record/story.aspx?guid={215A671B-98AE-4094-A87C-A782BB2B3F49}&print=true&dist=printMidSection

-Gold ETF Impact. The bottom line is GLD has been a smashing success. By excelling in its mission of tracking gold and providing an easy and efficient way to grant gold exposure to mainstream stock investors, it has grown into the 3rd largest ETF on the planet.

And this is even more impressive considering the heavy scepticism and withering attacks on GLD launched from fringe factions within the traditionally pro-gold community. Whether you or I would own GLD personally or not is irrelevant. The point is many nontraditional gold investors have flocked to GLD and this trend should only accelerate.

Broader participation in this gold bull, more capital from more origins bidding up gold, greatly benefits all gold investors. And as 2008 has shown, GLD owners aren't anywhere near as skittish in a gold selloff as many assumed they would be. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton111408.html

-Noted gold strategist tells Ticker Trax he is still 'wildly bullish'. Read more here-http://www.stockhouse.com/Columnists/2008/November/17/Issue-No-1-To-adopt-or-adapt-Ticker-TraX

or http://www.gata.org/node/6885

-Lack of funding decimates Zimbabwe gold sector. Zimbabwe's financial crisis deepens as gold production, an important export earner, declines to a trickle with gold miners owed big sums by Central Bank. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=73472&sn=Detail

-Richard Russell: I'm starting to think gold is manipulated. Read more here-http://www.gata.org/node/6876

-Chris Powell: Gold and silver market manipulation update. Read more here-http://www.gata.org/node/6871

-Every which way for gold. Wherever one turned at this weeks RBCCM gold meeting in London there was little optimism in the gold sector at least in the short and medium term. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=73062&sn=Detail

-Central banks around the world are indeed doing everything but dumping money out of helicopters. That inflationary rush has been led by Federal Reserve. Ignoring the fact that easy money has been a failed policy twice in recent years, to wit the technology stock bubble and the housing bubble, FOMC is pursuing most inflationary policy in that organization's dismal 95-year history. Federal Reserve's balance sheet is now 90+% larger than it was a year ago.

Never in peace time has a major central bank acted in such an inflationary manner. Economists at the Federal Reserve are committed to not making same mistakes of 1920s and 1930s. Be assured, they will not. Economists have an uncanny and totally reliable ability to create new mistakes. This weeks graph portrays the monetary consequences of the Federal Reserve's actions, and the beginning of their new mistakes.

Yes, no one can make banks lend money, as so many emails have noted. For that reason, Federal Reserve is going around the banks, lending directly to borrowers. At same time, U.S. government is running a deficit of almost $1.5 trillion, financed by selling debt to banks and investors.

These two activities have the same first round impact as that of bank lending. While in short run U.S. money supply numbers are volatile, those money supply numbers are starting to show some fairly dramatic growth. A central bank expanding its asset base by more than 90% will have an impact on the money supply.

Thus far, a desperate need for dollars to meet redemptions and liquidations by hedge funds has increased the value of the U.S. dollar and decreased the value of $Gold. However, the rate of monetary expansion shown in chart will ultimately come to dominate U.S. dollar's value, sending it down by as much as 50%. Gold should rally nicely in such an environment. Talk of dollar deflation is fun and amusing, but do not let such musings keep you from buying Gold! Ned W. Schmidt

SILVER

-Silver ETF for Dubai as they fly in bullion for the Hunts of Arabia. The Dubai Multi Commodities Center is understood to be putting the finishing touches to an exchange traded fund for silver with a launch likely next month as demand for silver has surged in the past six months.

Local bullion dealers are having to fly heavy silver bullion bars in from around the globe to meet demand as traditional sources closer to Dubai have been exhausted. The DMCC has successfully established itself as a regional hub for commodities trading over the past few years, and has its own swanky new business park with its gold, silver and diamond towers.

Will the new Dubai silver ETF have a big enough impact on the tiny global silver market to send prices higher like the Hunt Brothers did in the late 1970s when they cornered the market? Well, nothing succeeds like success and a silver ETF in Dubai looks like being the right product in the right place at the right time. Read more here-

http://news.silverseek.com/SilverSeek/1227016174.php

-At some point, it seems reasonable that some investors currently rushing into government paper might begin to have doubts about holding all their money in government debt. For now, the immediate issue is to pump money into the system to save it from imploding. But at some point, a certain number of investors may seek safety beyond government guarantees. The only assets promising greater safety than government guarantees are tangibles, because they are liability-free.

Given the rarity and scarcity of silver, even a relatively small movement of investment flows into silver can have a profound influence on price. Throw in these additional factors. There's still the likelihood of a major short squeeze. New uses for silver are being introduced every day. The above-ground supply has never been smaller or held in such strong and diversified hands. More potential investors become aware of this bullish silver story every day.

No matter what future economic conditions may be, good or bad, it is hard to see how silver will not fare spectacularly well. At this juncture, it's hard not to conclude that silver is a sure thing. For safety and peace of mind and for unusually high profit potential, silver looks better than ever. Ted Butler-Read more here-http://news.silverseek.com/TedButler/1227032447.php

-Silver market update from Clive Maund. Read more here-http://news.silverseek.com/CliveMaund/1227197713.php

-PanAm Silver says physical silver investment market remains strong. Pan American Silver President and CEO Geoff Burns predicted that the common investors buying physical gold and silver during the current global financial crisis "will be handsomely rewarded for their foresight." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=73052&sn=Detail

-Where are the silver bulls? Few listed resources subsectors are more reviled than that mining, developing and exploring for silver bullion. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=73294&sn=Detail

-Extra! Extra! Feds Bail Big Silver Short, CFTC Sees No Evil. Read more here-http://www.financialsense.com/fsu/editorials/2008/1117.html

-Silver and its importance to printed electronics. The market for silver conductive inks will almost triple during the next eight years to reach $2.4 billion by 2015 claim industry experts. Read more here-http://printedelectronics.idtechex.com/printedelectronicsworld/articles/silver_and_its_importance_to_printed_electronics_00001135.asp

-Silver finally comes back to the silver screen. Baby boomer filmgoers may remember CinemaScope, Cinerama, Todd AO, and other attempts to lure the public back to movie theaters. Now the 3D digital revolution is hoping to revitalize the industry. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=73051&sn=Detail

PLATINUM-PALLADIUM

-Johnson Matthey forecasts 240,000 ounce platinum supply deficit this year. Johnson Matthey says there are a number of positives for next year's platinum production from South Africa, but warns against too high expectations for price increases. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=73283&sn=Detail

-In spite of Stillwater cutbacks, McAllister says PGMs have a healthy future. Stillwater Mining CEO Frank McAllister believes that long-term demand for PGMs should be robust, as the current low metals prices cause production to dwindle. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=73447&sn=Detail

-Platinum, Palladium ETF investors' different behaviours. Johnson Matthey says investors in platinum and palladium exchange traded funds are fundamentally different people who treat their investments differently. Palladium ETFs are now a significant demand sector of the metal. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page43?oid=73405&sn=Detail

-Palladium prices could plummet to $125/oz. Palladium prices could fall as low as $125 an ounce, nearly a 12-year low, according to an interim review from Johnson Matthey. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page43?oid=73285&sn=Detail

DEFINITIONS-QUOTES-QUICK HITS

-Deflation. A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.

To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind. Investopedia.com

Abandon all hope once you enter deflation-Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3448664/Abandon-all-hope-once-you-enter-deflation.html

or http://www.gata.org/node/6866

-Reflation. An economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output. Possibilities include reducing tax, changing the money supply, or even adjusting interest rates. Investopedia.com-Reflation Challenge & Gold-Read more here-http://news.goldseek.com/GoldenJackass/1227165000.php

-Suppose you were an idiot. And suppose you were a member of Congress but then I repeat myself. Mark Twain

-No man's life, liberty, or property is safe while the legislature is in session. Mark Twain

-Gold at $1200 then $1650. The US dollar at .72, .62 and then .52. It cannot be averted. Jim Sinclair

-Gold May Spike to $2000 in Medium Term-Gold can easily go up to $1500-$2000 in the medium-term, says Johann Santer, MD at Superfund Financial Hong Kong. As such, he tells CNBC's Martin Soong that gold at $740 is a good entry point. Watch video here-http://www.cnbc.com/id/15840232?video=927012634

-China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

China's forex reserves, at $1.9056 trillion at the end of September, are the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves. Read more here-http://www.gata.org/node/6870 or http://www.gata.org/node/6892

-China, the second-biggest overseas holder of U.S. Treasuries, should increase its bullion holding to diversify its reserves because the dollar may decline, the country's gold association said. "China should have at least several thousand tons of gold in its reserves, five to six times the officially announced 600 tons," Hou Huimin, vice chairman of the China Gold Association said by phone from Beijing. The group represents producers, traders, and retailers. Read more here-http://www.gata.org/node/6872

-The buck is definitely running out of steam, so gold bulls will soon do plenty of dollar bashing." Ralph Preston, an analyst at Heritage West Futures in San Diego

-While dollar spreads are continuing to be unwound, giving the dollar some support, upside momentum has waned. Once the short-covering is out of the way, I believe we shall witness a significant fall in the dollar. Peter Grandich

-In a World Gold Council report released this week, the WGC said there were massive outflows of gold from institutional investors in the third quarter, as they struggled to raise cash to cover losses elsewhere.

But there were correspondingly massive inflows to retail investors, as they bought bars and coins to the tune of 232 metric tons (7.46 million ounces) in the third quarter. That compares to only 105 tons in the same period a year ago. Casey Daily Resource

-"Going forward, the US Dollar is in its final mid-term leg higher, nearing the end of its massive short-covering rally while other short-term driving forces diminish. True long-term fundamentals do not support a strong US Dollar and as it begins to once again return back to its long-term secular bear market the gold price will accelerate its appeal among dollar, euro and other paper currency holders. We are just entering into the next stage of the global currency crisis which will ultimately drive gold prices significantly higher over the coming months and years." Peter Spina of Goldforecaster.com

-"We believe that the fall in the PPI adds to the likelihood of further interest rate" cuts by the Fed, and adds "to the influences that will weaken the dollar soon." Julian Phillips, editor of Gold Forecaster-Read more here-http://news.goldseek.com/GoldForecaster/1226822640.php

-"Russian banking major Sberbank said on Wednesday (that) sales of precious metals have surged this year as its clients seek safe investments in the face of turbulent financial markets clients had bought around 6 tonnes of silver ingots in the first 10 months of the year three times as much as during the whole of 2007. Gold purchases for the period totalled 10 tonnes, or 50% more than all of 2007." Ed Steer-Read more here-http://www.reuters.com/article/rbssBanks/idUSLJ47489420081119

-"Wachovia Securities this month alerted its brokers and clients that it no longer would purchase precious metals for brokerage accounts, only shares in precious metals exchange-traded funds. In an explanation given to its brokers, Wachovia said the precious metals markets 'are illiquid with wide bid/ask spreads and minimal transparency.' This implies that real metal is awfully hard to get these days, and maybe that some brokerages would prefer that their clients not get it." Ed Steer-Read more here-http://www.gata.org/node/6896

-Auto bailout: Not now, maybe later. Democratic leaders say they will return week of Dec. 8 if companies can show they have a 'viable' turnaround plan. Read more here-

http://money.cnn.com/2008/11/20/news/economy/auto_industry_bailout/index.htm?postversion=2008112017

-'I.O.U.S.A.': Tackling the national debt. A former U.S. comptroller wants to scare America straight about its ballooning national debt. Read more here-

http://money.cnn.com/2008/11/17/pf/scared_straight.moneymag/index.htm

-In this economy, even sex doesn't sell. Read more here-http://www.latimes.com/news/nationworld/nation/la-na-brothel4-2008nov04,0,7844981.story

-Spam Turns Serious and Hormel Turns Out More. The economy is in tatters and, for millions of people, the future is uncertain. But for some employees at the Hormel Foods Corporation plant here, times have never been better. They are working at a furious pace and piling up all the overtime they want. Read more here-http://www.nytimes.com/2008/11/15/business/15spam.html?_r=2&adxnnl=1&oref=slogin&pagewanted=print&adxnnlx=1227211891-9ttVUOctbSgFD6VcqYR9nA

RARE COLORED DIAMONDS

-Sotheby's sale of Magnificent Jewels in Geneva was held Wednesday. The top seller at the auction was a ring set with an 8.02 carat fancy pink SI2 clarity diamond that sold for CHF 1,594,500 ($1.32 million). Idexonline.com

-Laurence Graff, chairman and founder of Graff Diamonds, which bought a 4.5 per cent stake in Gem Diamonds this month, is confident about the future of the diamond market. The billionaire, who has a necklace called the Lesotho Promise on sale for $75 million, said: "Top-quality gems are rare, hard to find and polish.

There will always be a demand for these high and top-quality diamonds, both to be worn and in which to invest. In the short term, their prices may fluctuate, but in the long term they retain their quality, unlike other commodities." Business.timesonline.co.uk

-French experts said on Tuesday they had proof that the Hope Diamond, a star exhibit in Washington's Smithsonian Institution, is a legendary gem once owned by King Louis XIV that was looted in the French Revolution. New evidence unearthed in France's National Museum of Natural History shows beyond reasonable doubt that the Hope Diamond is the same steely-blue stone once sported by the Sun King, they said.

Mineralogist Francois Farges, heading an investigation published in a peer-reviewed French journal, told AFP he was now "99 percent sure" that the Hope and the mythical Blue Diamond of the Crown were one and the same. "The evidence corroborates a scenario under which the diamond, after being stolen in Paris in 1792, was swiftly smuggled to London, where it was recut," he said.

The Blue Diamond came from a massive, 115.6-carat blue-tinged stone mined in the kingdom of Golconda, in India's Hyderabad state. In the mid-17th century, a French adventurer by the name of Jean-Baptiste Tavernier purchased the stone from Golconda's ruler and then sold it on to Louis XIV. The Sun King then ordered the court jeweller, Sieur Pitau, to make him a piece to remember.

After two years' work, Pitau presented his sovereign with a triangular-shaped 69-carat gem the size of a pigeon's egg that took the breath away as it snared the light, reflecting it back in bluish-grey rays. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=24150 or http://www.canada.com/topics/news/world/story.html?id=1f5933e7-add6-4bd8-a98a-b7edc1819129

-Diamonds prove to be an asset manager's best investment friend. "I've liked diamonds since I was young" was the first sentence that Jotika Savanananda, CEO of TMB Asset Management, told The Nation when asked about her personal investment style.

Jotika, who manages more than a Bt100 billion of other people's assets, has made the "women's best friend" her best investment tool. "My grandmother and our family often took me to diamond shops. So, I saw them buying diamonds since I was a kid. The first diamond ring I bought was during my studies at Sasin [Graduate Institute of Business Administration of Chulalongkorn University]," she said.

She has spent altogether Bt10 million on her diamond collection but its value has risen significantly over time. She declined to say how much her diamonds were worth at present, just that she would sell them only in time of need. Read more here-http://www.nationmultimedia.com/2008/11/17/business/business_30088623.php

COMMODITIES-OIL

-Dollar's Days Numbered; Buy Commodities: Jim Rogers. Read more here-http://www.cnbc.com/id/27717135/

-Sugar prices will rise next year as a credit shortage drives some mills out of business and reduces output, the head of the world's second-biggest cane processor said. Brazilian mills, which are low on cash after a two-year spending spree to expand capacity, will fail to keep pace with demand, helping widen a global deficit of the sweetener, Cosan SA Industria &

Comercio Chief Executive Officer Rubens Ometto said yesterday in an interview. "The trend is for a rise," said Ometto, who also controls the company. "Production is already lower than demand," he said, without providing specific forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=adoJfUORZ0s8

-Fu Chengyu, the head of China National Offshore Oil Corporation said that oil companies expect oil prices to fall due to decreasing demand and will cancel most planned investment projects. A meeting in Beijing predicted that oil could fall to $40 a barrel. Read more here-

http://www.ft.com/cms/s/0/a7aae3a0-b5ad-11dd-ab71-0000779fd18c.html?nclick_check=1

-How low can oil go? A lot lower, but it'll recover. World oil prices could easily fall below $50 a barrel and might even slip toward $40 or perhaps $35, but they will recover and could do so fairly quickly, analysts and economists say. Read more here-http://www.reuters.com/article/newsOne/idUSTRE4AC5OY20081113

-Iran wants big OPEC production cut. Big oil producing nation says cartel must respond to falling demand by slashing output. OPEC is set to meet Nov. 29. Read more here-

http://money.cnn.com/2008/11/15/news/international/opec.ap/index.htm

-What Caused the Big Slide in Oil Prices. On July 11, when the price of crude oil peaked at $147.27 per barrel, SemGroup, a major oil distributor based in Tulsa, Okla., was only a week or so away from a potential $5 billion payoff. Instead, the company imploded. And soon afterward, so did the price of oil, dropping some 60% in the subsequent months to a recent price below $60. Clearly, demand for oil didn't fall that much, but the price of oil isn't set by demand alone.

It's the product of an extremely volatile mixture of speculation, oil production, weather, government policies, the global economy, the number of miles the average American is driving in any given week, and so on. But the daily price is actually set or discovered, in economic parlance on the futures exchange. In late June and early July, speculators in oil futures battled each other, suspecting that a top was near.

In the ensuing weeks, oil would come crashing down to earth as traders everywhere including hedge funds, banks, and pension funds unwound their positions. And as SemGroup demonstrated, getting the timing wrong on this great unwind can have catastrophic results. SemGroup was short oil. Massively. That is, it had bet the price was going down by contracting to sell millions of barrels of oil it did not own at a future date, on the assumption that the price would fall and SemGroup could supply the barrels at a lower price and pocket the difference.

Three days after oil peaked, as it still threatened new all-time highs, the New York Mercantile Exchange (NYMEX) called margin on SemGroup, forcing the firm to put up more cash collateral to back its losing positions. Unable to raise the capital, SemGroup sold its entire crude oil futures position the very next day to the Barclays investment bank. SemGroup posted a $2.4 billion loss in the process, forcing it into bankruptcy. Read more here-http://www.time.com/time/printout/0,8816,1859380,00.html

-Oil Supertankers May Avoid Suez on Somalia Piracy. Shippers controlling almost a quarter the global fleet of crude-oil supertankers may avoid Egypt's Suez Canal after an increase in piracy off east Africa, potentially raising the cost of delivering the commodity. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aHbiuomk7e.Y&refer=home

GLOBAL RECESSION

-The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday. Whitehead, 86, said the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.

"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system." Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s. Whitehead warned the country's financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.

"I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America," said Whitehead, who served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the September 11, 2001 attacks. Read more here-

http://www.reuters.com/article/Finance08/idUSTRE4AB7HT20081112

-Volcker issues dire warning on slump. Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasize after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration as it struggles to restore confidence. Read more here-

http://www.telegraph.co.uk/finance/economics/3474683/Volcker-issues-dire-warning-on-slump.html

-Roubini Says U.S. Recession to Be Worst in 50 Years. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Roubini%20Says%20U.S.%20Recession%20to%20Be%20Worst%20in%2050%20Years&clipSRC=mms://media2.bloomberg.com/cache/vC6A2kpBh6Ts.asf

-Economic depression possible, says George Soros. Read more here-http://www.news.com.au/business/story/0,27753,24650136-14334,00.html

-30 reasons for Great Depression 2 by 2011. New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster. Read more here-http://www.marketwatch.com/news/story/well-great-depression-2-2011/story.aspx?guid={B28B49B5-EFD1-4941-B57E-A2BA1545BA09}&dist=TNMostRead&print=true&dist=printMidSection

-Long, painful U.S. recession is likely survey. Forecasters see anemic economic growth through 2009 as consumers retreat and unemployment rises. Read more here-

http://money.cnn.com/2008/11/17/news/economy/nabe_survey/index.htm

-Forecasters: U.S. in 14 month recession. Read more here-http://www.reuters.com/article/newsOne/idUSTRE4AG54L20081117

-Sharp decline seen in U.S. holiday shoppers. Retail group says 2008 should be the weakest year since it began tracking activity. Read more here-

http://money.cnn.com/2008/11/19/news/economy/holiday_retail/index.htm?postversion=2008111914

-Manufacturing in the Philadelphia region shrank in November at the fastest pace in 18 years, a sign that the credit crunch and weak demand are causing companies to cut back. The Federal Reserve Bank of Philadelphia's general economic index was minus 39.3 this month, weaker than forecast and the lowest reading since October 1990, from minus 37.5 in October, the bank said today. Negative readings signal contraction. The index averaged 5.1 last year. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aSYTi.L_ViqI&refer=home

-The index of leading U.S. economic indicators fell in October for the third time in four months as stocks and consumer confidence plunged, signaling a deepening recession. The Conference Board's gauge dropped 0.8 percent, more than forecast, after rising 0.1 percent in September, the New York- based group said today. The index points to the direction of the economy over the next three to six months. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a6mEfxa.SBf8&refer=home

-First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, a sign the labor market is deteriorating as the economic slump deepens.

Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=axoMU2lh.goE

-Fed hints at rate cut, lowers forecast. The Fed reduces its GDP projection, signals additional interest rate cuts and sees unemployment over 7% next year. Read more here-

http://money.cnn.com/2008/11/19/news/economy/fed_economy.ap/index.htm

-Japan's economy, the world's second largest, unexpectedly shrank in the third quarter, entering the first recession since 2001 as companies cut spending. Gross domestic product fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would grow 0.1 percent after contracting a revised 3.7 percent in the previous period. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5R9G.OGm4MU&refer=home

-Americans are digging deep to save money. Read more here-http://www.usatoday.com/money/perfi/basics/2008-11-16-thrift-saving-frugal_N.htm?loc=interstitialskip

-U.S. Downturn Drags More Consumers Into Bankruptcy. Read more here-http://www.nytimes.com/2008/11/16/business/16consumer.html?em=&pagewanted=print or

http://www.iht.com/articles/2008/11/16/business/16consumer.php

FINANCIAL CRISIS

-Financial Crisis Tab Already In the Trillions. Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved. Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources. Read more here-

http://www.cnbc.com/id/27719011

-The U.S. may need to spend as much as $1.2 trillion to stabilize the eight largest financial institutions because private investors are unwilling to take the risk, an FBR Capital Markets analyst said. "The sheer size of the capital deficiency, coupled with the opaque nature of credit risk, will keep private capital sidelined,'' Paul Miller said in a research note yesterday.

Treasury Secretary Henry Paulson has spent $290 billion of a $700 billion Troubled Asset Relief Program buying stakes in banks and in insurer American International Group Inc. to stabilize the U.S. markets. The Treasury's preferred equity investments aren't ''real capital'' and won't ensure the firms will survive, said Miller, who's based in Arlington, Virginia.

The eight companies are Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Morgan Stanley, AIG, Goldman Sachs Group Inc. and GE Capital Corp. They have a combined cushion of roughly $405.7 billion in tangible common equity, FBR estimates. They also have as many losses, $408.3 billion, on their balance sheets that will eventually hit earnings and wipe out that equity.

Though Treasury's cash injections so far have bolstered bank capital, they give Treasury a senior repayment position that leaves common equity holders to absorb the majority of the losses, Miller said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=artMfO8m83fM

-Iceland agreed a $4.6 billion bailout from the International Monetary Fund and Nordic countries to help resurrect the island's economy. It will get about $6.3 billion more from the U.K., the Netherlands and Germany to cover foreign deposits at a failed bank. The two accords will heap a total of about $11 billion of debt on the shoulders of a population of 320,000, or $34,375 for each individual. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aIq1nHqZxcos

-Pakistan reached an agreement in principle with the International Monetary Fund on a $7.6 billion loan package aimed at preventing the nation from defaulting on foreign debt and restoring investor confidence. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aqMqAaRZiuO0&refer=home

-Florida pension fund loses a quarter its value. Fla. pension fund loses a quarter of its value but officials say no need to panic. Read more here-

http://finance.yahoo.com/news/Florida-pension-fund-loses-a-apf-13603975.html

-U.S. banks tighten credit card lending too late. Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.

Still, the measures may fall short in containing a growing area of stress on banks' balance sheets that some experts say could rival the subprime crisis. "It's so similar to the mortgage situation that it is shocking when you think about it," former Goldman Sachs chairman John Whitehead said at the Reuters Global Finance Summit. Read more here-

http://www.reuters.com/article/GCA-CreditCrisis/idUSTRE4AG4UO20081117?sp=true

SHADOWSTATS.COM INFO

-http://www.shadowstats.com/alternate_data

STOCK MARKET-HEDGE FUNDS

-A gallon of gas or a share of GM? More than 5% of the firms in the S&P 500 are penny stocks, trading for less than $5 a share including GM, Motorola and Sprint. Be wary of the looming wave of reverse splits. Read more here-http://money.cnn.com/2008/11/18/markets/thebuzz/index.htm?postversion=2008111812

-Goldman Falls below IPO Price, Erasing Almost 10 Years of Gains. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=arGAFnER7RVE

-Wall Street Lays Another Egg. Read more here-http://www.vanityfair.com/politics/features/2008/12/banks200812?printable=true&currentPage=all

-General Electric Co. Chief Executive Officer Jeffrey Immelt and Citigroup Inc.'s Vikram Pandit are back to buying their own companies' shares. That means there may be more stock declines to come. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a7fW2x5_qvzg

-Suspicions about Plunge Protection Team break onto CNBC. Read more here-http://www.gata.org/node/6891

-There is no magic elixir for the cure of the market. While we believe we are at a low it will still take many months of work and no new lows before we can determine whether we have put in our lows. We have often remarked on the similarities between the markets of the 1930's and this decade. We can only hope that continues.

We compare the two below and are showing that chart of the 1930's and early 1940's. If we continue to follow the earlier decade's road map we should see a feeble recovery in 2009 followed by another collapse in 2010. Another feeble rise could get underway in 2011 and then we plunge to our final lows in 2012.

The scary alternative is that a feeble recovery into 2009 is followed by a further collapse to new lows and while we follow the road map the final lows of 2012 are made some 40 to 50 per cent below today's lows. We certainly hope not but it is possible if things do not go well in attempting to restructure the world. But right now the scenario still calls for a rebound into 2009. David Chapman-Read more here-http://www.321gold.com/editorials/chapman_d/chapman_d_111708.html

-Analysts have cut profit estimates for 48 percent of stocks they cover worldwide, the most in at least 15 years, and more downgrades are likely as the economy slows, JPMorgan Chase & Co. said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=a4bEItVxt2sw&refer=home

-Watch a video series on the crash of 1929. Watch video here-http://www.pbs.org/wgbh/amex/crash/program/index.html

-Hedge Fund Assets Shrank 9% as Investors Withdrew $40 Billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=arL.nGOD_PPY

-Hedge-fund assets may fall to about $1 trillion by the middle of next year, a decline of almost 50 percent from their peak in June, because of market losses and client withdrawals, Citigroup Inc. said in a report. Managers are likely to see investors, led by funds of funds, pull 20 percent of their money, Tobias Levkovich, an analyst at the New York-based bank, wrote this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aHZezLEuKOpo&refer=home

REAL ESTATE-RENTS

-Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country. The median price of a U.S. home fell 9 percent from a year earlier and sales of properties with mortgages in default accounted for at least a third of all transactions, the Chicago based National Association of Realtors said today. Prices fell in 120 U.S. metropolitan areas rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLgJDGcwH0oI

-San Francisco Bay Area Home Prices Fall Record 41%. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aev1RZEuwD6Y

-U.S. housing starts and permits for future construction both dropped to record lows in October, signs the housing downturn may extend into a fourth year. Construction starts on housing fell 4.5 percent in October, less than economists forecast, to an annual rate of 791,000 that was the lowest since records began in 1959, the Commerce Department said in Washington. Building permits, a sign of future residential projects, dropped 12 percent to a 708,000 pace, the lowest since at least 1960. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayFpFXHa5bvU&refer=home

-Dubai's Palm Jumeirah sees prices fall as crunch moves in Property prices on the Palm Jumeirah, the island in Dubai that has been dubbed the 'eighth wonder of the world', have plummeted by as much as 40pc since September amid fears that the global credit crisis is stalling the emirate's economy. Read more here-

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/3489393/Dubais-Palm-Jumeirah-sees-prices-fall-as-crunch-moves-in.html

-Crisis in paradise: Meltdown leaves ghost resorts. Read more here-http://www.breitbart.com/article.php?id=D94I86580&show_article=1

-Homeowners fleeing underwater mortgages in California and Florida know where to come up for air: Texas. "Texas is an extremely friendly place to live if you owe money and do not want to pay,'' said Marjorie Britt, a bankruptcy attorney with Britt & Catrett PC in Houston.

"If you have a lot of money and even more debt and want to shelter your assets, you can live fairly normally.'' Distressed borrowers can hang on to luxury cars, a primary residence, paychecks, retirement accounts, and even jewelry that creditors might claim elsewhere, Britt said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aI99ZTfd5KEo&refer=home

-Rents for U.K. homes fell for the first time in five-and-a-half years as the worst housing slump since the 1990s caused a record increase in properties put on the rental market, the Royal Institution of Chartered Surveyors said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aI.M_5CqhbCY&refer=home

-Office rents in Mayfair and St. James's, the London districts with Europe's biggest concentration of hedge funds, are falling for the first time since 2005 as the alternative investment industry has its worst year in two decades. The annual cost of renting new or refurbished offices in those neighborhoods, the most expensive in the world, fell 6.5 percent to 107.50 pounds ($168) a square foot in the six months ended Sept. 30, data compiled by Jones Lang LaSalle Inc. show.

Incentives such as rent-free periods lowered the net figure to 95.96 pounds, the commercial property broker estimates. Demand for space is falling as at least 350 funds in the $1.7 trillion hedge fund industry have closed this year amid the global financial crisis, including Peloton Partners' ABS Fund and MKM Longboat Capital Advisors' Multi-Strategy Fund. Client

redemptions and forced asset sales have given investors losses for five straight months through October, the longest streak since 1990. The slump may push rents down to as low as 90 pounds a foot, Jones Lang of Chicago estimates. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=axGGfACsOKY0&refer=home

GEOPOLITICAL NEWS

-Barack Obama is warned to beware of a 'huge threat' from al-Qaeda. Security officials fear a 'spectacular' during the transition period. Read more here-

http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5158569.ece

-Iranian President Mahmoud Ahmadinejad signaled that the Persian Gulf country will press ahead with its nuclear program, hours prior to the release of a report on the atomic dispute by the United Nations nuclear agency.

The U.S. and its major allies want to deprive Iran of "honor and independence'' by pressuring the country into halting uranium enrichment work, Ahmadinejad said today in a speech in the northwestern Zanjan province broadcast on state television. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aHxYSxPodlKU

-Iran has produced the minimum amount of low-enriched uranium needed to make a bomb if it was processed to weapons grade, a scenario that would first require the expulsion of UN inspectors, arms-control experts said.

"There is definitely cause for concern,'' Andreas Persbo, a senior researcher at the London-based Verification Research, Training and Information Center, said by telephone today. "Their uranium conversion operations are going quite well.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a_RUWtZMdXxY or

http://www.iht.com/bin/printfriendly.php?id=17986277

-Israeli Air Force chief: We are ready to deal with Iran. "We are ready to do whatever is demanded of us" in order to stop Iran from getting a nuclear weapon, IAF commander Maj. Gen. Ido Nehushtan told German magazine Der Spiegel in an interview published Tuesday. Read more here-http://www.jpost.com/servlet/Satellite?cid=1226404771120&pagename=JPost%2FJPArticle%2FShowFull

-Israeli Defense Minister Ehud Barak said the U.S. and Europe should put aside differences with China and Russia over human-rights and missile-defense issues to focus on working together to stop Iran from developing nuclear weapons. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aM5aOd86Q69M

-Admiral Michael Mullen said it will take at least two years to safely withdraw all U.S. troops from Iraq, an estimate that may conflict with President-elect Barack Obama's goal of pulling most forces out within 16 months. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=akdf3aroo0JM

The GoldBugg Report - November 25, 2008
Posted by Worldwide Precious Metals on Tuesday, November 25, 2008

A Special Report from Precious Metals International

Precious Metals Turn ↑

Is this the Beginning of the Next Phase of the BULL MARKET for Precious Metals?? - We think so!!!

Over this past week we have witnessed even more insanity in the World's Financial Markets.

The Fed closed 2 Banks in California.
The State of Georgia Closed a Regional Bank. (This brings the total Bank Failures to date for 2008 to 22).
Executives from GM, Ford, and Chrysler arrived by Private Jets (Tin Cups in Hand) to beg Congress for a 25 Billion Dollar loan. Unfortunately they had no plan as to how they would use these funds to turn their Companies around. They were given to December 8^th to return with a viable "use of Funds" in order to receive "viable" Congressional Consideration.

It should be expected that Congress will give them what they are asking for and probably more. Their justification will be their concern that should these Auto Companies eventually fail, the "fall out" would affect hundreds of supportive industries and create massive unemployment. Some Analysts are even using the "D" word as the end result of their potential failure.

Citigroup has been claiming for months that they are very stable and well capitalized. We have advised you in our previous Memos that Citi has the potential of becoming the "Biggest Bank Failure in the history of the World". Early in the week Citi announced they were cutting up to 52,000 employees from their payroll between now and mid 2009.

Later in the Week they announced that they were seeking to either merge or sell assets in order to avoid failure. By Fridays close their Stock had plummeted to $3.77.

This Morning the announcement was official - Once again - "Uncle Sam to the Rescue".

20 Billion from Tarp
306 Billion in Government Guarantees on their Residential and Commercial Mortgage paper
Dividends restricted to a maximum of 1¢
Government gets 7 Billion in preferred shares at 8% Interest.

We say this won't cut it, as our sources advise us that Citi's Sub prime portfolio is in excess of 5 Trillion not the 1 Trillion we all thought.

It sure looks like the folks at Citi have been secretly meeting behind closed doors with our friends at the Fed and the Treasury for quite some time.

Now lets look at all the announcements of Major Retailers (Did we say Announcements??) Some yes - Some yet to come, so here we go.

Circuit City (filed Chapter 11)

Ann Taylor 117 stores nationwide closing

Lane Bryant, Fashion Bug and Catherine's to close 150 stores nationwide

Eddie Bauer to close 27 stores and more after January

Cache will close all stores

Talbots closing down specialty stores

J. Jill closing all stores (owned by Talbots) Pacific Sunwear (also owned by Talbots)

GAP closing 85 stores

Footlocker closing 140 stores and more to close after January

Wickes Furniture closing down

Levitz closing down remaining stores

Bombay closing remaining stores

Zales closing down 82 stores and 105 after January

Whitehall closing all stores

Piercing Pagoda closing all stores

Disney closing 98 stores and will close more after January

Home Depot closing 15 Stores

Macys to close 9 stores after January

Linens and Things closing all stores

Movie Galley closing all Stores

Pep Boys closing 33 Stores

JC Penny closing 33 Stores

Ethan Allen closing down 12 Stores

Wilson Leather closing down all Stores

Sharper Image closing down all Stores

KB Toys closing 356 Stores

Loews to close down some Stores

Dillards to close some Stores

Make certain you don't buy holiday Gift Cards or Gift Certificates from any of these Retailers as they may not be there when your recipient goes to use them.

For the thousands who will lose their jobs due to these closings, you have our sympathies and we wish you good luck in securing New Employment.

Let's not forget the US Dollar. Now that US Treasuries are approaching a 0 to negative yield you can look for the Dollar's recent strength to reverse and reverse sharply.

Finally for those folks who have given their redemption notices to their Hedge Fund Managers don't look to receive your funds expeditiously - Many Hedge Funds are refusing to honour redemption requests or are conducting redemptions on a "first come first serve" basis. So much for "Liquidity". In our opinion anyone who invests in Hedge Funds in the Future must be classified as "Brain Dead".

As we pen this Memo (11:30 a.m.) Gold is up $30.00 on the day - (4%), Silver is up $1.17 (12%), Platinum is up $53.00 (6%) and Palladium is up $19.00 (10%).

We feel that this price activity coupled with Fridays bounce in all Metals is indicative of having witnessed the bottom of the synthetic price correction we have been experiencing since late July early August.

All of the Above coupled with the continued shortfall in Comex Inventories relative to Open Interest for December, February Gold and Dec, March Silver, the massive inflation which will result from the Treasury having to print, print, print and the increase to the unemployment rolls provides us with the right scenario to signal the beginning of the next Bull Market phase for Precious Metals.

Its time to be aggressively pro-active but do not overextend your ability to stay the course as the volatility day to day should be expected to continue.

Trading Department - Precious Metals International, Ltd

A Special Report from Precious Metals International
Posted by Worldwide Precious Metals on Tuesday, November 25, 2008

The GoldBugg Report - November 19, 2008

November 18, 2008

WORLD FINANCIAL REPORT ON RADIO NOV 14 2008 SHOW

-Silver market analyst Ted Butler has obtained a letter from the U.S. Commodity Futures Trading Commission to U.S. Rep. Gary G. Miller, Republican of California, that virtually confirms Butler's speculation in September that the smashing of the silver price this year involved JPMorganChase's takeover of Bear Stearns in March.

Butler writes: "Bear Stearns held the largest concentrated short position in COMEX silver (and gold) futures at the time of its forced merger with JP Morgan in March. That position was not discovered until the publishing of the August Bank Participation Report followed by the October 8 letter from the CFTC to Congressman Miller. Furthermore, Bear Stearns had no legitimate backing to the short silver position, either in actual metal or cash.

Otherwise it could have been delivered against or bought back, just as would have happened were it a long position. "The price of silver at the time of Bear Stearns implosion was $20 to $21 an ounce. A free-market covering of a concentrated short position of this size would have driven silver prices to the $50 or $100 level and would have exposed the long-term manipulation. Rather than let the free market deal with the required short covering of such an uneconomic and unbacked short position, government authorities arranged to have the short position transferred to JP Morgan.

This was undertaken by the U.S. Treasury Department, along with taxpayer guarantees against loss to Morgan worth billions of dollars. This was done, no doubt, to save the financial system from imploding. This was also patently illegal, as it aided and abetted the silver manipulation." That is, it is now virtually certain that the big silver short (and the big gold short) is the U.S. government's New York bank, JPMorganChase. GATA-Read more here-http://news.silverseek.com/TedButler/1226344970.php

"We human beings only say we like to buy low and sell high. Our every instinct is to do the opposite. Rock-bottom prices only seem low in retrospect. At the time, they seem frightening because of the very reasons they are cheap." James Grant

GOLD

-Governments can't handle global run on gold coins, New York Post http://www.nypost.com/seven/11182008/business/governments_cant_handle_global_run_on_go_139306.htm

-Gold may climb above $1,000 an ounce in 2011 as global mine output drops, mining costs rise and demand increases, Morgan Stanley said. "Mining production actually peaked in 2001 and has since been declining,'' the bank's commodity analyst Hussein Allidina said in an interview with Bloomberg television in Singapore. "When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aQJtHinhNw9Q&refer=home

-Got Gold Report-COMEX Commercials Least Net Short Gold In Years. The big news this week is that the largest of the largest traders for gold futures, the commercial traders on the COMEX, are now the least net short gold they have been in years. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47779

-Gold miners reduced forward sales contracts by 2.3 million ounces in the third quarter to 16.5 million ounces, London-based researcher VM Group said. The industry's so-called hedge book compares with 29.1 million ounces a year earlier and 41.5 million ounces at the end of the third quarter of 2006, according to the VM report co- published by Haliburton Mineral Services in Toronto and sponsored by Fortis.

Toronto-based Barrick Gold Corp. accounted for 1 million ounces of the decline. "Continued dehedging from Barrick and AngloGold Ashanti Ltd. meant another large quarter of dehedging,'' VM Group analyst Matthew Turner said in the report. ''However this rate is not sustainable and from now on we are likely to see much lower dehedging volumes.''

Forward gold sales usually allow miners to sell the metal at an agreed price at a future date in a bet that prices will fall below the locked-in level. Hedges have been a ''bad bet'' since 2002, VM Group said in August. Mining companies reduced hedges by 10.3 million ounces in the nine months through September. Read more here-

http://www.bloomberg.com/apps/news?pid=20601116&sid=aaMpDG7Hzo3g

-8 Reasons to Own Gold. Read more here-http://biz.yahoo.com/investopedia/081107/4473.html?.v=1

-Gold seen outperforming oil as recession brews. Read more here-http://www.gata.org/node/6856

-Timing the next rush to gold. Read more here-http://www.gata.org/node/6852

-The Never Ending Search for Gold. Richard Russell-Read more here-http://www.silverbearcafe.com/private/11.08/search.html

-Obama's golden opportunity, go back to the gold standard. Read more here-http://washingtontimes.com/news/2008/nov/09/golden-opportunity/

-Gold's non-correlation with equity markets continues with most equity markets again under pressure this week. With recessions only beginning in all major economies and the likelihood that recessions will be protracted and deep, safe haven demand for gold is set to remain robust. However, anything is possible in the short term and leveraged trading is for the foolhardy.

Risk aversion should remain paramount today and in the coming weeks and investors should shun speculative short term get rich schemes for passive long term investing. Value investors should continue to remain properly diversified and maintain a minimum of 10% to 20% of their portfolio in gold bullion. The old Wall street adage of keeping 10% of your portfolio in gold and hoping it doesn't work has never been more appropriate. Gold.ie

-Saudi Arabia buys $3.5bn of gold in two weeks. Read more here-http://news.goldseek.com/PeterCooper/1226586450.php

-I believe a position in gold absolutely must be retained in fact, enhanced if at all possible. The sell- off since August reflects the giant margin call that hedge funds have faced as banks are trying to reduce their loan books. There is a huge disconnect between the paper market in precious metals as represented by futures and the physical market as represented by coins and bullion.

The latter has been on fire and physical is selling at a premium to the paper form. The US government is up to its usual games making gold ownership more expensive by suspending the production of gold coins whilst, at the same time, debasing the dollar like never before. It is not beyond the realms of possibility that they will try and make ownership of gold by Americans illegal again in any future crisis.

Would you rather own gold or the paper of a hugely indebted government whose budget deficit next year could get close to double digits? Silver and platinum are even more depressed but both metals have some industrial uses which are less in demand under present circumstances. They are cheap on a relative and an absolute basis. William R Thomson, chairman of Private Capital Ltd, Hong Kong and advisor to Axiom Funds and Finavestment, London-Read more here-http://www.321gold.com/editorials/thomson/thomson110708.html

-Gold is at US$730 per ounce today. My expectation is that the price will be three times higher that is, between US$2,000 and US$2,500 per ounce - in 2010 to 2012. The reason is simply that the amount of paper money created in order to stave off the crisis and reflate the banking system will take about 18 months to feed through into inflation, and that the value of the US$

will again fall sharply as a result. In addition, low or even zero interest rates will favour gold and other commodities. I also expect oil to rebound from the current low levels to at least US$200 within 2-3 years. Robert Lloyd George, chairman and CEO of Lloyd George Management, Hong Kong-Read more here-http://www.321gold.com/editorials/thomson/thomson110708.html

-Gold was and is a form of cash; and it probably always will be. Paper currency, on the other hand, is a promise to redeem in terms of something else and as national debts mount higher, the chances of default mount with it. Further, though the US prints increasing numbers of dollars, the amount of gold backing up those dollars is small and will probably get smaller.

With the dollar's value falling, people will begin to buy gold; its potential upward rise will then be unlimited. Gold mining stocks are riskier than owning bullion as there are dangers from fire, flood, resource depletion, and nationalization. But as gold prices climb, so do the prices of stocks. Moreover, many gold stocks average 15 per cent dividends. If your net worth is between US$100,000 and US$1,000,000, 25-50 per cent of your assets should be in gold and silver.

Of the gold, a rough breakdown would be 60 per cent in bullion and coins, 30 per cent in gold mining stocks, and maybe, if you have the appetite, 10 per cent in penny stocks. Ernest Kepper, former official of the International Finance Corporation and Wall Street investment banker heading an Asian financial consultancy-Read more here-

http://www.321gold.com/editorials/thomson/thomson110708.html

SILVER

-CFTC wants new regulatory system. Head of the Commodity Futures Trading Commission wants to replace it and the SEC with three new regulators to better manage the complex financial system. Read more here-http://money.cnn.com/2008/11/11/news/economy/cftc_head.ap/index.htm

-Why Jim Rogers chooses silver over gold to beat inflation. Read more here-http://news.silverseek.com/SilverSeek/1226324941.php

-Silver still buys a good dinner in ancient Petra. Read more here-http://news.silverseek.com/SilverSeek/1226413842.php

-Silver climbing out of the bottom. Read more here-http://www.silverinvestingnews.com/569/silver-climbing-out-of-the-bottom.html

-Inflation to set silver back on track. Read more here-http://www.silverinvestingnews.com/614/inflation-to-set-silver-back-on-track.html

-David Bond: A black market in silver, right out in the open. Read more here-http://www.gata.org/node/6865 or http://news.silverseek.com/SilverSeek/1226424548.php

-Recession weighs on silver, festive demand helps. Read more here-http://in.reuters.com/article/domesticNews/idINSP37829920081113

-Silver hit by rising cost of production. Refined silver output in China, the world's third-biggest producer, has peaked and may stop growing as producers halt expansion because of higher costs, lower prices and reduced incentives, according to an industry official.

Rising costs of labor and higher taxes on exports had reduced producers' margins, Zhou Juqiu, chairman of the gold and silver division at the China Non-ferrous Metals Industry Association, said. Output may rise to nearly 10,000 tons this year from 9,092 tons last year, he said in an interview with Bloomberg News last Friday.

Spot silver prices have more than halved from a record in March after hedge funds and speculative investors sold commodities to raise cash while recession fears have reduced demand for industrial use of the precious metal. China's annual silver output growth had already slowed to 10 percent last year compared with an average 30 percent between 2001 and 2006, Zhou said.

Export rebates "There won't be much growth going forward," he added. While producers are still "doing OK," they are faced with an increasingly difficult environment, including tighter financing and reduced export market, he said. Read more here-http://www.chinamining.org/News/2008-11-10/1226280718d18984.html

-A potential supply/demand squeeze, investor demand has been accelerating, silver is cheap relative to gold. To expand upon that, the price of gold recently traded at 82 times the price of silver. This is approximately 36% higher than the ratio over the past 8 years, and looking back in history, the ratio has generally been closer 20 to 1. If we return closer to the historical norm, the price of gold would need to go way down or the price of silver would need to go way up.

This ratio is seriously out of whack primarily because silver is viewed as not only a precious metal, but also an industrial metal. Investors are alarmed of a global economic slowdown and that it will dampen demand for silver's industrials uses. The other side is not so forgiving with the economic crises causing more and more investors to flock to silver as a refuge to safety. That makes sense to me, being that Central banks around the world are flooding the financial system with trillions of dollars.

This, we view as a temporary fix and as more and more people recognize that we have a serious problem we expect more money to flow into silver and other safe havens. We are not doom and gloom, however because of the current situation and tough choices that have been made, we expect to see a sinking economy, a falling dollar and severe inflation.

We would suggest investors with the intestinal fortitude, whether it be via this strategy or another, to gain exposure to silver and make it 5-15% of their overall portfolios. Jim Rodgers, famed commodity bull, in a CNBC interview in mid October said that the policy decisions being made around the globe are setting up an "inflationary holocaust." Matthew Bradbard-Read more here-http://seekingalpha.com/article/105116-hi-ho-silver

DEFINITIONS-QUOTES-QUICK HITS

-Word of the year: 'Hypermiling'. New Oxford American Dictionary crowns term that defines how some drivers reacted to high gas prices. Read more here-

http://money.cnn.com/2008/11/11/news/economy/wordof_year/index.htm?postversion=2008111112

-A V shaped recovery is a sharp drop with a quick sharp rise in say 1 year. U-shaped involves a gradual slowdown with a slow turn around in say 2 years. L-shaped recovery is a slow decline with a prolonged period of slowdown as happened in Japan during the 1990s that lasted nearly10 years. Investopedia.com

-Since gold is the inverse of the US dollar and the dollar strength is purely from enormous money flows seeking to readjust their positions, it is quite short term. It could end as early as one minute from now. When it does end, the dollar dives and gold roars. Gold will trade at $1200 and at $1650. Jim Sinclair

-More than $28 trillion in value has been erased from global equity markets this year. Casey Daily Resource

-Neither equities nor commodities have gold's monetary and safe haven qualities and this is why gold is likely to vastly outperform both in the coming months. Gold.ie

-"Demand for physical gold is very strong worldwide; a lot of jewelry people and investors are looking for gold. A lot of safe-haven buyers are looking for gold." Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland's four bullion refiners

-US May Lose Its 'AAA' Rating. The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche. "The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC. In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world. Read and watch video here-http://www.cnbc.com/id/27641538

-It is my belief that in the very, very, very near term, the only thing you're going to see in precious metals prices is extraordinarily volatility. What the world is doing now, perversely, is putting money in U.S. Treasuries, not because they like the dollar, but because the dollar is liquid and the U.S. markets are very, very transparent.

It is my belief increasingly; however, that some of that money will spill into gold. I think the market for gold will be extremely volatile in the near term. I believe it has the potential to be extremely, extremely biased to the upside in a three-to-five year timeframe. I am very, very, very bullish on the gold market looking longer term. Rick Rule-Read interview here-

http://news.goldseek.com/GoldSeek/1226042468.php

-In the interim gold is oversold sufficiently that a rebound rally should soon get underway. If we are correct on this it will find resistance at $825 and again at around $900. We probably won't see new highs in this move. But once we complete our 34-month cycle low we should embark on a spectacular move up in the next 8.5-year cycle phase.

The last 25-year cycle low was seen with the lows of the 1999 and 2001. The next 25-year cycle phase should peak in its second 8.5-year cycle. It will be during this period that gold takes off to $2,000 and possibly higher. The cause will be the huge stimulus provided by the authorities to get the economy out of this mess accompanied by a decline in the value of the US$. David Chapman-Read more here-http://www.321gold.com/editorials/chapman_d/chapman_d_111008.html

-"While gold has not performed as well as expected over the past month, it continues to be sought after as a good diversifier," said David Beahm, a vice president at precious metals retailer Blanchard & Co. Beahm added that the price of gold is following the dollar and "while the dollar remains strong, it is only a matter of time until it begins to fall again." Casey Daily Resource

-Mark O'Byrne, a director at Gold & Silver Investments Ltd., is unabashedly bullish on gold. "The worst of the sell-off appears to be behind us as," he declared, "even after the recent gains, we remain oversold and any further falls are likely to be short and shallow. Gold will likely surprise many by recovering its recent sharp losses as quickly as they were incurred, and we could see gold above $800 again well before the end of November." Casey Daily Resource

-Those with long-term vision are biding their time. While the dollar has been impressive in its recent runup, a lot of that and a lot of gold's weakness has to do with the unwinding of short dollar/long commodities trades.

That being the case, we can expect that the dollar "will again come under pressure once this period of massive global deleveraging is over," said Mark O'Byrne, executive director at Gold and Silver Investments.

But near term, "Central banks are attempting to inflate their way out of a deflationary slump," O'Byrne said. Deflation weighs on gold, which is primarily perceived as an inflation hedge, and until the monetary inflation we're seeing kicks price inflation into a higher gear, gold could languish. Casey Daily Resource

-Equities look set to continue to underperform particularly the financials. Goldman Sachs can be regarded as a form of bellwether or as a proxy for Wall Street and its share price has fallen by some 2/3's in recent weeks. Goldman has fallen from over $240 to $67 per share. Its performance does not bode well for the US financials and US financial system. Gold.ie

-Investors in the U.S. pull $31.8B out of stock funds the week ending Nov 12-Read more here-http://money.cnn.com/2008/11/13/markets/mutual_funds/index.htm

-Belief that U.S. is heading in right direction is at all-time low. Read more here-http://www.cnn.com/2008/POLITICS/11/10/bush.transition.poll/index.html

-76% say Obama can fix economy poll. CNN survey shows about three-quarters believe Obama will improve economic conditions and calm markets. Read more here-

http://money.cnn.com/2008/11/13/news/economy/obama_poll/index.htm?postversion=2008111316

-Billionaire Julian Robertson, who founded hedge fund Tiger Management LLC, said North American sports franchises are overvalued. Read more here-

http://www.bloomberg.com/apps/news?pid=20601079&sid=aylbcdBhqyp8&refer=home

RARE COLORED DIAMONDS

-Moussaieff buys rare 39.19-carat blue diamond. A South African firm acting for a leading London jeweller, Moussaieff, has bought an extremely rare 39.19 carat rough blue diamond for $8.8 million. London-listed miner Petra Diamonds Ltd, which had placed the diamond on tender in Johannesburg, sold the gemstone, the company said in a statement released on Friday.

"Blue is one of the most rare colors of diamond and this exceptional stone is even more special due to its unusually large size," said Johan Dippenaar, CEO of Petra. Alisa Moussaieff, co-owner of Moussaieff, said she was confident the blue rough diamond would yield an exceptional polished gemstone. "We will obtain a 15-carat polished, extremely fine blue diamond," she told Reuters by telephone from Israel on Friday.

"Blue diamonds are rare and are getting rarer and rarer." She declined to give details on price, but said she believed she had paid a world-record high price for a rough blue diamond, and that it was the most magnificent example of a blue diamond to come onto the international market in 15 years. Mrs. Moussaieff, whose company has boutiques on London's Bond Street and in the London Hilton Hotel on Park Lane, said she expected the polished stone would ultimately go to an investor.

Asked who might buy it, she told Reuters, "I would say investors not necessarily people who want to wear it, not necessarily someone who wants to give it to a girlfriend, but cold-blooded investors." She said that in spite of the present global financial crisis, she was confident that the blue diamond was so rare it would continue to appreciate in value and that the market for diamonds of this rarity was liquid.

"For the last 15 years there hasn't been a blue of this quality on the market," said Mrs. Moussaieff, who owns some of the rarest color diamonds in the world, including blues and the celebrated 5.1-carat Moussaieff Red diamond. Mrs Moussaieff said she expected that the 15-carat polished blue diamond would be of very high, "VVS" or "VS", quality.

The rare stone was produced from the Cullinan mine in South Africa, renowned as the world's only significant source of highly prized blue diamonds. The South African agent which purchased the diamond for Moussaieff was Laub Diamond, a diamond market source said. Story here-http://africa.reuters.com/business/news/usnJOE49U0N6.html

-Christie's Stresses Strong Demand for Colored Diamonds to auction off 35 Ct rare Wittelsbach Diamond in London. Christie's expressed its confidence in the colored diamond market ahead of its London jewels sale in December. "The diamond market as a whole, like the international jewellery market, continues to be strong," the auction house said in a statement about the upcoming event on December 10.

In particular, it explained demand for colored diamonds is high, citing a recent record sale it made in Geneva of a 13.39 carat fancy intense blue diamond for $8.9 million. Christie's is hoping to emulate that feat when it presents the Wittelsbach Diamond, a rare 35.56 carat grayish blue diamond, VS2 clarity, at 'Jewels: The London Sale' on December 10. The stone, which dates back to Austrian royalty of the 17th century and is now part of a private collection, has an estimated value of about $15 million (EUR 11.3 million), a Christie's spokesperson told Rapaport News.

While general demand for diamonds has waned in the past month or two on the back of the global financial crisis, exceptional stones have offered some sparkle in the rough. Rio Tinto recently reported strong interest at its annual Argyle Pink Diamond Tender which concluded in October, and Petra Diamonds said last week it sold a 39.19 carat special blue diamond for $8.8 million on tender.

The Wittelsbach diamond earned esteem in 1664 when King Philip IV of Spain selected it to be part of his daughter, Infanta Margarita Teresa's, dowry upon her engagement to Leopold I of Austria, who later became the Holy Roman Emperor. Christie's hopes that the romance of the diamond's history combined with current demand for rare colored diamonds, will generate high interest in the stone amongst buyers. Story here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23967

-Dynastic blue diamond given to Velázquez girl could fetch £10m. A "truly extraordinary" blue-grey diamond that was given to the girl in one of the most studied paintings in Western art is to go on sale at Christie's next month. Read more here-http://www.telegraph.co.uk/news/worldnews/3366888/Dynastic-blue-diamond-given-to-Velazquez-girl-could-fetch-10m.html

-Rio Tinto reported a "strong market" following its 24th annual Argyle Pink Diamond Tender, concluded several weeks ago. The diamond miner did not disclose prices the offered goods fetched, or if all of them were sold. For the first time, the rare diamonds offered at the tender had reserve prices. Of the some one hundred people invited to view the pink diamonds from Rio Tinto's Argyle mine in Australia, diamantaires, jewelry manufacturers and luxury retailers were the successful bidders.

The company said in a release that pink diamonds enjoy an increasing attraction as an investment option. "The Argyle pink diamonds selected for the 2008 Tender attracted substantial interest from an increasing number of investors and is evidence that the increasing rarity of these stones is becoming more valuable and sought after over time," according to Josephine Archer, sales and marketing manager of Argyle Pink Diamonds.

This year's Pink Diamond Tender contained a record number of round diamonds, including a matching pair, along with the first heart shaped diamond in seven years and three rare violets. The Argyle pink are usually smaller diamonds. This year, 30 diamonds weighing more than one carat were tendered. The total weight of the 65 offered diamonds was 62.46 carats. "All the diamonds received a significant level of interest and competition in what can only be described as a difficult economic market," said Raj Kandiah, general manager of Argyle Pink Diamonds.

Rio Tinto also used its Pink Diamond Tender to re-launch the Argyle pink diamond brand and its new distribution strategy. With just over a decade of Argyle production remaining, 15 Authorized Partners have been selected to receive polished pink diamonds directly from the mine, with a number of Select Ateliers chosen to use the brand, but not buy directly from the mine. Story here-http://www.idexonline.com/portal_FullNews.asp?id=31416 or http://www.diamondintelligence.com/magazine/magazine.aspx?id=7157 or

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23915

-Japan defies financial crisis with sell-out diamond-encrusted mobile phones. A range of diamond-encrusted mobile phones has sold out in Japan within days of being unveiled in a sign of the nation's undiminished appetite for luxury goods despite the global economic downturn. Read more here-http://www.telegraph.co.uk/news/worldnews/asia/japan/3414347/Japan-defies-financial-crisis-with-sell-out-diamond-encrusted-mobile-phones.html

COMMODITIES-OIL-WIND

-Steep food price increases on way: experts. U.S. food prices will rise by at least 7 percent in 2009 because of higher feed costs for chickens, hogs and cattle, said a group of food-industry economists on Thursday. It would be the third year in a row that food prices rose faster than the overall U.S. inflation rate. Food inflation is the highest since 1990.

"The sizable increase in the cost of producing food has not been fully passed on to the consumer," said private consultant Bill Lapp. He foresaw food inflation of 7 percent-9 percent in 2009. Read more here-http://www.reuters.com/article/topNews/idUSTRE4A58RZ20081106?feedType=RSS&feedName=topNews

-Traders Bet on $30 Crude Oil as OPEC Plans Talks on Output Cut. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aK5RcomuMimw&refer=home

-Iran hints at emergency meeting as oil falls. The price of crude oil reached a 21-month low, prompting calls from some Opec members for a further reduction in supply. Read more here-

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5133756.ece

-OPEC president: Oil cuts likely if no price rally. Read more here-http://www.cbc.ca/cp/business/081108/b110802A.html

-Qatar oil min says oil price should stay above $70. Oil should be above $70 a barrel to encourage investment in increased production capacity and avoid creating future supply crises, Qatar's oil minister said this week. Read more here-http://www.guardian.co.uk/business/feedarticle/8008167

-Cost of crude seen rising to $200 by 2030. World energy demand to rise 1.6% per year, while cost of crude is expected to reach $200 a barrel by 2030. Read more here-

http://money.cnn.com/2008/11/12/markets/oil_demand.ap/index.htm or http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5101525.ece

-The International Energy Agency, an adviser to 28 nations, cut its global oil demand forecast the most in 12 years as world economic growth deteriorates. The IEA lowered its 2009 estimate by 670,000 barrels a day, or 0.8 percent, to 86.5 million barrels a day following weaker economic forecasts from the International Monetary Fund, it said in a monthly report today. That's the biggest cut since 1996. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=axBxnBOUodUY

-Oil-Sands spending to fall 20% as Projects Delayed. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a56e_LPvSzYU&refer=canada

-World Needs a Kuwait a Year to Meet Demand, IEA Says. The world must find new oil production equivalent to Kuwait's existing output every year until 2030 to meet demand and counter the decline of existing fields, an International Energy Agency report showed.

The agency, an adviser to 28 nations, forecasts global oil demand will rise by 1 percent a year through 2030, while the rate of output decline at existing fields will accelerate to 8.6 percent from 6.7 percent. There must be "adequate and timely'' investment in global oil output for supplies to suffice, the Paris-based IEA said in its annual World Energy Outlook published today.

"There remains a real risk that under-investment will cause an oil-supply crunch'' by 2015 as the decline in output from mature oilfields speeds up, the Paris-based adviser said. ''The gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010.''

An additional 64 million barrels a day of additional production must be brought on stream between 2007 and 2030, the group said. That is about 2.78 million barrels a day every year. Kuwait currently produces about 2.6 million barrels a day, according to Bloomberg estimates. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aYQRKL1pOTBQ

-Chavez Says Oil Price Decline Temporary, to Recover on Demand. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ajaRdTa1ESI8

-CIBC's Rubin blames high oil prices for economy's nosedive. Read more here-http://www.financialpost.com/reports/oil-watch/story.html?id=929937

http://money.cnn.com/2008/11/12/markets/oil_demand.ap/index.htm

-The great global deleveraging continues. In a world that has become addicted to debt fuelled growth, the idea that readily available credit may no longer be available, has scared many into facing the truth; credit is not free and should never have been priced as such.

Over the past few weeks markets have continue to sell off, outlook for production and consumption are all bearish and thus oil continues its volatile ride losing $2 overnight to its current level of $58 a barrel. (Month to date it is down over 40% in USD terms and more than 62% in euro terms). Gold.ie

-Pickens' wind plan hits a snag. Credit crunch and falling natural gas prices may force cutbacks in giant Texas farm. Read more here-

http://money.cnn.com/2008/11/12/news/economy/pickens/index.htm?postversion=2008111212

-Trying to catch the wind. Developers and turbine makers are scrambling to feed growing demand for power. Read more here-

http://money.cnn.com/2008/11/04/magazines/fortune/woody_wind.fortune/index.htm?postversion=2008111212

GLOBAL FINANCIAL CRISIS-BAILOUT

-Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far. Read more here-

http://www.forbes.com/home/2008/11/12/paulson-bernanke-fed-biz-wall-cx_lm_1112bailout.html

-Bailout Lacks Oversight Despite Billions Pledged. Watchdog Panel Is Empty; Report Is Unfinished. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2008/11/12/AR2008111202846_pf.html

-Paulson Shifts Focus of Rescue to Consumer Lending. U.S. Treasury Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

"Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,'' Paulson said today in a speech at the Treasury in Washington. ''This is creating a heavy burden on the American people and reducing the number of jobs in our economy.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=a44uLcFI7ubA&refer=home or http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/financial_meltdown

-Paulson Credibility Takes Hit With Rescue-Plan Shift. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=apwPJfpF6MgU&refer=economy

-Bailout's Next Phase: Consumers. Read more here-http://online.wsj.com/article/SB122650321703420903.html

-Fed Defies Transparency Aim in Refusal to Disclose. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=worldwide

-Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=ayoT0_huyp5E&refer=economy

-The U.S. government's $700 billion Troubled Asset Relief Program is a "sugar boost'' that won't solve the financial industry's problems, Toronto-Dominion Bank Chief Executive Officer Edmund Clark said. "TARP is like getting a temporary sugar boost,'' Clark said yesterday in an interview in New York. ''There's no question that it postponed the adjustment process.''

Canada's second-biggest bank, which operates more than 1,100 branches in the U.S., isn't eligible for the aid program because it's a foreign-based lender. Clark said the bailouts may only buy time for troubled U.S. banks. In three years, the U.S. will ''have discovered the government didn't socialize losses, it just allowed the institution to have a longer life, hoping that things would get better.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a47oHpfDiZKg

-Banks Left Out of TARP Bailout Could Face Extinction. Read more here-http://www.time.com/time/printout/0,8816,1858844,00.html

-Fannie Mae posted a record quarterly loss as new Chief Executive Officer Herbert Allison slashed the value of the mortgage-finance provider's assets by at least $21.4 billion and said it may need to tap federal funds next year. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ausqyp34rOO4&refer=home

-Fannie Says $100 Billion Pledge From Treasury May Not Be Enough. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a.iQh4uHj3X8&refer=home

-Credit Suisse shuts down bond fund. Swiss bank Credit Suisse Group said Saturday that it is shutting down a bond fund and its subfunds after their value was crushed by the global financial crisis, according to a published report. Read more here-http://www.marketwatch.com/news/story/credit-suisse-reportedly-shuts-down/story.aspx?guid={3F275626-BD4E-429D-8C7F-79625F2C1F2F}&siteid=yahoomy

-Goldman urged bets against California bonds it helped sell. Read more here-http://www.gata.org/node/6862

-Are jobless next to need a bailout? Obama vows action as jobless rate jumps to 6.5 percent. Read more here-http://www.csmonitor.com/2008/1110/p01s03-usec.html

-Bonuses for Wall Street Should Go to Zero, U.S. Taxpayers Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=apRDGKM7Sbi8&refer=home

MORE BANKS TAKEN OVER

-Regulators shut banks in Texas, California. Regulators shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19. Read more here-http://apnews.myway.com/article/20081108/D94AJ5JO0.html

-The Latvian government said on Saturday it was taking over the country's second largest bank as the global financial crisis hit the small Baltic state, where economic growth has also sharply fallen.

It said in a statement it acted to "ensure a stable financial system in Latvia and the work of Parex bank". Parex is the largest locally-owned bank in a sector where Nordic banks have made inroads in recent years. Read more here-http://www.reuters.com/article/bondsNews/idUSL860214520081108

-D. Carnegie & Co. AB, Sweden's largest publicly traded investment bank, was seized by the country's national debt office and will be sold off in parts after accusations that it took "exceptional risks'' with loans.

The debt office assumed control of Carnegie Investment Bank AB and Max Matthiessen Holding AB, the two units that make up Stockholm-based Carnegie, which had been used as collateral for a 5 billion-krona ($640 million) loan made by the government last month. Carnegie will keep operating under new ownership. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a6O8wC.rZ1.U

DEMOCRATS TARGETING U.S. RETIREMENT ACCOUNTS?

-Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers' personal retirement accounts including 401(k)s and IRAs and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly. The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism.

Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers' retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration. Read more here-http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html

GLOBAL RECESSION

-China pledged a 4 trillion yuan ($586 billion) stimulus plan to prop up growth in the fourth-largest economy as the world heads toward a recession. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=augL9_cumtA4&refer=home

-Where will China get the money for their stimulus plan, will they sell some of their U.S. dollars? Read more here-http://ftalphaville.ft.com/blog/2008/11/11/18088/all-the-treasuries-in-china/

-Soros says deep recession inevitable, depression possible. Read more here-http://www.reuters.com/article/newsOne/idUSTRE4AC5IN20081113

-The U.S. downturn will be the longest in three decades, and the drought in consumer spending may be the worst ever, according to economists surveyed by Bloomberg News. The implosion of credit markets last month will cause the economy to shrink at a 3 percent annual rate in the fourth quarter and decline at a 1.5 percent pace in the first three months of 2009, according to the median estimate of 59 economists surveyed Nov. 3 to Nov. 11.

Following last quarter's 0.3 percent drop, the slump would be the longest since 1974-75. "The economy fell off a cliff in October,'' said Richard Berner, co-head of global economics at Morgan Stanley in New York. ''We had a huge financial shock that intensified the credit crunch and triggered a sharp downturn.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aCIytV1_Ii7M&refer=home

-Obama Is Seen Inheriting Worst U.S. Recession Since Reagan Era. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aTP1DuSuMY38&refer=home

-Economy not quite in freefall, but close, Greenspan says. No doubt U.S. in a 'very severe recession'. Read more here-http://www.financialpost.com/most_popular/story.html?id=940875

-OECD Forecasts Recessions in the U.S., Europe, Japan. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ap49FOHqwlSc

-Bank of Canada's Carney Signals a Recession Is Possibility. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=amDfSs6YgqDE

-German Economy Enters Worst Recession in 12 Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=asVhpVLebe1Q

-Australia's economy, which cruised through the 1997 Asian financial crisis and the dot-com bust, is facing the prospect of its first recession in almost two decades. Waning global demand for commodities threatens to staunch a five-year flood of export earnings that helped boost Australian incomes by the most in more than 30 years. Without shipments overseas, the economy would have contracted in the second quarter.

China's performance may be the key to whether the economy shrinks: A slowdown in Australia's fastest growing export market would hurt shipments of iron ore, coal, copper and cotton. Treasurer Wayne Swan said this week Australia may be hit harder than expected as the global slowdown spreads to the emerging markets that are among the nation's main trading partners.

"It'll be no mean feat for Australia to stay out of a recession,'' said Rory Robertson, an economist at Macquarie Group Ltd. in Sydney. ''Consumers and business are hunkering down across the world, almost as we speak, shocked to the core by the financial dislocation.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=asd0.p2Zg9EA&refer=home

-Stunned Icelanders Struggle After Economy's Fall. Red more here-http://www.nytimes.com/2008/11/09/world/europe/09iceland.html?_r=2&oref=slogin&pagewanted=print

-First-time claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession, as weakening demand led companies to fire more workers.

Initial jobless claims increased by 32,000 to a larger- than-forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington. The total number of people on benefit rolls jumped to the highest level since 1983. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYZezaUiLEr4&refer=home

-Las Vegas Sands to lay off 11,000 in Asia. Cash crunch forces Las Vegas Sands Corp. to halt Macau casino construction. Read more here-

http://money.cnn.com/2008/11/13/news/companies/sands_macau.ap/index.htm

-Down and Out in Beverly Hills: Rolexes, Picassos Hit Pawnshops. The worse the economy gets, the better it is for Jordan Tabach-Bank. "Business is booming,'' said Tabach-Bank, the chief executive officer of Beverly Loan Co. in Beverly Hills, California.

Beverly Loan is a pawnshop. Not just any pawnshop, but the kind that caters to people who hock Cartiers, Harley- Davidsons and Oscar statuettes when they need cash. They really need it now, Tabach-Bank said from a third-floor office, protected by bulletproof glass, off his showroom in the Bank of America building near Rodeo Drive.

"I've never seen so many bankers, lawyers, doctors and actors'' with valuable things to pawn, he said. He pointed to an 18-carat white gold bracelet with 69 diamonds ($2,900) and an 18-carat yellow gold Rolex Yachtmaster II (''a steal'' at $18,500). With credit drying up at regular lenders, ''in many cases now, we're not just the bank of last resort,'' Tabach-Bank said. "We're the bank of only resort.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601093&sid=aQhOlWCOHawM&refer=home

U.S. DEBT PROBLEMS-FISCAL-TRADE

-U.S. October Budget Deficit Swells to a Record $237.2 Billion. The U.S. budget deficit last month exceeded the shortfall for President George W. Bush's first full year in office, spurred by purchases of stakes in a group of the nation's largest banks.

The deficit in the first month of the 2009 fiscal year climbed to a record $237.2 billion, compared with a gap of $56.8 billion in October last year, the Treasury Department reported today in Washington. Revenue fell 7.5 percent, while spending soared 71 percent.

Treasury Secretary Henry Paulson spent $115 billion last month to buy shares in eight of the biggest U.S. banks as part of his $700 billion Troubled Asset Relief Program. Deteriorating credit conditions and the economic slump are straining the nation's finances and will leave President-elect Barack Obama with a deficit worse than the record $455 billion of last year. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=anAw_3rxjNSU&refer=home

-California's budget deficit will grow to $28 billion through June 2010 unless lawmakers take bold action, possibly including a hike in the state income tax, the Legislature's nonpartisan analyst said this week. Read more here-http://www.breitbart.com/article.php?id=D94CU54O0&show_article=1

-A Town Drowns in Debt as Home Values Plunge. Mountain House California this town, 59 feet above sea level, is the most underwater community in America. Because of plunging home values, almost 90 percent of homeowners here owe more on their mortgages than their houses are worth, according to figures released Monday. That is the highest percentage in the country. The average homeowner in Mountain House is "underwater," as it is known, by $122,000.

A visit to the area over the last couple of days shows how the nationwide housing crisis is contributing to a broad slowdown of the American economy, as families who feel burdened by high mortgages are pulling back on their spending. Jerry Martinez, a general contractor, and his wife, Marcie, an accounts clerk, are among the struggling owners in Mountain House. Burdened with credit card debt and a house losing value by the day, they are learning the necessity of self-denial for themselves and their three children.

No more family bowling night. No more dinners at Chili's or Applebee's. No more going to the movies. "We make decent money, but it takes a tremendous amount to pay the mortgage," Mr. Martinez, 33, said. Read more here-http://www.nytimes.com/2008/11/11/business/11home.html?_r=1&adxnnl=1&partner=rss&emc=rss&adxnnlx=1226430107-DWF65loH73nCtbjqF469/w&pagewanted=print&oref=slogin

-The U.S. trade deficit in September narrowed more than forecast as a record decline in the cost of foreign crude oil caused fuel imports to tumble. The gap shrank 4.4 percent to $56.5 billion, the smallest in almost a year, from $59.1 billion in August, the Commerce Department said today in Washington. Excluding petroleum, the deficit widened as overseas sales of American-made goods dropped by the most since 2001. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=akd8Vd7ZXZN8&refer=home

-The U.S. Fed balance sheet shows that the Fed has borrowed and taken in deposits to fund the loans that are as big as the issuance of currency. In effect, the Fed has doubled its footprint and doubled its responsibilities. Mostly under the covers, they added almost $1 trillion new credit to the financial world in about two months. Read more here- http://www.321gold.com/editorials/casey/casey111108.html

U.S. DOLLAR

-Dollar to Come Under Serious Pressure in Coming Months. This is especially the case as the reserve currency of the world is likely to come under serious pressure again in the coming months. The dollar's strength of late has been quite impressive with significant gains against most fiat currencies, especially the other major currencies the euro and the pound.

But given the terrible and deteriorating fundamental fiscal position of the US and the huge trade and current account deficits and the rapidly deteriorating budget deficits the dollar will again come under pressure once this period of massive global deleveraging is over. Trillions of dollars of US dollar denominated debt had to be paid back in recent weeks in a massive and unprecedented deleveraging of the financial system and this contributed to massive short covering and the significant rally seen in the dollar.

It is worth remembering that the dollar rose sharply in the 4 months after the geopolitical crisis that was the September 11th tragedy. Thereafter it fell, with intermittent bear market rallies, for the next 7 years. Similarly the global financial crisis has seen a sharp rise in the dollar (from oversold levels) but this is very likely a brief correction in a secular bear market for the dollar.

With central banks slashing interest rates to historically low levels, savers are again being punished and the opportunity cost of holding gold continues to decrease. Gold's critics use the fact that it does not yield anything as a simplistic criticism of gold. It does not yield anything as it is no one else's liability and is not dependent of the performance of corporations, banks and governments.

Thus it has no counterparty risk and does not have to offer a yield to compensate for these risks. Savers internationally are increasingly confronted with negative real interest rates and continuing systemic risk which is likely to rightly lead to increasing diversification into gold. Gold.ie

INTEREST RATES

-Yield Curve May Steepen to Record During Recession. Treasury two-year notes, the worst performing U.S. government securities in the past year, may beat longer-term debt as the Federal Reserve cuts interest rates to pull the U.S. economy out of a nosedive, according to one of the bond market's most-watched barometers. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aKmxK0Dtpv4I

AIG LOSSES CONTINUE

-AIG Gets Expanded Bailout, Posts $24.5 Billion Loss. American International Group Inc. got a $150 billion government rescue package, almost doubling the initial bailout of less than two months ago as the insurer burns through cash at a record rate.

AIG will get lower interest rates and $40 billion of new capital from the government to help ease the impact of four straight quarterly deficits, including a $24.5 billion third- quarter loss posted this week by the New York-based company. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a__sWuaTWZXw&refer=home

-AIG's Losses Lead Insurers as Tally Nears $1 Trillion. American International Group Inc.'s losses from the collapsing mortgage market account for almost half the $123.6 billion inflicted on North American insurers, helping push the tally for the world's biggest financial firms toward the trillion-dollar mark. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aqaXBx8Ogdxw

AMERICAN EXPRESS BECOMES BANK-WANTS FEDERAL AID

-American Express Co., the credit-card company that relied most on the capital markets for fundraising, fell in early trading Tuesday after winning U.S. Federal Reserve approval to become a commercial bank.

The Fed waived a 30-day waiting period on the application because of "the unusual and exigent circumstances affecting the financial markets,'' according to a Fed statement released yesterday in Washington. Chairman Ben S. Bernanke and his colleagues unanimously approved the plan.

Converting to a U.S.-insured lender may give American Express access to the Treasury's $250 billion bank rescue program and make credit market investors more willing to hold debt from the New York-based company. American Express had to reassure investors last month that it had enough cash to last for a year as credit markets seized up. Read more here-

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

-American Express seeks $3.5B from feds. Credit card company looks to government money as credit crisis dismantles primary funding base, The Wall Street Journal reports. Read more here-http://money.cnn.com/2008/11/12/news/companies/amex_funds.ap/index.htm?postversion=2008111208

CIRCUIT CITY FILES FOR BANKRUPTCY

-Circuit City Stores Inc. filed for bankruptcy amid rising competition from Best Buy Co., Wal-Mart Stores Inc. and online electronics retailers. The petition for Chapter 11 protection in U.S. Bankruptcy Court in Richmond, Virginia, listed $3.4 billion in assets and $2.32 billion in liabilities, driving the shares down 56 percent before the New York Stock Exchange halted trading. The company said it is entering court protection owing Hewlett-Packard Co. $119 million and Samsung Electronics Co. $116 million.

The Richmond-based company, founded in 1949 when Samuel Wurtzel opened the city's first retail television store, has lost more than $5 billion in stock-market value in two years. Circuit City plans to stay in business while it comes up with a plan to restructure. "It's very incongruent for retailers to file bankruptcy before Christmas,'' Burt Flickinger, managing director of consultant Strategic Resource Group in New York, said in a Bloomberg Television interview.

"You're going to see a record number of retailer bankruptcies and closings.'' Concerns among vendors that Circuit City wouldn't be able to pay for the merchandise it sells ''escalated considerably'' in the past week, the company said in the filing. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Vg0XjJ_wOE&refer=home

-Why Circuit City Busted, While Best Buy Boomed. Read more here-http://www.time.com/time/printout/0,8816,1858079,00.html

STARBUCKS PROFIT DOWN 96 PERCENT

-Starbucks Profit Falls as Consumers Cut Back on Java. Starbucks Corp., the world's largest chain of coffee shops, reported fourth-quarter profit that fell more than analysts estimated after customer visits declined for the fifth consecutive quarter.

Starbucks said July 1 it would close 600 underperforming cafes in major U.S. cities, 70 percent of which were less than three years old. The company is eliminating as many as 13,000 jobs, the most in its history. It also shut three-quarters of its 84 stores in Australia, backing away from a market it entered eight years ago. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=azf5Wx7rJAgQ&refer=home

-Starbucks Corp. Chief Executive Officer Howard Schultz backed away from his goal of opening 40,000 stores after the world's largest chain of coffee shops reported fourth-quarter profit that plunged 96 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aQyLLsQ_DbZc

HEDGE FUND CRISIS

-The global hedge fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Tantallon Capital were buffeted by investor redemptions. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ayJkUWjzpLVk&refer=home

-Soros, Falcone Defend Hedge Funds at House Hearing. George Soros and Philip Falcone, in a rare appearance by hedge-fund managers before Congress, defended their industry's practices and profits while splitting over whether the U.S. should impose stricter regulations.

"This is not a case where management takes huge bonuses or stock options while the company is failing,'' Falcone, senior managing director of New York-based Harbinger Capital Partners, said in testimony today to the House Committee on Oversight and Government Reform.

Falcone urged Congress to oversee the $1.7 trillion industry and require more disclosure of investments, while Soros, founder of Soros Fund Management LLC in New York, cautioned against "ill-considered'' regulations because the managers are reeling from market losses and client defections. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXFlt0Ejr_.o&refer=home

-'Hedge funds will be decimated'. 5 top hedge fund managers testify at congressional hearings about the industry. Read more here-

http://money.cnn.com/2008/11/13/news/economy/benner_hedgies.fortune/index.htm

-Fortress Hedge-Fund Investors Ask to Pull 25% of Cash. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a_AvAZbyq_8A&refer=home

-Tontine Associates LLC, the investment firm run by Jeffrey Gendell, plans to liquidate two stock hedge funds after they lost more than two-thirds of their value this year, people familiar with the matter said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aghbrqbJyNDQ&refer=home

-Hedge funds run by Jeffrey Gendell and John Burbank III posted their worst monthly losses in October. Peter Thiel gave back gains made earlier in the year. Nobel-prize winner Myron Scholes froze his biggest fund.

The managers, like many in the $1.7 trillion hedge-fund industry, were caught in a downdraft of market declines, client redemptions, demands from lenders for more collateral and forced asset sales that accelerated after Lehman Brothers Holdings Inc. collapsed in mid-September.

Funds fell by an average 5.4 percent last month, pushing the year-to-date drop to 15.5 percent, according to the HFRI Fund Weighted Composite Index compiled by Chicago-based Hedge Fund Research Inc. Investors have been handed losses for five straight months, the longest streak since HFRI started the index in 1990. Read more here-

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

-Ospraie in a corner. Dwight Anderson built a $9 billion hedge fund empire betting on volatile commodities markets. His world came undone this summer. Read more here-

http://money.cnn.com/2008/11/12/news/companies/ospraie_demos.fortune/index.htm?postversion=2008111209

-Lawrence Asset Management Inc. has temporarily halted redemption orders in its flagship hedge fund after it plunged 65 per cent for the first 10 months of this year. The firm "believes it is in the best interests of all shareholders to suspend redemptions for 60 days" on the Lawrence Partners Fund, its president Ravi Sood told investors in a letter this week. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20081111.wlawrence11/GIStory/

AUTO MAKERS

-President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush's support, people familiar with the matter said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBlCucXR33Jw&refer=home

-Chrysler in Crisis, Needs U.S. Aid, Nardelli Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=azi8ROwVPBuQ&refer=home

-Cerberus Would Cede Profit in Chrysler Sale in Rescue. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aAp1.QVrxgWc&refer=home

-General Motors Corp., seeking a U.S. federal bailout to stay in business, is having a harder time selling $4 billion in assets after saying it may run out of cash, according to people familiar with the negotiations. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aJq6bh69jVT4

-Goldman Stops Rating GM, JPMorgan Downgrades Shares. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aAKWYEJ0sQOs

-Why GM can't survive bankruptcy. Some companies use the courts to reorganize and come out stronger. That would be difficult for GM, experts say. Read more here-

http://money.cnn.com/2008/11/13/news/companies/gm_bankruptcy/index.htm?postversion=2008111305

-Is General Motors Worth Saving? Read more here-http://www.time.com/time/printout/0,8816,1858702,00.html

-GM: The Threat of Bankruptcy. GM's senior management, business experts, and some members of Congress think letting the automaker go Chapter 11 would be a disaster. Read more here-http://www.businessweek.com/print/lifestyle/content/nov2008/bw20081111_141573.htm

REAL ESTATE-MORTGAGES-FORECLOSURES

-One-third of U.S. homeowners who sold their property in the 12 months through September lost money as foreclosures depressed prices and more Americans became unemployed in a weakening economy, Zillow.com reported. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=a36RCxT4Tl1o&refer=home

-Fewer Americans signed contracts to buy previously owned homes in September, indicating the credit crisis will inflict more damage on the housing market. The index of signed purchase agreements, or pending home resales fell 4.6 percent, more than forecast, to 89.2, the National Association of Realtors said today in Washington. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid=ai7PX36RigYI&refer=home

-U.K. home sales declined to the lowest level in at least three decades and the lending freeze pushed down prices for a 15th month, the Royal Institution of Chartered Surveyors said. Real-estate agents and surveyors sold an average of 10.9 homes in the quarter through October, the least since the series began in 1978, RICS said today.

The percentage of agents saying prices dropped exceeded those reporting gains by 82 points, an indicator that has been negative since August 2007. A separate report showed retail sales fell for the first time since 2005. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=arfvxwIPAzBI&refer=economy

-Trump Files Suit against Lenders. Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper. Read more here-http://online.wsj.com/article/SB122610459432510207.html?mod=djemRealEstate

-Yellowstone Club, a private ski and golf resort in Montana, sought bankruptcy protection from creditors, citing a decline in the real estate market. Yellowstone Development, based in Rancho Mirage, California, listed assets of $500 million to $1 billion and debt of less than $500 million in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Butte, Montana.

Yellowstone Club consists of Yellowstone Mountain Club, the previous owner of the land, and Yellowstone Development and Big Sky, which bought the property to develop ski trails, a golf course, lodges and residences, according to court papers. The companies are collectively known as "Yellowstone Club.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a9VhNOm8y7qY

-Toll Revenue Drops 41% as Luxury-Home Demand Slumps. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aBXQfaf1qnYg

-No. 2 mall operator warns of bankruptcy. General Growth Properties blames weak retail sales and a credit market freeze. Read more here-

http://money.cnn.com/2008/11/11/news/companies/general_growth/index.htm?postversion=2008111115

-Tales of Woe from Real Estate Agents. Read more here-http://www.time.com/time/printout/0,8816,1858092,00.html

-More than a quarter million U.S. households received a foreclosure filing in October even as state laws designed to protect property owners from losing their homes slowed the pace of defaults, RealtyTrac Inc. said.

A total of 279,561 properties got a default notice, were warned of a pending auction or were foreclosed on, the Irvine, California-based seller of default data said today. Filings rose 25 percent from a year earlier, an improvement from average monthly gains of about 50 percent this year, after California passed a law delaying foreclosures for some borrowers. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a3SL4NiQK9bk or http://money.cnn.com/2008/11/13/real_estate/foreclosures_october/index.htm

-The News Press reports from Florida. "The Fort Myers/Cape Coral metropolitan area ranks third nationally in foreclosures, a position not likely to improve with 20,000 homes on the market and another 29,000 in foreclosure. An estimated 40 to 60 percent of homes purchased during the boom went to speculators or investors. Problems also arose when individuals who didn't have the means to own a home took ill-advised financial risks.

'It was clearly a pace we couldn't keep up,' said real estate agent Steve Koffman. 'Every waiter and waitress in town was buying a home." "Now, the backlog of homes for sale is 22 months, and those in foreclosure would take another 24 months to sell. 'We weren't the only epicenter, but if you want to pick the poster-boy case, it is Southwest Florida,' said economist David Jones." Read more here-http://thehousingbubbleblog.com/?p=5070

-Citi, Fannie, Freddie to Halt Some Foreclosures. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aDBGRC.3CRSs&refer=home

-Foreclosures: Washington to the Rescue? The Treasury is finally moving to keep people in their homes because it can't ask Congress for more bank-bailout funds without some help for homeowners. Read more here-http://www.businessweek.com/print/bwdaily/dnflash/content/nov2008/db20081111_824239.htm

-U.S. unveils mortgage plan. Effort focuses on Fannie, Freddie sets standards for private sector. No direct financial help from U.S. Read more here-

http://money.cnn.com/2008/11/11/news/economy/loan_modification/index.htm?postversion=2008111115

GEOPOLITICAL NEWS

-Obama administration to ratchet up hunt for bin Laden. Read more here-http://www.cnn.com/2008/POLITICS/11/12/binladen.hunt/index.html

-Bin Laden 'cut off from al-Qaeda'. The CIA says Osama Bin Laden is isolated from the day-to-day operations of al-Qaeda, but that the organisation is still the greatest threat to the US.

CIA director Michael Hayden said the Saudi militant was probably hiding in the tribal area of north-west Pakistan.

Mr Hayden said Bin Laden was "putting a lot of energy into his own survival" and that his capture remained the US government's top priority. But he warned that al-Qaeda was still spreading in Africa and the Mid-East. In a speech to the Atlantic Council on Thursday, Mr. Hayden said: "[Bin Laden] is putting a lot of energy into his own survival, a lot of energy into his own security." Read more here-http://news.bbc.co.uk/2/hi/americas/7728551.stm

-Al-Qaeda Has Adapted to U.S. Gains Against It, CIA Chief Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1DJmsw97Sds

-Iran successfully test-fired a new, domestically-designed and manufactured missile near the Iraqi border, state-funded Press TV reported. The Samen missile was launched yesterday during a military drill by the elite Islamic Revolutionary Guards Corp in the border city of Marivan, in the western Kurdistan province, Press TV said on its English-language Web site.

Iranian forces also tested heavy and semi-heavy artillery and rocket launchers, the Tehran-based satellite news channel reported. No further information was immediately available. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8boVPPM02N4&refer=home

The GoldBugg Report - November 19, 2008
Posted by Worldwide Precious Metals on Tuesday, November 18, 2008

The GoldBugg Report - November 12, 2008

November 12, 2008

The GoldBugg Report

-What has been happening to gold?

-Gold is Up 12% while S&P is Down 37% Since Credit Crisis Began. See the charts.

-Silver will outperform gold as investors turn to the metal as a hedge against inflation, investor Jim Rogers said. "Silver will do better than gold,"

GOLD

-What has been happening to gold? Specialist coin dealer Blanchard & Co. explains price decline and what is ahead. The dollar, emerging markets, the global financial crisis all hold the key. As the global financial crisis continues to unwind, many investors and market observers have been scratching their heads as to why the price of gold often considered a key safe-haven investment during times of uncertainty has declined.

The analysts at Blanchard and Company offer an answer and predict where the metal is headed over the coming quarters. Doyle says the inflationary pressures of the U.S. Treasury's financial bailout package will produce a powerful downward adjustment in the dollar, and that a further drop in the dollar is inevitable over the next few years, given the large U.S. trade imbalance, noting that there is no precedent for a country with such a large external deficit to avoid a major currency depreciation.

"Once the economy finds its track, dollar weakness is going to drive gold above past record levels, and demand for tangible assets like gold will continue to grow," Doyle says. "Fundamentals will re-establish themselves as the driver of the gold market, and we believe we'll see $1,250 gold during this period." Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=72060&sn=Detail

-Gold should rally again on the gradual realization that 44th President, President Obama, will be confronted with a challenge akin to the monumental challenge facing Franklin D Roosevelt in November 1932, in the early days of the Great Depression. Central bankers and politicians look set to try and inflate their way out of the recent deflationary spiral. It is worth noting that gold outperforms other asset classes not just in periods of inflation or stagflation.

Gold also outperforms in deflationary depressions as it did in the 1930s when the dollar (which was backed by gold unlike today in our modern floating fiat currency monetary system) was sharply devalued overnight by Roosevelt from $22/oz to $35/oz. Thus overnight in January 1934, gold was revalued by 59%. It is worth remembering that the Dow Jones fell by 90% during the period and property prices fell by more than 50%.

President Obama's election also has historical parallels with the mid 1970s and the election of Jimmy Carter in 1976. Back then America and much of the western world was confronted with deep stagflation. Nixon had ended the convertibility of gold into dollars and backing of dollars by gold in the international marketplace in 1971. Deepening stagflation saw gold surge from $35/oz to over $200/oz in 1974.

Then gold fell sharply by some 50% - from $200/oz to $100/oz in 1976. This should put the recent fall in the gold price into perspective. After Carter's election in 1976, gold resumed its bull market and surged from $100/oz in 1976 to over $850/oz in January 1980. Similar price increases may be seen in the gold market in the coming years and gold's inflation adjusted high of some $2,400/oz looks a very comfortable price target. Gold.ie

-With President Obama's promise of a new "New Deal", gold is set to again confound the critics and show itself as an essential component in a properly diversified portfolio. No matter who was elected President, in the medium to long term the dollar is likely to come under increasing pressure due to the US' deteriorating fiscal position and this should see gold remain in a bull market.

Ex Goldman Sachs CEO, Treasury Secretary Hank Paulson and the Republican leadership may have been glad to see the dollar rally and oil fall sharply in recent months and that is what came to pass (greatly aided by the credit and solvency crisis and gigantic deleveraging of the global financial system). However, with the elections over, these likely countertrends may be reversed and the primary trends of a fall in the value of the dollar and a rise in the value of gold are likely to reassert themselves in the coming months.

President Bush and his administration spent money like drunken sailors and their guns and butter economic policies (more guns than butter) have left President Obama with a poisoned chalice. Goldman Sachs predicts that next year the US Treasury will issue an incredible $US2 Trillion in debt, or twice last year's record total. These are figures are more akin to those of a Latin American banana republic.

The policies of enormous tax cuts for the already extremely wealthy and favouring the corporate and financial sector and Wall Street interests at the expense of Main Street and the majority of Americans has left Main Street America on its knees and the great hope is that President Obama can help alleviate the suffering of thousands of Americans who are now losing their jobs and/or their homes.

President Obama must be careful that his fiscal stimulus and efforts to reflate the rapidly deflating economy do not result in deepening inflation and stagflation. This would then necessitate a Paul Volker style Federal Reserve Chairman who would hawkishly increase interest rates in order to tame inflation and encourage Americans to forego consumption and rebuild a culture of prudent saving which will be necessary if America wishes to regain its economic health again.

Interestingly, the highly respected Volker (who is rightly increasingly seen as the best Federal Reserve Chairman in recent history as Greenspan and Bernanke's reputations become tarnished) is being considered as Treasury Secretary but is more likely to be one of Obama's 'wise men' who will advise him on economic matters. Physical demand for bullion remains very robust.

There may also be a realization that gold bullion's intrinsic value is something to be sought after in a world of volatile paper assets where politicians and central bankers have adopted the "inflate or die" fiscal and monetary policy option. After a brief hiatus of deflation we are likely to get a sharp bout of stagflation in the coming months which, if not tendered to carefully, could lead to a more serious hyperinflation. Investors and savers should be cognoscente of the big picture historical trends and prepare, invest and save accordingly. Gold.ie

-Gold is Up 12% while S&P is Down 37% Since Credit Crisis Began.

-Gold Is Still in an Uptrend. The bear market rally in the Dollar Index over the past four months is as strong as the two back-to-back bear market rallies in the early 1990s. There is an important message in that observation. There is a good probability that this current bear market rally in the Dollar Index is drawing to a close.

Thus, the flight out of the US dollar into commodities and gold will probably resume soon. After all, nothing fundamental has changed for the dollar. Its outlook worsens by the day as the federal government creates ever-more schemes and gimmicks to bail out insolvent banks and jumpstart a moribund economy. As a result, investors and fund managers will soon understand that they are at risk by sitting in US dollar cash and owning US government debt.

In summary, gold is still the place to be regardless which currency you compare it to. Gold is climbing against all of the national currencies presented in the above charts. Read and view charts here-http://goldmoney.com/en/commentary.php

-James Turk Explains: Why Gold & Silver During These Turbulent Times. Read more here-http://www.kitco.com/ind/Taylor/printerfriendly/nov052008.html

-What Better to Own Than Gold? Read more here-http://www.kitco.com/ind/Taylor/printerfriendly/nov032008.html

-How the Fed could create a new gold rush. Read more here-http://www.moneyweek.com/investments/precious-metals-and-gems/how-the-fed-could-create-a-new-gold-rush-13958.aspx

-Brien Lundin: Is Gold Holding a Wild Card? Read more here-http://news.goldseek.com/GoldSeek/1225837266.php

-Eric Sprott talks about gold and silver. Listen to interview here-http://www.youtube.com/watch?v=2aGbF14LoWo

-In his latest essay Eric Sprott, chairman of Sprott Asset Management in Toronto, explains why gold is better than cash, a proposition that does not require much argument today in places like Iceland, Brazil, and Mexico and that, Sprott believes, soon will not require a lot of argument in the United States either. Sprott's essay is headlined "Cash or Gold?" Read more here-

http://www.sprott.com/pdf/marketsataglance/MAAG.pdf or http://www.321gold.com/editorials/sprott/sprott110608.html

-Coin dealers puzzled as paper gold falls amid real gold's scarcity. Read more here-http://www.gata.org/node/6835

-Murray Pollitt: A 'New Bretton Woods' is likely to remonetize gold. Read more here-http://www.gata.org/node/6840

-Barrick's Munk: Gold outlook is 'a hell of a lot more positive than anything else.' Because of the global financial crisis, Barrick chief Peter Munk said the pressure on gold has been absolutely unprecedented, which may be why the gold price has yet to live up to its promise. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page34?oid=71812&sn=Detail

-Gold a victim of its own success, Munk argues. The greenback's stunning rise has been inversely correlated to gold's decline. Mr. Munk believes the U.S. dollar is certain to fall and that can only mean better times for the gold price. Read more here-http://www.reportonbusiness.com/servlet/story/RTGAM.20081030.wrbarrick31/BNStory/energy/home

-Is President Obama a buy signal for precious metals? Which asset class could you possibly buy for safe returns in a collapsing global economy? Which asset class will protect you as the deflation of the recession turns into the higher inflation of the government printing press and the slow recovery?

This just has to be precious metals, just like in the late 1970s. Cash and precious metals beat bonds, equities and real estate in that troubled time. It is happening all over again the 2008 crash is very much like 1974 and sadly so will be the outcome in terms of stagflation.

For President Obama the classic dilemma of an elected politician is presented: he had to raise enormous hopes for change to get elected; and now he will find it hugely difficult to deliver on his promises. That could mean he faces a short presidency like Jimmy Carter in the late 70s rather than becoming another FDR from the 30s but he might surprise us all. Read more here-http://news.goldseek.com/GoldSeek/1225901482.php

-Chavez takes over biggest gold mine in Venezuela: minister. Read more here-http://www.breitbart.com/article.php?id=081105220533.9xxyupf3&show_article=1

or http://www.theglobeandmail.com/servlet/story/RTGAM.20081105.wrcrystallex1106/BNStory/energy/home

-Venezuela handing Las Cristinas and Brisas gold mines to Russians via Rusoro. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=72553&sn=Detail

-Gold production 'in crisis' AngloGold Ashanti CEO. Read and watch video here-http://www.miningweekly.com/article.php?a_id=146429

-Zimbabwe gold mines face collapse. Zimbabwe's gold mining industry, Africa's third biggest nine years ago, is on the brink of "total collapse" because the country's central bank refuses to pay for the gold it buys from the mines, the mines' representative body said on Monday. Read more here-http://www.mg.co.za/article/2008-11-03-zimbabwe-gold-mines-face-collapse

-In the past few weeks, the U.S. Federal Reserve has joined with the U.S. Treasury in an attempt to remedy the financial fiasco. In that effort, the Federal Reserve's balance sheet has ballooned by more than 50%. Never in peace time history has the central bank for the world's reserve currency so intentionally implemented policies that will destroy the value of that reserve currency.

As a consequence of that massive monetary ease, the U.S. money supply, M-2, is now growing at a double digit rate. That monetary growth is readily evident in the first graph. The deflationists can now quite worrying, the quantity of U.S. dollars is rising and the value of those dollars will therefore fall.

As the second chart below shows, that renewed monetary growth is likely to benefit Gold investors. The green line is the six month rate of change of the value of $Gold. It uses the left axis. The red line is the six month rate of change for the inflationary component of U.S. money supply growth, using the right axis. Calculation for that measure is the annualized six month rate of change minus 3%, a long term estimate of productivity growth.

Buy signals on Gold have been created with that monetary inflation measure. When that measure is negative and then turns up into a positive reading, a buy signal is given. Those signals are marked with black triangles. As is apparent, those signals are associated with rising returns on Gold. This most recent explosion of U.S. monetary growth is signalling that the return on Gold should begin rising dramatically.

That would be as expected as the Federal Reserve is doing all possible to inflate, and reduce the value of the dollar. At the same time a massive short, real and psychological, position has been built such that a classic short squeeze in $Gold is extremely likely. Investors not mired in the thoughts of 1930 should be buying Gold at these prices, while they exist. Ned W. Schmidt

SILVER

-Silver will outperform gold as investors turn to the metal as a hedge against inflation, investor Jim Rogers said. "Silver will do better than gold," Rogers, chairman of Singapore-based Rogers Holdings, said this week in an interview in New York. "It's been beaten down horribly. If you put a gun to my head and said you have to buy one, I would buy silver rather than gold."

Gold may drop as central banks and the International Monetary Fund sell the metal to raise cash, said Rogers, who correctly predicted in April 2006 that gold would reach US$1,000 an ounce. The IMF in May ratified a plan that included proposals to sell 403.3 tonnes of gold to reduce a budget deficit.

"The IMF has gigantic amounts of gold," said Rogers, a co-founder with George Soros of the Quantum Hedge Fund. "Maybe gold is going to go down for a while. If gold does go down, I'm going to buy more." Read more here-http://www.financialpost.com/trading_desk/mining/story.html?id=929067

-More Signs Of A Silver Shortage. The evidence of a wholesale silver shortage continues to build. This is in addition to the current retail shortage. The continuing tightening in the price differentials between the trading months in COMEX futures has continued and become more dramatic.

One of the clearest indicators of a shortage in a physical commodity occurs when the nearby futures months trade at a premium to more deferred trading months. That means buyers are willing to pay more for a commodity because it is not immediately available. Remember, the definition of a commodity shortage revolves around delays and premiums. While the nearby months in COMEX silver futures haven't yet grown to a premium over the more deferred months (called backwardation or an inverted market), they have moved noticeably in that direction.

A second sign was the unusual and persistent buying of the recently concluded October COMEX silver futures contract, which recorded almost 1300 contracts delivered (6.5 million ounces) for the month. The bulk of these contracts resulted in a removal of silver from COMEX silver warehouses. Ted Butler and Israel Friedman

-Silver knowns and unknowns, but a still bullish appraisal. An interesting viewpoint on the current state of the silver investment market form one of London's specialist precious metals fund managers. In his opening address to the successful London Silver Summit yesterday specialist precious metals and natural resources fund manager Ned Naylor-Leyland chose to quote Donald Rumsfeld as indicative of analysis of the precious metals sectors at the moment.

The well-known poetic Rumsfeld utterance chosen was: "As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know." The reactions of the gold and silver prices in the current markets really bear this out, with disputed fundamentals, partly depending on one's viewpoint of precious metals as money or a store of wealth or not, suggesting big advances while in reality prices have fallen.

Naylor-Leyland said the "Death of fiat money will happen" and pointed out that a new series of Bretton Woods discussions getting under way at the end of this month will at least focus people's minds on the idea of a precious metals backing for world currencies, even though the general government and Central Bank opposition to such an idea will make serious consideration of this unlikely. This could, however, raise the profile of an opinion that "silver is money".

Whether one agrees with this concept or not, Naylor-Leyland felt that, contrary to a Societe Generale view we published yesterday - Commodities in recession as speculative bubble bursts - but the purge is over - the case for silver and silver equities as investments is "compelling". Small physical metal purchases are currently being made at up to 60 percent over spot prices as demand exceeds actual supply contrary to what the overall market may be telling us.

The market, according to Naylor-Leyland "hasn't understood the dynamics of silver compared with other industrial metals." Because investors are finding it difficult to buy silver bullion in reasonable quantities, they are likely to have to look to silver equities to gain a foothold in the market. These may well be particularly cheap at the moment with many down around 75 percent or more from their peaks.

Governments printing money to try to mitigate the current financial crisis are building up to a situation where it is going to be almost impossible to avoid significant inflation - indeed managed inflation can be a popular policy for governments. Tthe problem here is that there is the possibility of unmanaged, or out-of-control inflation as a result of the huge increases in money supply currently being generated.

Naylor-Leyland primarily recommends buying silver bullion as an inflation hedge, but if bullion prices rise then equities in those silver miners which survive the current downturn should also soar if he is correct in his analysis. He is firmly in the 'silver is money' camp, although talks a more rational scenario than some of the real silver bulls. An interesting viewpoint. Story here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=72497&sn=Detail

-Silver Production Falls by 70%.This headline should grab anyone's attention, especially those interested in the silver market. Before going forward, let me explain that fully 70% of silver is produced as a result of mining other metals, mostly base metals. Copper mining, for example, is responsible for 28% of the silver mined in 2007. Lead/Zinc mining yielded 32% of the silver mined in 2007. Finally, gold mining brought about 10% of the silver mined, again in 2007.

All data is from GFMS World Silver Survey 2008, page 31. The point is, with the current low prices for all of the base metals, many companies that produce them are slowing, closing, or stopping projects. The result is obvious: the overall production of silver from base metal and even gold mining is going to be reduced because of current economic conditions.

Will this bring down silver production by the 70% mentioned in my "yellow journalism" headline? Of course not, but my headline builds awareness that a slowdown in global mining activity is not necessarily going to flood the market with silver; quite the contrary, slowing mining activity slows the amount of silver produced. David Morgan-Read more here-http://news.silverseek.com/SilverInvestor/1225460356.php

-Is the silver futures market about to crack wide open? Read more here-http://news.silverseek.com/SilverSeek/1225695000.php

-Long-term fundamentals for silver never better Hecla CEO. Despite low metals prices, Hecla's Phil Baker says small denomination silver demand is still doing well, citing the lack of physical inventories.

"While there is a great deal of short-term uncertainty about the prices of the metals we produce, I believe in the long-term the fundamentals have never been better," Baker advised. "Silver like gold should eventually perform well as a result of the impact of all the liquidity injection into the economy by the Fed and Treasury in what we believe will be the ultimate impact on the U.S. dollar."

"On the fundamental supply-demand front the lack of physical inventories for small denomination silver shows the broad-based demand for the metal as an investment," he said. "And industrial demand for silver will, over the long term, not abate given the unique properties of the metal." "So the fundamentals for our business is probably the best it's ever been," Baker asserted. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=72383&sn=Detail

-Silver Wheaton more bullish than ever on silver price. Silver Wheaton President and CEO Peter Barnes believes that the current environment of depressed silver prices will not persist in the long term, potentially strengthening over the next six months. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=72188&sn=Detail or http://www.miningweekly.com/article.php?a_id=146693

-Coeur foresees a positive silver supply/demand picture. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=72002&sn=Detail

PLATINUM-PALLADIUM

-The single largest demand today for platinum group metals (PGMs) comes from their legally mandated use in exhaust emission control for the internal combustion, hydrocarbon fueled, (ICHF), engines used in 99% of all motor vehicles now produced globally.

Therefore the long-term future demand for PGMs by the global OEM automotive industry is dependent on the total number of ICHF power trains built for future vehicles. However, today this number doesn't appear to be dependent solely on the total number of motor vehicles built from now on. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47601

DEFINITIONS-QUOTES-QUICK HITS

Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation.

Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind. Investopedia.com-Read more here-http://money.cnn.com/2008/11/06/news/deflation.fortune/index.htm?postversion=2008110617

-Stagflation. A condition of slow economic growth and relatively high unemployment a time of stagnation accompanied by a rise in prices, or inflation. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects. Investopedia.com

-History is a vast early warning system. Norman Cousins

-My congratulations to the new President elect Mr. Obama. And at the same time I offer my condolences. I hate to say it, but this poor schmuck has "fall guy" written all over him. However, I wish him the best anyway, not that it will do him any good. Ed Steer

-In past recessions, investors found value in gold. The metal gained 78 percent from November 1973 to March 1975; 20 percent from January to July 1980; 2.3 percent from July 1981 to November 1982; 1 percent from July 1990 to March 1991; and 2.7 percent from March to November 2001. Bloomberg

-"We are in a historic period of forced liquidation where all positions must be reversed,'' Jim Rogers, chairman of Singapore based Rogers Holdings, said in an e-mail to Bloomberg News. "Gold and everything else are falling because of the forced liquidation without any regard to fundamentals.'' Bloomberg

-For our Canadian friends, with your dollar at 1.15 against the U.S. Dollar current prices for Silver and Gold are still very attractive. More simply put, your Canadian dollar at 1.15 buys more Silver or Gold than it did 10 months ago when your dollar was at par to the U.S. dollar.

For example, 1,000 oz's of Silver, bought now, and owned outright at $11.02 , per ounce, costs approximately $13,536 Cdn, whereas 1,000 oz's of Silver in January, at an average cost of $16.00 per ounce, cost $17,550 Cdn. We therefore continue our long term bullish sentiment for Silver and Gold, and especially Silver, and feel that current prices appear very attractive for long time appreciation. Precious Metals International

-Speaking on Bloomberg TV, Marc Faber the Swiss fund manager and Gloom Boom & Doom editor and publisher said he is holding gold, cash and short-term bonds because inflation will increase as the US government lowers interest rates in an attempt to counter the economic slowdown. "The governments in this world have no other option but to print money. That will lead down the road to inflation." "Faber, said stocks make up 7% to 8% of his holdings, with cash, bonds and his biggest position, gold, accounting for the rest. Bloomberg

-Swiss financial guru Marc Faber tells swissinfo he sees hard times ahead for the world's stock exchanges and even state bankruptcy for the United States. Read more here-

http://macedoniaonline.eu/content/view/4299/2/

-The Hulbert Financial Digest's investment-letter monitoring through Oct. 31 is now available. One of the few winners is Sy Harding's Street Smart Report. Over the year to date through October, Street Smart Report is up 3.6% by Hulbert Financial Digest count, vs. negative 32.9% for the dividend-reinvested Dow Jones Wilshire 5000. Over the past 12 months, the letter is up 5.26% vs. negative 36.31% for the total return DJ-Wilshire 5000.

Over the past five years, the letter has achieved an annualized gain of 3.18%, vs. 0.78% annualized for the total return DJ-W 5000. Street Smart Report focuses on technical indicators and patterns of market movement like the "Four Year Presidential Cycle" (which suggests the next two years will be strong). But editor Harding does allow himself some fundamental fulminations about the economy: "As we have said several times in the last year, 'It isn't rocket science to expect that the worst housing meltdown in 30 years, the worst financial system

crisis since the Great Depression, the bursting of the worst consumer debt bubble ever, the greatest government debt level in history, and a few other 'worst ever' conditions, would result in a worse than usual economic recession. Going back to the recessions prior to those mild events of 2001 and 1991, the recession of 1981-82 lasted for 16 months, and the unemployment rate reached 10.8%. The 1973-75 recession also lasted 16 months, during which unemployment reached 9.0%.

If we are just entering a similar 16-month recession, it would not end until early 2010.' "Harding says this ties in with his reading of stocks: "The stock market is in a serious bear market, which will see its low for this year in the October/November timeframe, but will not see its final low until 2009 or 2010. That is that, like the bear markets of 2000-2002, and 1973-74, this one will also last for upwards of three years." Harding has a buy signal for gold. Read more here-http://www.marketwatch.com/news/story/street-smarts-make-profits/story.aspx?guid={886CB5E0-92F2-4C5F-A670-D8024B17C026}&dist=TNMostRead

-The interest on $2.1 Trillion [so far] or excess debt alone will eventually swamp the U.S. budget. It is absurd and highly correlated with US money coming back to the US from overseas investing and foreign money coming to the US for a safe haven during a crisis. These are short term events, the dollar's day in the sun is drawing to a close and soon it will reverse. By the way, after 9/11 the dollar rallied for 4 months and then fell for 7 years. Thus far the dollar rally is about 3 1/2 months old. Monty Guild

-The US Election has been one of truly historical significance and the US now has its first African-American President and First Lady. Clearly with the Democratic Party now having control of all elements of the US Government we should expect to see a myriad of Social Programs throughout this administration.

All of which will serve to add to the already strained need to print US Dollars caused by the Current Financial Crisis. In our minds there now is little doubt that the US is headed down an economic path towards massive Inflation. This alone should provide substantially higher prices for Gold and Silver. Precious Metals International

-For the foreseeable future, writes Mark O'Byrne of Gold and Silver Investments, "deflationary pressures continue to be prevalent and central banks internationally continue to aggressively cut interest rates in an effort to stimulate credit growth and inflate their way out of a possible Depression," thus the new president's "honeymoon is likely to be very short." Casey Daily Resource

-As this is a fair and balanced presentation, we should note that at the other (far) end of the spectrum we find über-pessimist Jon Nadler of Kitco, who wrote that: "Investors should sell into rallies and only accumulate at $675, $640, $580, and $540 if those targets are reached. Gold lost some of its safe-haven attributes in this last crisis.

Liquidations and deflation are alive and well." We agree that liquidations and deflation are alive and well, but they are temporary. Deleveraging will eventually end, and the truly staggering inflation in the monetary base over the past couple of weeks will overwhelm deflation. It is a matter of when, not if. Casey Daily Resource

-The reason for weakness in gold seems simple to Adrian Day, the president of Adrian Day's Asset Management: "Global liquidation means more money from foreign assets are going into the dollar," Day wrote. "The dollar is seen as a safe haven. There's also liquidation of gold itself, which is easily sold."

James Turk, the founder of Goldmoney.com, had a different take, though, saying that, "The dollar is in a short squeeze that won't last much longer. Gold is dropping in dollar terms because of central-bank intervention and the massive deleveraging of dollar debt."

"There's significant pressure on all metals and commodities," said Paul Sutherland, of Financial & Investment Group in Traverse City, Michigan. "Gold is not acting like a currency. It's acting like a commodity. People are selling gold and gold shares because it's something you can sell to raise cash." Casey Daily Resource

-"The wonderful thing about gold is that you still have willing buyers,'' said Paul Sutherland, chief investment officer for Traverse City, Michigan-based Financial & Investment Management Group, which manages about $540 million and has 5 percent of its assets in the metal. "One of the first things people will buy once they take their heads out of the foxhole is gold. It can take on a life of its own and go to $1,000, $2,000.'' Bloomberg

-"Gold's being treated like any other asset, it's deflating,'' said Ralph Preston, a futures analyst at Heritage West Futures in San Diego who had predicted a rally to $1,150 by year end. "I'm exercising patience and looking over a longer time horizon for gold to regain, in the eyes of the market, its status as a safe haven.'' Bloomberg

-Mario Innecco of MF Global U.K., who in March expected gold at $1,200 by yearend, said the range now is $850 to $950. "All the Western central banks have guaranteed the banking system,'' Innecco said from London. "The cost is going to be higher inflation and paper currencies will be worth less.'' Bloomberg

-Robert Lutts, chief investment officer of Massachusetts-based Cabot Money Management says that $2,000 gold was a reasonable target in the next several years, and he has long recommended clients to allocate 5 to 10 percent of their portfolios in gold investments. Reuters

-Peter Schiff on CNBC Squawk Box, Economic Impact of Obama Victory. Watch video here-http://www.youtube.com/watch?v=SSixu-wxvKI

-It is worth remembering that prior to the stock market crash of October of 1929, the Dow had peaked 381 earlier that same year. It was not until some three years later, when severe recession and then depression took hold, that the Dow reached its low of just 42, a fall of some 90 percent from its 1929 highs.

In a historical context, the Dow's recent fall from 14,164 to some 8,200 (a decline of just over 40%) does not necessarily indicate that stocks are cheap. Today, a 90% fall would bring the Dow down to a level of 1,416. Read more here-http://www.321gold.com/editorials/browne/browne110608.html

-American consumers have $14 trillion worth of personal debt and the national debt has risen sharply to some $11 trillion ($5.7 Trillion when President Bush came to power) and projections that this debt could surge to as high as $20 trillion in the coming years. And this does not count the staggering unfunded liabilities of either Social Security, Medicaid and Medicare. The head of the Federal Reserve Bank of Dallas, Richard W. Fisher has said that the unfunded liabilities from Medicare and Social Security adds up to $99.2 trillion. Gold.ie

-The Federal Reserve Bank of New York has hired the former chief risk officer of Bear Stearns Cos, Michael Alix, to advise on bank supervision, according to a release in the Fed's Web site. Alix will serve as a senior advisor to William Rutledge in the Bank Supervision Group and his appointment is effective Nov. 3, according to the release dated Oct. 31. At Bear Stearns, an investment bank that collapsed in March and has become hallmark of the global credit crisis, Alix served as chief risk officer from 2006 to 2008 and global head of credit risk management from 1996 to 2006. Reuters

RARE COLORED DIAMONDS

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23915

-Gem Diamonds, the owner of the world-renowned Letseng Mine in Lesotho, and the Dubai Multi Commodities Centre (DMCC) jointly announced that the 478 carat white diamond recovered at Letseng in September will make its first public appearance on November 8 at the Atlantis Hotel, Palm Jumeirah.

The diamond ranks as the 20th-largest rough diamond ever to be recovered, and the third largest rough diamond this century. It is the largest diamond in recorded history to be received in the Middle East. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23939

-First production from De Beers' Voorspoed mine in the Free State province of South Africa has proved true to the mine's historic production of fancy color diamonds now sought after in the international market. Voorspoed operations manager Andy Taylor told Mineweb after the opening of De Beers' first large new inland mine since Venetia in 1992, that the first days of production at Voorspoed has delivered an number of fancy yellows and some fancy pink diamonds.

Taylor said it was still early days at Voorspoed mine, located in the Free State province of South Africa, but indications were that the fancy stones expected from Voorspoed were in fact there. "We have recovered some fancy yellows and pinks, not in large quantities as expected with these rare, valuable stones, but in line with what is historically known about the mine."

"Voorspoed is the first major new diamond mine to be opened in South Africa for almost two decades, and is testament to our confidence in the robust future of the diamond industry," Nicky Oppenheimer, Chairman of De Beers said in a statement. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=72429&sn=Detail

or http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=72237&sn=Detail

COMMODITIES-OIL

-Commodities Bull Market? Read more here-http://www.321gold.com/editorials/wright/wright103108.html

-Commodities in recession as speculative bubble bursts but the purge is over. Economists call for an "L-shaped" recovery. Further price declines projected for the next two quarters, but the long-term trend remains bullish; new records in three years? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=72421&sn=Detail

-Long-term outlook for commodities. Read more here-http://www.321gold.com/editorials/saville/saville110408.html

-Q&A with Investing Legend Jim Rogers on Commodities. Read more here-http://www.time.com/time/business/article/0,8599,1855667,00.html

-IEA predicts surge in oil prices to $100 a barrel. The International Energy Agency said Thursday that import prices for crude oil will likely average $100 a barrel in the period between 2008 and 2015, and will rise to more than $120 in 2030. Read more here-http://www.marketwatch.com/news/story/iea-predicts-surge-oil-prices/story.aspx?guid={F74B9B32-83A5-4AF6-94B4-344E4F4F4A3E}&dist=TNMostRead&print=true&dist=printMidSection

-World will struggle to meet oil demand. Output from the world's oilfields is declining faster than previously thought, the first authoritative public study of the biggest field's shows. Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times. Read more here-http://www.ft.com/cms/s/0/e5e78778-a53f-11dd-b4f5-000077b07658.html?nclick_check=1

-Threat to North Sea oil from low crude price and access to finance. Read more here-http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5093309.ece

-Chevron Project Offers Glimpse of Future: More Work, Less Oil. Read more here-http://online.wsj.com/article/SB122531663876381697.html?mod=todays_us_page_one

WORLD FINANCIAL CRISIS

-What Happens when Countries Go Bankrupt? Read more here-http://www.spiegel.de/international/business/0,1518,druck-588419,00.html

-Cost of Resolving The Crisis: Lessons From 35 Years Of Crises. A new IMF database, which covers the universe of systemic banking crises from 1970 to 2007, shows that the average fiscal cost was about 15% of GDP, or three times the U.S.' $700 billion.

This article points out that quick action often lowers the ultimate cost. Moreover wishful thinking teamed with regulatory forbearance and bank liquidity plans often raises the cost by delaying vital, but politically painful, government action. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47640

-Your $3 trillion bailout. Washington is waging war on the financial crisis. Mr. Obama: You have to see it through. Read more here-http://money.cnn.com/2008/11/05/news/economy/three_trillion_dollar_bailout/index.htm?postversion=2008110511

-Bailout beneficiary takes over Florida bank. Regulators close down Freedom Bank, a Florida-based bank with total assets of $287 million. Read more here-

http://money.cnn.com/2008/10/31/news/companies/bank_failure/index.htm

-Alpha Bank & Trust fails, taken over in Georgia. Read more here-http://www.gwinnettherald.com/Articles-i-2008-10-31-175542.114126_Alpha_Bank_Trust_fails_taken_over.html

-Japan's desperate 260bn bid to kick-start economy. Japan is to give emergency cash hand-outs to every household in the country regardless of whether they are rich or poor as a part of $260bn blitz to kick-start the world's second-largest economy and prevent a slide back into deflation. Read more here-http://www.telegraph.co.uk/news/worldnews/asia/japan/3286794/Japans-desperate-260bn-bid-to-kick-start-economy.html

-£800m payout to U.K. savers who lost money in Icesave collapse to begin within days. Read more here-http://www.dailymail.co.uk/news/article-1083642/800m-payout-savers-lost-money-Icesave-collapse-begin-days.html

-Hungary gets $8.3 billion bailout. European Union sends emergency rescue loan to Hungary, as country unable to meet debt payments in midst of financial crisis. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6_KnDHARt2o&refer=home or http://money.cnn.com/2008/11/04/news/international/hungary_rescue_loan.ap/index.htm

IMF NEEDS MONEY

-IMF may need to "print money" as crisis spreads. The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3269669/IMF-may-need-to-print-money-as-crisis-spreads.html

-Brown asks Saudis to help fund IMF. The British Prime Minister promised that they would have a say in any future new world economic order. Read more here-

http://money.cnn.com/2008/11/02/news/international/brown_imf.ap/index.htm

-IMF denies selling or leasing gold this year. Read more here-http://www.gata.org/node/6827

-The strange case of falling international reserves. Read more here-http://news.goldseek.com/GoldSeek/1225998768.php

GLOBAL RECESSION

-Global economic growth will slow to 1 percent in 2009 from an average 3.5 percent in the past five years as major advanced economies experience ''the steepest decline in GDP since World War II,'' Fitch Ratings said. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=ac2KrEvTqcWQ&refer=economy

-Economists see recession through 2009. Survey finds that falling consumer demand, rising unemployment and ongoing credit crunch will fuel downturn through end of next year. Read more here-http://money.cnn.com/2008/11/03/news/economy/nabe_survey/index.htm

-More Americans than anticipated filed first-time claims for unemployment benefits last week and total jobless rolls climbed to the highest level in 25 years, indicating further deterioration of the labor market. Some 481,000 workers filed initial claims in the week ended Nov. 1, the Labor Department said today in Washington, exceeding the 477,000 projected by economists surveyed by Bloomberg News. The number of people staying on benefit rolls was the most since February 1983.

Companies are facing reduced access to credit alongside the biggest slowdown in consumer spending in 28 years. The government may report tomorrow that the economy lost 200,000 jobs in October, the most in five years and bringing the total drop so far this year to almost 1 million. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a.pczFBwkraw

-More Americans threw in the towel in October as monthly bankruptcy filings topped 100,000 for the first time since bankruptcy laws were tightened three years ago. Businesses and individuals filed 108,595 bankruptcy petitions of all types, up 13 percent from the prior month, according to data provided by Automated Access to Court Electronic Records, a service of Jupiter eSources LLC in Oklahoma City. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a2Im.Pr5oAf4

-Service industries in the U.S. contracted the most on record in October as credit dried up and consumers reined in spending. The Institute for Supply Management's non-manufacturing index, which covers almost 90 percent of the economy, fell to 44.4, below economists' forecasts and the worst result since records began in 1997. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aem3jfKbrFrk&refer=home

-Manufacturing in the U.S. contracted in October at the fastest pace in 26 years as it got tougher to obtain credit and faltering economies abroad eroded prospects for American exports.

The Institute for Supply Management's factory index fell to 38.9 from 43.5 in September; 50 is the dividing line between expansion and contraction. The Commerce Department said separately that construction spending fell for the eighth time in 10 months in September. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ahi.fhN8N82o&refer=home

-Retailers Report a Sales Collapse. Sales at the nation's largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades.

The remarkable slowdown hit luxury chains that sell $5,000 designer dresses as badly as stores that offer $18 packs of underwear, suggesting that consumers at all income levels are snapping their wallets shut.

Sales at Neiman Marcus, the luxury department store, dropped nearly 28 percent in October compared with the same month last year. Sales fell 20 percent at Abercrombie & Fitch, nearly 17 percent at Saks, 16 percent at Gap and nearly that much at Nordstrom.

Of the more than two dozen major retailers that reported on Thursday, most had sales declines at stores open at least a year, the majority of the decreases in double digits. Deep discounters like Wal-Mart and BJ's Wholesale Club reported gains. Read more here-http://www.nytimes.com/2008/11/07/business/07retail.html?_r=1&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

-George Magnus: the man who predicted the sub-prime crisis would lead to recession. George Magnus does not look like a prophet. Yet this is the man widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession. Read more here-http://www.telegraph.co.uk/finance/3366527/George-Magnus-the-man-who-predicted-the-sub-prime-crisis-would-lead-to-recession-profile.html

INTEREST RATES

-Federal Reserve Bank of San Francisco President Janet Yellen said the central bank may cut the benchmark interest rate close to zero percent from the current 1 percent level should the economy remain weak. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a.VDZUEW6e2M

-Zero Interest-Rate World May Lie Ahead as Trichet, King Cut. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=agGBpPduI3E4&refer=home

-ECB Cuts Interest Rate by Half Point to Counter Economic Slump. The European Central Bank lowered interest rates for the second time in less than a month to counter the euro region's worst economic slump in 15 years. ECB policy makers meeting in Frankfurt reduced the benchmark lending rate by half a percentage point to 3.25 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=axO8AkbbPSHw&refer=home

-Trichet Says Can't Rule Out More Cuts as Growth Slows. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a2zFGF5voCig&refer=home

-BOE Leads European Central Banks in Cutting Rates. The Bank of England led European central banks in reducing borrowing costs to counter the worst financial crisis in almost a century, cutting its key rate by 1.5 percentage points to the lowest level since 1955. The U.K. central bank reduced its benchmark rate by the most since 1992, taking it to 3 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aNqiUv0DquYc&refer=home

-Australia's central bank cut its benchmark interest rate by a larger-than-expected three quarters of a percentage point, the third reduction in as many months, amid evidence global financial turmoil is buffeting the economy. Governor Glenn Stevens lowered the overnight cash rate target to a 3 1/2-year low 5.25 percent in Sydney this week. Read more here-

http://www.bloomberg.com/apps/news?pid=20601081&sid=aqFJ.sHtwu8c&refer=australia

-The Bank of Japan's interest rates may be headed back to zero. Governor Masaaki Shirakawa and his board cut the key overnight lending rate last Friday by 20 basis points to 0.3 percent, abandoning a two-year struggle to raise the lowest borrowing costs among major economies.

Three of the eight members argued for a deeper cut of 25 basis points and one wanted no change. "We are headed back to a zero interest-rate world,'' said Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=av2VQkhpqdhc or http://money.cnn.com/2008/10/31/news/international/boj_rates.ap/index.htm

-The Swiss central bank unexpectedly lowered its main lending rate by 50 basis points, joining rate cuts by the Bank of England and the European Central Bank, and said the economy may contract next year. The central bank, led by Jean-Pierre Roth, lowered its three-month Libor target to 2 percent today from 2.5 percent, the biggest reduction in more than five years, it said in a statement from Zurich.

The SNB wasn't scheduled to decide on interest rates until Dec. 11. The U.K. central bank cut its key rate by 150 basis points and the ECB pared its benchmark by 50 basis points. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amr30znjlUpY

-India's central bank unexpectedly cut interest rates for the second time in two weeks and reduced the amount of money lenders must hold in reserve in a bid to protect the economy from the global slowdown.

The Reserve Bank of India lowered its repurchase rate to 7.5 percent from 8 percent, reduced the amount of deposits that lenders need to set aside as reserves to 5.5 percent from 6.5 percent, and cut the amount of money lenders are required to keep in government bonds to 24 percent from 25 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=abPM9GUQijz8&refer=home

U.S. FISCAL DEBT

-The U.S. Treasury predicted it would borrow this quarter more than three times the amount initially forecast as weaker economic growth and the costs of a new bank rescue package swell the budget deficit. Borrowing needs will rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That would be more than double the largest ever a record $244 billion in new marketable debt in the first three months of this year. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=afv3_LLd7wiM&refer=home or http://www.reuters.com/article/bondsNews/idUSN0336150620081104

-Treasury sales could top $1 trillion to fund bailout. U.S. could also bring back 7-year note, do more frequent sales. Read more here-http://www.marketwatch.com/news/story/Treasury-may-borrow-1-trillion/story.aspx?guid={E94E3DAF-1C0E-4280-9C30-DE29E85160E0}&dist=hplatest

-Voters in states led by California embraced municipal debt as they approved about $39.7 billion of new borrowing, representing about 83 percent of measures for which results were available. Californians approved at least $27 billion, including money for schools and loans to veterans.

Voters in 41 states from Rhode Island to Alaska considered $66.4 billion of bond proposals yesterday, the second-biggest slate after November 2006's $78.6 billion, according to Ipreo, a New York-based financial data provider. The measures sought the largest amount of new borrowing during a presidential election.

So far, taxpayers assented to most of the $47 billion in proposals for which results were immediately available, as they shrugged off economic woes to affirm their support for public works and infrastructure. On average, voters have approved 82 percent of the debt proposed at November general elections the past 10 years, according to Ipreo figures. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHTC.5dE8tgo&refer=home

-America is bankrupt, according to investment legend Jim Rogers. "The American government bonds are the world's last bubble and the price of commodities has to increase." Read and watch video here-http://www.rtl.nl/(/financien/rtlz/nieuws/)/components/financien/rtlz/2008/weken_2008/45/1104_0945_jim_rogers_america_is_bankrupt_english_version_entire_interview.xml

-Call this a crisis? Just wait. Actually, don't wait, because we've got to stop a bigger economic disaster in the making: 78 million baby-boomers eligible for Social Security and Medicare. Read more here-http://money.cnn.com/2008/10/28/magazines/fortune/babyboomcrisis_walker.fortune/index.htm

-I.O.U.S.A. documentary on U.S. debt, 30 minute version. Watch here-http://www.youtube.com/watch?v=O_TjBNjc9Bo&eurl=http://www.leavittbrothers.com/members/stocks/Stocks_PM_Observation.cfm?PM_DATE=11/03/2008

STOCK MARKET IN BEAR

-Jim Rogers Says Markets May Go 'A Lot Further Down'. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Jim%20Rogers%20Says%20Markets%20May%20Go%20%60A%20Lot%20Further%20Down%27&clipSRC=mms://media2.bloomberg.com/cache/vCM4wglCjinI.asf

-UBS AG, Switzerland's largest bank, faces dozens of claims in the U.S. from clients who bought ''100 percent principal protected notes'' issued by Lehman Brothers Holdings Inc. that are now almost worthless. Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid=aBJ_0ULSgrjY&refer=invest

-U.S. stocks on the day after presidential elections. Read more here-http://in.reuters.com/article/usMktRpt/idINN0531971420081105

CREDIT CARD CRISIS

-Banks asking for credit card debt forgiveness-Banks losing billions in unpaid credit card bills urge government to forgive consumer debt. Read more here-

http://biz.yahoo.com/ap/081030/meltdown_credit_cards.html

-Citi says credit card losses may rise through 2009. Bank suffers $1.4 billion hit from card-backed assets in latest quarter. Read more here-

http://www.marketwatch.com/news/story/citi-say-credit-card-losses/story.aspx?guid={BE8D388F-5173-4BC3-A880-DC409509989C}&dist=TNMostRead

-Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=awS5vZQvmwd4

CREDIT DEFAULT SWAP TROUBLE

-Credit-default swap traders wagered the most on debt of Italy, Spain and Deutsche Bank AG, according to a Depository Trust & Clearing Corp. report that gives the broadest data yet on the unregulated market.

A total $33.6 trillion of transactions are outstanding on governments, companies and asset-backed securities worldwide, based on gross numbers, the DTCC said in the report released on its Web site yesterday. After canceling out overlapping trades, investors have taken out a net $22.7 billion of contracts based on Italy's debt, $16.7 billion against Spain and $12.5 billion on Deutsche Bank of Frankfurt, the report shows.

"The bigger the outstanding amount of debt, the bigger the volume of credit-default swaps,'' said Philip Gisdakis, a Munich- based credit analyst at UniCredit SpA. ''Sovereigns have huge debt outstanding. Deutsche Bank has a huge balance sheet, so it's quite understandable it's at the top of the list.''

The DTCC, which operates a central registry of credit- default swap trades, released the data after U.S. authorities blamed the unregulated market for exacerbating the credit crisis that led to almost $690 billion in bank losses and writedowns.

The level of credit-default swaps reported by DTCC is smaller than previous estimates. The Bank for International Settlements estimated contracts of $57.9 trillion outstanding in May. DTCC's data may calm concerns that investors and dealers have too much at risk, said Brian Yelvington, a New York-based strategist at fixed-income research firm CreditSights Inc. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=auQSTZnaO5JY&refer=home or http://www.bloomberg.com/apps/news?pid=20601109&sid=aJzpw_m1iC4M&refer=exclusive

-Credit swaps are no problem, their inventors and managers insist. Read more here-http://www.gata.org/node/6842

HEDGE FUND-PRIVATE EQUITY MELTDOWN

-Clarium Capital Management LLC, the hedge-fund firm run by PayPal co-founder Peter Thiel, slumped 18 percent in October, its biggest monthly decline, because of losses on bonds. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a3fOcp0Q0hJQ

-Blue Mountain Freezes $3.1 Billion Hedge Fund After Withdrawals. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aKeoPtrg6NbU

-Farallon Capital Management LLC's biggest hedge fund fell 23.8 percent this year through October, according to two people familiar with the matter, all but ensuring its first annual loss since opening 22 years ago. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=auGq0YLJidlg&refer=home

-Baltic, London Hedge Funds Halt Redemptions. Read more here-http://www.finalternatives.com/node/5983

-Blackstone Group LP, the world's largest private-equity firm, posted the biggest quarterly loss in 18 months as a public company as the financial crisis eroded the value of the businesses and real estate it has acquired.

The loss excluding some costs was $502.5 million, or 44 cents a share, compared with a profit of $234 million, or 21 cents, a year earlier, the New York-based company said today in a statement. Results were worse than even the most pessimistic analysts' estimates, sending Blackstone's stock down as much as 16 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aORjQ2kdxJsA&refer=home

NOURIEL ROUBINI-STAG-DEFLATION COMING

-Get Ready For 'Stag-Deflation'. Read more here-http://www.forbes.com/2008/10/29/stagnation-recession-deflation-oped-cx_nr_1030roubini_print.html

-In the court of 'Dr Doom' Nouriel Roubini. The economics professor who forecast the crisis that would engulf the US economy is now much in demand on Capitol Hill. Read more here-

http://www.independent.co.uk/news/business/analysis-and-features/in-the-court-of-dr-doom-nouriel-roubini-982276.html

AUTO MAKERS

-U.S. Auto Sales Tumble; Month Was Worst Since 1945, GM Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a4.EjoYxXSlk&refer=home

-General Motors Corp., hammered by the worst auto market in 25 years, needs U.S. aid because ''time is very short'' to stop its collapse, says Roger Altman, the former Treasury official advising GM in merger talks with Chrysler LLC. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aSc56MIykTVk&refer=home

-Automakers in Capitol Hill push. The Big Three meet with Pelosi and Reid to discuss industry's dim outlook and a possible bailout as GM and Ford face quarterly losses. Read more here-http://money.cnn.com/2008/11/06/news/companies/automakers/index.htm

-Toyota Motor Corp., the world's second-largest automaker, forecast the biggest drop in profit in at least 18 years as a global slump cripples auto demand and gains in the yen erode the value of overseas sales. Read more here-http://www.bloomberg.com/apps/news?pid=20601080&sid=aXP94fKJOMAk&refer=asia

-World's largest Lamborghini dealer closes. The world's largest dealer of Lamborghini has shut down. Lamborghini Orange County was known for catering to the glamorous fans of the 12-cylinder, $600,000 sports cars. Its doors were padlocked Wednesday. It sold about 10 per cent of the 2,400 Lamborghinis made in the world each year. NBA stars Kobe Bryant and Dennis Rodman were among its customers.

The dealership flew in actors Eric Roberts and Luke Perry by helicopter from Los Angeles to attend a company event earlier this year. Other promotional parties have featured stars such as Elton John and Sharon Stone. The owner of the Santa Ana-based dealership would not comment on the closing. Lamborghini's separate sales company in the United States says the dealer closed because of its own mistakes, not the economy. Globe and Mail-Story here-http://www.theglobeandmail.com/servlet/story/RTGAM.20081106.wlamborghini1106/BNStory/International/?cid=al_gam_nletter_newsUp

-GMAC loss expands to $2.52B. Finance arm of GM says quarterly revenue fell 24%, reports mortgage lending division ResCap could fail. Read more here-

http://money.cnn.com/2008/11/05/news/companies/GMAC_earns.ap/index.htm

REAL ESTATE-MORTGAGES-FORECLOSURES

-Average U.K. home loses £30,000 as house prices plummet by 15% in just one year. Read more here-http://www.dailymail.co.uk/news/article-1083495/Average-home-loses-30-000-house-prices-plummet-15-just-year.html

-Forecast 2009: U.S. homes. The prediction: Prices will fall further before year-end. Read more here-http://money.cnn.com/2008/11/04/pf/forecast_home3.moneymag/index.htm?postversion=2008110605

-One Brooklyn Condo Demand 'Killed' as Market Slides. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a.RyEwPeIUuU&refer=home

-New York City commercial real estate transactions plunged 61 percent in 2008 through October as the global credit crisis roiled lending and sidelined buyers. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aEJwkP6e4q8U

-Indian Builders Lure Home Buyers with Free Cars, Gold. Read more here-http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20081103\ACQDJON200811032347DOWJONESDJONLINE000643.htm&&mypage=newsheadlines&title=Indian%20Builders%20Lure%20Home%20Buyers%20With%20Free%20Cars,%20Gold

-Almost 20 percent of U.S. mortgage borrowers owed more on their loans in the third quarter than their house was worth as foreclosures depressed prices and the economy weakened, according to First American CoreLogic.

More than 7.5 million properties already have negative equity and another 2.1 million will follow should home prices decline another 5 percent, Santa Ana, California-based First American, a seller of economic and real estate data, said in a report today. Six states account for almost 60 percent of homes with negative equity, led by Nevada and Michigan. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aYyk2_TLjGao&refer=invest or http://news.yahoo.com/s/ap/20081031/ap_on_bi_ge/meltdown_underwater_borrowers

-Mounting job losses fueling foreclosures. Bad loans were originally the main culprit driving homeowners into foreclosure. But now it's unemployment that's fueling the mortgage meltdown. Read more here-http://money.cnn.com/2008/11/04/real_estate/job_losses_fuel_foreclosure/index.htm

GEOPOLITICAL NEWS

-World faces growing risk of war: US intelligence chief. Read more here-http://www.breitbart.com/article.php?id=081031180559.hq1yll01&show_article=1

-Putin may return to Kremlin in '09: report. Read more here-http://news.yahoo.com/s/nm/20081106/wl_nm/us_russia_medvedev_putin

-Russian President Dmitry Medvedev wasted little time in laying down his first challenge to Barack Obama. Hours after Obama won the U.S. presidential election, Medvedev said yesterday he'd put short-range Iskander missiles in Kaliningrad, a region wedged between Poland and Lithuania, to "neutralize'' a planned U.S. missile-defense system. A radio- jamming installation there will also be aimed at elements of the U.S. system in Poland and the Czech Republic, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=axaJPSutPn4Q

The GoldBugg Report - November 12, 2008
Posted by Worldwide Precious Metals on Wednesday, November 12, 2008

The GoldBugg Report - November 4, 2008

November 4, 2008

The GoldBugg Report November 4, 2008

Economic Impact of the Obama Victory What it could mean to the economy if Barack Obama becomes President, with Peter Schiff http://www.cnbc.com/id/15840232?video=916889554&play=1

-The world tires of dollar hegemony, Paul Craig Roberts http://www.gata.org/node/6838

-Gold Futures Rise as Dollar Drops Against Euro; Silver Advances http://www.bloomberg.com/apps/news?pid=20601012&sid=a_JD5Dj5QOvE&refer=commodities

GOLD

-Golden Buying Opportunity and Hedge against Uncertainty Ahead. Perhaps the most interesting development during the intensification of the credit crisis is that the price of gold did not climb higher than it did. Upon the initiation of the crisis in August 2007, the price of gold surged reaching a high of $1002.95 on March 14, 2007. Since then the cost of the precious commodity has fluctuated with the most recent price action sending it to recent lows of 725.74.

However, given the pervasive uncertainty in markets we think that this represents a strategic buying opportunity on the back of our bullish call for gold to spike towards $1100 in 2009 with the potential for a much larger move over the longer term. The unwinding of positions in a panic and the intense period of deleveraging ahead has stimulated many market participants to move smartly into Yen and quite interestingly, into the dollar as safe haven moves.

Given the stability of the Japanese banking system, the move into the Yen makes sense. However, we see the recent strength of the dollar an understandably reactionary move by global investors after a half-century of a dollar hegemony, to find shelter in a global storm where no safe havens appear to exist and instead have turned to a deeply indebted US government out

of habit. Thus, once the tide begins to ebb from the storm and investors can begin to evaluate the extent to which the US, EU and global governments have moved to stem the tide we do expect that gold will replace the dollar as the preferred hedge against uncertainty ahead. Read more here-http://www.321gold.com/editorials/brusuelas/brusuelas102408.html

-John Embry: Gold's Game-Changing Moment Could be Fast Approaching. Watch video here-http://envast.blogspot.com/2008/10/john-embry-golds-game-changing-moment.html

-Gold Fields CEO said Gold to reach $1,000 next year and stay there. Watch video here-http://envast.blogspot.com/2008/10/gold-fields-ceo-said-gold-to-reach-1000.html or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=71774&sn=Detail

-World gold production to decline 3% per year Cutifani. AngloGold Ashanti CEO Mark Cutifani says world gold production will continue to drop for the next five years and gold fundamentals will assert themselves. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=71781&sn=Detail

-Gammon Gold CE0 Sees Gold at $1,500 on Inflation Threat. Read more here-http://www.bloomberg.com/avp/avp.htm?N=ceo&T=Gammon%27s%20Marion%20Sees%20Gold%20at%20%241%2C500%20on%20Inflation%20Threat&clipSRC=mms://media2.bloomberg.com/cache/vXFfDOP3LLvY.asf

-The bottom line is extreme circumstances, a rare global financial panic, drove the sharp rally in the US dollar. And this massive and fast dollar rally hammered gold. But once the panic abates and money managers all over the world start chasing good returns again, the dollar-long T-bill buying frenzy will reverse hard. And as the USDX sinks again to reflect its dismal fundamentals, gold will really shine. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton102508.html

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1225087620.php

-Peter Schiff CNBC interview on gold. Watch here-http://news.goldseek.com/GoldSeek/1224829020.php

-Mints struggle to meet metals demand. Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any, that is. Demand for physical gold and silver is gobbling up product at nearly every mint around the globe and in Canada has the Royal Canadian Mint allocating its supply among its distributors, who in turn are limiting the number of coins they sell to dealers, who sell to consumers.

"Virtually every mint in the world is sold out of product and as fast as we can produce it, all of us, there is more demand," said David Madge, director of bullion services at the Royal Canadian Mint. The situation is causing major headaches for bullion dealers like Donald Carlson. "It's a nightmare trying to keep enough stock in," said Carlson, general manager of Calgary's Albern Coins & Foreign Exchange Ltd.

In the United States, sales of the one ounce gold bullion American Eagle coins are being allocated to authorized dealers, while sales of American Buffalo gold coins were suspended in late September. In the latter case, demand depleted inventories, said Carla Coolman, spokeswoman for the U.S. Mint. "We are working very hard to resume sales as soon as we can," Coolman said from Washington. Read more here-http://www.gata.org/node/6818

-Gold coins in short supply, command 50% premium. Read more here-http://www.commodityonline.com/news/Gold-coins-in-short-supply-command-50-premium-12471-3-1.html

-Mr. Buffett's Market Call. In summary, there are times to be in stocks, and times to be in cash. Right now cash is the better choice, but not dollar-cash as Mr. Buffett warns. Stocks are cheap in dollar terms. The Dow industrials finished last week at a new closing low for 2008, as did the Standard & Poor's 500 index.

So far this year the DJIA is down 37% while the S&P 500 has lost 40% and the Nasdaq 41%. At these price levels, Mr. Buffett advises that stocks are a better choice than dollars, but in my view, stocks are not yet a better choice than gold. If history is any guide, and I believe it is and so does Mr. Buffett given that he used historical examples, the price of the DJIA measured in terms of gold has much further to fall.

Consequently, investors should stay out of the DJIA and other major indices while they continue to hold gold, thereby keeping their money safe and sound until stock prices fall to more reasonable levels when measured in terms of gold. James Turk-Read more here-http://www.kitco.com/ind/Turk/turk_oct272008.html

-Ten Reasons Why Gold Isn't Above $1,000. Read more here-http://seekingalpha.com/article/101919-ten-reasons-why-gold-isn-t-above-1-000

-A hard look at gold from Richard Russell. Read more here-http://www.321gold.com/editorials/russell/russell102808.html

-Gold sales pick up phenomenally in India. Read more here-http://www.gata.org/node/6816

-Dubai runs out of gold on Diwali rush. Read more here-http://www.gulfnews.com/nation/Society/10255029.html

-Bangkok gold outlets stop weekend bar trade. Low world supplies and pronounced price swings have prompted local gold outlets to suspend trading of gold bars on Saturdays and Sundays until early next year, effective this weekend. Read more here-http://www.bangkokpost.com/251008_Business/25Oct2008_biz33.php

-Vietnamese seek the security of gold. Read more here-http://business.timesonline.co.uk/tol/business/economics/article5019424.ece

-It ain't over 'til it's over silver and gold still seem the best bets. Despite government moves around the world to allay the financial meltdown, it's not over yet and in the meantime gold and silver may offer the best bets for capital protection. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page67?oid=71434&sn=Detail

-Gold jewellery demand down 21 percent in 2Q, but production down too. The World Gold Council reports that gold jewellery demand fell 21 percent year on year in the second quarter, but anecdotal eveidence suggests a sharp pick up in the third quarter. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=71491&sn=Detail

SILVER

-Got Gold Report-COMEX Commercials Least Net Short Silver in Years. The Got Gold Report takes aim on the few big bullion banks which it contends have had a trading advantage in gold and silver futures markets and suggests investors take delivery of gold and silver from the COMEX in December to take advantage of the result of the short seller's actions; artificially low prices. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47362

-In rural India, Silver is a hedge against inflation. Read more here-http://www.commodityonline.com/news/In-rural-India-Silver-is-a-hedge-against-inflation-12475-3-1.html

-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1225087260.php

-New policy on purchase and sale of silver 'Libertad' coins. Read more here-http://www.321gold.com/editorials/price/price102808.html

-Premiums Paid for 100 Ounce Silver Bars. Read more here-http://seekingalpha.com/article/102885-premiums-paid-for-100-ounce-silver-bars?source=feed

-Premium for Silver Coins Soars. Read more here-http://news.silverseek.com/SilverSeek/1225487254.php

-In a moment, I'd like to describe a new development in silver that should prove quite bullish to the price, but first I'd like to review some continuing facts that are significant in their own right. It would appear that the confluence of many factors point to sharply higher silver prices dead ahead. Yes, I know the price has recently collapsed. Ironically, it is that very price smash that is the basis for the coming price launch higher.

In fact, as I wrote last week, it is not just that investors are likely to buy silver, there is already an historic silver investment rush in force. And this investment rush is even more significant since it has developed only in the past three years, after decades of net investment selling of silver. Again, I couldn't make these things up if I tried. And please remember, even in a recession with lower industrial demand, if users can't get the silver supplies they need, they will panic at some point and rush to build inventories.

I did not anticipate the brutal decline to below $9 an ounce. Fortunately, those who hold real silver on a non-margined basis, my consistent public advice, still hold their silver. The rise in premiums of many items, particularly U.S. Silver Eagles, has minimized the pain of the decline. New buyers, however, have just been given a gift beyond description. The collapse in price has had nothing to do with the merits of silver, but will have everything to do with the coming explosive rally. The uneconomic low price will shock the price higher. Ted Butler-Read more here-http://news.silverseek.com/TedButler/1225121146.php

DEFINITIONS-QUOTES-QUICK HITS

-Force majeure. (French for "superior force") is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, act of nature (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.

However, force majeure is not intended to excuse negligence or other malfeasance of a party, as where non-performance is caused by the usual and natural consequences of external forces (e.g., predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated. Read more here-http://en.wikipedia.org/wiki/Force_majeure

-A U.K. newspaper has noted that AC/DC's Back in Black album topped U.K. charts 28 years ago when inflation was at 20% and unemployment hit 2 million. Now its latest, Black Ice, is at the top of the U.K. charts, their first 'number one' in 28 years. Read more here-http://www.news.com.au/heraldsun/story/0,21985,24557872-2902,00.html

-Dear Bank Manager, In view of current developments in the banking market, if one of my checks is returned marked 'Insufficient Funds', does that refer to me or to you? Anonymous

-I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. Winston Churchill

-"The currency is ridiculously undervalued. I can't think of any country in the world that has no fiscal deficit, no trade deficit and no inflation except Canada. I think the Canadian dollar should go through parity. Krishnamurthy Narayanan-CI Global Opportunities Fund

-U.S. Treasuries and the greenback. "I don't think it can hold for that much longer." Once the world has to absorb trillions of dollars in new U.S. debt watch out. In fact, I think the odds of the U.S. having its own currency crisis are "at least 30 per cent." Krishnamurthy Narayanan-CI Global Opportunities Fund

-The Canadian dollar gained the most in at least 37 years as its U.S. counterpart weakened versus most of the world's major currencies and commodities including oil, natural gas, copper and gold increased. Canada's dollar rose the most since at least 1971, when Bloomberg records begin. It has strengthened 5.2 percent since Oct. 24, after declining during four straight weeks. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aZt4oyouaPDA&refer=canada

-Loonie poised for quick recovery: economist. The Canadian dollar could quickly recover more than half the massive losses it has sustained this month once banks, hedge funds and other big investors no longer have to buy vast quantities of greenbacks and yen to cover short positions in those currencies, CIBC World Markets said Friday. Read more here-

http://www.globeinvestor.com/servlet/story/RTGAM.20081024.wdollar1024/GIStory/

-"Some are beginning to extrapolate the medium to long-term consequences of central-bank monetary creation," said Jeffrey Nichols, of American Precious Metals Advisors. "The flashing lights that they are seeing ahead are the lights of inflation and currency depreciation," developments which will inevitably push gold higher. Casey Daily Resource

-Silver surged 12% Wednesday from extremely oversold levels, its largest jump since December 31st 1979. Gold.ie

-Silver, which saw a low of $8.40 at 5:40 a.m. NYT in London on 10/28 has broken through $10.00 and settled at $9.80 in New York on 10/29. That's a $1.40 to the upside or a 16% Improvement in one day. Precious Metals International

-Gold has hit a low of $680.00 yet as we write this Memo we are already approaching $760.00, an 11% improvement from the $680.00 low seen only 4 Trading Days ago. Precious Metals International

-In the same time period October 24th-October 29th the US Dollar has started to come off its Highs against the Euro, British Pound and Canadian Dollar. The British Pound has gained 7% since October 24th. The Euro has gained 4 ½ in Trading of October 29th (One Day). The Canadian has improved 6% in Trading throughout the 29th (One Day). Precious Metals International

-With Silver & Gold we are seeing all the signals of the "Short Squeeze" we discussed in our Memo of October 23rd which is in our analogy to the "Perfect Storm", the beginning of Storm #1. Now comes the beginning stages of Storm #2 the reversal of the US Dollar.

Add the catalyst "Cold Front" of the actions of the Treasury and Federal Reserve over the past several weeks, including their ½ pt rate cut on October 29th and you have the Perfect Scenario to create the "Long Term" "Perfect Storm" of Inflation, Inflation, Inflation.

Over the past 12 weeks we have been requesting that all owners of Precious Metals stay the coarse and shore up your holdings in order to get past the "Synthetic Paper Market Prices". We now feel that what we are seeing is the beginning of the end of Paper Price manipulation and victory overall is in sight for the Owners of Physical Precious Metals Bullion. Precious Metals International

-"If and when the credit markets are functioning normally again, they're going to start talking about inflation, and gold can spike $100 in a day. Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago

-Once massive leveraged positions around the world are unwound, "gold and silver will probably rise very sharply," said Jeffrey Christian, managing director of CPM Group in New York.

What's happening in the paper gold market bears little resemblance to the physical world. Indian sales sharply underline the point, with about 50 metric tons of the metal sold during the first three weeks of October. That contrasts with a bit more than 80 tons sold in whole of last year's fourth quarter. Casey Daily Resource

-The Gartman Letter, expressing some respect for gold's relative performance, points out that there is a strong seller of gold at the $740-$745 level, quite large; quite adamant and quite intent upon asserting his or its will upon the market." There is informed speculation that investment bank selling pressured gold at times this week. Gold.ie

-Physical demand remains near record levels internationally with rising premiums for all bullion products and delays and shortages deepening. There are now little or no gold coins or bars (1 oz and 10 oz) available for immediate delivery throughout the world. There are no silver coins or bars available besides 1000 oz silver bars.

Investors are paying far higher premiums to secure physical bullion and they are willing to wait 6 to 8 weeks due to the unavailability of gold coins and bars and as they have no choice but to wait if they wish to take delivery of physical bullion. This demand is being seen throughout the entire world but especially in the western world, in the Middle East and throughout the Indian subcontinent and wider Asia. Gold.ie

-International demand remains near record levels with deepening shortages and huge demand in much of the western world, the Middle East and India. Meanwhile, supply remains anemic at best. Gold mining production worldwide fell 6% during the first-half of the year compared with the first half of 2007, the World Gold Council said Monday. Totalling just 590 tonnes between April and July, global gold mining output was the lowest since 1996 according to data from the US Geological Survey and this despite rising gold prices in recent years. Gold.ie

-As noted this week, gold supply continues to fall with gold mining production worldwide failing 6% during the first-half of the year compared with the first half of 2007. Totalling just 590 tonnes between April and July, global gold mining output was the lowest since 1996 according to data from the US Geological Survey. The Wall Street Journal reported of "phenomenal" demand in India where in just 3 weeks Indian investors bought nearly as much tonnage of gold as they did in the entire final quarter last year.

In the first 3 weeks of October alone, more than 50 tonnes of gold was sold. Incredibly, during the whole of October-December quarter last year just 80 tonnes was sold. The Journal reported that "gold sales have picked up phenomenally following consistent steep fall in equity markets which has boosted the demand for the metal as a safe investment option."

Demand for silver remains very robust as well internationally and in India appetite for silver bullion is extremely high as seen in the very unusual fact that silver bullion bars (1000 oz) are being air freighted to India. Silver bullion is normally moved by sea as air freight costs for silver are very high (due to weight and volume) and this shows huge demand for silver bullion throughout the subcontinent.

Record demand for bullion internationally is an international phenomenon and one that bodes well for the gold price in the coming weeks and months as materially higher gold prices will be necessary to curtail demand and increase supply into the extremely tight, unprecedented so, physical marketplace. Gold.ie

-A recession is now inevitable in the US and the question now is as to how severe the recession is and whether it leads to a depression in the US and a global recession. The risks of an international monetary crisis are increasing by the day and with Bernanke's helicopters showering dollars on the international financial system in an effort to prevent a systemic deflationary crash and depression there is the increasing possibility of a Weimar style hyperinflation developing.

There is a titanic battle between the Scylla of a deflationary crash and the Charybdis of a Weimar hyperinflation or a particularly nasty bout of global stagflation that would make the stagflation experienced by western nations in the 1970s look benign in comparison.

Scylla and Charybdis are two sea monsters of Greek mythology who were situated on opposite sides of the narrow strait between Italy and Siciliy. The sea monsters were located in close enough proximity to each other that they posed an inescapable threat to passing sailors; avoiding Charybdis meant passing too closely to Scylla and vice versa. Gold.ie

-Since many hedge fund managers like to drive Porsche roadsters, it's somehow appropriate that the German auto maker just ran them down. The European hedge fund community took a pounding Monday covering short positions in Volkswagen. Shares in the auto company doubled Monday on a short squeeze that came after Porsche announced it had used derivatives to build a 74 per cent stake in VW.

That move brought a long-running takeover near the finish line, and also meant portfolio managers betting on a drop in Volkswagen shares had to cover positions. In their rush to cover shorts, often at massive losses, hedge funds pushed up the value of Volkswagen by 123 per cent on Monday, briefly making the auto maker the largest company on earth. Shares subsequently slipped, but ended the day up 25 per cent.

A handful of deals gain infamy for the widespread damage they inflict on hedge funds. GE's failed bid for Honeywell is in this hall of shame. Monday's nightmare on Volkswagen seems certain to gain the same notoriety. Given the fragile health of the community, losses on Volkswagen positions will be a fatal blow for some European funds. The squeeze on Volkswagen is partly due to the fact that the company has a relatively small public float, with just 5.8 per cent of the stock in public hands after Porsche's move.

The Financial Times quoted Max Warburton, an analyst at Sanford Bernstein, saying the short squeeze had brought the German market into disrepute. "It is a huge question for regulators and arguably an embarrassment for all European capital markets." The Globe & Mail

RARE COLORED DIAMONDS

-During the current financial crisis, the global polished diamond markets were "a relative oasis of calm and tranquility amid a roiling sea of turmoil," said IDEX Online analyst Ken Gassman. www.idexonline.com

-The diamond industry, in contrast, has been a stalwart of stability in the raging subprime tempest. Being that it is a closed market and production is limited, it has been relatively immune to financial speculation and anxiety spill over. www.idexonline.com

-Despite the tough economic times, miner Rockwell Diamonds and the Steinmetz Diamond Group succeeded in selling several large color diamonds to buyers in Southeast Asia, realizing large premiums on the value of the rough. The miner reported that a 102 carat, vivid yellow cut from a 212 carat diamond achieved a 50 percent premium on the rough diamond's value.

Two matching 10 carat, vivid yellow diamonds cut from a 36 carat stone achieved an 80 percent premium on the rough diamond. Rockwell did not disclose how much the three diamonds sold for, reporting only that they added approximately $2 million to its revenues. Steinmetz polished the diamonds, which were recovered in South Africa. Read more here-

http://www.idexonline.com/portal_FullNews.asp?id=31376

-Christie's Jewels: The Hong Kong Sale, taking place on December 2 at the Hong Kong Convention and Exhibition Centre, features an exquisite selection of over 300 extraordinary jewels across a spectrum of taste and style including an exceedingly rare 1.70 carat fancy purplish red diamond. Even with the notable discovery of the Argyle deposits in Australia only a number of red diamonds have been documented, examined or even discovered.

With only a few specimens of its type in existence, very few people ever have the chance to see one up close. When Ronald Winston acquired the Raj Red diamond of 2.23 carats in 1998, he commented: "I think it is one of the rarest objects on earth. My father never saw a red diamond and he'd seen everything." Adding to the allure of the red diamond is that the cause of its color is not yet thoroughly understood; it is generally concluded that the red color results from structural features in the diamond's crystal lattice combined possibly with minute quantities of nitrogen.

The red diamond offered in this sale boasts a luscious burgundy red color that is evenly distributed, a trait sure to appeal to distinguished collectors the world over. That there have been only 3 fancy red diamonds larger than the present diamond ever sold at auction underscores its rarity and allure. Read more here-http://www.diamondintelligence.com/magazine/magazine.aspx?id=7133 or http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23875

-At the Christie's June 2008 Hong Kong Jewellery Auction numerous records were set for rare gemstones.

-A 101.27ct F, VVS1 diamond was sold to a private collector for US$6.2million.

- World record price per carat for an emerald: A pair of Romanov emeralds sold to an Asian Private Collector for US$2,409,241 (lot 2346).

- World record price for a green diamond at auction: A square-shaped fancy green diamond of 10.36cts fetched US$3,485,281 (lot 2340).

- The Chloe Diamond, an 84-carat stone sold by Sotheby's in Geneva last year for $16.2 million, fell just short of the world record for the most expensive diamond ever sold at auction.

- A record selling price for ruby was set at Christie's in St. Moritz on February 15 2007 when an 8.62 carat cushion-cut ruby realized a price of $425,000 per carat $3.6million.

- In April 2007 at Christie's New York Auction, a 22ct Kashmir sapphire sold on behalf of the Minnesota Historical Society which realized $3,064,000, making it the most expensive sapphire in the world.

-Michael Arnstein, a rare gemstone dealer with The Natural Sapphire Company, says: "We've never seen interest in gemstones like this before. Clients are coming out of the woodwork for larger more expensive gemstones. Half of our clients specifically ask us about 'investment grade'. Many of our clients are disenchanted with traditional investments.

With the stock markets crashing and real estate being an unknown, people are looking for alternatives to park their cash." Read more here-http://www.marketwatch.com/news/story/rare-gemstones-hitting-record-sales/story.aspx?guid={A86D8E5A-0070-479B-ADC9-63AEFEBEC612}&dist=hppr

-An Inside View of the Pink Diamond Tender. September may be "back-to-school" month for most, but for me, it means seeing "the Argyle pinks." This was my 10th year in a row to get a ringside seat, and let me tell you, it doesn't get any less exciting as the years go on.

For 24 years running, the Argyle Diamond Mine has given up a small but incredible handful of Fancy Pink Diamonds. The numbers: Less than 50,000 carats of pink rough is found from 25 million carats mined. Of that 50,000 carats, only 65 stones were considered fancy enough to be considered "special."

So special in fact, that this small lot is taken around the world for an invitation-only silent bid auction called the Argyle Pink Diamond Tender (aka "Rio Tinto's Argyle Diamond Mine Pink Diamond Tender, after Rio Tinto took over the Argyle mine in roughly 2002).

This year's collection was, yet again, an exciting example of what Mother Nature can do with just a little bit of carbon (and a whole lot of natural heat and pressure). Read more here-

http://www.jckonline.com/blog/1950000195/post/940034094.html

-The value of the worldwide diamond jewellery retail market was estimated at US$61 billion in 2005, up from US$50 billion in 2002. It is expected to grow by 3% annually to reach US$90 billion in 2015.

-One of the major drivers of diamond demand is the increased spending power of the new middle class in the major emerging markets of China, Russia, India, Asia and Latin America.

-In recent years, the diamond industry has experienced a declining reserve base and increased production costs due to lower grades and cost inflation.

-Global diamond mining cost inflation is partly driven by deeper mining and off-shore mining operations, but also general shortage of mining materials and skilled labour around the world.

-Supply constraints along with an expected growth in demand results in forecasted demand outstripping supply by up to US$7 billion by 2012 especially with larger high-quality diamonds expected to become increasingly rare. Tacy Limited Report on the Diamond Market

COMMODITIES-OIL

-World is facing a natural resources crisis worse than financial crunch. Two planets need by 2030 at this rate, warns report. Humans using 30% more resources than sustainable. Read more here-http://www.guardian.co.uk/environment/2008/oct/29/climatechange-endangeredhabitats

-Metals commodities outlook positive despite forecasts of rough going in 2009. BMO's Bart Melek notes that the sentiment at the recent LME Week was not as bearish as one would expect given that many metal prices are so low and some miners are operating below cash costs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=71521&sn=Detail

-Pickens: My Energy Plan Is The "Only Plan". Tells 60 Minutes Wind Power, Solar Energy And Domestic Natural Gas Are The Only Choices To End Country's Oil Addiction. Read and watch video here-http://www.cbsnews.com/stories/2008/10/23/60minutes/main4541322.shtml

-Oil: Will We See $80 or $50 A Barrel? Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47513

-OPEC may decrease production further. Iran's OPEC governor says that if Friday's cut doesn't support prices, it may move again to decrease output. Read more here-

http://money.cnn.com/2008/10/26/news/international/iran_oil.ap/index.htm?postversion=2008102613

FINANCIAL CRISIS

-The Bet That Blew Up Wall Street. Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis. Read and watch video here-

http://www.cbsnews.com/stories/2008/10/26/60minutes/main4546199.shtml

-IMF may need to 'print money' as crisis spreads. The International Monetary Fund may soon lack the money to bail out an ever-growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

The fund is already close to committing a quarter of its $200 billion (L130 billion) reserve chest, with a loans to Iceland ($2 billion), Ukraine ($16.5 billion), and talks under way with Pakistan ($14.5 billion) and Hungary ($10 billion) as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF's work in the great arc of countries from the Baltic states to Turkey is only just beginning. "When you tot up the countries across the region with external funding needs, you get to $500 billion or $600 billion very quickly, and that blows the IMF out of the water. The fund may soon have to start calling on the West for additional funds," he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil, and India have together spent $75 billion of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

"Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We're in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is," he said. Read more here-http://www.gata.org/node/6821

-Iceland secured an emergency bailout loan of about $2.1 billion from the International Monetary Fund after the collapse of the island's banking system paralyzed much of its foreign exchange market. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aC1D1HLDTZSY&refer=economy

-The European Central Bank gave Denmark access to 12 billion euros ($15 billion) in funds as the ECB steps up efforts to help neighboring countries deal with the global financial crisis. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afLPJAmcHqzA

-The International Monetary Fund will lend Ukraine $16.5 billion and give Hungary "a substantial financing package'' as the turmoil in global credit markets and recession concerns sweep across eastern Europe's emerging markets. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ai.iCUxotV0k

-Japan unveils $275 billion stimulus package. Package to include loans for small and medium-sized businesses and payments to households. Read more here-

http://money.cnn.com/2008/10/30/news/international/japan_stimulus.ap/index.htm

-Credit 'Tsunami' Swamps Trade as Banks Curtail Loans. Richard Burnett's lumber company had started loading wood onto ships heading for China. More was en route to the docks. It was all part of an order that would fill 100 40-foot cargo containers.

Then Burnett got a call from his buyer at Shanghai VIVA Wood Products Co. The deal was dead. He told Burnett, president of Cross Creek Sales LLC in Augusta, Georgia, he couldn't get a letter of credit to guarantee payment for at least six months.

"It was like a spigot got cut off,'' Burnett said, recounting the transaction that fell apart in July. The inability of buyers in China and Vietnam to get letters of credit has cost his company as much as $4 million this year, a third of projected revenue, forcing him to lay off 15 of 35 employees, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601103&sid=awMvopgbSWB8&refer=us

-U.S. has plundered world with dollar, Chinese state paper rages. The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies. A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said. Read more here-http://www.gata.org/node/6813

-Taiwan dumps Fannie, Freddie and Uncle Sam? Taiwan's financial regulators reportedly have ordered that nation's insurance companies to pare their holdings of the debt and mortgage-backed securities of Fannie Mae, Freddie Mac, and Ginnie Mae securities, according to a report on the Internet site of Asian Investor magazine.

Such an order would be a stunning rebuke to Washington, coming a little more than a month after the federal government effectively nationalized the mortgage giants. Fannie and Freddie last month were placed into conservatorships with the Treasury standing ready to inject up to $100 billion through purchases of preferred shares in the government sponsored enterprises. Read more here-http://www.gata.org/node/6811

RUN ON A BANK IN KUWAIT

-Customers rushed to withdraw money from Gulf Bank KSC, Kuwait's second-biggest bank, after clients defaulted on currency contracts and the central bank was forced to guarantee deposits. In the first signs of a bank run in the Persian Gulf, some Gulf Bank customers demanded money in a panic, Fawzy al-Thunayan, general manager for board affairs, said in an interview today from Kuwait.

Trading in Gulf Bank shares was suspended for a second day on the Kuwait bourse. "Some have withdrawn funds,'' said al-Thunayan, who declined to comment on the size of the losses or disclose how many depositors had withdrawn funds. "We can't blame them.'' The bank is ''concerned, definitely, but not afraid.'' Kuwait's central bank will guarantee deposits at Gulf Bank, which remains solvent after client defaulted on currency derivatives contracts, the state-run Kuwait News Agency cited Kuwait Finance Minister Mustafa al-Shimali as saying yesterday.

A guarantee of bank deposits in Kuwait will make it the second country after the United Arab Emirates who to have done so in a bid to shore up confidence. Khalid Al-Matrook, a 33-year-old civil engineer, was among customers standing outside Gulf Bank's head office in Kuwait City today. He said he was frightened by yesterday's news of the currency defaults. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aHofkM2HOoYw

RECESSION

-The U.S. economy is in a recession because of a financial crisis caused by excessive debt, former Federal Reserve Chairman Paul Volcker said. "I don't think there is any doubt we are in a recession, which seems to be spreading through the developed world,'' Volcker said today in a speech in Miami Beach, Florida. ''I don't know how deep, but it will be rather long before we see robust growth.''

Volcker, known for quelling inflation during the presidencies of Jimmy Carter and Ronald Reagan, said a collapse in the housing market in 2007 triggered "cascading" declines in asset prices that led to the bankruptcy of Lehman Brothers Holdings Inc. and the seizing up of credit markets.

"I've lived through a lot of crises, but I've never seen anything as complicated as this one,'' Volcker said as the keynote speaker to a conference of the Urban Land Institute, a Washington-based association of architects, planners and real estate financiers. ''We should have seen it coming.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=aW4FyxoNscm4&refer=economy

-The economy suffered its biggest decline since 2001 in the third quarter, ushering in what may be the worst recession in a quarter-century and boosting the chances of Barack Obama and fellow Democrats in next week's elections.

Gross domestic product contracted at a 0.3 percent pace from July to September, according to a Commerce Department report today in Washington. The decline was smaller than forecast and stocks rose. Even so, the economy may be in for a larger drop this quarter after the record two-decade expansion in consumer spending came to an end.

"The crisis really kicked up in late September,'' Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, said in a Bloomberg Television interview. ''We're going to be looking at a very unfriendly GDP number in the fourth quarter, with a drop of 2 to 4 percent.'' Read more here-

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

-In the third quarter of 2007, Volvo AB booked 41,970 European orders for new trucks. Guess how many prospective purchases Volvo, the world's second-biggest maker of heavy rigs, received in the third quarter of this year?

Here's a clue. Picture a highway gridlocked by 41,815 abandoned trucks because Volvo's order book got destroyed to the tune of 99.63 percent, with customers signing up for just 155 vehicles in the three-month period, the Gothenburg, Sweden-based company said last week.

The pathogen that has fatally infected swathes of the banking industry is now contaminating non-financial companies. ''We're heading toward the sharpest downturn I've ever seen in Europe,'' said Chief Executive Officer Leif Johansson. Volvo has company. Daimler AG, the world's biggest truckmaker, said earlier this month that its U.S. deliveries slumped by a third in the first half of the year. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid=a7AhRhE4NJlM&refer=home

-Personal bankruptcies on the rise. Three years after the passing of new legislation aimed at reducing personal bankruptcies, 2008 filings approach the one-million mark. Read more here-

http://money.cnn.com/2008/10/24/pf/bankruptcy_filings/index.htm?postversion=2008102711

U.S. DEBT

-David Walker, the former U.S. comptroller general, says the government has lost control of the national debt. Watch video here-http://money.cnn.com/video/ft/#/video/fortune/2008/10/29/fortune.walker.abyss.fortune

-The U.S. Treasury faces historic financing demands from a weakening economy and the added costs of a $700 billion Wall Street rescue program, the department's top domestic finance official said today.

"This year's financing needs will be unprecedented,'' said Anthony Ryan, the Treasury's acting undersecretary for domestic finance, at a Securities Industry and Financial Markets Association conference in New York, where he was a last-minute substitute for Treasury Secretary Henry Paulson.

Ryan's borrowing outlook comes after Treasury officials spent much of the past month publicly praising the rescue plan's virtues. The Treasury needs to sell debt to raise money for the new initiatives and also cope with a weaker economy, two factors analysts say may push the country's budget deficit to more than $1 trillion for the current fiscal year.

As part of the rescue effort, the Treasury aims to boost the economy by pushing $250 billion in new capital to U.S. banks. Half of that money has been set aside for large banks, which hold about half of all U.S. deposits, in hopes of stimulating more lending to businesses and consumers. The rest will go to regional banks and smaller institutions. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=aorUd4dpNb3Y&refer=economy

HEDGE FUND MELTDOWN

-GLG chief Emmanuel Roman warns thousands of hedge funds on brink of failure. Emmanuel Roman, the co-chief executive of Europe's biggest hedge fund GLG, has warned that thousands of hedge funds are on the brink of failure as the global economy contracts with unexpected severity. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3248965/GLG-chief-Emmanuel-Roman-warns-thousands-of-hedge-funds-on-brink-of-failure-financial-crisis.html

-Soros sees 'shakeout' downsizing hedge fund world. Read more here-http://www.reuters.com/article/americasHedgeFundsNews/idUSLNE49S05Y20081029

-Hedge funds are aggravating the worst market selloff in 50 years as they dump assets to meet investor redemptions and keep lenders at bay. U.S. hedge-fund managers may lose 15 percent of assets to withdrawals by year-end while their European rivals shed as much as 25 percent, Huw van Steenis, a Morgan Stanley analyst in London, wrote yesterday in a report to clients.

Combined with investment losses, industry assets may shrink to $1.3 trillion, a 32 percent drop from the peak in June. With the average hedge fund down 18 percent this year, as measured by the HFRX Global Index, managers are selling assets to repay departing investors and meet demands from lenders for more collateral. Others including Paulson & Co. and Winton Capital Management LLC are hoarding cash to soothe nervous clients and wait for signs the worst is over.

When stocks rally, hedge funds take advantage to unload what they can. "I have never seen a market as full of panic as I've seen in the last seven or eight weeks,'' Kenneth Griffin, founder of Citadel Investment Group LLC, a Chicago-based hedge-fund firm, said this week. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8.xpaCUzHSI&refer=home

CREDIT CARDS NEXT CRISIS

-Consumers Feel the Next Crisis: It's Credit Cards. First came the mortgage crisis. Now comes the credit card crisis. After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers. The pullback is affecting even creditworthy consumers and threatens an already beleaguered banking industry with another wave of heavy losses after an era in which it reaped near record gains from the business of easy credit that it helped create.

Lenders wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. With companies laying off tens of thousands of workers, the industry stands to lose at least another $55 billion over the next year and a half, analysts say. Currently, the total losses amount to 5.5 percent of credit card debt outstanding, and could surpass the 7.9 percent level reached after the technology bubble burst in 2001.

"If unemployment continues to increase, credit card net charge-offs could exceed historical norms," Gary L. Crittenden, Citigroup's chief financial officer, said. Faced with sobering conditions, companies that issue MasterCard, Visa and other cards are rushing to stanch the bleeding, even as options once easily tapped by borrowers to pay off credit card obligations, like home equity lines or the ability to transfer balances to a new card, dry up. Read more here-http://www.nytimes.com/2008/10/29/business/29credit.html?_r=3&oref=slogin&ref=business&pagewanted=print&oref=slogin

-Russia begins to refuse credit cards in worsening global financial crisis. Russian businesses have begun to refuse credit cards as the global financial crisis worsens. Read more here-

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3269843/Russia-begins-to-refuse-credit-cards-in-worsening-global-financial-crisis.html

INTEREST RATES

-Peter Schiff Says Fed Should Raise Rates, Sees Dollar Risk. Watch video here- http://news.goldseek.com/EuroCapital/1225398621.php or

http://www.bloomberg.com/avp/avp.htm?N=av&T=Schiff%20Says%20Fed%20Should%20Raise%20Rates%2C%20Sees%20Dollar%20Risk&clipSRC=mms://media2.bloomberg.com/cache/vCtmIO.95s6Y.asf

-Fed official can see interest rates close to zero. Read more here-http://www.gata.org/node/6826

-European Central Bank President Jean-Claude Trichet said the bank may cut interest rates again at its next policy meeting on Nov. 6 as the financial market crisis damps inflation pressures. "I consider it possible that the Governing Council would decrease interest rates once again at its next meeting,'' Trichet said in a speech in Madrid today. ''It is not a certainty, it is a possibility.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8SUtjTg7E1U&refer=home

-The Federal Reserve cut its benchmark interest rate by half a percentage point to 1 percent, matching a half-century low, in an effort to avert the worst U.S. economic downturn in the postwar era. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awpa6f1vDwlg

-Iceland's central bank unexpectedly raised the benchmark interest rate by six percentage points to the highest level in at least seven years to boost the currency after reaching a loan agreement with the International Monetary Fund. The rate was lifted to 18 percent, the Reykjavik-based bank said in a statement this week, taking it to the highest since the bank began targeting inflation in 2001. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=ajq1U3.FwHJY&refer=economy

-Norway's central bank cut the benchmark interest rate by half a percentage point for the second time this month and forecast further reductions as it slashed its forecast for economic growth next year. The bank reduced the overnight deposit rate to 4.75 percent, the lowest in a year, it said on its Web site this week. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=aFiQwUD_4T0Q&refer=economy

-The Bank of Israel cut the benchmark lending rate by a quarter of a percentage point, the second reduction in three weeks, as global financial turmoil imperils domestic economic growth and inflation expectations fall. The rate was reduced to 3.5 percent, a spokeswoman for the Jerusalem-based central bank said today. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a32sZExq2emE

-China cut interest rates for the third time in two months to stimulate growth in the world's fourth-largest economy after the global financial crisis curbed exports and production. The key one-year lending rate will drop to 6.66 percent from 6.93 percent, the People's Bank of China said on its Web site today. The deposit rate will fall to 3.60 percent from 3.87 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aTS7_VmUNvxI&refer=home

-The Bank of Korea slashed interest rates by a record at an emergency meeting in an attempt to restore confidence after stocks lost a fifth of their value and the won fell to a decade low last week. Governor Lee Seong Tae lowered the seven-day repurchase rate by 75 basis points to 4.25 percent and cut rates on special loans for small and medium-sized companies to 2.5

percent from 3.25 percent, the central bank said in a statement in Seoul this week. It will also accept bonds issued by commercial banks as collateral in its money-market operations, giving them access to more funds. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ajTDUEAb7J14&refer=home

NOURIEL ROUBINI

-Nouriel Roubini: I fear the worst is yet to come. When this man predicted a global financial crisis more than a year ago, people laughed. Not any more. Read more here-

http://business.timesonline.co.uk/tol/business/economics/article5014463.ece

-Roubini Says U.S. Needs $400 Billion Stimulus Package. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Roubini%20Says%20U.S.%20Needs%20%24400%20Billion%20Stimulus%20Package&clipSRC=mms://media2.bloomberg.com/cache/vq44wyEF3URM.asf

-Roubini Says S&P May Fall 30% More Over 2-Year Recession. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Roubini%20Says%20S%26P%20May%20Fall%2030%25%20More%20Over%202-Year%20Recession&clipSRC=mms://media2.bloomberg.com/cache/v.8Wcra7zbSE.asf

ARGENTINE PENSION SEIZURE WILL SPUR BRAZIL STOCK SALE

-Argentina's planned nationalization of its retirement system will trigger a fire sale of Brazilian stocks this week as private pension funds are forced to shed foreign holdings. The funds must unload all foreign assets by Oct. 31, "particularly those in Brazil,'' Amado Boudou, the head of the country's social security agency, said in an interview Wednesday with America 24. La Nacion reported that the AFJPs might have to dump the securities as soon as this week.

"That's not news we like, but I don't think it will cause problems,'' Carlos Kawall, chief financial officer of Brazil's securities exchange BM&FBovespa SA, said in an interview in New York. Pension funds in Argentina, known as AFJPs, owned 1.8 billion pesos ($536 million) of Brazilian stocks including Cia. Vale do Rio Doce, Petroleo Brasileiro SA and Banco Bradesco SA as of Oct. 15, according to the regulator's Web site. Although that's only about 0.1 percent of Brazil's total market value, it represents 21 percent of average daily trading in the past week.

The requirement to repatriate Brazilian funds will ''take pressure off of the exchange rate,'' Sergio Chodos, the head of the AFJP regulator, said in an interview published in Wednesdays edition of Argentine newspaper Cronista. The peso fell to the weakest against the dollar since December 2002 this week. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aPHDu0m4.K10

-A New York federal judge blocked Argentina from transferring out of the U.S. investments held by its pension funds, granting a request by bondholders holding a $553 million judgment against the South American country. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aJjlFXnqromQ&refer=home

REAL ESTATE

-House prices in 20 U.S. cities declined at the fastest pace on record as foreclosures climbed before the credit crisis deepened this month. The S&P/Case-Shiller home-price index dropped 16.6 percent in August from a year earlier, as forecast, after a 16.3 percent decline in July. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

The decrease in property values, which helped boost sales last month to the highest level of the year, will probably intensify in coming months as the latest tightening of credit markets threatens to dry up mortgage financing. Prolonged price declines may push even more houses into foreclosure, weakening consumer spending and the economy.

"There's still quite a bit further for prices to go down, even though the volume has probably bottomed out," William Cheney, chief economist at John Hancock Financial Services Inc. in Boston, said in a Bloomberg Television interview. "Prices will probably find a bottom sometime next year." Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=a22yrweGD74o&refer=invest

-A majority of U.S. homeowners believe the value of their property fell over the past year, according to a survey of real estate market confidence by data company Zillow.com. The survey of 1,388 homeowners between Oct. 7 and Oct. 9 found 51 percent said their houses had lost value, while 49 percent believed the value had stayed the same or increased, Seattle-based Zillow found. In an earlier survey, taken June 30 to July 2, 38 percent said their homes had lost value and 62 percent said they had gained or stayed the same.

Three quarters of homes have actually fallen in value over the past year, Zillow said. ''The bad news on the general economy front is getting through to people and certainly is making their perception of home values more accurate,'' Zillow's Vice President of Data and Analytics Stan Humphries said in an interview. The median price of an existing home dropped to $191,600 in August, down from a record high of $230,200 in July 2006, according to the Chicago-based National Association of Realtors.

The disconnect between owners' perception of value and actual market conditions makes it harder for real estate agents to price homes to sell, Humphries said. Homeowners ''have a larger sense of the personal wealth of their portfolio than is actually the case,'' he said. Zillow's Home Value Misperception Index shrank to 16 in the third quarter from 32 in the second quarter.

An index value of zero indicates homeowner perceptions are in line with actual values. Homeowners also were less optimistic about the future. About 21 percent said they believe their home's value will rise over the next six months, compared with 32 percent who predicted price appreciation in the previous survey. About 57 percent said they thought property values in their local market will fall. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aE04JJV9jIWA&refer=invest

FORECLOSURES-MORTGAGES-RENTS

-The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said.

The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said. Read more here-

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

-Rents in the Boston area spiked 4.2 percent over the past year, the biggest increase in seven years, while rising foreclosures and a slumping housing market pushed more people into apartment living. Read more here-http://www.boston.com/business/articles/2008/10/29/areas_rents_up_42_in_one_year/

-U.K. mortgage approvals stayed close to a record low and consumer credit rose at the weakest pace since 1993 after the worsening financial crisis prompted banks to tighten lending, pushing the country towards a recession. Lenders approved 33,000 loans for house purchase in September, up from 32,000 in August, the lowest since comparable data began in 1999, the Bank of England said.

Economists expected approvals to be unchanged, according to the median of 26 forecasts in a Bloomberg News survey. Consumer borrowing rose 0.1 percent on the month, the least since April 1993. The outlook for the U.K.'s struggling economy deteriorated after the collapse of Lehman Brothers Holdings Inc. last month made banks more wary about lending to each other and to households.

The economy contracted for the first time in 16 years in the third quarter and as the housing slump worsens, the Bank of England predicts that 10 percent of mortgage holders may soon owe more than their homes are worth. "The U.K. didn't sneak into recession, it jumped,'' said Alan Clarke, an economist at BNP Paribas SA in London. "There are worse figures yet to come.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a4mnLOZNW0Wc&refer=economy

-Manhattan office rents may fall by about 25 percent between now and mid-2010, Colliers ABR predicted, as the city sheds tens of thousands of jobs in a financial industry-led recession. "The next 12 to 24 months will be a struggle for the NYC commercial real-estate market,'' wrote Robert Sammons, managing director for research at the New York-based real estate brokerage, in a report today.

"While we are bullish on the city and the region in the long-term, like the rest of the country we will have to buckle down for some time.'' Sammons cited projections by the New York City comptroller's office of 165,000 private sector job losses through the end of 2010, up from a forecast of 85,000 job losses in July. About 35,000 of those may be in financial services, comptroller William Thompson Jr. said on Oct. 15.

Three of the five biggest New York-based investment banks, Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. have either gone bankrupt or are being taken over, as losses on residential mortgage securities have taken their toll. There will be ''further consolidations'' as the financial industry learns new ways of conducting business, Sammons wrote. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aAp57UpT8Mto

IRAN OPENS BASE AT HORMUZ STRAIT FOR GULF DEFENSE

-Iran opened a naval base on the Strait of Hormuz that's capable of keeping foreign forces out of the Persian Gulf, the chief of the Iranian navy said. "With this naval base, a new line of defense was created in the Persian Gulf,'' Admiral Habibollah Sayyari was cited today as saying by state-run Fars News.

"If necessary, we can prevent any enemy from entering the Persian Gulf's strategic area.'' The naval chief said the facility, which was inaugurated this week, is needed because of the presence of foreign forces in the region. The base in the southern port of Jask, 1,050 miles (1,690 kilometers) south of Tehran, is in the eastern part of the strait at the entrance to the Gulf.

The Strait of Hormuz has been the focus of increasing tension in recent months. Iran has said it may close the strait should the U.S. attack the country over its refusal to halt uranium enrichment as part of a nuclear program. Some 20 percent of the world's oil is shipped through the strait, according to the U.S. Department of Energy. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aEodCjKUbes0

The GoldBugg Report - November 4, 2008
Posted by Worldwide Precious Metals on Tuesday, November 04, 2008

Information Request

Use our Information Request Form and one of our helpful customer service representatives will contact you promptly.

Request Info

Chat Online

Talk live right now with one of our Precious Metals Experts.

WWPMC Newsletter

Subscribe to our newsletter to receive timely information on precious metals by email.

As featured on:

Newsroom

The GoldBugg Report - November 25, 2008

November 25, 2008

A Special Report from Precious Metals International

The GoldBugg Report - November 19, 2008

November 18, 2008

The GoldBugg Report - November 12, 2008

November 12, 2008

The GoldBugg Report - November 4, 2008

November 4, 2008

Information Request

Chat Online

WWPMC Newsletter

WWPMC Articles

WWPMC Archives