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The GoldBugg Report – January 27, 2009

January 27, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 23 2009 SHOW

-RBC says upside in gold and silver

-Gold to Gain through 2012, Morgan Stanley Forecasts

-A Rough Projection of Gold and Silver Prices

-BUFFETT-THE U.S. IS IN MIDST OF AN ECONOMIC PEARL HARBOR

-ROUBINI-BANKING SYSTEM IS EFFECTIVELY INSOLVENT

GOLD

-Gold to Gain through 2012, Morgan Stanley Forecasts. Gold may average higher for each of the next three years and climb to a record driven by increased demand and a declining dollar as governments ramp up spending to battle the global recession, according to Morgan Stanley. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aZhKY54ePh18

-Morgan Stanley and UBS raise gold price forecasts. Morgan Stanley and UBS raised their gold price forecasts, citing safe-haven demand for bullion amid turmoil in the banking sector and a gloomy outlook for the economy. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=77110&sn;=Detail

-Gold to the rescue as financial forces overwhelm challenging fundamentals GFMS. GFMS Ltd expects gold to help safeguard investors against government profligacy in 2009; prices to remain volatile and dips are possible, but followed by a strong bull run. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=76793&sn;=Detail

-RBC says upside in gold and silver, but PGMs to underperform. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=77122&sn;=Detail

-97% Indian investors put money in Gold. During these days of economic meltdown and volatile movements on stocks and commodities markets, what is the best avenue of investment? For the Indian investors, the biggest investment route is indeed gold, says a new survey. Most Indians prefer to put their money in the yellow metal. Read more here-

http://www.commodityonline.com/news/97-Indian-investors-put-money-in-Gold!-14362-3-1.html

-A Rough Projection of Gold and Silver Prices. Read more here-http://libertyvalley.com/rough_projection_gold_and_silver_prices

-Gold, silver ETFs see strong buying pressure: Got Gold Report. Read more here-http://www.stockhouse.com/Columnists/2009/Jan-1/19/Gold,-silver-ETFs-see-strong-buying-pressure–Got- or http://www.gata.org/node/7102

-Gold held by exchange-traded funds reached a record level in 2008, as investors bought the metal as a safe haven against economic troubles, the World Gold Council said in a report. At 1,190 tons, ETF gold holdings are now higher than central bank holdings in Switzerland, the fifth last official gold holder in the world. Investors bought ETFs representing 96 tons of gold in the fourth quarter, following the purchase of an unprecedented 145 tons in the previous quarter, the WGC said. Marketwatch.com

-Michael Zielinski: U.S. Mint discouraging gold ownership. Read more here-http://www.gata.org/node/7112

-Michael Zielinski: Mint’s new pricing policy raises premiums. Read more here-http://www.gata.org/node/7105

-Dominic Frisby: Gold is shifting from West to East. Read more here-http://www.gata.org/node/7111

-James Turk: The Fed’s blueprint for market intervention. Read more here-http://www.gata.org/node/7097

-GATA’s 10th anniversary gold manipulation evidence mounts. Read more here-http://www.gata.org/node/7101

-Peter Brimelow: Gold bounces back as manipulation plan is exposed. Read more here-http://www.gata.org/node/7116

-Peter Degraaf: Does manipulation render technical analysis obsolete? Read more here-http://www.gata.org/node/7113

SILVER

-Ted Butler on Real Silver Availability. Much has been written about the actual amount of physical silver that exists in world above ground inventories. Due to decades of industrial consumption depleting world inventories, there is remarkably little silver remaining. I have estimated perhaps one billion ounces of silver bullion equivalent exists at anywhere near current prices, and my estimates are much higher than most published estimates.

Considering that the cumulative world mine production through the ages has been roughly 40 billion ounces that means only 2.5% of that total production remains in bullion equivalent form. That’s shocking. This is one of the key reasons for buying silver, namely, there isn’t much left. I’ve written countless articles over the years, trying to put this shockingly small amount of silver remaining into different perspectives.

I’ve compared it to the total amount of money and credit in the world, namely, $11 billion of silver remaining compared to the many tens of trillions of dollars of money and credit sloshing around. Each ten trillion is a thousand times more than all the silver in the world is currently worth. I’ve compared the amount of silver, in ounces and dollar terms, in per capita terms, namely, how much there is if evenly divided among the earth’s 6.5 billion inhabitants.

For each man, woman and child, there exists 0.15 of an ounce. At current prices that’s around $1.65 a person. Not much of a surplus or overhang. I’ve compared the amount of silver remaining above-ground to other commodities, and particularly to gold it’s constant compatriot through millennia. I have explained that because gold was always highly valued as an investment and for jewelry, its high price prevented it from being industrially consumed, in stark contrast with what occurred in silver.

Due to this plainly-observed historical reality, the world cumulative gold mine production of 5 billion ounces still exists in a relatively easy to recover form. So even though 8 times more silver than gold was produced throughout history, 5 times more gold than silver exists above ground today, due to silver’s industrial consumption profile over the past 100 years. Further, when you assign a dollar value to gold and silver above ground inventories, given the current price disparity between the two, the comparisons are even more startling.

Because gold is currently running at almost 80 times the price of silver, that means there is 400 times more gold than silver in the world in dollar terms. On a per capita basis, that comes to $660 per inhabitant, compared to $1.65 for silver. In the past, I’ve estimated that maybe one in a million knew these facts. My conclusion was the growing awareness of this situation alone would impact the price of silver for many years to come. Read more here-http://news.silverseek.com/TedButler/1232473167.php

-Potential silver prices based on the gold to silver ratio.

Gold to silver ratio at 80 to 1 with gold at $2000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2000 the silver price would be $40.00
Gold to silver ratio at 16 to 1 with gold at $2000 the silver price would be $125.00

DEFINITIONS-QUOTES-QUICK HITS

-Great Depression. An economic recession that began on October 29, 1929, following the crash of the U.S. stock market. The Great Depression originated in the United States, but quickly spread to Europe and the rest of the world. Lasting nearly a decade, the Depression caused massive levels of poverty, hunger, unemployment and political unrest.

The NYSE crashed on October 24, 1929, a day known as Black Thursday. Thousands of people lost nearly the entire value of their investments, leaving them with next to nothing. The trend continued and the following Tuesday, Black Tuesday, the DJIA dropped 12%, marking the start of the great depression. International trade declined, along with personal income, tax revenues and product prices.

Many economists believed the Great Depression was evidence that capitalism, when left unchecked, is a dangerous ideology. This caused some nations to change their political structures, such as Germany, who adopted fascism. Investopedia.com-Read more here-http://en.wikipedia.org/wiki/Great_depression

-Contango. When the futures price is above the expected future spot price. Consequently, the price will decline to the spot price before the delivery date. Investopedia.com-Read more here-http://en.wikipedia.org/wiki/Contango

-If stupidity got us into this mess, why can’t it get us out? Will Rogers

-Historically, the way you make money in times like these is that you find things where the fundamentals are unimpaired. Jim Rogers-2009 will be the year of Total decline for U.S. Jim Rogers-Watch video here-http://www.youtube.com/watch?v=w84EiCt0Lqk&eurl;=http://goldismoney.info/forums/showthread.php?t=340856

-To be a reasonable investor over the long term, it doesn’t take a high IQ, said Jean-Marie Eveillard. Instead, it’s a willingness to move away from the herd to follow your own path, at the risk of lagging, if you think the herd is about to run over the cliff. Bloomberg

-Gold is likely to have another good year as the world increasingly wakes up to today’s realities. As they do, they will also come to understand that gold is money, which is a good thing to hold any time, but particularly during economic and monetary turmoil. James Turk-Another Great Depression-Read more here-http://www.kitco.com/ind/Turk/turk_jan152009.html

-The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames, and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic. Iain Martin, The Telegraph, January 21, 2009-Read more here-http://www.telegraph.co.uk/comment/columnists/iainmartin/4295219/Gordon-Brown-brings-Britain-to-the-edge-of-bankruptcy.html or http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4299883/UK-cannot-take-Icelands-soft-option.html

-The markets have more power than all the tin-horn politicians on the planet earth. The markets have more power than the Fed and all the central banks of the world taken together. Remember, the Fed’s inflation and interest rate manipulations will work only as long as the markets go along with the Fed. The minute the markets see that the Fed’s machinations aren’t working, then we’ll get our first taste of true deflation, and the Fed’s power will have evaporated. Richard Russell

-Our contemporary brand of socialism has one fatal flaw. It’s too expensive. When you try to shower benefits on so many recipients, you eventually must resort to subterfuge. Foremost among those tricks is money and credit expansion. Inevitably, you debase your currency. James Cook

-There are many “experts” and “analysts” predicting much higher prices for Gold (as high as $5,000.00) Silver (as high as $150.00). These seem astronomical, and wouldn’t we all love to see these prices actually take place. We are not so bold. However we do agree that Long Term prices should move substantially higher. Should we see similar price appreciation throughout 2009 as that experienced in the last three months we could be looking at $2,100.00 Gold and $37.00 Silver by year end 2009.

Even these numbers seem aggressive, and of course there are never any guarantees. However comparing these projections to current prices, current prices certainly look like an exceptional bargain. Given everything happening in today’s worldwide economy, there have never been more compelling reasons to substantiate the ownership of Precious Metals. Precious Metals International

-President Obama his cabinet and financial advisors are inheriting what can only be described as an “international economic disaster.” His challenge will be to create a domestic economic stimulus program that will hopefully bring about a stop to the deepening of the current recession before it escalates into a depression, restore international confidence in the United States Government and the US Financial Markets.

With interest rates at all time lows and credit remaining a severe problem, there is one thing you can absolutely count on The US Government has to print more dollars and in plain and simple language “that’s going to create Inflation.” Precious Metals International

-”Gold is gaining on systemic fear,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “These governments are going to have to infuse more money into the financial system, and that will eventually lead to inflation.” Bloomberg

-What percentage of my portfolio should be in precious metals bullion? Ibbotson Associates recommends between 7-16 percent just for proper diversification, while Wainwright Economics recommends between 18-47 percent to protect portfolios against inflation. To make money in 2009, you will likely need an even higher allocation than those recommended by Ibbotson and Wainwright. Furthermore, given our experience in 2008, it is critical that investors hold actual bullion and not a paper proxy or derivative.

Physical bullion is the only asset that is not someone else’s liability. The single point to remember from these comments is that, no matter what your allocation to bullion turns out to be, it should certainly not be zero. In order to adapt to current global changes, investors need to rethink their investment strategy and their portfolio allocations, because the next 20 years are going to be completely unlike the past 20. Read more here-http://news.goldseek.com/GoldSeek/1231783824.php

-In case you haven’t got the message the current world financial and monetary system is done for. That’s why the U.S. government is sitting on the precious metals prices at the moment. But it’s still the only game in town as far as wealth preservation is concerned and you can’t own too much gold or silver bullion. They will be just about the only things left standing when the current system finally passes into history however long that takes. And it won’t be much longer at the rate it’s going now. Ed Steer

-Weighed down by enormous debt levels, no domestic savings from which to draw, angry foreign creditors and a collapsing tax base, the Fed has no choice but to inflate in a big way; while it may be a race to inflate worldwide, the US has more baggage than others.

With all countries daring the inflation monster while trying to stay one step ahead of its jaws, the one that is weighed down the most, much like the slowest antelope in tiger country, will naturally be the first to be caught. The carnage won’t be pretty, but gold will shine. Chris Galakoutis-Read more here-http://www.321gold.com/editorials/galakoutis/galakoutis011909.html

-In simplest of terms, a lot of U.S. dollars are being created. Demand for dollars in this world is limited. It has an upper limit. That supply of U.S. dollars may be starting to over power the demand for dollars. In the chart above is a second line that represents our dollar index, a better measure than the improperly designed popular index.

This vast quantity of money being created seems to becoming dominant. That supply of money may be capping the value of the dollar, and will likely over come it. Money supply growth this excessive can only push down the value of the currency, in this case the U.S. dollar. The dollar index seems already to be topping out. Investors must answer an important question. Has any currency created in such abundance ever appreciated?

Two U.S. Presidents have been very good to Gold investors. Obama is likely to continue that run of Gold prosperity. $2.5 trillion of debt, largely to be financed by Federal Reserve monetization, is indeed change. No economic hegemon has ever been so financially irresponsible. While such debt monetization has been practiced in “banana republics” for over a century, it is new to the market for U.S. dollars. As a consequence, the clearest investment theme for the Obama era is Gold, bought on any and all price weakness. Ned W. Schmidt-Read more here-http://news.goldseek.com/NedSchmidt/1232487328.php

-Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a “swift and violent rebound” in energy prices in the second half of the year. Oil prices may have reached their lowest point already, after falling to $32.40 in mid-December, and are expected to rise to $65 by the end of this year, the analyst said. There is scope for a “new bull market” in oil, Currie said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=al1yxPTKDu4Q

-Is Oil’s Future Sustainable? If Not, What Are The Consequences? View PDF file here-http://www.simmonsco-intl.com/files/Dallas%20Committee%20On%20Foreign%20Relations.pdf

-The Dow Jones Industrial Average fell 14 percent between Barack Obama’s election and Inauguration Day, the biggest decline ever. Bloomberg

-Wilbur L. Ross, the investor who made billions turning around distressed steel and textile companies, expects “horrific” first-quarter results from U.S. businesses and said the unemployment rate may reach the highest in 26 years.

“Just look at the announcements that have been made about job cuts since the first of the year,” Ross said today in a Bloomberg Radio interview. “You’re going to see unemployment get up toward the 10 percent region.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aO_R23ZME6uc

-”As a general observation, the broad market historically has not been able to move higher in any sustainable way while financials have lost ground in absolute terms.” Banks and insurers have been leading the market downward, and RBC’s team concluded: “The intermediate rally now in progress is just a recovery within an ongoing bear market, and that the next 4-year cycle low is not due until somewhere close to mid-2010.” RBC Dominion Securities

-California’s controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money. Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California’s growing deficit.

With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs. Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.

A severe drop in revenue has left the state’s main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available. AP

-Retail: The quiet crisis. The industry shed more than a half-million jobs in 2008. But that doesn’t get a lot of attention in Washington. Read more here-

http://money.cnn.com/2009/01/21/news/economy/retail_challenge/index.htm?postversion=2009012113

-Madoff Investors May Recover More From IRS Than From His Firm. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=accxxaYa.NRI

-Madoff Trustee Picard May Take Five Years to Pay Back Investors. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=a6JDlygKnj8k&refer;=home

-Hedge Fund Run by Ex-Bondsman Is Ponzi Scam, SEC Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a19JJSLP2A5M

-Brad Lerner was pleased when a November statement showed his $500,000 investment in a fund run by Arthur Nadel had gained 8.5 percent for the year as the Standard & Poor’s 500 Index fell 39 percent. Lerner, an internist from Sarasota, Florida, never got a December statement.

Instead, one of Nadel’s partners came to him last week with the news that the fund manager couldn’t be found. Lerner, 55, and others whose money was invested by Nadel’s Scoop Management Inc. in Sarasota may have lost as much as $350 million, law enforcement officials say. “Hindsight is 20-20,” Lerner, who had most of his life savings in the Viking IRA fund, said in a Jan. 17 interview. “But I guess it was too good to be true.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXihyqNVeRBM&refer;=home

-Zimbabwe introduces $100 trillion banknote. Zimbabwe’s central bank will introduce a $100 trillion Zimbabwean banknote, worth about US $33 on the black market, to try to ease desperate cash shortages, state-run media said this week. Read more here-http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/4269695/Zimbabwe-introduces-100-trillion-banknote.html

-U.S. Presidents and their popularity over the years. Read and view more-http://online.wsj.com/public/resources/documents/info-presapp0605-31.html

-Growing stocks of unsold cars around the world. View pictures here-http://www.guardian.co.uk/business/gallery/2009/jan/16/unsold-cars?picture=341883529

-China warns of “grim” fight against deadly bird flu. Read more here-http://www.alertnet.org/thenews/newsdesk/PEK277826.htm

RARE COLORED DIAMONDS

-The Rare Colored Diamonds Historical Value Tracker is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalValueTracker.html

-Diamonds are rare and getting rarer. With approximately only 20 years of known diamond reserves left in the ground (at 2007 production rates) and with future demand growth in emerging markets, demand is likely to significantly outpace what is forecast to be lower levels of diamond supply for many years to come. Gareth Penny

-Research shows that in uncertain times consumers gravitate towards quality, they buy fewer, but better things, things that last, which are not disposable and that hold their value over time. Clearly diamonds, which history tells us tend to hold their value both financial and emotional over time. Gareth Penny

-The mass market has been hit, but there will always be a market for quality diamonds. In the part of the market in which we operate, clients are rare, but so are the diamonds. There are more clients than diamonds. Laurence Graff

-”I think diamonds could end up being thought of like they once were an emergency escape mechanism. The Jews sewed them into their hems and used them for safe passage. We’re all worried about the Banks and how we would ‘get out of Dodge’ if we had to.” Trend expert Faith Popcorn

-Bear Stearns and Lehman Brothers have disappeared and the Big Three and Citigroup hover on the edge of vanishing a diamond is forever. From Adam Hanft article De Beers: Diamonds Are a Recession’s Best Friend

-If more people bought diamonds instead of credit-default swaps, we’d be just fine now. From Adam Hanft article De Beers: Diamonds Are a Recession’s Best Friend

-Angola’s Endiama is advocating for diamonds, maintaining that they have become a good investment. Manuel Calado, chief executive officer (CEO) of Endiama, said that buying diamonds can be a means of investment and that the government-controlled company is planning to motivate the world’s financial institutions and consumers to invest in diamonds.

Calado recently said that “at this time of crisis, people need to trust something,” and he used diamonds as the perfect example for investment.

In the past few days, Endiama has been contacting jewelers, banks, and exploration and sales companies to draw their attention to diamonds as an investment. The Angola Press agency, reported that the nation was leading the effort to spark investment in diamonds during the global recession. Diamonds.net

-Rio Tinto Claims Record Price for Argyle Diamond. Rio Tinto Diamonds said in December it received a record price for a pink diamond mined at its Argyle mine in Western Australia. The company did not disclose who bought the diamond or the price the stone fetched saying only that it sold above the reserve price.

The stone, named “Aphrodite” after the Greek Goddess of Love and Passion, is a 1.01 carat round, purplish red diamond, Rio Tinto explained. It was sold as part of this year’s Argyle Pink Diamond Tender which ran from August to November.

“In spite of the difficult economic outlook, this truly top end of the luxury market continues to defy gravity,” said Josephine Archer, sales and marketing manager of Argyle Pink Diamonds. “In the rarified world of Argyle Pink Diamonds we have seen and continue to see, sustained demand and very strong prices.”

The Argyle mine is the only known source of rare pink diamonds. Rio Tinto reported demand for its stones has increased due to the growing scarcity of the product. Production at Argyle is expected to decline as the mine transitions to an underground operation before it eventually closes within the next 10 years. Diamonds.net

-Rio Tinto Diamond Production Declines 20% in 2008. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=31763

-Rio Tinto’s total diamond production for the fourth quarter of 2008 was down 12 percent from the same quarter in 2007. Read more here-

http://www.diamondintelligence.com/magazine/magazine.aspx?id=7542

-Argyle Stops Underground Project, Reduces Diamond Production until March. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=31755

-Rio Tinto Group, the world’s third largest mining company, will cut production and slow spending on the A$1.86 billion ($1.3 billion) underground expansion at the Argyle diamond mine in Western Australia to reduce debt. Development of the mine will be slowed, Gervase Greene, spokesman for London-based Rio Tinto, said in an interview. “It will mean some job losses,” he said without specifying a number.

There may be about 200 contract positions cut, said Kavneet Elvin, a spokeswoman for Macmahon Holdings Ltd., which is contracted by Rio Tinto to work at Argyle. Rio is slashing spending by $5 billion and eliminating 14,000 jobs worldwide as it seeks to reduce costs and debt. The worst global economic crisis since the Great Depression of the 1930s is reducing demand for commodities from diamonds to copper, causing mine closures and halting expansion projects.

Diamond processing facilities at the mine will be closed for as long as three months, starting in March, Rio said in an e-mailed statement. Argyle is the world’s largest diamond supplier. “We remain convinced that the diamond business has excellent long-term prospects,” said Kevin McLeish, chief operating officer of Argyle Diamonds. Macmahon said the decision will reduce its revenue from the contract to about A$20 million a year, from A$80 million a year.

The Argyle mine in Western Australian supplies 90 percent of the world’s pink diamonds, with those gems accounting for just 1 percent of total production at the mine. Diamonds and industrial minerals accounted for 13 percent of Rio’s sales in 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601081&sid;=aK_Df4kGFWr0&refer;=australia or http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=76668&sn;=Detail

ROUBINI-BANKING SYSTEM IS EFFECTIVELY INSOLVENT

-U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis. “I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg. President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News.

Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed. Bank of America Corp., the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds.

Citigroup Inc. posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Pandit’s plan to rebuild a capital base eroded by the credit crisis. “The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aS0yBnMR3USk

BUFFETT-THE U.S. IS IN MIDST OF AN ECONOMIC PEARL HARBOR

-The U.S. is facing an “economic Pearl Harbor” that has spread fear throughout the country, billionaire investor Warren Buffett told Tom Brokaw in an interview broadcast on Dateline NBC. “We have a negative feedback cycle going on right now,” Buffett said, according to a transcript of the interview on CNBC’s Web site. “We have fear which leads to people not wanting to spend, and not wanting to make investments. And that leads to more fear.”

Buffett, the chairman of Berkshire Hathaway Inc., said Barack Obama is “the absolute right commander in chief” to guide the country through the financial crisis. He can “convey to the American people what needs to be done, not to expect miracles, that it’s going to take time,” Buffett, 78, said in the interview. Buffett declined to predict how long the economy will remain under duress, except to say that he doesn’t expect a recovery to take five years.

He contrasted the current economic crisis with the period “three or four years ago,” when “everybody lent you more and more on a house that kept going up, and you could keep spending money you didn’t have.” Buffett said the economic slump is the worst since World War II, though not as severe as the Great Depression. He said “it’s never paid to bet against America,” and that the country would come through the crisis. “But it’s not always a smooth ride.” Bloomberg

FINANCIAL BAILOUT-CREDIT CRISIS

-U.K. unveils second bank rescue plan. British government launches wide scale insurance plan to protect banks against further losses and boost lending. Read more here-

http://money.cnn.com/2009/01/19/news/international/britain_bank_bailout/index.htm or http://www.bloomberg.com/apps/news?pid=20601068&sid;=aeuHkvDTKczc&refer;=economy

-The new bank bailouts are not likely to work because they are run by the same people who prolonged the economic agony by throwing money at weak companies rather than allowing them to fail and encouraging the strong ones, Marc Faber, the publisher of the Gloom, Doom and Boom Report, told CNBC Monday. Read and watch video here-

http://www.cnbc.com/id/28730368

-Treasury lists 39 ‘bailed’ banks – $1.5B. The government’s Capital Repurchase Program swells to $193.8 billion, and the department offers details on payouts. Read more here-

http://money.cnn.com/2009/01/22/news/economy/bank_bailout_details.reut/index.htm

-One-Quarter of Stimulus Money Won’t Be Spent by 2011, CBO Says. The government wouldn’t be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010, according to a new report that suggests it may take longer than expected to boost the economy. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aJAoR5GECKWo

-The red line shows that, since August, banks have built their cash position in the form of Treasuries, agencies and deposits at the Fed by $865 billion, while their loans and leases have increased by only $325 billion.

In other words, rather than lending the billions of dollars received from the Treasury’s Troubled Asset Relief Program (TARP), as was originally intended, the recipient banks have squirreled away the bailout funds in order to shore up their balance sheets. Read more here-http://caseyresearch.com/displayCcs.php?e=true

-Arabs lost 2.5 trillion dollars from credit crunch: Kuwait. Read more here-http://www.breitbart.com/article.php?id=CNG.21a790b26de73c80e4048954b0b52ce9.9d1&show;_article=1

ACAMPORA-DOW MAY FALL TO 6,000 SHOULD LOW BREAK

A decline in U.S. stock indexes below the 2008 lows from November may trigger a rout that pushes benchmark averages to levels not seen since the mid-1990s, according to two leading technical analysts.

“Hopefully we don’t make new lows, because if we do, all bets are off,” said Ralph Acampora, who retired from Knight Capital Group Inc. in October 2007 after four decades on Wall Street. Should the Dow Jones Industrial Average fall below the 7,552.29 it touched on Nov. 20, it might tumble to 6,000, Acampora said. That’s 27 percent below the Jan 15 close of 8,212.49 and a level last reached in October 1996.

The lows reached by the Dow average and the Standard & Poor’s 500 Index in November are “a very, very significant area” because they are roughly where the last bear market ended in 2003, said John Murphy, chief technical analyst at StockCharts.com and the author of three books on market analysis. “If that’s broken, it becomes very negative.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=a70_dt3j1Nk4&refer;=home

STOCK MARKET

-The Standard & Poor’s 500 Index is off to its second-worst start as analysts cut profit estimates by a record 83 percentage points and companies signal worse to come. The benchmark index for U.S. equities fell 5.9 percent in the first 11 trading days of 2009, second only to last year’s 6.5 percent drop, according to data compiled by Bloomberg going back to 1928.

The decline erased about half of a 24 percent rally since Nov. 20 as optimism that government spending would revive the economy evaporated. “Analysts’ expectations have to come down, and they have to come way down,” said Roland Lescure, who oversees $128 billion as chief investment officer of Groupama Asset Management in Paris. “The fourth quarter has been dreadful.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=adGy_VIX8UPo

-Merrill Lynch & Co. clients withdrew $10 billion in the fourth quarter, more than triple the pace of the previous three months, as stock markets sank and Bank of America Corp. moved to complete its acquisition of the New York- based firm.

The outflows increased from $3 billion in the third quarter, according to a Merrill filing with the U.S. Securities and Exchange Commission. Total clients assets, a figure that includes the declining value of investments, fell to $1.25 trillion from $1.48 trillion as the Dow Jones Industrial Average slid almost 20 percent. Read more here-

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

-Hedge-fund investors withdrew a record $152 billion in the fourth quarter as the industry posted its worst returns in almost two decades, according to Hedge Fund Research Inc. Global assets dropped to $1.4 trillion at the end of the year, the same level as 2006 and $525 billion less than a peak of $1.93 trillion in June, the Chicago-based firm said in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aL3fOSkanqs8&refer;=home

-Kingdom Holding Co., the investment company controlled by Prince Alwaleed bin Talal, reported a fourth-quarter loss of almost 31 billion riyals ($8.26 billion) after Citigroup Inc. shares plunged in the credit crisis. “The loss is phenomenal,” John Sfakianakis, chief economist at Saudi British Bank, said in an interview today by telephone from Riyadh. “This is the biggest corporate story for Saudi Arabia in many years.”

Citigroup lost more than 75 percent of its market value last year as its capital base was eroded by the credit crisis. The global bank recorded more than $85 billion in writedowns and losses tied to mortgage-related securities and was forced to accept $45 billion in U.S. government rescue funds. Alwaleed, 53, is the largest individual investor in New York-based Citigroup. Kingdom Holding said Nov. 20 that Alwaleed planned to boost his Citigroup stake to 5 percent.

The Saudi billionaire is increasing his holding in the struggling bank after a year in which his investments failed to keep pace with regional benchmarks. Riyadh-based Kingdom Holding dropped 62 percent, more than Saudi Arabia’s Tadawul All-Share Index. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=aZylaijsw91E

BOND BUBBLE?

-”The biggest investment bubble today may involve one of the safest asset classes: U.S. Treasuries.” Barron’s January 5, 2009

“Risk-free return” is the standard tag attached to the government’s solemn obligations. An investor I know, repulsed by prevailing government yields, has a timelier description “return-free risk”. James Grant December 4, 2008

-”If the dollar holds steady, Treasury bond prices are likely to plunge; if Treasury prices hold steady, the value of the dollar is likely to plunge. Either way, foreign holders of Treasury securities are facing probable losses, and they know it” Hussman December 22, 2008

-”What bond investors know as “break even inflation rates” are currently signaling a future where the U.S. CPI averages -1% for the next 10 years. Possible but not likely. Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s.” Bill Gross January 2009-Read more quotes here-http://www.fallstreet.com/jan1509.php

U.S. DOLLAR-TREASURIES

-Dollar is “Absolutely Doomed.” With promises of more U.S. government intervention, we are going to be in a situation of hyperinflation and a dollar that is absolutely doomed, warns Kirby Daley, senior strategist at the Newedge Group. Watch video here-http://www.cnbc.com/id/15840232?video=1005419227&play;=1

-Ron Paul: I Think It’s Gonna Take The Collapses Of The Dollar! To Get A New Mentality. Watch video here-http://www.youtube.com/watch?v=XBKB-EX3TC0

-Jim Rogers Says Worried About Dollar, Favors China. “If I were you, I would be worried about the U.S. dollar,” said Rogers in a speech at the Asia Financial Forum in Hong Kong. “The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.” Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=a7lAsPVUwcu0&refer;=home

-Jim Rogers sees Renminbi replacing US Dollar as world reserve currency. Read more here-http://www.midasletter.com/news/09012002_Jim-Rogers-says-Renmibi-to-replace-us-dollar.php

-A rally that sent U.S. Treasuries to their best year since 1995 is coming to an end, South Korea’s National Pension Service, the country’s biggest investor, said. U.S. government efforts to combat the recession will prompt the Federal Reserve to raise interest rates this year, said Kim Heeseok, who oversees $160 billion as head of global investments for the service in Seoul.

The decline would snap a surge that sent the securities up 14 percent last year, according to Merrill Lynch & Co.’s U.S. Treasury Master index, as investors sought the relative safety of debt. “It’s time to sell U.S. Treasuries,” said Kim, who took over as head of investments at the start of the year. “The stimulus plan may cause inflation. The U.S. will raise the benchmark interest rate.” Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aPxxVXsVreKQ&refer;=home

CANADIAN INTEREST RATES-DEBT

-The Bank of Canada slashed its key interest rate to the lowest since the institution was founded in 1934 and signaled that more cuts may be needed to jolt the economy out of recession and stabilize credit markets.

Governor Mark Carney cut the target rate on overnight loans between commercial banks by half a point to 1 percent, lower than the previous record of 1.12 percent in 1958, when the rate was based on treasury-bill yields. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=azoE7jwNsTGs&refer;=home

-Canada Will Post Two-Year Deficit of C$64 Billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=auZdf4lSgzNk

REAL ESTATE-FORECLOSURE

-U.S. home prices fell 8.7 percent in November from a year earlier, led by declines in California and Florida, as foreclosures increased and companies shed jobs. The house price index is down 10.5 percent from its peak in April 2007, the Federal Housing Finance Agency said today in Washington. Measured monthly, the index fell 1.8 percent from October, greater than the 1.2 percent average estimate in a Bloomberg poll of 11 economists.

U.S. foreclosure filings jumped 81 percent last year as falling house prices, tighter mortgage lending and the longest recession in a quarter century battered property owners, RealtyTrac Inc. said last week. The nation lost more than 2.6 million jobs in 2008, the most since 1945, and U.S. stocks had their worst performance since the Great Depression. President Barack Obama has said the country needs to prevent foreclosures to revive the housing market and economy.

The Pacific region that includes California led the annualized declines in the house price index, with a drop of 22 percent. The South Atlantic area, including Florida, was next with a decrease of 12 percent, followed by the Mountain region, including Arizona and Nevada, which fell 9.1 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXCzP5TjQYQs&refer;=home

-Home prices in the San Francisco Bay Area fell 44 percent last month from a year earlier as discounted, foreclosed properties lured buyers, MDA DataQuick said. The median price in the Bay Area fell to $330,000 from $587,500. A total of 6,889 new and existing houses and condominiums were sold in the nine-county region in December, up 36 percent from 5,065 a year earlier, the San Diego-based real estate research company said today in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aBFeGA16iN2U

-U.S. Homebuilder Confidence Dropped to Record Low. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=atbRtohsT710&refer;=home

-U.S. builders broke ground in December on the fewest houses since record-keeping began as sales and credit dried up, signaling the real-estate slump will keep hurting economic growth.

Housing starts fell 16 percent last month to an annual rate of 550,000 that was less than forecast and the lowest since the government started compiling statistics in 1959, the Commerce Department said today in Washington.

Building permits, an indicator of future projects, were also at a record low. Builders, whose shares have lost 76 percent of their value over the last three years, are slashing prices to compete with a record number of foreclosed homes coming onto the market. Barack Obama’s advisers say the president will use up to $100 billion in financial-rescue funds to ease the mortgage crisis.

“Homebuilders have no choice,” said Ryan Sweet, an economist at Moody’s Economy.com Inc. in West Chester, Pennsylvania. “The market is bloated with excess supply and demand is weak. The pace of housing starts will remain depressed until 2011.” Economy.com projected starts would drop to a 580,000 pace. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDKiShZMG5Q0

-A proposed change to bankruptcy laws that would allow judges to reduce consumers’ mortgages may not succeed in reducing the foreclosures that have been dragging down property prices, according to a Barclays Capital strategist.

Some borrowers would later default on their reworked loans while others, who wouldn’t benefit by filing because their incomes are high enough to handle their debts, would face “a greater temptation” to abandon their obligations if their neighbors get bailed out, Glenn Boyd, head of U.S. asset-backed securities strategy at Barclays in New York, said yesterday.

“Bankruptcy cramdowns essentially tells them that everyone else has been given leeway to abrogate those contracts,” he said in an interview. “The concern is more people will walk away from their homes.” Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid;=aQLJjTAxCE4Q&refer;=invest

The GoldBugg Report – January 27, 2009
Posted by Worldwide Precious Metals on Tuesday, January 27, 2009

The GoldBugg Report – January 20, 2009

January 20, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 15 2009 SHOW

-Peter Schiff predicts Imminent Doom Fear And Loathing In America. Watch more here-http://www.youtube.com/watch?v=djgH9wA-JSU

-HSBC raises gold forecasts.

-5 New Forces to Drive Gold Higher.

GOLD

-5 New Forces to Drive Gold Higher. Read more here-http://news.goldseek.com/GoldSeek/1231436253.php

China has stopped buying U.S. debt-An interesting piece in the New York Times today signals that China, up until now the biggest buyer of U.S. Treasuries and bonds issued by Fannie and Freddie, is moving towards an end to that policy. China holds over US$1 trillion of such paper, and as interest rates collapse, there is less and less incentive for them to buy American.

China has made several adjustments to programs that used to give banks and other financial institutions within the country incentive to buy U.S. assets, which means essentially that these same customers for assets will now be looking for Chinese products. The effect this will have on gold is two-fold. In the first place, reduced demand for U.S. debt will hamper Obama’s plans to keep printing money, because the one limiting factor that still seems to be respected in terms of how much paper can be printed, is the idea that there

must be a counterparty to every issuance of T-Bills to warrant continued printing. Theoretically, less demand for T-Bills will force a rise in interest rates to attract investors. But that does not appear forthcoming, which will make the U.S. dollar weak relative to other currencies especially gold.

The second effect is that by eliminating incentives for Chinese banks to acquire U.S. denominated assets, investors there will divert more funds to holding gold as a hedge against their current U.S. dollar holdings, which will be diminishing in value.

2. Future discoveries of gold deposits will diminish dramatically-The biggest source of gold ounce inventory for major gold producers is the discoveries made by the several thousand juniors who scour the earth in search of favorable geology. With the collapse in base metals prices, many of these juniors are under increasing pressure to consolidate and downsize, and many more will disappear altogether.

That means less money going into gold exploration, and that means the number of new discoveries that can be acquired by majors is going to go down sharply in the coming years. In theory, as gold continues to outperform all other asset classes, there will be a rush back into junior gold exploration, but that won’t happen until gold is taken much higher and investment demand for it soars.

3. Existing by-product gold production will fall sharply-In copper, zinc and other base metals mines around the world, gold occurs in metallic deposits as a by-product of some other dominant mineral. In the United States, 15 percent of gold production is derived from mining copper, lead and zinc ores.

With the collapse in prices for these metals, the by-product production of gold is most often insufficient to justify the continued operation of the mine profitably, and it is likely that a significant amount of this by-product gold production will cease along with the shutdown of these operations. The result will be less gold production from existing operations, contributing to the now even faster growing gap between supply and demand.

4. Gold is becoming mainstream-One of the biggest contributors to gold’s unpopularity as a main street investment is that its has been mercilessly derided and ridiculed by mainstream investment media and institutions. There is very little opportunity for an investment advisor to insinuate himself into a gold purchase transaction, since most anybody who wants to hold the metal can visit their local bullion exchange or mint and buy as much as they’d like.

Because the massive investment institutions that dominate the investment advisory business can’t make a fee out of advising you to buy gold, they try to convince you to purchase other asset classes which their firm has either originated or is a participant in a syndication of investment banks selling such products.

Thanks to the widespread coverage of the questionable integrity of these complex securities, and since many main street investors have been burned by their investment advisors (they feel), there is increasing main street advice being doled out to buy gold. One need only search Google news on any given day to discover that headlines critical of gold are now replaced with headlines singing its praises.

5. Gold is the best performing asset class of the decade-Now that the global financial meltdown has got up a head of steam, investors are hard pressed to find any investment that has performed well over the last ten years as consistently as gold.

-CIBC World Markets has increased its 2009 gold price prediction from $900/oz to $950/oz and introduced a 2010 gold price of $1,050/oz. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=76503&sn;=Detail

-Economists around the world are tipping the gold price to soar this year, with the most bullish market-watchers predicting the yellow metal could hit more than $2000 an ounce. ANZ head of commodities research Mark Pervan says the $2000 price forecast is based on speculation of a collapsing US dollar stemming from a “massive injection of US dollars into the system.

People will buy gold as an alternative.” Gold is used as a safe haven in times of weak equity markets, bought as a hedge against inflation and currency markets. Read more here-

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid;=10551285

-HSBC raises gold forecasts. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=76396&sn;=Detail

-Gold prices this year should surge above 2008’s record levels, rising as high as $1,080 an ounce as government fiscal stimulus efforts weaken the U.S. dollar and fuel inflation, a closely watched report said on Thursday. Gold could average $915 an ounce in the first half of 2009, up from last year’s average of $871.96, GFMS, a London-based consultancy, said in an update of its Gold Survey 2008 report. Read more here-http://www.reuters.com/article/marketsNews/idAFN1547398520090115?rpc=44 or http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=amlZ8lCJKrdQ

-A prominent figure at a major Australian stockbroker firm has urged people to buy gold if they are concerned about the effects of the economic crisis, the Melbourne Herald Sun reported on Saturday January 10th. The yellow metal which is seen as a hedge against inflation has been on a bull run since hitting its last significant low back in 1999 and achieved an all-time high price of $1,030 per ounce in March last year.

Now Allan Furlong, manager of private client services with Sydney-based Joseph Palmer and Sons, has explained that purchasing gold bullion is a sensible approach in the current climate.

He told the newspaper: “I expect gold to stay up until we come out of this credit crunch.

If you want gold if you think the world is going to end then go and buy physical gold and pay to have it stored somewhere.” Mr. Furlong’s view on gold investment was strongly echoed recently by Darren Heathcote, head of trading at the Sydney offices of Investec Bank, South Africa’s largest bank.

He explained in an interview with Bloomberg that concerns over the dollar are persisting and that buying gold as a safety measure is on an increasingly upward trend. “Gold is obviously gaining a lot of favour as a safe haven asset again,” he told the news provider. Read more here-http://goldnews.bullionvault.com/Goldbug/gold_buying/gold_prices_to_stay_up_in_the_credit_crunch_18970589

-All that shimmers is gold. The safe haven status of gold is starting to shine brighter and brighter, according to Jurg Kiener, CEO of Swiss Asia Capital. He explains his bullish outlook on the precious metal. Watch video here-http://www.cnbc.com/id/15840232?video=986190031

-Bonds in a Bubble? Gold has been the top-performing asset class over the past decade and we have no reason to suspect it is about to give up that mantle. Indeed, with the risks to bonds outlined above, owning gold becomes even more imperative. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1231743900.php

-John Embry commentary, be ready as the U.S. may turn dollar into confetti. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf

-Eric Sprott: Gold: The Go-To Asset in any Environment. Read more here-http://www.theaureport.com/pub/na/2060

-During late 2008’s unprecedented financial-market panic, gold got something of a bum rap. Since this metal didn’t soar during the stock chaos like most of its investors expected, many assume something must be wrong in gold-land. But gold ultimately did hold its own, up 2.1% in Q4 while the S&P; 500 plunged 22.4%.

The bottom line is gold’s performance during late 2008’s epic stock panic did not look anywhere near as bad to most of the rest of the world as it did to American investors. Unfortunately our dollar-centric worldview greatly distorted gold’s true performance. It is a big mistake to read too much into dollar gold’s recent technicals that were driven by an incredibly anomalous panic-driven dollar surge that is already reversing.

Rather than dampening investors’ enthusiasm, gold’s new bull highs achieved in the midst of the panic in much of the world will only accelerate gold investment demand. Post-panic, investors everywhere are much more conscious of risk and diversification. Increasing numbers will begin the time-honored best practice of always having some material fraction of one’s total investment portfolio deployed in physical gold. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton010909.html

-Rising commodity prices to trigger renaissance for uranium and gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page72103?oid=76673&sn;=Detail

-Price Gap Portends Gold Price Boom. Read more here-http://www.321gold.com/editorials/browne/browne011509.html

-Gold’s 2-year cycle. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=76222&sn;=Detail

-Gold mine production down but costs up 24% world-wide. The increase in costs is due to rising input prices, notably energy and reagents, along with a hint of management relaxation and life-of-mine conservation in the face of higher prices. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=76792&sn;=Detail

-Initiatives to expedite the use of gold dinars as an alternative main trading currency is among 29 resolutions adopted at the Third Islamic Economic Congress that ended Thursday. Read more here-http://malaysia.news.yahoo.com/bnm/20090115/tts-congress-resolutions-bm-993ba14.html

-Another analyst predicts a big official revaluation of gold. Read more here-http://www.gata.org/node/7090

-Gold revaluation clutching at golden straws. Some gold analysts are coming up with theoretical moves which could have a huge impact on the gold price, but will the suggested scenarios ever happen? Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=76771&sn;=Detail or http://www.gata.org/node/7092

SILVER

-LBMA forecast for gold, silver, platinum, and palladium. Read more here-http://www.thebulliondesk.com/content/reports/tbd/temp/2009Forecast20090109.pdf

-COMEX commercial positions favour silver: Got Gold Report. Read more here-http://www.stockhouse.com/Columnists/2009/Jan-1/12/COMEX-commercial-positions-favor-silver–Got-Gold- or http://saigoncharlie.blogspot.com/2009/01/comex-commercial-positions-favor-silver.html

-Potential silver prices based on the gold to silver ratio.

Gold to silver ratio at 80 to 1 with gold at $1500 the silver price would be $18.75
Gold to silver ratio at 70 to 1 with gold at $1500 the silver price would be $21.43
Gold to silver ratio at 60 to 1 with gold at $1500 the silver price would be $25.00
Gold to silver ratio at 50 to 1 with gold at $1500 the silver price would be $30.00
Gold to silver ratio at 16 to 1 with gold at $1500 the silver price would be $93.75

-While 2008 was supposed to be a banner year for silver, CIBC Global Markets suggested that “events later in the year have tarnished silver’s performance. In a recently published analysis, CIBC metals analysts Barry Cooper, Brian Quast and Cosmos Chiu maintained their 2009 and 2010 silver price forecasts of $12/oz and $11/oz respectively, advising, “We believe that holding gold is better than holding silver through what we think will be a tumultuous 2009 and possibly longer.” Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=76504&sn;=Detail

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1231785890.php

-Silver ETF Reaches New Inventory High. Read more here-http://news.silverseek.com/SilverSeek/1231857472.php

-Silver News and Views with David Morgan. Read more here-http://news.silverseek.com/SilverInvestor/1231483800.php

-Is This the End of Silver’s Outperformance, or Will It Outshine Gold Once Again? Read more here-http://www.kitco.com/ind/Radomski/jan152009.html

-Warnings by Apex Silver executives last summer that the Colorado based silver miner was suffering from a severe liquidity crisis came to pass Monday as the company announced it will file for Chapter 11 bankruptcy this week. The company’s liquidity problems had been compounded by increased cash costs and high operating costs, while lead and zinc prices substantially declined. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=76560&sn;=Detail

DEFINITIONS-QUOTES-QUICK HITS

-Fool’s Gold. What Does Fool’s Gold Mean? A gold-colored mineral that is often mistaken for real gold. Also known as Iron Pyrite. During historical periods of gold rushes, many less-than-knowledgeable miners would frequently believe that they hit the motherload upon finding a huge cache of fool’s gold. Unfortunately, unlike the real stuff, fool’s gold is relatively worthless. Investopedia.com

-Frank Lesh, of FuturePath Trading in Chicago summed it up by saying that, “Ultimately, the dollar is the driver. The dollar push is holding gold back. Lesh pointed out that, “Gold is not as weak as some of the other commodities. Volatility in other markets and the geopolitical tensions are always supportive for gold. A good dip in prices is a buying opportunity.” Casey Daily Resource

-”The problem with socialism is that you eventually run out of other people’s money.” Margaret Thatcher

-The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009. In terms of our sector, we expect consumer loans and credit cards to continue to get worse. Jamie Dimon, CEO, JPMorgan, 14 January 2009

-Investigating Goldman Sachs’ shorting its own mortgage-backed securities when Henry Paulson was CEO would be a good start in cleaning up the mess and restoring confidence. Prosecuting JPMorgan Chase’s involvement in sucker-punching gold prices last August would be another step toward restoring confidence. Curtis Hesler, Forbes.com, 12 January 2009

-Its worth noting that silver and platinum are now unbelievably oversold and they should rally hard and outperform gold over the following months. Accordingly, I would recommend buying some silver and platinum bullion at these levels. Puru Saxena-Read more here-http://www.321gold.com/editorials/saxena/saxena010809.html

-Perth Mint rations gold as rush erupts over financial crisis. Australia’s biggest wholesaler of gold coins and bars, has rationed its sales with the global financial crisis sparking a new gold rush. Worried investors are seeking a safe home for their money and ploughing billions of dollars into the precious metal in a bid to preserve their wealth.

Demand has now reached such unprecedented levels that the Perth Mint has been forced to ration its sales. Perth Mint’s bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins except its 1oz “Kangaroo” gold bullion coin. On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

“We are working three shifts a day, six days a week, and still can’t keep up with demand,” Perth Mint CEO Ed Harbuz said. “I’ve never known anything like this in the precious metals market. “We would be working Sundays too but we are having difficulty getting enough staff.” Read more here-http://www.news.com.au/perthnow/story/0,27574,24894861-2761,00.html

or http://www.gata.org/node/7078

-After the recent bear market rally the next step in another leg down. Will that then be it? Will the bottom be in the market? I suppose that depends how low we go. My own prediction for this market bottom is 4-5,000 on the Dow and for gold to surge to $4-5,000 an ounce.

However, the initial impact of the stock crash will be a dollar rally, so the gold price surge will have to wait until that is done and then the dollar and bonds will crash. In this environment it makes sense to sit on cash or precious metals and do little else while the financial professionals lose their clients another massive amount of money. Peter Cooper

-What do I want to own in January 2010? Not dollars, not bonds and not stocks, unless they are advantaged by higher commodity prices. Gold and crude oil will remain at the heart of my investment philosophy, along with other tangibles. Curtis Hesler-http://www.gata.org/node/7088

-We get many requests for projections on gold for the year 2009. This is the way we see it a minimum of $1,200 and the possibility of $2,000. The dollar will revisit 71.11 on the USDX and break that level to the downside, perhaps to 60 or 65. We believe $80.00 a barrel is a reasonable price for oil. House prices will fall 15% to 20% more and the 10-year Treasury note should reach 4%. Bob Chapman

-We ask how can major premiums persist for six months in physical gold and silver assets, as supply remains very limited and the futures prices fall at the same time? It is impossible unless our government is rigging the market. Today’s government corruption is as bad as it gets.

In spite of all this gold and silver will move relentlessly higher as they have over the past 8-1/2 years. Sooner or later these crooks will lose. Besides where else can you go with your investible funds? The market is headed much lower as is real estate; commodities face recession and less demand and now the bond market is a bubble. There is only one place left and that is gold and silver assets. Bob Chapman

-”Gold is in a bull market,” said Steven Lehman. “Given the unprecedented stimulus measures that have been taken and will continue to be taken, ultimately that will be negative for the currency. Gold is priced in dollars, so consequently gold will be more expensive.” Bloomberg

-When the resource sector was really hot in 2003 and 2006, silver soared much more than gold. So that’s another barometer for the recession the silver-gold ratio. When silver starts outperforming gold, it means the resource sector is starting to strengthen. Silver will have a bigger boost than gold when it’s rising as both a precious metal and an industrial metal.

Silver always moves with gold. Whether it’s going to be stronger or weaker than gold is the question and right now the trend is favoring gold over silver. Certainly in the years from 2003 to 2006, silver was the winner compared to gold. I think silver is still an okay investment.

Again, if you have to pick, I like gold better, but I do like silver too and its rise is just starting. In fact, though it’s following gold, it could be leading the base metals in an intermediate rise and silver does have more upside potential in the short term. It’s not even close to overbought.

Pamela Aden-Read more here-http://news.goldseek.com/AdenResearch/1230908400.php

-”To be a reasonable investor over the long term, it doesn’t take a high IQ,” said Jean-Marie Eveillard. Instead, it’s a “willingness to move away from the herd to follow your own path, at the risk of lagging, if you think the herd is about to run over the cliff.” Bloomberg

-S&P; Case Shiller sees Southern California home prices off 24.9% in 2009 and 5.1% in 2010; a net 50% drop is seen and perhaps as much as 70% from the peak prices. That puts the $550,000 home at $275,000 or $165,000. Bob Chapman

-Adrian Day, the president of Adrian Day’s Asset Management noted that, “Further out, the massive amounts of dollars created will have an impact. Once they get into the economy that will lead to some inflationary pressure as well as a deteriorating dollar.” Casey Daily Resource

-”Gold is transportable, it’s 100 percent liquid, and it’s perfectly divisible in the context of ounces, bars, or coins,” says the head of a California research firm who keeps a supply of it, along with food, water, and guns, on hand. “And most important, there’s no counterparty” i.e., it’s an investment beholden to no one, and perhaps one of the few assets that will retain value if the financial system collapses. Read more here-http://nymag.com/news/features/all-new/53372/ or http://www.gata.org/node/7087

-Even the rich suffer in a financial crisis. Over a third of American millionaire households said they had lost at least 30% of their net worth since September, according to a new report by Spectrem Group, a financial consultancy.

Property, mutual funds, shares and annuities took the biggest knocks. Unsurprisingly, financial advisors are under more scrutiny, with satisfaction levels falling from 60% earlier in the year to 40%. A majority of the wealthy say they may not be able to support their lifestyles and nearly 20% will delay retirement. Economist.com

-Peter Schiff predicts Imminent Doom Fear And Loathing In America. Watch more here-http://www.youtube.com/watch?v=djgH9wA-JSU

-Iran president: ‘Not feasible’ for Israel to live. Read more here-http://www.breitbart.com/article.php?id=D95NMH4O1&show;_article=1

-U.S. Rejected Aid for Israeli Raid on Iranian Nuclear Site. Read more here-http://www.nytimes.com/2009/01/11/washington/11iran.html?pagewanted=print

-Bin Laden message: Stop ‘aggression’ against Gaza. Read more here-http://www.cnn.com/2009/WORLD/meast/01/14/binladen.message/index.html

-Bin Laden urges jihad against Israel. Read more here-http://www.breitbart.com/article.php?id=D95MURVG0&show;_article=1

-U.S. military report warns ’sudden collapse’ of Mexico is possible. Read more here-http://www.elpasotimes.com/newupdated/ci_11444354

-British Airways credit card is UK’s most expensive after hiking interest charge to 46%. Read more here-http://www.dailymail.co.uk/news/article-1110305/British-Airways-credit-card-UKs-expensive—hiking-charge-46.html

-Decade’s Worst Flu Marches on Europe after Virus Hits Ireland. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a8cTy7tbUjhQ&refer;=home

Rare Colored Diamonds

-Rio Tinto Diamond Production Declines 20% in 2008. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=31763

-Argyle Stops Underground Project, Reduces Diamond Production until March. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=31755

-’Priceless’ Rare Red Diamond on Display at Los Angeles Museum. A blood-red diamond once stolen by the Nazis is currently on display at a downtown Los Angeles museum through February 1, thanks to a local jeweler who bought it in 2007. The 5-carat, emerald-cut stone is one of only three such stones of that size known to exist in the world, according to a report by local newspaper Daily News on Saturday. “Red is the rarest color in diamonds.

This is one of the rarest diamonds in the world, and even if my company went on for another 1,000 years we would never find a diamond more rare than this,” Douglas Kazanjian, head of a Beverly Hills jewelry firm, told the newspaper. Kazanjian refused to put a price on the diamond, known as Kazanjian Red, which he bought from a female client from the Far East in 2007. The gem was mined in South Africa in the 1920s.

The dark and rough 35-carat stone was bought by a broker for about $40 a carat, and eventually made its way to Amsterdam, where it was cut and polished. At the time, no one knew how to value the stone, and it wound up in a safe in Arnhem, the Netherlands. That’s where Nazi troops found it in 1944 and made it part of a hoard that American soldiers eventually uncovered in a salt mine near Adolf Hitler’s Bavarian summer retreat.

“This was part of Hitler’s personal collection during the war,” Kazanjian said. The stone was returned to the family that owned it, but sold several times before disappearing from the public eye. Years later, one of Kazanjian’s clients from the Far East turned up with it, and the jeweler couldn’t resist the offer, according to the report.

Kazanjian declined to disclose the purchase price or identify the woman who sold it to him. Kazanjian plans to sell the diamond someday and use the proceeds for his family’s scholarship foundation, but decided to send it on a world tour first, starting at the Los Angeles County Natural History Museum. Xinhua News Agency

COMMODITIES-OIL

-Did Speculation Fuel Oil Price Swings? Speculation Affected Oil Price Swings More Than Supply And Demand. Read and watch more here-

http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770.shtml

-Where is oil going next? Read more here-http://www.iht.com/articles/2009/01/15/business/15oil.php

-Crude Oil Declines After OPEC Reduces 2009 Demand Forecast. Crude oil fell after OPEC said that demand for its crude will decline 4.2 percent this year as the recession in the U.S., Europe and Japan curbs fuel use.

Consumption of OPEC’s oil will shrink 1.4 million barrels a day to 29.5 million barrels a day, according to a monthly report released Thursday. U.S. fuel demand fell 6 percent last year, the biggest drop since 1980, as prices touched records and the economy contracted, the industry-funded American Petroleum Institute said today.

“The overriding factor impacting the market is the fact that we are in the midst of a global recession, which is buffeting the U.S., even China,” said Rachel Ziemba an analyst at RGE Monitor, an economic research company in New York. “That’s going to be a negative for oil demand.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=a11zSWRVPZDQ&refer;=home#

-EIA lowers 2009 world oil demand forecast. Read more here-http://uk.reuters.com/article/oilRpt/idUKN1342228320090113

-Saudi Arabia to Pump Less Oil than Quota in February. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSJMVLktVOMY

-Chávez reopens oil bids to West as prices plunge. Read more here-http://www.iht.com/articles/2009/01/15/america/15venez.php

-Tumbling oil prices are forcing many of the richest Persian Gulf states to record budget deficits and limit a critical source of foreign investment for poorer Arab countries. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ai8ZshRIrB3E&refer;=exclusive

-Morgan Stanley is seeking a supertanker to store crude oil, joining Citigroup Inc. and Royal Dutch Shell Plc in trying to profit from higher prices later in the year, four shipbrokers said.

The bank has yet to find a suitable vessel, said one of the brokers, all of whom asked not to be identified because the information is private. Carlos Melville, a spokesman for Morgan Stanley in London, declined to comment.

“There’s a lot of people looking for storage,” Denis Petropoulos, London-based head of tankers at Braemar Shipping Services Plc, the world’s second-largest publicly traded shipbroker, said by phone.

Banks and commodity traders are seeking new ways to make money after the Standard & Poor’s 500 Index fell by the most since 1937 last year and crude oil prices dropped more than $100 a barrel from their peak. Companies including Koch Industries Inc. and BP Plc are hoarding enough crude at sea to supply the world for almost a day. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZ8zTUi12IkY&refer;=home

FINANCIAL-CREDIT CRISIS

-U.S. Senate Allows Use of $350 Billion From TARP. The U.S. Senate voted to allow the release of $350 billion in financial-rescue funds sought by President-elect Barack Obama.

Senators defeated, 52-42, a resolution that would have prevented the release of the second half of the $700 billion in the Troubled Asset Relief Program, enacted last year to boost the sagging U.S. economy. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aR5bWg.J0iFc&refer;=home

-The Federal Reserve’s top two officials urged a new effort to address the toxic assets held by financial companies, warning that they threaten to prevent banks from resuming lending to households and companies.

Chairman Ben S. Bernanke and Vice Chairman Donald Kohn said in separate remarks yesterday that the illiquid investments raise questions about the “underlying value” of banks and may hinder “private investment and new lending.” They called for the government to remove or insure the assets.

The goal is to prevent the type of economic stagnation that plagued Japan in the 1990s, when banks weighed down with bad loans were unable to lend. President-elect Barack Obama has a window of opportunity to oversee a comprehensive bank restructuring plan after taking office next week.

“Banks are insolvent now,” said Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia, who estimates that financial institutions need an additional $1 trillion to $1.2 trillion in new help. “Until you address this shortfall, banks will continue to be credit hoarders and destroyers as they shrink their balance sheets.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aVS2KSR6X7r8 or http://money.cnn.com/2009/01/13/news/economy/bernanke_speech/index.htm?postversion=2009011313

-A group led by former Federal Reserve Chairman Paul Volcker called for a regulatory crackdown that would curtail risk-taking by systemically important financial institutions and limit their share of deposits.

The panel of former central bankers, finance ministers and academics known as the Group of Thirty advised that regulators impose capital limits on proprietary trading and bar large banks from running hedge funds and private-equity units that mix their own and their clients’ money. In a report released Thursday, the group also urged governments worldwide to tighten supervision of insurance companies, investment banks and large broker-dealers.

The recommendations come as U.S. lawmakers and the incoming Obama administration consider ways to overhaul regulation after major financial institutions reported almost $1 trillion in losses and writedowns stemming from the credit crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=agfDfcTVCTqw&refer;=home

-David Bowie’s ‘back catalogue bonds’ may have started the credit crunch. Read more here-http://www.mirror.co.uk/news/top-stories/2009/01/12/david-bowie-s-back-catalogue-bonds-may-have-started-the-credit-crunch-115875-21036649/

-Ireland’s Government Will Take Full Control of Anglo Irish Bank. Ireland’s government will take full control of Anglo Irish Bank Corp., it said in Dublin Thursday. The government last month said it would invest 1.5 billion euros and take a 75 percent stake. “The Government believes that the recapitalization is not now the appropriate an effective means to secure its continued viability,” it said in a statement today. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aJvzdotkmJIo#

RECESSION

-Warning: Falling price zone ahead. Deflation has become the No. 1 fear of a growing number of economists, who worry that lower prices will further hurt the economy. Read more here-

http://money.cnn.com/2009/01/14/news/economy/deflation/index.htm?postversion=2009011415

-An $825 billion economic-stimulus measure drafted in the U.S. House of Representatives would provide $550 billion in new government spending along with $275 billion in tax cuts for families and businesses.

A summary of the proposal released Thursday said it would provide about $90 billion in infrastructure spending, $87 billion in aid to states struggling with surging Medicaid costs and $43 billion in unemployment and job training programs, including a $25 per week increase in jobless benefits.

Other provisions would provide $20 billion for federal nutrition assistance, $15.6 billion to Pell Grants, which help low-income families send their children to college, and $6 billion to expand broadband access in underserved areas. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=acGKgfPz6H04&refer;=home

-The International Monetary Fund may need another $150 billion to help counter the hit to emerging markets and poorer countries from a worsening global economic downturn, Managing Director Dominique Strauss-Kahn said. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=ajOSb4P.uH7k&refer;=home

-Fed: Economy continues to sour. Central bank’s Beige Book says the economy continued to deteriorate across the nation amid grim retail sales and depressed real estate markets. Read more here-http://money.cnn.com/2009/01/14/news/economy/beige_book/index.htm?postversion=2009011414

-Economy could lose 2M jobs in ‘09 report. Conference Board says there’s no sign that labor market will improve any time soon. Read more here-

http://money.cnn.com/2009/01/12/news/economy/economy_job_loss/index.htm?postversion=2009011211

-Sales at U.S. retailers fell more than twice as much as forecast in December as job losses and the lack of credit led Americans to cut back on everything from car purchases to eating out.

The 2.7 percent slump marked the sixth straight month of declines, the longest string since comparable records began in 1992, the Commerce Department said today in Washington. Labor Department data showed the global collapse in commodities caused prices of goods imported by the U.S. to fall for a fifth month.

Wednesday’s sales figures indicate the hit to spending in the recession is even deeper than estimated, and spurred a sell-off in stocks. The loss of 2.6 million jobs and declining home and stock values are squeezing households. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aHFAgQKZaE.U&refer;=home

-Holiday sales: Much worse than feared. Retail group says combined November-December sales fell 2.8%, after expecting a modest gain. Read more here-

http://money.cnn.com/2009/01/14/news/economy/nrf_holidaysales/index.htm?postversion=2009011414

-U.S. Drivers Hold On to Autos, Shun Showrooms on Job-Loss Risk. Drivers rattled by the worst U.S. labor market since World War II are hanging on to old autos longer instead of buying new models, threatening to crimp sales again in 2009 after demand plummeted to a 16-year low.

Used vehicles being traded in at dealerships averaged 6.3 years of age after the Wall Street meltdown in late 2008, about 6 months older than before the crisis, according to forecaster J.D. Power & Associates in Troy, Michigan. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=asi8tS5TV0eQ&refer;=exclusive

INTEREST RATES-MONEY SUPPLY

-The European Central Bank cut its benchmark interest rate by half of a percentage point to 2% on Thursday, matching its lowest-ever rate as inflation plummets and recession spreads. Read more here-http://money.cnn.com/2009/01/15/news/international/ecb_rates.reut/index.htm

-The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy.

The Government is set to throw out the 165-year-old law that obliges the Bank to publish a weekly account of its balance sheet a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 that originally granted the Bank the sole right to print UK money. Read more here-http://www.gata.org/node/7083

-Growth of Global Money Supply. Read more here-http://news.goldseek.com/GoldSeek/1231778551.php

U.S. BUDGET DEFICIT-TRADE GAP-PENSIONS

-U.S. deficit soars to $485.2 billion. The budget gap in first three months of the fiscal year surpasses the level recorded for all of ‘08. Read more here-

http://money.cnn.com/2009/01/13/news/economy/treasury_budget_deficit_Dec08/index.htm?postversion=2009011314 or http://www.bloomberg.com/apps/news?pid=20601110&sid;=aA_EZHK984c4

-The U.S. trade deficit narrowed 29 percent in November, the most in 12 years, as tumbling oil prices and a slump in consumer spending slashed imports. The gap shrank more than forecast to $40.4 billion, the smallest since November 2003, from a revised $56.7 billion in October, the Commerce Department said today in Washington. Americans bought 12 percent fewer goods and services from overseas, sending imports to the lowest level in three years. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aEq7Am2S15PA&refer;=home

-State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion, forcing some to cut benefits for new hires. Assets for 109 state funds declined 37 percent to $1.46 trillion over the 14 months ended Dec. 16, according to the Center for Retirement Research at Boston College. The Standard & Poor’s 500 Index of stocks fell 41 percent in the period.

“Not a whole lot of people get too excited about pension funds,” Philadelphia Mayor Michael Nutter said in an interview. “But if you have to pay those costs, they do grab your attention.”

After Philadelphia’s fund lost $650 million in the first nine months of last year, Nutter joined the mayors of Atlanta and Phoenix in writing a letter to Treasury Secretary Henry Paulson seeking financial help for U.S. cities. Their November letter cited investment deficits and rising pension costs.

The $865 billion in losses, which exceed the $700 billion Troubled Asset Relief Program that Congress approved in October, comes as states face budget deficits totaling $42 billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ahb6gcv6yWcs&refer;=home

STOCK MARKET

-Societe Generale said on Thursday that the United States’ economy looks likely to enter a depression and China’s could implode. In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout. He predicted that the S&P; 500 index of U.S. stocks could be set for a fall of nearly 70 percent from recent levels. Edwards also raised the danger of a global trade war with China.

“While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere,” Edwards wrote. “It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression.”

Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen. But he called in October for clients to increase their exposure to equities, which he said were due a rebound. “We believe that the market is (now) set to quickly slide sharply towards our 500 target for the S&P;,” he said. The S&P; 500 stock index is currently at 842, up about 14 percent since hitting a low in November. Read more here-http://www.guardian.co.uk/business/feedarticle/8260101

-Bear Market Comparison. Read more here-http://www.321gold.com/editorials/saville/saville011309.html

-Crashes percentage changes in Dow Jones Industrial Average close

REAL ESTATE-FORECLOSURES

-Warning that Irish house prices may fall by 80%. Read more here-http://www.irishtimes.com/newspaper/finance/2009/0113/1231738220759.html

-U.K. real-estate companies may need to be rescued by shareholders this year to stay afloat. The largest commercial-property firms need to raise as much as $20 billion this year to restore their balance sheets at a time when financing is scarce, according to estimates by Bernd Stahli, an analyst at Merrill Lynch & Co. in London. The FTSE 350 Real Estate Index fell 7.3 percent, the biggest slide since 1987. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aUMpF9JbbnI0

-U.S. home prices, already down 23 percent from their July 2006 peak, will continue to fall until the third quarter of next year, PMI Mortgage Insurance Co. said in a report. Ninety-seven percent of the 381 U.S. metropolitan areas surveyed are likely to have lower home prices in September 2010, according to the Walnut Creek, California-based insurer’s Market Risk Index, which assigns a score to every region based on the likelihood real estate values will be lower in two years.

“The two primary drivers of increased risk scores across a broader segment of MSAs are the continued high level of foreclosures and rising unemployment,” David Berson, PMI’s chief economist and strategist, said in a statement. The three-year-old housing recession has spurred a credit crisis that’s making it harder for borrowers to qualify for home loans. With home values tumbling, homeowners who are unable to refinance or sell have pushed the U.S. foreclosure rate to a post-World War II high.

The lending crunch has, in turn, made it more difficult for companies to pay their bills, driving the jobless rate to a 15-year high. The 10 regions with the highest risk for lower home prices were in California, Florida and Nevada, PMI said. The 10 with the lowest risk for lower real estate values were Denver; Indianapolis; Cleveland; Columbus, Ohio; Charlotte, North Carolina; San Antonio; Pittsburgh and three Texas metro areas: Houston, Fort Worth and Dallas, according to the survey.

Mortgage issuance declined 23 percent last year from 2007, according to the Washington-based Mortgage Bankers Association. Home prices will fall another 15 percent, according to economists Michelle Meyer and Julia Coronado of Barclays Capital Inc. in New York. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aov5kTvfFfAU

-Manhattan apartment rents fell in the fourth quarter as the recession and Wall Street job cuts deterred tenants from moving. Rents fell 3.9 percent for studios to an average of $1,841, one bedroom apartments dropped 2.5 percent to $2,527 and two- bedroom apartments fell 4.2 percent to $3,551 from a year earlier, brokerage Citi-Habitats Inc. said today in a report. Three-bedrooms dropped 0.1 percent to an average of $4,712. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aQ7IUVU9YF5I

-U.S. office vacancies likely will rise to 17 percent by the end of the year as companies give up space amid job cuts and a shrinking economy, said Bob Bach, chief economist at real estate broker Grubb & Ellis Co. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aX7hU.pTuTGY

-Manhattan office vacancies rose to 7.6 percent in the fourth quarter, the highest since 2004, as the recession led companies to give up space, brokerage CB Richard Ellis Group Inc. said in a report. Rents fell 2 percent to $67.20 a square foot, according to the world’s biggest commercial real estate services provider. The vacancy rate was 2.7 percentage points higher than the same period in 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aMdOWzKBs4YM

-U.S. foreclosure filings jumped 81 percent last year as falling house prices, tighter mortgage lending and the longest recession in a quarter century battered property owners, RealtyTrac Inc. said. More than 2.3 million properties got a default or auction notice, or were seized by lenders, the Irvine, California-based seller of default data said today.

That’s the most RealtyTrac has documented in four years of recordkeeping. Filings rose 41 percent in December from a year earlier to 303,410. The nation lost more than 2.6 million jobs last year, the most since 1945, and U.S. stocks had their worst performance since the Great Depression. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=asgBXeQ.u5Lg or http://money.cnn.com/2009/01/15/real_estate/millions_in_foreclosure/index.htm

-Freddie Foreclosures, Eviction Plans Continue During Moratorium. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aNaue9COnrdc&refer;=home

The GoldBugg Report – January 20, 2009
Posted by Worldwide Precious Metals on Tuesday, January 20, 2009

Memo to All Retail Dealers

Today January 20^th, 2009 is truly a historic day for the United States and the World.

Today the United States is swearing into the Office of the Presidency the First African American ever to be elected to Office.

President Obama, his cabinet and financial advisors are inheriting what can only be described as an “international economic disaster”.

His challenge will be to create a domestic economic stimulus program that will hopefully bring about a stop to the deepening of the current recession before it escalates into a depression, restore international confidence in the United States Government and the US Financial Markets.

With interest rates at all time lows and credit remaining a severe problem, there is one thing you can absolutely count on – The US Government has to print more dollars and in plain and simple language “that’s going to create INFLATION”.

In our Memos of November 24^th, 2008 and December 8^th, 2008 we suggested to all that the synthetic lows in Late October we have experienced of $680.00 Gold and $8.40 Silver were “the bottom” of this correction.

Looking at current prices as of this date 10:00 a.m. January 20^th Gold is $854.00 (an increase of $174.00 from the $680.00 Lows) plus 25.5%. Silver is $11.25 (an increase of $2.85 from the $8.40 Low) plus 34%.

These new levels we see today have not come without volatility but as we can see the overall trend has over the past three months, convincingly turned to the upside.

The way we see it, this is due to several factors.

1. J. P. Morgan is slowly unwinding the massive short exposure they inherited from Bear Sterns (the driving force behind the downturn in Silver & Gold since March of 2008).

2. Hedge Funds have, for the most part exited most of their highly leveraged portfolios due to “Redemption Requests” (It is unlikely Hedge Funds still in business will have much of an impact on our products in the Future as they are about to fall under Regulatory constraints. Something they never had to concern themselves with in the past).

3. Increased demand worldwide for physical product. (This investor demand will have an effect on above ground supplies as fresh mining production is coming to a grinding halt at a time when investor demand is increasing).

4. The historic “Flight to Quality”.

Currently from a technical view here are the short term support and resistance levels for Gold and Silver.

Gold Support $807.00

Resistance $890.00

Silver Support $11.09

Resistance $11.43

There are many “experts” and “analysts” predicting much higher prices for Gold (as high as $5,000.00) Silver (as high as $150.00). These seem astronomical, and wouldn’t we all love to see these prices actually take place.

We are not so bold. However we do agree that Long Term prices should move substantially higher.

Should we see similar price appreciation throughout 2009 as that experienced in the last three months we could be looking at $2,100.00 Gold and $37.00 Silver by year end 2009. Even these numbers seem aggressive, and of course there are never any guarantees. However comparing these projections to current prices, current prices certainly look like an exceptional bargain.

Given everything happening in today’s worldwide economy, there have never been more compelling reasons to substantiate the ownership of Precious Metals.

Trading Department – Precious Metals International Ltd

Memo to All Retail Dealers
Posted by Worldwide Precious Metals on Tuesday, January 20, 2009

The GoldBugg Report – January 13, 2009

January 13, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 9 2009 SHOW

-Gold Climbs Again Eight Years in a Row.

-The Wall Street Journal (December 31, 2008), in the Return on Investment Column, stated that silver is one of the ten investments to watch in 2009.

-Silver is massively oversold probably more oversold than any other commodity or stock market in the world and yet its fundamentals are arguably as sound now as they were before.

GOLD

-Gold Climbs Again Eight Years in a Row. The numbers for 2008 are in. Gold has done it again. Gold is up for the eighth year in a row against the US dollar. Here are gold’s rates of appreciation in terms of several major currencies. To conclude, gold and silver will probably appreciate in 2009. There is no reason to think otherwise, given the path chosen by central banks in general and the Federal Reserve in particular.

After all, who wants to own any national currency when the interest income one can receive is less than the inflation rate? Who wants to own any national currency when counterparty risk makes repayment uncertain? In short, the interest income available today on any national currency does not fully compensate for the risks one takes when holding that currency.

So why lose sleep from worrying about holding national currency and what the Federal Reserve or some other central bank will do to that currency? Own the precious metals instead. But as I repeatedly emphasize own physical gold and physical silver. Own the real thing, and do not accept paper substitutes. Read more here-http://goldmoney.com/en/commentary.php

-Gold May Advance for Eighth Year as ‘Perfect Insurance’ Sought. The following is a table of gold, silver, platinum and palladium forecasts. Read more here- http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a1C1lhTmTaFo

-Gold market update from Clive Maund. Read more here-http://news.goldseek.com/CliveMaund/1231103190.php

-2009 Gold Outlook. Despite a bit of downside in the immediate future, we expect gold to have a stellar year. Global economic turmoil and deflation will undoubtedly continue to influence gold prices in the near-term. A short-term pullback in gold prices from current levels to $800 maybe even a bit lower is not out of the question. However, we expect gold prices to break new records during 2009.

For our current perspective, we expect gold prices to reach as high as $1,300 during 2009, which would be a profit of over 50% from current levels. Gold prices in 2009 will be supported more heavily by supply/demand fundamentals than in the previous years of this gold bull market.

As we’ve previously discussed, during the third quarter of 2008, world gold demand outstripped supply by 10.5 million ounces. This deficit was worth $8.5 billion and was the largest supply/demand deficit since the gold bull market of the 1970s. Official 4Q 2008 world gold supply/demand figures will be calculated and reported later this month. Gold World will report them to you when the data is released.

In the meantime, though, all estimates suggest that there will be another very large deficit in world gold supplies from the fourth-quarter, with investment demand continuing to drive the market. We expect that a continuing surge in investment demand could push gold prices as high as $1,300 at one point during 2009.

There will likely be a bit more volatility in the gold market in 2009 as more and more speculators come into the market. It is likely that the gold market will experience three or four price peaks (selling points) during 2009. Read more here-http://www.goldworld.com/articles/2009-gold-outlook/356

-Dow/Gold Ratio: Buy Gold. For the past century, the Dow/Gold Ratio has been a leading predictor of the starts and ends of bubbles. The Dow/Gold ratio is calculated by figuring out how many ounces of gold it would take to buy the Dow Jones Industrial Average. On Tuesday, the Dow closed at about 8,600. An ounce of gold was changing hands for about $880 an ounce. Thus, the Dow/Gold ratio was about 9.8 (8,600/880). If you take a look at the chart below courtesy of U.S. Gold it’s easy to see the Dow/Gold Ratio has peaked just before the two major bear markets of the past century.

The Dow/Gold ratio has always peaked near a point of maximum pessimism. Following severe recessions or depressions, the Dow/Gold ratio bottomed out at 1 or 2. During peak periods of fear, gold became such a dear safe haven, one or two ounces of gold could buy the entire Dow.

Are we headed there? There’s certainly an outside chance, but it’s certainly not a sure thing either. If we look at this ratio completely objectively, the Dow/Gold ratio is telling us to sell stocks and buy gold. Either gold is going to $4,300 (half the Dow), the Dow is going down to 1,760, or somewhere in between. Andrew Mickey-Read more here-

http://news.goldseek.com/GoldSeek/1231052640.php

-David Hale: Only one alternative to the dollar gold. Read more here-http://www.gata.org/node/7062

-Jay Taylor is interviewed about gold on BNN. Watch video here-http://watch.bnn.ca/#clip126509

-Gold ETF holdings still rising as Eastern demand falls. Rises in gold ETF holdings are currently helping the gold price maintain some strength despite big falls in Middle East and Indian imports. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=76261&sn;=Detail

SILVER

-The following table presents silver’s annual rates of appreciation for the same nine major currencies. Silver too has appreciated in terms of each of the above currencies, but its annual changes show much greater volatility than gold. These changes range from -38.8% to 49.3%. James Turk

-The silver bulls are back. Silver bullion is trading just above USD 11/oz, 48% lower than its record level seen in March 2008, and far more than the fall in the gold bullion price currently a modest 18% lower than record levels set in the same month. And while the majority of mined gold ranks as primary production, around two-thirds of silver production ranks as a by-product, mainly on base metal and gold mines.

On the fundamentals, the consensus of the analytical community appears to be bullish for silver bullion supply-demand supporting rising dollar prices over the longer term. There is generally bullish sentiment for both gold and silver bullion going forward, as further supported by the growing belief, once again, that the dollar will be pressurised further, after staging a very impressive rally between July and December 2008.

The ratio of the gold to silver bullion price is currently around 77 times, far above its five and ten year averages of between 55 and 60 times. A year ago, the ratio was below 50. For investors believing that silver is historically more volatile than gold, a reversion to the mean longer term ratio – regardless of what gold bullion does – is simply bullish for silver.

The silver price averaged USD 13.38/oz in 2007, some 16% higher than 2006 levels; led by increased investment demand, the price made levels not seen since 1980. Despite the retrenchment of the price from highs set in March 2008, the longer term picture suggests that significant portions of stockpiled silver held by mainly China, Russia, and India, have been drawn down.

Total newly mined global supply is estimated at just over 900m ounces for 2008, and is not seen as rising much above that in the medium term. Production is declining at a number of mines, to be balanced, at least in part, by new silver primary and byproduct mines. Goldcorp’s Peñasquito mine in Mexico could be producing up to 30m ounces of silver a year by 2012, while Barrick’s Pascua/Lama interest in Chile could be producing up to 20m ounces of byproduct silver, also by 2012.

Meanwhile, silver bullion exchange traded funds (ETFs) continue to offer a bullish undertone for the metal. The iShares Silver ETF, available in US markets since May 2006 is no longer alone. The ETF Securities Silver has since emerged in London, with 9.7moz under management, and the ZKB Silver ETF has emerged in Switzerland, with 34.6moz.

These ETFs added 7.3moz and 25.0moz of new demand, respectively, during 2008. The iShares Silver ETF added around 65moz during 2008, taking its total silver holdings to nearly 220moz. The transparency and liquidity of silver ETFs has seen an ongoing fall in the numbers of short-term speculators engaging in silver positions on the New York Commodities Exchange (COMEX), the Tokyo Commodities Exchange (TOCOM), and the Over-the-Counter (OTC) market. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=76356&sn;=Detail

-The silver price, per ounce, in 2008 averaged a strong US$14.98, a nearly 12-percent increase over the 2007 average price of US$13.38; the best average annual price since 1980. A key development in silver’s fortune has been renewed investor interest in the white metal, which began in earnest in 2004 and continues today, as illustrated in the chart below.

In fact, the Wall Street Journal (December 31, 2008), in the Return on Investment Column, stated that silver is one of the ten investments to watch in 2009. The Silver Institute-Read more here-http://www.silverinstitute.org/pr08jan09.php

-Silver market update from Clive Maund. Read more here-http://news.silverseek.com/CliveMaund/1231102809.php

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1231259223.php

PLATINUM-PALLADIUM

-Platinum or gold which will be the better performer in 2009? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=76289&sn;=Detail

-Platinum back around $1,000 but will it stay there? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=76257&sn;=Detail

-Chart from David Chapman. Read more here-http://news.goldseek.com/UnionSecurities/1231139400.php

DEFINITIONS-QUOTES-QUICK HITS

-Kondratiev Wave. What Does Kondratiev Wave Mean? An economic theory created by Soviet economist Nikolai Kondratiev that states that Western capitalist economies are susceptible to high performance volatility. Also known as “Kondratiev cycle”.

Investopedia explains Kondratiev Wave. Kondratiev called these large performance fluctuations “super-cycles,” which last 50-60 years. Kondratiev claimed to have predicted in the 1920s the stock market crash of 1929, also known as Black Thursday. His prediction was based on the market crash of 1870. Investopedia.com-Read more here-

http://en.wikipedia.org/wiki/Kondratiev_wave

-I want to warn people from Nigeria who might be watching our show if you get any emails from Washington asking for money, it’s a scam. Don’t fall for it. Jay Leno

-In January 1980, just before the Federal Reserve avoided an inflationary catastrophe, the gold price peaked at $875. That is $2,430 in today’s dollars. But the pools of speculative capital are much larger now than in 1980. A true gold bubble could well leave this benchmark far behind. Martin Hutchinson, N.Y. Times, January 1, 2009

-I need to confess that I have no idea where the S&P500; will be in a year’s time. But given the catastrophic economic conditions we find ourselves in, I’m convinced that governments around the world will increase the intensity with which they will be attempt to save the world with monetary and fiscal measures. As pointed out in last month’s report, this will increase volatility and should be ‘gold friendly’. Marc Faber

-The bull market in gold has resumed. Let this be a lesson to long-term investors. You do not panic when prices fall in a bull market; you buy on extreme weakness. Bob Chapman

-Silver is massively oversold probably more oversold than any other commodity or stock market in the world and yet its fundamentals are arguably as sound now as they were before.

Industrial demand for silver is set to fall admittedly but that will be more than made up for by significantly increasing investment demand.

Also importantly the supply of silver may fall silver supply coming primarily from the by product in base metal mines many of which are failing due to the collapse in base metal prices. Silver’s average price in Q1 08 was some $18 and this will likely be surpassed in 2009. It is important to remember that silver’s average price in all of 2008 was some $15/oz and thus silver is currently trading at some 36% below its average price in 2008.

Most importantly, there is less refined silver in the world than gold a fact that most people simply cannot get their head around and fully understand due to gold being currently some 77 times more valuable than silver. Silver is likely to return back to its recent highs in 2008 above $20/oz and there is a possibility that silver could reach well over the nominal 1980 high of $50/oz in 2009. Gold.ie

-Potential silver prices based on the gold to silver ratio.

Gold to silver ratio at 80 to 1 with gold at $1200 the silver price would be $15.00
Gold to silver ratio at 70 to 1 with gold at $1200 the silver price would be $17.14
Gold to silver ratio at 60 to 1 with gold at $1200 the silver price would be $20.00
Gold to silver ratio at 50 to 1 with gold at $1200 the silver price would be $24.00
Gold to silver ratio at 16 to 1 with gold at $1200 the silver price would be $75.00

-Merrill Lynch says rich want gold bars, not gold paper. Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or “paper” proxies.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. “People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs,” he said, referring to exchange trade funds listed in London, New York, and other bourses.

“They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands,” he said. Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June. Read more here-http://www.gata.org/node/7073

-As long as the markets continue to be volatile and uncertain which unfortunately seems very likely demand for physical gold and silver bullion will likely stay very strong and should result in higher prices. Thus, the confluence of decreasing supply and increasing demand due to strong international geopolitical, systemic and macroeconomic factors is leading to extremely bullish conditions for the gold and silver markets.

Probably even more bullish than in the 1970s when silver rose from $1.39/oz to over $50/oz or 3,600% and gold rose some 2,400% from $35 to over $850 in just 9 years. Taken individually, any one of these factors would be bullish for gold but in unison, these combination of factors will likely lead to gold prices surging in 2009.

The inflation adjusted high of $2,400/oz in 1980 remains a conservative estimate for gold to reach in the next 2 to 5 years. Similarly, the inflation adjusted high for silver in 1980 of some $120/oz remains a conservative price target that will very likely be reached within to 2 to 5 years. Gold.ie

-The price of gold will go above $1,000 per ounce this year, according to Peter Hambro, chairman of Russian gold producer Peter Hambro Mining, writes William MacNamara . “How much over $1,000, I don’t know. But there are perfectly legitimate scenarios for it reaching $1,500, even $2,000,” he told the Financial Times. Read more here-

http://www.ft.com/cms/s/0/dd39ede6-db90-11dd-be53-000077b07658.html?nclick_check=1 or http://www.gata.org/node/7061

-Survivors and those who win buy gold and silver. We think the secret to getting through this is to hunker down, eliminate debts, keep a low profile. Gold topped out near $850 years ago right where our price is today. We forecast 80% of the gold upside is still ahead in these markets. Silver is behind gold for now but will catch-up. They never trade like twins most of the time. We think the worst silver could do is $50; but expect much higher prices. Roger Wiegand-Read more here-http://www.kitco.com/ind/Wiegand/printerfriendly/jan072009.html

-GFMS CEO Paul Walker predicts gold could rise to about $1,100/ounce by the end of 2009 with an “outside chance” of the metal reaching $1,200/oz during the year. The UK-based precious metals analyst has turned more bullish on gold’s prospects following the financial crisis that erupted from September onwards and the steps taken by US and other government authorities to deal with it. Walker said: “Gold is looking a very attractive proposition for those people looking for a safe place to put their cash. Read more here-

http://www.miningmx.com/gold_silver/917818.htm

-Byron Wien, the investment strategist who predicted a recession would drive U.S. stocks lower last year, says gold will rise to $1,200 an ounce and oil will rebound to $80 a barrel. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ajQbVN8S5Ep4&refer;=home

-I am afraid any rally in stock prices will prove a sucker’s rally and it will not be long before something happens to trigger the inevitable sell-off by the hedge funds for their redemptions, and once that starts it will be quite a big down leg. Will that also be bad for gold and silver?

That was the lesson of 2008 but confidence in the dollar is beginning to wane with the size of bailouts and stimulus packages and the implications for the bond market. It would be unwise to place too much faith in the greenback, and better to at least hedge with precious metals. The rush from the dollar to gold could be very quick if history is any guide. Peter Cooper

-Throughout the ages, gold has stood the test of time as a consistently reliable medium of exchange, and has frequently been referred to as “God’s money,” as only God can make more of it. Seeking superhuman power over money in the way alchemists did in ancient times caused society to shun them as charlatans.

In much the same way, free people today should be sending the message that this power and control over our money is no longer acceptable. The irony is that even had the ancient practice of alchemy been successful, and gold was suddenly, magically made abundant, alchemists still would have failed to create real wealth.

Creating gold from lead would have cheapened its status to that of rhinestones or cubic zirconia. It is unnatural and dangerous for paper to be considered as precious as a precious metal. Our fiat currency system is crumbling and coming to an end, as all fiat currencies eventually do. Ron Paul-U.S. Congressman-Watch Ron on CNN here-

http://news.goldseek.com/RonPaul/1231449691.php

-U.K. Gold Sales Would Be Worth $7 Billion More at Recent Prices. Gold sold by the U.K. in the four years through 2002 would be worth an extra $7 billion at recent prices, the government said. The U.K. sold 395 tons of the metal in the period for about $3.5 billion, Ian Pearson, economic secretary to the Treasury, said in a Dec. 18 written response to

government questions published on a parliamentary Web site.

The sales “reflected a prudent decision to reduce over exposure to a single asset in the net reserves portfolio,” he said. Based on the morning “fixing” in London on Dec. 15, the sold reserves would be worth about $10.5 billion, he said. Bloomberg-Read more here-http://www.telegraph.co.uk/news/newstopics/politics/labour/4162054/Gordon-Browns-decision-to-sell-half-of-the-UKs-gold-reserves-cost-UK-5billion.html

-China may put new curbs on overseas investments. Read more here-http://uk.reuters.com/article/marketsNewsUS/idUKSHA4669620090107

-U.S. debt is losing its appeal in China. China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home a shift that could pose some challenges to the U.S. government in the near future. Read more here-

http://www.iht.com/bin/printfriendly.php?id=19167239 or http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?_r=3&ref;=world&pagewanted;=print

-China’s central bank said yesterday that it plans to implement a pilot program that would settle overseas trade with the Chinese currency instead of the US dollar. Read more here-

http://www.gata.org/node/7071

-The S&P; 500 will be lucky to record a $42.00 earnings estimate for 2009. That puts the forward price earnings ratio at 20. The historical average is 14-1/2% to 15% and in depressions 8 to 10 times earnings. The market supposedly has factored $42.00 into its performance, when historically the market has done a terrible job pricing in bad news, especially with all the manipulation going on.

We expect a 70% fall during this depression or the Dow at 4,200. That means on these 2,000-point Dow rallies you sell into the rally or short into it. We believe S&P; earnings will be $35.00. By the way, those S&P; earnings were $24.67 in 2001 and $27.57 in 2002. The bear market that began in March of 2000 is still in force. The move in the Dow from 7,268 to 14,100 was manufactured by our government via low interest rates, large injections of money and credit and non-existent lending practices. Bob Chapman

-The Bank of England cut the benchmark interest rate to the lowest since the central bank was founded in 1694 as policy makers tried to prevent the credit squeeze from deepening Britain’s recession. The Monetary Policy Committee, led by Governor Mervyn King, trimmed the bank rate by a half point to 1.5 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZLXttq0_pQQ&refer;=home or http://www.gata.org/node/7074

-Surviving the depression from Eric Sprott. Far be it from us to mince words. Make no mistake we are in a Depression. That’s right, it’s the dreaded ‘D’ word. And we are knee deep in it right now. This is not a run-of-the-mill recession.

Does anyone still believe we’re in for just a few quarters of, at worst, low single-digit economic contraction, after which things will return to normal? We find it shocking that most economists still do. This is far worse than a recession. It’s a Depression. To call it anything else is to ignore the obvious. Read more here-http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

-Holiday Sales Were Dismal, Data Shows. Read more here-http://www.nytimes.com/2009/01/09/business/economy/09shop.html?partner=rss&emc;=rss&pagewanted;=print

-Auto sales plunge again in December. Sales of cars, trucks and SUVs all plummeted, capping the worst year for industrywide auto sales since 1992. Read more here-

http://money.cnn.com/2009/01/05/news/companies/autosales/index.htm?postversion=2009010515

-Zimbabwe’s money man plans to keep on printing. Read more here-http://www.latimes.com/news/nationworld/world/la-fg-zimbabwe-bank1-2009jan01,0,2457198.story

-The Ponzi Scheme in Every Hedge Fund. Read more here-http://www.time.com/time/business/article/0,8599,1869196,00.html

-Satyam Founder Sparks India’s Enron With Fake Reports. Ramalinga Raju built Satyam Computer Services Ltd. into India’s fourth-biggest software maker over two decades. He undermined the company’s future with revelations that he overstated profit and falsified assets for years, triggering a scandal that’s being compared to Enron Corp. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=akJyO8yxmXTY

-Madoff Investigators Claim to Find 100 Checks in Desk. Investigators searching the office desk of Bernard Madoff after his arrest found about 100 signed checks, totaling about $173 million, ready to be sent to family, friends, and employees, prosecutors said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=asQxW8FREEPw

-China issues bird flu alert after woman dies. Read more here-http://www.reuters.com/article/healthNews/idUSTRE50641D20090107?feedType=RSS&feedName;=healthNews

-Virtually all the dominant strain of flu in the United States this season is resistant to the leading antiviral drug Tamiflu, and scientists and health officials are trying to figure out why. Read more here-http://www.nytimes.com/2009/01/09/health/09flu.html?partner=rss&emc;=rss&pagewanted;=print

-William Perry, who headed the Pentagon during a 1994 nuclear standoff with North Korea, predicted on Thursday that President-elect Barack Obama will soon face a nuclear crisis with Iran. Iran is “moving inexorably toward becoming a nuclear power,” with ominous implications for the Middle East, Perry said. Read more here-

http://seattletimes.nwsource.com/html/politics/2008604708_apobamanuclearchallenges.html?syndication=rss

RARE COLORED DIAMONDS

-5-Carat ‘Kazanjian Red’ Diamond on Display in LA. For a limited time, the famed “Kazanjian Red” diamond will be on display at the Natural History Museum of Los Angeles County.

One of only three vividly blood-hued red diamonds known to exist, the 5-carat “Kazanjian Red” holds a history as brilliant as its color.

It was found in 1927 in a diamond field in South Africa, but was stolen during World War II in Arnhem during the Nazi occupation of the Netherlands, where it was hidden for years in a salt mine among other stolen treasures. Eventually, after first mistaking the rare diamond to be a ruby American soldiers recovered the Kazanjian Red, but could not return it due to its rightful owners not surviving the war.

The gem was sold and over time was passed through several hands, including those of Sir Ernest Oppenheimer. After being hidden away by a private collector for 37 years, it was finally purchased by Los Angeles-based Kazanjian Bros. Inc and is on its very first exhibition in the U.S. The Kazanjian Red will be available for public viewing at the Natural History Museums’s Gem and Mineral Hall through February 1st. KTLA News

-Graff Remains Bullish on Diamond Market for 2009. “If you can add beauty to the world, it’s a wonderful thing to do,” says Laurence Graff, a man who clearly loves beautiful things. He may balk at selling his art, but that is not the case with his diamonds. “If you don’t sell your diamonds, then you become a museum and that’s not what Graff is about.” Graff Diamonds is currently in the process of cutting the staggeringly large 478-carat Light of Letseng diamond, which the company bought for $18.4 million.

The diamond was mined in Lesotho by Gem Diamonds, a company in which Graff has built a 9 percent stake. “The size and quality of the stones produced at the Letseng mine are exceptional; that’s why I decided to buy my stake in the company. I also wanted to buy into production, particularly of quality gems.” It will take 12 months to cut the Light of Letseng stone and it will be incredibly valuable once this is done.

The stone is the twentieth-largest rough diamond ever recovered and it represents the third significant discovery from the same mine in Lesotho in three years, following the 603-carat Lesotho Promise and the 493-carat Lesotho Legacy. All of these stones were purchased by Graff Diamonds. The diamond market has suffered this year along with every other market, with the price of rough diamonds falling 45 percent in the final four months of 2008.

However, Graff remains bullish. “The mass market has been hit, but there will always be a market for quality gems. In the part of the market in which we operate, clients are rare, but so are the diamonds. There are more clients than diamonds.” To the suggestion that the Light of Letseng would make a good Christmas present, he exclaimed: “People who buy these diamonds do not need to buy them for Christmas.”

The purchase of the Light of Letseng proves Graff’s faith in the future of the diamond market. Once the stone has been cut in 12 months’ time, it will make a beautiful present be it for Christmas or not. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=24764

-Diamond clues to beasts’ demise. Read more here-http://news.bbc.co.uk/2/hi/science/nature/7808171.stm

OIL

-Oil Traders Seek Another 10 Supertankers for Storage. Oil traders are seeking as many as 10 supertankers to store crude, potentially taking the amount hoarded at sea to almost five days of European Union demand, according to Frontline Ltd., the largest owner of the vessels.

About 25 of the carriers, each able to hold about 2 million barrels of crude, were already hired for storage. There are enquiries for 5 to 10 more, Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today. Traders are storing crude to take advantage of higher prices for supply in the future. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZkqK5faJBmA&refer;=home

FORMER BANK OF ENGLAND OFFICIAL EXPECTS DOLLAR COLLAPSE

-Americans must prepare themselves for a massive collapse in the dollar as investors around the world dump their US assets, a former Bank of England policymaker has warned. The long-held assumption that US assets particularly government bonds are a safe haven will soon be overturned as investors lose their patience with the world’s biggest economy, according to Willem Buiter.

Professor Buiter, a former Monetary Policy Committee member who is now at the London School of Economics, said this increasing disenchantment would result in an exodus of foreign cash from the US. Writing on his blog, Prof Buiter said: “There will before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many.

But learning takes place.” He said that the dollar had been kept elevated in recent years by what some called “dark matter” or “American alpha” an assumption that the US could earn more on its overseas investments than foreign investors could make on their American assets. However, this notion had been gradually dismantled in recent years, before being dealt a fatal blow by the current financial crisis, he said.

“The past eight years of imperial overstretch, hubris and domestic and international abuse of power on the part of the Bush administration has left the US materially weakened financially, economically, politically and morally,” he said. “Even the most hard-nosed, Guantanamo Bay-indifferent potential foreign investor in the US must recognize that its financial system has collapsed.” He said investors would, rightly, suspect that the US would have to generate major inflation to whittle away its debt and this dollar collapse means that the US has less leeway for major spending plans than politicians realize. Read more here-http://www.gata.org/node/7058

U.S. BUDGET DEFICIT AT MORE THAN 1 TRILLION-DEFICITS FOR YEARS TO COME

-President-elect Barack Obama said he expects to inherit a $1 trillion budget deficit and that similar shortfalls are in store “for years to come” as the government grapples with a recession and other spending demands. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aECC6Y15OhwQ&refer;=home

-The U.S. budget deficit will more than double this year to at least $1.18 trillion, driven up by the federal bailout of the financial industry, Fannie Mae and Freddie Mac, according to the Congressional Budget Office. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a3ysWPimmmOA

FINANCIAL CRISIS-RECESSION-DEBT CRISIS

-The $8 trillion bailout. Many details of Obama’s rescue plan remain uncertain. But it’s likely to cost at least $700 billion and that would push Uncle Sam’s bailouts near $8 trillion. Read more here-http://money.cnn.com/2009/01/06/news/economy/where_stimulus_fits_in/index.htm

-President-elect Barack Obama warned that the U.S. risks sinking deeper into an economic crisis without an infusion of government spending and a cut in tax rates and urged Congress to act quickly on a stimulus package that may total $775 billion. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=azAp..che8Xc&refer;=home

-U.S. governors seek $1 trillion federal assistance. Governors of five U.S. states urged the federal government to provide $1 trillion in aid to the country’s 50 states to help pay for education, welfare and infrastructure as states struggle with steep budget deficits amid a deepening recession. Read more here-http://www.reuters.com/article/newsOne/idUSTRE5014F120090102

-U.S. banks need to raise more capital after downgrades of mortgage-backed securities surged in the last quarter, Oppenheimer & Co. Inc. analyst Meredith Whitney said. U.S. banks’ earnings will be hurt in 2009 by as much as $40 billion of further writedowns as asset prices continue to drop, and credit-ratings are cut on home loan-related securities, Whitney said in a note to clients Jan. 6. Downgrades force banks to hold additional capital in reserve, so U.S. lenders will need to raise more cash, according to Whitney.

Ratings cuts accelerated last year, with about $2.3 trillion of securities downgraded in the fourth quarter, she said. “There is an undeniable correlation between downgrades and increased capital demands by the banks,” Whitney wrote. “The banks will once again have to raise fresh capital in 2009.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aMGMHfNeGek8

-The U.S. economic outlook through the first half of 2009 is “grim,” and the first signs of a recovery may not emerge until the third quarter, said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City.

“The sharp deterioration of banking and credit conditions, the deepening slump in consumer and business confidence and the ongoing housing correction must work its way through the economy,” Hoenig said in the text of a speech today in Kansas City. Avoiding such a process “may sow the seeds for the next crisis.”

The bank president’s remarks underscore the view of policy makers that “substantial” risks to the economy remained when they cut the benchmark interest rate to a record low last month to stem the yearlong recession. Those views are contained in the minutes of the Dec. 15-16 Federal Open Market Committee meeting released yesterday.

“The picture for the last quarter of 2008 and at least the first half of this year is grim,” said Hoenig, 62. “If we pursue systematic policies with the right balance of monetary and fiscal stimulus, the early signs of economic recovery could show themselves as early as the third quarter of 2009.”

The U.S. economy ended 2008 in a steep decline, with factory orders, home sales and service industries all contracting, according to reports released this week. Hoenig today joined San Francisco Fed President Janet Yellen, Chicago Fed President Charles Evans and many economists in endorsing a fiscal stimulus plan to combat the yearlong recession.

Such a measure will be “a critical element affecting the recovery in 2009,” and “putting our economy back on its feet is the priority,” he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aMwYhDqEud6w or http://money.cnn.com/2009/01/06/news/economy/fed_minutes/index.htm

-The number of Americans collecting unemployment benefits surged to a 26-year high as the labor market worsened in a yearlong recession. Initial jobless claims unexpectedly fell by 24,000 to 467,000 in the week that ended Jan. 3, the lowest level in almost three months, the Labor Department said today in Washington. The total number of people getting benefits rose a week earlier to 4.6 million, the most since 1982. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aS_tiZQqsv.I&refer;=home

-U.S. Economy: Companies Cut Payrolls at Faster Pace. Reports issued two days before the release of U.S. jobless data showed private employers cut payrolls at a faster pace in December, threatening to send the unemployment rate to levels unseen in a quarter century.

“The level of unemployment is going to be higher” and may exceed 10 percent, Martin Feldstein, the former National Bureau of Economic Research president and Harvard University professor said in a Bloomberg Television interview. “It’s really bad and it needs a fix,” he said before a hearing on the fiscal-stimulus plan with House lawmakers in Washington.

Companies cut an estimated 693,000 jobs in December, the most since ADP Employer Services began its gauge based on payroll data in 2001. Chicago-based Challenger, Gray & Christmas Inc. said firings announced by U.S. employers rose 275 percent last month from December 2007, to 166,348. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=a1AcrBP3.r.I&refer;=home

-U.S. Debt Expected To Soar This Year. $2 Trillion Increase May Test Federal Ability to Borrow. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/01/02/AR2009010202322_pf.html

STOCK MARKET

-Stocks to Struggle as Earnings Fall, Citigroup Says. “To be able to call a meaningful turn in global equities we need to be closer to the bottom in the corporate earnings cycle,” the strategists wrote. “On our forecasts that is more likely to happen in 2010. We suspect 2009 may be a trading range year. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=ajJe1_bsfYAg&refer;=home

-Let’s look at their estimates for earnings in 2008. They started at $92 in early 2007 and are now down to $48. This chart is not something to inspire confidence in stock analysts.

On a trailing one-year basis, that puts the Price to Earnings Ratio (P/E) at over 19 as of today’s close at 925, which does not make the market cheap. But last year’s earnings are history. What about 2009? Again, the analysts are in a race to find the bottom.

The current projections are for $42.26 for 2009. That makes the forward P/E 22. That doesn’t look like value at all, when the historical average is closer to 15.But how bad can it get? Analysts must surely by now have lowered their estimates to more realistic numbers.

Shouldn’t we start to price in the recovery from here? Well, no, not if you look at the last recession. In 2001, as-reported earnings were $24.67. Operating earnings in 2002 were $27.57. Does anyone think the current recession will be milder than the last one? Or shorter? John Mauldin-Read more here-http://news.goldseek.com/MillenniumWaveAdvisors/1231052820.php

REAL ESTATE

-Radical cheap: $1,000 homes. In places like Detroit and Cleveland, banks are unloading rundown homes for next to nothing. And they’re tremendous bargains, even after factoring in renovation costs. Read more here-http://money.cnn.com/2009/01/08/real_estate/thousand_dollar_homes/index.htm or watch video here-http://money.cnn.com/video/#/video/news/2009/01/06/news.harlow.1000home.cnnmoney

-As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales. While the purchases are trimming the inventory of unsold properties, most of those bought by speculators will likely return to the market when prices rise again, hampering any recovery, said Nobel laureate economist Joseph Stiglitz and Yale University Professor Robert Shiller in interviews.

“We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”

Banks owned a record $11.5 billion of repossessed homes in the U.S. at the end of the third quarter, according to the Federal Deposit Insurance Corp. Foreclosures accounted for almost half of all U.S. purchases in November and homes in default helped increase sales 83 percent in California.

There were an average 3,100 foreclosures per day in the U.S. in November, according to RealtyTrac Inc., an Irvine, California real estate data company. That’s triple the 1,000 per day average in 1933, the worst year of the Great Depression, according to the Federal Reserve Bank of St. Louis. The repossessed properties offer opportunities for investors, who typically buy homes at auction and rent them out until prices increase and they can sell. Read more here-

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

-Pending Sales of Existing Homes Fell 4% in November. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ajuRLTKaEKm4

-Home buyers advised to look before they leap. Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish. Read more here-http://www.marketwatch.com/news/story/year-bad-time-buy-home/story.aspx?guid={7FDA1504-8F8D-4795-B8F0-B4EA17FDDFF4}&dist;=TNMostRead

-Manhattan Apartment Sales Drop. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aRyM8YacoYEA or http://www.bloomberg.com/apps/news?pid=20601213&refer;=home&sid;=aturS6ZBEvX0

-Manhattan Office Rents Fall Most in Two Decades. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZZvAeQPTd_Q&refer;=home

The GoldBugg Report – January 13, 2009
Posted by Worldwide Precious Metals on Tuesday, January 13, 2009

The GoldBugg Report – January 06, 2008

January 6, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 2 2009 SHOW

-Four Immediate Bull Points for Gold.

Peter Cooper

1. Geopolitics: Israel has attacked Gaza with considerable loss of life, a reminder of the chronic political problems of the Middle East with Iran and Pakistan other possible flash points. Arabs are big investors in gold and respond to disruptions in their own backyard.

2. Physical delivery requests are mounting at the Comex futures exchange which could well result in an immediate shortage of gold at the year-end. The futures market looks about to breakdown, giving control of the gold price back to the physical market where available stocks are low.

3. Gold preserved value through the storm of 2008, and 2009 looks no better, while investors are increasingly concerned about the bubble in the bond market. In the investment cycle the next step is a bond crash and a flight to precious metals.

4. The dollar rally looks to have already broken down, so look for a swift reversal to dollar devaluation and gold appreciation. That would also boost the oil price, usually a positive for gold, and also linked to geopolitical instability in the Middle East.

GOLD

-Four Immediate Bull Points for Gold. Peter Cooper-Read more here-http://news.goldseek.com/PeterCooper/1230534060.php

-Click here to view Gold Year End charts in various currencies with commentary from Dan Norcini. View here-http://www.jsmineset.com/wp-content/uploads/2008/12/gold-year-end-charts-for-2008.pdf

-So it’s time to look ahead to 2009. It’s shaping up to be an ugly year for financial institutions and the economy, but a good one I expect for the precious metals. Here are my 2009 targets:

Gold will climb into 4-digits in the first quarter and this time will remain in 4-digits for the rest of the year. The potential high is $1800 per ounce ($57.87 per goldgram). I expect the low to be $850, which will be reached early in the first quarter.

In short, 2009 is shaping up to be the key “break-out year” for gold. It will become a “break-out year” because the average investor will start becoming aware of gold and begin buying. Despite its remarkable performance throughout this decade, few people own physical gold. That will begin to change in 2009 as the financial disruptions will worsen and people seek a safe haven for their money. James Turk-Read more here-http://news.goldseek.com/JamesTurk/1230583965.php

-Since early 2001, gold has nearly quadrupled at best. It has relentlessly carved higher highs and higher lows on a secular basis. Its dollar price has increased every single year (the green numbers on the bottom show the amounts). The only way such results are possible is if global demand growth has indeed exceeded supply growth since 2001. I challenge you to find another investment that can even approach such performance in the incredibly chaotic markets we’ve witnessed over the last 7 years. Gold is already in an elite class of its own.

The bottom line is gold’s fundamentals are more bullish today than ever. Despite relatively high prices, mined supply is shrinking. Central banks’ relative power in this market is waning dramatically. And thanks to both natural market forces and artificial manipulation contrivances, global investment demand for gold is likely to grow tremendously from today’s levels. This secular gold bull is far from over friends! Adam Hamilton, CPA-Read more here-http://news.goldseek.com/Zealllc/1230329460.php

-Keep your gold and cash, which are best regardless of what happens. In this year of extreme market drops and volatility, for example, gold has held up best and it’s been the best investment. It’s also one of the most important guideposts to be watching. If gold can now stay above $857, it’ll be very bullish, strongly suggesting it’s headed higher and the above, more positive scenario will likely unfold.

Cash is important for dozens of reasons, and it’ll enable you to take advantage of the many bargains now available and during 2009 in order to add or buy new positions, especially in precious metals, stocks, currencies and most gold shares. Whatever you do, don’t sell now. We think we could soon be in for some long overdue good news. Mary Anne & Pamela Aden-Read more here-http://news.goldseek.com/AdenResearch/1230653915.php

-Gold will hit a new high price. Gold continues to track the expanding “cornucopia” channel I constructed two and a half years ago. As the current credit crunch dissolves into higher inflation, I think it reasonable to expect gold to once again race to the top of that channel. I am hopeful that the U.S. dollar price of gold will approach $1,250 within the next 12 to 16 months. Read more here-http://sitekreator.com/Optimist/highest_gold_value_ever.html

-Ten Predictions for 2009. Gold will make a new all-time (nominal) high reaching a price of $1,400 or more during 2009. A panicked flight to safety could push gold towards $2,000, although the central banks will dump gold on the market or make other attempts at suppressing the price advance. Jason Hamlin-Read more here-

http://www.kitco.com/ind/Hamlin/printerfriendly/dec232008.html

-Don’t Miss the Coming Gold Bull. Read more here-http://seekingalpha.com/article/112785-don-t-miss-the-coming-gold-bull

-Gold in 2008 and the Exciting 2009. Read more here-http://news.goldseek.com/GoldForecaster/1230330660.php

-Phenomenal Demand for Gold Coins Continues. Read more here-http://english.neftegaz.ru/lenta/show/85555/

-Mint can’t meet demand as investors buy assets they can hold. In the third quarter, when the U.S. bailed out Fannie Mae and Freddie Mac, the Fed gathered the chiefs of major banks on Wall Street to plot a rescue, and Lehman Brothers descended into bankruptcy protection, gold sales went into high gear, said Natalie Dempster, head of the World Gold Council’s North American investment unit. U.S. demand for gold coins and small bars jumped 600 percent and international demand rose 121 percent, according to the council.

“The fact that gold is nobody else’s liability was really an extremely important trait for investors in Q3 that were growing increasingly mistrustful of financial institutions in general,” Dempster said. To get gold as stocks began to fall, investors were willing to pay. “You saw people paying premiums to get coins and small bars,” Dempster said. Read more here-

http://www.gata.org/node/7035

-Year-end leap in oil price could bode well for gold in 2009. With OPEC seemingly determined to drive oil back to around $100 a barrel, this should be very positive for the gold price as the dollar suffers. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=76022&sn;=Detail

-2008 Year Review and Outlook For 2009 from Peter Grandich. Read more here-http://news.goldseek.com/Grandich/1230739382.php

-Biggest Gold ETF Holds Its Weight. ‘Positive Sign That Demand Is Firm’. Read more here-http://online.wsj.com/article/SB123068272472944093.html?mod=googlenews_wsj

-Should the Federal Reserve and other central banks achieve success and re-inflate the economy that could be a tailwind for gold. For now, investors will have to contend with the fact that it was one of the few assets that did not lose anyone money. Read more here-http://blogs.wsj.com/marketbeat/2008/12/26/gold-not-so-golden-in-2008/

-”We are very reluctant to buy stocks of junior gold-mining companies that sit on a deposit that has not been turned into a mine yet,” Mr. Eveillard said. “In the extreme, if a deposit cannot be turned into a mine, then the price of gold could go to $3,000 an ounce but the stock would be worth zero.” Meanwhile, Mr. Eveillard said, First Eagle is one of the few gold funds to hold a large percentage in bullion, not relying upon exchange-traded funds.

As of this past week, 35% of the fund’s holdings were in bullion. “If you look at gold as insurance, then gold bullion is preferable to gold-mining shares,” he said, since it avoids the risks facing mining companies themselves. Mr. Eveillard said he is “extremely positive” about the longer-term prospects for gold. “What passes for the monetary system world-wide is fraying at the edges,” he said.

President-elect Barack Obama has signaled that his administration will use fiscal policy to stimulate the economy at the same time the Federal Reserve is doing the same with monetary policy. But ultimately, all of these plans are likely to prove to be inflationary, Mr. Eveillard said. And investors often buy gold as a hedge against inflation. Read more here-http://online.wsj.com/article/SB122929697856605179.html

-Interviewed Monday this week on the “Trading Day” program of Business News Network in Canada, former Federal Reserve Governor Lyle Gramley hinted that a big upward revaluation of gold may figure heavily in the Fed’s attempt to rescue the U.S. economy. The program’s guest host, Niall Ferguson, an author and history professor at Harvard, asked Gramley, now senior adviser at Stanford Group in Houston, about the seemingly grotesque expansion of the Fed’s balance sheet in recent months.

Ferguson asked: “I’ve heard it said that the Fed has turned into a government-owned hedge fund, leveraged at 50 to 1. Do you feel nervous about what this might actually do to the Fed’s reputation?” Gramley replied: “I think you have to reckon with the fact that one of the Fed’s assets is gold certificates, which are priced, as I remember, at $42 an ounce, and if we were to price them at market prices, the Fed’s leverage would look a lot less than it is now.”

While valuing the U.S. government’s claimed gold reserves at today’s Comex closing price of around $822 per ounce instead of the government antique bookkeeping entry of $42.22 per ounce would indeed vastly expand the government’s monetary assets, it might not be enough to offset the liabilities and guarantees the government lately has taken on. But the job might be done by revaluing the gold to $5,000 or $10,000 per ounce, as the British economist Peter Millar speculated two years ago might be necessary to prevent debt deflation. Story and video here-http://watch.bnn.ca/trading-day/december-2008/trading-day-december-8-2008/#clip119798 or http://www.gata.org/node/6989

-”I can only recommend one thing: precious metals,” Eric Sprott said in an interview. Governments worldwide are printing money furiously in a vain attempt to bail out the banking system and keep the economy afloat, he said. With the purchasing power of currencies being eroded, the only real safe haven is gold, he argues. “The developed world is throwing $20-trillion (U.S.) at the banking system. There are holes in the dike. You had better be ready for the worst of all possibilities.”

The allure of gold bullion is that it tends to hold its purchasing power, adjusting for currency shifts, rising with inflation and holding its value even in deflation. In a deflationary environment, even if the nominal price of gold just holds steady, its purchasing power will rise as other prices fall. That’s important, because Mr. Sprott says the world is in “a deflationary death spiral.” Given the steepness of the economic slump, companies will be hard pressed to earn a profit and stock prices will languish, Mr. Sprott predicted.

“You’ve got to try to survive this thing.” What about buying precious-metal stocks or gold-backed certificates instead of the metal itself? “With stocks, you need the price to go up,” he said. “If you buy bullion, if it just holds its value, you will be okay.” Gold bullion could hold steady, yet gold stocks could fall.

“I own lots of gold stocks, don’t get me wrong. But to be really defensive, gold is the only place to be.” As for certificates, “I tend not to be a big believer in anything that is just a piece of paper in your hand. Our banks sold citizens $35-billion of paper they said was good but it wasn’t,” he said, referring to asset-backed commercial paper. Read more here-

http://www.theglobeandmail.com/partners/free/globeinvestor/investment/nov08/online/buillon.html

-Citigroup says gold could rise above $2,000 next year as world unravels. Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity, according to an internal client note from the US bank Citigroup. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3526645/Citigroup-says-gold-could-rise-above-2000-next-year-as-world-unravels.html or http://www.gata.org/files/CitiFXGoldReport-11-26-2008.pdf

-Rob Kirby: Morgan Chase’s gold derivatives soared as gold was floored. Read more here-http://www.gata.org/node/7047 or http://news.goldseek.com/GoldSeek/1230678365.php

-GATA’s interview with Silberinfo. Read more here-http://www.silberinfo.com/home/nachrichten/top-thema/detail-4/article/is-the-comex-just-a-farce.html#

-Venezuela will seize gold mining concessions, Chavez says. Read more here-http://www.gata.org/node/7038

-Israeli archaeologists find rare gold coins. Read more here-http://www.cnn.com/2008/WORLD/meast/12/22/israel.rare.coins/index.html

SILVER

-Will silver finally outperform gold in 2009? Having been burned two years in a row, I am asking this forecast as a question rather than offering it as a statement. The underlying fundamentals for silver continue to improve, and we saw a spark of silver’s potential early this past year when it climbed above $20. I expect silver will again break above $20 this year, and I repeat my $30 forecast from last year.

Silver is dirt cheap. It’s only a matter of time before it climbs above $30, but if you choose to buy silver, be prepared for the volatility, which is reflected in the gold/silver ratio. I think the ratio will not break above over-head resistance in the low 80s. The downside potential for the ratio is 45 or so, which is the bottom of its multi-year trading range.

If I am right that gold reaches $1800 sometime during the course of 2009, and if the low in the gold/silver ratio is 45 at that same moment in time, then mathematically, silver would be $40. If the ratio only moves to 60, then silver will be $30. In any case, I expect the gold/silver ratio to fall in 2009. Thus, regardless of the prices they eventually achieve, I expect that silver will outperform gold in 2009. James Turk-Read more here-http://news.goldseek.com/JamesTurk/1230583965.php

-Silver will do very well. Silver has been a neglected and almost abandoned orphan in the economic storm. The common wisdom says that economic activity is slowing, so industrial metals like silver will have reduced consumption and should be sold. Past readers of the Optimist will attest that my views are neither common nor wisdom, so I am free to take a contrary approach.

Just as fewer houses being constructed reduce the need for copper wires, and fewer automobiles being built reduce the need for platinum in catalytic converters, the quantity of silver needed for many industrial uses is also likely to be reduced. In the case of silver, however, the reduction in industrial demand is likely to be more than offset by a greater reduction in the supply of silver which is produced as a by product of base metals mining.

As base metal prices and production plummet from reduced economic activity, the sharply reduced supply factor should provide a positive tone for silver prices. Also, if the odd silver sidestep cycle continues in 2009, then it is possible that the price of silver could target $25 per ounce in the next 12 to 16 months. Read more here-http://sitekreator.com/Optimist/highest_gold_value_ever.html

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1230657055.php

-I’m actually now in a situation where I like silver, platinum, palladium and the other platinum group metals as well as gold. I like silver for a couple of reasons. One is it’s a financial asset like gold, it is benefiting from the move of investors into silver and gold, and it will continue to benefit from that. But you’ll also see several other things. First off, there is not a lot of metal in the silver market, half a billion ounces in bullion and maybe a half a billion ounces in bullion coins.

In gold you have a billion-plus ounces that investors own and another 980 million ounces that central banks own. There aren’t those large enormous stockpiles of silver if you’re looking at it on a dollar value basis. In addition, silver is an industrial metal with some very interesting new uses coming up. It’s losing some of its traditional uses such as photography; but in other uses, such as batteries and electronics, it’s actually growing very sharply and could grow more sharply over the next few years.

So I think silver’s got a lot of good things going for it. It’s an alternative financial asset like gold. It’s a smaller, less liquid, more volatile market than gold. And it has the industrial base that gold doesn’t have. So I like silver for those three reasons. Jeffrey Christian-Read more here-http://news.goldseek.com/GoldSeek/1229452680.php

-Trace Mayer: A problem with GLD and SLV ETFs. Read more here-http://seekingalpha.com/article/110609-the-problem-with-gld-and-slv-etfs or

http://www.runtogold.com/2008/12/a-problem-with-gld-and-slv-etfs/

DEFINITIONS-QUOTES-QUICK HITS

-Push On A String. What Does Push On A String Mean? When monetary policy cannot entice consumers into spending more money or investing in an economy, even if monetary policy is loosened to to put more money into peoples’ hands. This term is often attributed to noted economist John Maynard Keyenes.

Investopedia explains Push on A String. If the core demand doesn’t exist to induce people to part with their money, it can’t be forced through monetary policy. Trying to do so is like trying to “push on a string”. Such a situation occurred during the Great Depression in the 1930s and in Japan during the late 1990s when interest rates were about 1%.

This situation is sometimes referred to as a “liquidity trap” and explains why central bankers do not attempt to lower rates to levels approaching zero. To lower rates to this level would eliminate monetary policy’s power to influence economic growth and consumption. Investopedia.com

-”All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” Arthur Schopenhauer-Read more here-

http://en.wikipedia.org/wiki/Arthur_Schopenhauer

-”The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.” Bertrand Russell-Read more here-

http://en.wikipedia.org/wiki/Bertrand_Russell

-Gold futures ended higher last Wednesday marking the metal’s eighth straight yearly gain the longest winning streak since at least 1980. The metal’s annual return of 5.5%, however, is the smallest since 2004. Marketwatch.com

-The editor and publisher of the “Gloom, Boom, and Doom Report” says the best place for investments these days is in hard assets. “You want to be in gold, silver, platinum, and also oil,” Marc Faber told CNBC. “If you believe in a recovery of asset prices as a result of money printing, you should be in hard assets, particularly precious metals.” Read more here-

http://www.cnbc.com/id/28418476

-Investment guru Marc Faber says economies around the world may stay in recession for five to 10 years. “We’re faced with a global recession that will last for a very long time,” he told Bloomberg TV. “Recovery won’t come until maybe in five to 10 years time. I think 2009 will be catastrophic.” The massive easing program implemented by the Federal Reserve will end up hurting the economy, Faber maintains.

“It’s hard to believe that after blowing up so many bubbles over the past couple years, the Fed is managing to blow yet another bubble,” he says. “Thirty-year Treasury bonds are yielding about 2.5 percent. You would have to assume that over the next 30 years there will be no inflation problem” to make those yields attractive.

Given the expansionary fiscal and monetary policy of the United States, “there will be a time when inflation accelerates along with a weak dollar,” Faber says. “When that happens, central banks will have to increases interest rates, which will be difficult to implement.” Faber says the U.S. stock market became oversold Nov. 21.

But the S&P; 500 index has rebounded 20 percent since then. “So the market may rebound more, but then it will drop again,” he says. Ron Rimkus, a money manager for BB&T;, also sees stock weakness amid the recession. “We’re going to have to start looking at these earnings reports, and we’re going to have to deal with the ongoing, severe recession,” he told Bloomberg TV. Story here-http://moneynews.newsmax.com/streettalk/faber_recession/2008/12/29/165970.html

-”If the Fed is going to expand the monetary aggregates as they have in order to sponsor economic growth, then inflationary pressures will become more evident after the turn of the year, and so too should our exposure to gold.” Dennis Gartman

-”Not since 1967 is it so obvious there is going to be a war in the Middle East that will send gold and oil well past this year’s highs.” Ralph Preston of Heritage West Financial

-”Gold may be a good place because it is competing against zero rate of return.” “When most else is unsafe, or yielding virtually nothing, at least gold has some historical significance.”

Ron Goodis of Equidex Brokerage Group Inc.

-Euro celebrates 10th anniversary; Slovakia 16th country to adopt the currency. Read more here-http://www.cbc.ca/cp/business/090101/b010111A.html

-Gulf Cooperation Council leaders Tuesday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010. Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided. Read more here-http://news.goldseek.com/PeterCooper/1230733632.php

-U.S. stocks plunged the most in 2008 since the Great Depression as financial shares collapsed, energy and metal producers tumbled and the world’s biggest economy suffered a yearlong recession.

The S&P; 500 decreased 38.5 percent, the most since the 38.6 percent plunge in 1937, to 903.25 and sank to an 11-year low of 752.44 on Nov. 20. Volatility increased, with the index rising or falling 5 percent in a single day 18 times. The Dow Jones Industrial Average slumped 34 percent to 8,776.39 for the steepest drop since 1931. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a5RkfQG30k1k

-Crushed by the global credit crisis and a collapse in the prices of base metals, energy and most other commodities, the S&P;/TSX composite index fell 35 per cent for the year to close at 8,987.7. It was the worst collapse in decades the biggest drop since the Great Depression, according to Bloomberg. And it was an abysmal market globally with an estimated loss of $30-trillion (U.S.) in value, the news agency said. Theglobeandmail.com

-Robert Stovall, 82, pointed out that he’s still wary about more losses in 2009, based partly on how the stock market performed the year after 1931, when the Dow industrials fell nearly 53%. In 1932, the stock market turned in another year of double-digit percentage losses.

“I’ve been in the business for 55 years, and this is the worst [bear market] I’ve lived through as an active participant,” he said. “There could be more trouble ahead, and I expect there would be. In the meantime, we’ve had a lot people hurt by the markets. We’ve had scandal on top of mistakes a lot of casualties and I think that’ll continue. We have to be careful as we come into the New Year.” Read more here-http://www.marketwatch.com/news/story/father-son-market-experts-diverge-2009/story.aspx?guid={D9FAA669-628A-47AC-85C0-F5ED60A26342}&dist;=TNMostRead

-Billionaire Warren Buffett’s Berkshire Hathaway Inc. dropped 32 percent in 2008, the worst performance in more than three decades, as the recession forced down the value of the firm’s equity holdings and derivative bets. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aZgkHXSN1WzY

-Among those who have lost money in the alleged Ponzi scheme run by Bernard Madoff are some high-profile names, ranging from economist Henry Kaufman to actor Kevin Bacon, according to media reports Wednesday. Read more here-http://www.reuters.com/article/newsOne/idUSTRE4BU0OR20081231

-21 Dumbest Moments in Business 2008. Read more here-http://money.cnn.com/galleries/2008/fortune/0812/gallery.dumbest_moments_2009.fortune/index.html

-As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S. In Moscow, Igor Panarin’s Forecasts Are All the Rage; America ‘Disintegrates’ in 2010. Read more here-

http://online.wsj.com/article/SB123051100709638419.html

-Chinese New Year 2009 the Year of Ox the Year of Brown Cow. Read more here-http://en.wikipedia.org/wiki/Year_of_the_ox

RARE COLORED DIAMONDS

-Rio Tinto Claims Record Price for Argyle Diamond. Rio Tinto Diamonds said Monday it has received a record price for a pink diamond mined at its Argyle mine in Western Australia. The company did not disclose who bought the diamond or the price the stone fetched saying only that it sold above the reserve price.

OIL-COMMODITIES

-The Risk of Misjudging Peak Oil: A Real Physical Crisis. Slide show here-http://www.321energy.com/editorials/simmons/simmons122408/simmons122408.html

-Commodities had the biggest annual decline in five decades as demand for energy, metals and grains tumbled in the second half because of the recession. In 2008, the worldwide economy crumbled. Home prices plummeted, investment banks collapsed and credit froze. U.S. consumer spending plunged, pushing U.S. automakers to the brink of bankruptcy. Growth in China and other emerging markets withered.

From July to December, the slumping economy drove crude oil, gasoline, copper, corn, and wheat down from records in the first half. This year, the Reuters/Jefferies CRB Index of 19 raw materials fell 36 percent, the most since the gauge debuted in 1956, to 229.54. It rose to a record 473.97 on July 3. On Dec. 5, the measure dropped to the lowest since August 2002.

“Macroeconomically, we’re in a free fall,” said John Brynjolfsson, the managing director and chief investment officer at hedge fund Armored Wolf LLC in Aliso Viejo, California. “That’s a complete destruction in industrial production and demand, and this is likely to keep pressure on the commodity sector in general.”

In 2008, 15 prices dropped in the CRB, led by gasoline and nickel. Only four climbed, paced by cocoa. “The recession will stretch for at least the next six months,” Marc Faber, the managing director of Marc Faber Ltd. in Hong Kong and publisher of the “Gloom, Boom and Doom Report” said in an interview on Bloomberg Television on Dec. 26. “2009 will be a write-off in terms of economic activity.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aOk_hJwwPcvE

ANALYST-ONE THIRD OF BANKS COULD COLLAPSE IN 2009

-Financial analyst Ralph Silva of TowerGroup told CNBC that he expects no less than one third of banks to fail in 2009 and that anything up to a thousand could collapse if they don’t merge. Silva said that only five or six global banks have enough funds to survive comfortably throughout 2009.

“The rest of the banks, and that means a thousand other banks, don’t have enough money to get themselves through 2009,” added Silva. “In 2009 we’re gonna see one third of the banks in the G8 countries disappear, either being merged, forced or not forced, or completely disappearing,” said Silva.

The analyst predicted that rather than letting banks fail, governments will force them to merge, citing the example of Bradford and Bingley in the UK, which would lead to “very few banks owning quite a bit more.” Silva warned that banks would not be able to lend any money throughout 2009 because they would be more concerned with merely surviving and being able to pay their own employees. CNBC-Watch video here-http://www.cnbc.com/id/15840232?video=975644719&play;=1

-Banks cut lending by 55% in 2008. U.S. loan issuance fell to the lowest volume since 1994 as banks repair balance sheets, shun underwriting new, risky deals. Read more here-

http://money.cnn.com/2008/12/30/news/economy/loan_issuance.reut/index.htm

FINANCIAL CRISIS

-Three days that shook the world. The most powerful people in American capitalism convened on September 12 to try and save Lehman Brothers. Three months later, it is clear that the egos, passions and prejudices of the participants in those meetings have reordered the American business landscape. Read more here-

http://money.cnn.com/galleries/2008/fortune/0812/gallery.threedays.fortune/index.html

-It has been a year of record misery: the largest bankruptcy, bank failure and Ponzi scheme in U.S. history; $720 billion in writedowns and losses by financial institutions; $30.1 trillion in market valuation wiped out. The biggest loss and the hardest thing to recover, though, may be something that can’t be precisely measured confidence in the markets and the firms that rely on them.

“The wholesale funding model lost its credibility,” said David Hendler, senior analyst at New York-based CreditSights Inc. “That started the semi-nationalization of funding in the financial markets. It’s a real chink in the armor of capitalism as supposedly the best process for allocating capital. The government is now deciding who gets access to capital.”

For Paul DeRosa, a principal of Mount Lucas Management Corp., a $1 billion hedge fund in Princeton, New Jersey, most unnerving was that the credit crisis revived something that, like the bubonic plague, was supposed to be a relic of the past.

“We had what was for all intents and purposes a systemic bank run for the first time in 70 years,” said DeRosa, whose fund is up 25 percent this year. “This ended our belief that financial panics were a thing of the past. That’s why this is a transcendent event.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ataVotdLreS0&refer;=home

-The Treasury Department has committed nearly $10 billion more than the $350 billion Congress has authorized to date for the financial-sector rescue package, which could constrain how the incoming Obama administration deploys the rest of the fund. Read more here-http://www.gata.org/node/7045

-People Pulling Up to Pawnshops Today Are Driving Cadillacs and BMWs. Well-to-Do Turn to Last-Resort Lenders; Putting Up Diamonds, Dumpsters as Collateral. Read more here-

http://online.wsj.com/article/SB123059909346041273.html?mod=googlenews_wsj

RETAIL-HOLIDAY SALES

-Thousands of stores to disappear in 2009. Experts say disastrous holiday sales will force many more merchants into bankruptcy and ultimately into liquidation. Read more here-

http://money.cnn.com/2008/12/31/news/economy/retail_closures/index.htm?postversion=2008123113 or http://www.bloomberg.com/apps/news?pid=20601087&sid;=ajAqMbszJmNY&refer;=home

-More disappointment for retailers. Research group says holiday sales were weaker than forecast despite final week surge. Read more here-

http://money.cnn.com/2008/12/31/news/economy/shoppertrak_sales/index.htm?postversion=2008123114 or http://www.bloomberg.com/apps/news?pid=20601110&sid;=aQEwsalPwHE4

THE 10 WORST PREDICTIONS FOR 2008

-’Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?’ No! No! No! Bear Stearns is fine! Do not take your money out. … Bear Stearns is not in trouble. I mean, if anything they’re more likely to be taken over. Don’t move your money from Bear! That’s just being silly! Don’t be silly!” Jim Cramer, responding to a viewer’s e-mail on CNBC’s Mad Money, March 11, 2008.

Hopefully, Peter got a second opinion. Six days after the volatile CNBC host made his emphatic pronouncement, Bear Stearns faced the modern equivalent of an old-fashioned bank run. Amid widespread speculation on Wall Street about the bank’s massive exposure to subprime mortgages, Bear’s shares lost 90 percent of their value and the investment bank was sold for a pittance to JPMorgan Chase, with a last-minute assist from the U.S. Federal Reserve. Read more here-http://www.foreignpolicy.com/story/cms.php?story_id=4569&page;=0

-”I believe the banking system has been stabilized. No one is asking themselves anymore, is there some major institution that might fail and that we would not be able to do anything about it.” Henry Paulson on National Public Radio, Nov. 13, 2008.

The U.S. Treasury secretary entered November with guns blazing. After much hemming and hawing before Congress a month earlier, he came out with what he called his “bazooka” a $700 billion mandate to scoop up bad assets from troubled banks. By mid-November, he had already discharged $300 billion in munitions, albeit mostly via the kind of direct equity stakes he had rejected earlier. Unfortunately for Paulson, shortly after his vote of confidence, Citigroup’s stock price plunged 75 percent in one week, closing below $5 for the first time in 14 years.

SECOND MORTGAGE DISASTER COMING?

-A Second Mortgage Disaster On The Horizon? New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default. The trouble now is that the insanity didn’t end with sub-primes. There were two other kinds of exotic mortgages that became popular, called “Alt-A” and “option ARM.”

The option ARMs, in particular, lured borrowers in with low initial interest rates so-called teaser rates sometimes as low as one percent. But after two, three or five years those rates “reset.” They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500. Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

“The defaults right now are incredibly high. At unprecedented levels. And there’s no evidence that the default rate is tapering off. Those defaults almost inevitably are leading to foreclosures, and homes being auctioned, and home prices continuing to fall,” investment fund manager Whitney Tilson explains. Read and watch more here-

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

REAL ESTATE

-Home prices in 20 major U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales. The S&P;/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in September. The gauge has fallen every month since January 2007. Year-over-year records began in 2001.

The financial market meltdown that’s reverberated around the globe has prompted banks to curb lending, signaling the housing slump will persist for a fourth year in 2009. Falling property values have eroded household wealth, causing consumers to pare spending and deepening what is projected to be the longest recession in the postwar period.

“We’re seeing a shift to a housing market that is driven by a poor economy rather than a housing market that’s driven by oversupply,” said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. “The credit problems that hit in October exacerbated the speed of it.”

Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in October, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas. “The bear market continues,” David Blitzer, chairman of the index committee at S&P;, said in a statement. The declines in Atlanta, Seattle and Portland surpassed 10 percent for the first time, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aquICb64DYOc&refer;=home

-London house prices fell more than in any other U.K. region this year and probably will decline further in 2009 as the economy sinks deeper into a recession, Hometrack Ltd. said. Residential property prices dropped 10.1 percent in the capital, more than the 8.7 percent average across the country, the property researcher said in a report today. London house prices fell 1 percent in December alone, compared with a 0.9 percent drop across Britain.

“The onset of recession and the prospect of rising unemployment over 2009 will continue to damp confidence and in turn demand, which will inevitably lead to further house price falls over the next 12 months,” Richard Donnell, Hometrack’s director of research, said in the statement.

Banks are rationing credit as they rebuild their balance sheets and brace for the recession, hurting the ability of consumers to afford moving. Prime Minister Gordon Brown’s government will announce new measures next month to revive lending after institutions failed to pass on the full impact of Bank of England interest-rate reductions.

Hometrack, which surveyed 1,809 real estate agents and surveyors, said many homeowners are choosing not to move as unemployment rises and companies including Woolworths Group Plc and MFI Group Ltd. tip into bankruptcy. Consumer spending shrank in the third quarter, triggering the biggest contraction in economic growth since 1990. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=arL6UVCjhD6w&refer;=home

The GoldBugg Report – January 06, 2008
Posted by Worldwide Precious Metals on Tuesday, January 6, 2009

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