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The GoldBugg Report – February 24, 2009

February 24, 2009

WORLD FINANCIAL REPORT ON RADIO FEB 20 2009 SHOW

February 20^th, 2009

Memo to All Retail Dealers

Another week comes to a close and the World’s Financial Markets continue their unprecedented turmoil and deterioration. As we pen this memo the Dow has broken down through the 7500 support level and closed at 7365.67.

It’s next key support level is 7200 and if that breaks its “Katie bar the door.”

Today rumours riddled the markets, based on comments by Mr. Bernanke and the market’s paranoid interpretation of his comments, that US Nationalization of some US Banks was being considered by the US Government.

Later in the Day, White House and the Treasury tried to dispel these rumours, but it looks like the markets are not buying in to the possibility that their comments are viable.

Here is how Precious Metals Faired:

(Friday to Friday Close)

Notice that while Gold & Silver continued to appreciate substantially Platinum was moderately up while Palladium actually lost ground. Again we feel this is continued confirmation of Gold & Silver being the product of choice as the “Flight to Quality” continues.

Net Change Year to Date

Since the lows for Gold and Silver seen in October (Gold $680.00, Silver $8.40) with a ratio of 80.95/1, we have seen a remarkable but logical appreciation of $322.00 in Gold (+47.36%) and $6.14 in Silver (+73.1%).

In our memos of Oct 30^th, Nov 6^th, and Nov 24^th 2008 we stressed this to be a time to be proactive and for those folks who did – congratulations and thank you for your confidence in PMI.

For those who have yet to cross over to the world of Precious Metals ownership we do not feel it is too late as we see long term price appreciation having a long way to go.

If we see similar appreciation over the next four months we could see Gold approach $1,500.00 and Silver in the $25.00 range which would put the Silver/Gold ratio at 60/1.

In the meantime here are the Short Term Support and Resistance Levels:

We make no guarantee of price levels discussed, and certainly PMI is not alone in anticipation of much higher prices for Gold, Silver, Platinum and Palladium. However with the continued dissolving of the world financial systems as we have known them, and given the fact that historically Precious Metals have been the only product man can own and hold to preserve purchasing power, it seems logical that now, more than ever is a serious time for Precious Metals.

Trading Department – Precious Metals International

GOLD

-Gold Cycles Relative to the S&P; 500. A chart of Gold cycles relative to the S&P; 500 and a chart of the price of Gold relative to the S&P; 500 clearly suggest an out performance by Gold in the years to come.

As frequently outlined in our Gold Comments, our 40-year cycle suggests similar outcomes, since during the last 1/3rd of the 40-year cycle (1922-1934; 1962-1974; 2002-?) Resources (or “hard-assets”) invariably outperform “soft-assets” (Banks, etc.). Ron Meisels-Story here-http://www.321gold.com/editorials/meisels/meisels021609.html

-Insight: Gold primed to be ‘mania asset.’ Gold is exhibiting all the classic signs of being in a structural bull market. On fears of inflation in early 2008, it rallied. Then, on fears of deflation in late 2008, it rallied again. How high can gold ultimately go? A Dow Jones Industrial Average/gold ratio of 2:1 would be a good sign the bull market in gold is getting well advanced. We saw this in 1932 and 1980. Only nine years ago in 2000, however, this ratio reached over 40:1. Read more here-http://www.ft.com/cms/s/0/eff64394-fdd7-11dd-932e-000077b07658.html?nclick_check=1

-Gold to Beat Equities, Bonds Amid Crisis, MFC’s Pichit Predicts. Investors should boost gold holdings as the global financial crisis will increase demand for the precious metal as a safe haven, according to MFC Asset Management Pcl, Thailand’s fourth-biggest mutual-fund company.

“Returns from investing in gold will continue to outpace those from equities and bonds for the next couple years,” President Pichit Akrathit said today in an interview. “Gold has proven for several centuries that the metal is a safe place as a store of wealth during most economic crises.” Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aqi9enzsjGME

-$2500 gold is Nichols nuts or a prescient observer? Talking to Mineweb radio yesterday, gold commentator Jeffrey Nichols predicted a $2,500 gold price as the global financial crisis gets worse before it gets better. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=78718&sn;=Detail

-McEwen, Goldcorp Founder, Bets Crisis Will Drive Gold to $5,000. Goldcorp Inc. founder Rob McEwen, who has more than $100 million in gold investments, said he expects the metal to top $5,000 an ounce as governments increase the money supply to combat recession. Bullion will more than double to $2,000 an ounce by the end of next year before rising to McEwen’s target by the end of the cycle, which could take an additional four years, the investor said.

“Politicians around the world are listening to cries from their electorates and they’re giving money to all callers,” McEwen said yesterday in a telephone interview from Toronto.

McEwen, who founded what is now the world’s second-largest gold producer by market value, owns stakes in three Canadian precious-metal explorers worth more than $100 million. He said he also has a “big, big” holding in bullion. Gold gained for the eighth straight year in 2008 amid investor concern the economy would collapse and government efforts to prevent that would increase inflation.

McEwen said he started buying bullion in August 2007, at the beginning of the subprime mortgage crisis. Gold has jumped 40 percent since Aug. 1 of that year, touching a high of $948.20 today, while the Standard & Poor’s 500 Index has dropped 43 percent. “I realized we had reached an inflection point regarding money,” McEwen said. “It was all about protecting money, and gold served that purpose.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=adHg7t8BL5Bg&refer;=canada

-Murenbeeld reckons gold will reach $2,300. The gold price should average $945/oz during 2009 but rise to $995/oz by the end of the year and average $1,050/oz during 2010.

Those are the latest predictions made by gold “guru” Martin Murenbeeld, chief economist for Dundee Wealth Economics, speaking at the Mining Indaba being held in Cape Town.

But Murenbeeld added he believed gold would eventually reach $2,300/oz although he did not put a timeframe on this prediction. The price level of $2,300/oz holds considerable significance for gold investors and analysts because it represents the current, inflation-adjusted value of the price of $850/oz that gold reached early in 1980.

Interviewed after his presentation Murenbeeld said, “Over the long cycle gold will take out $2,300/oz but that could take up to five years before it happens.” Read more here-

http://www.miningmx.com/events/indaba_2009/murenbeeld-reckons-gold-will-reach-$2,300.htm

-Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double. Bullion may top $2,000 an ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.

“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.” Sprott, who manages $4.5 billion, said in March that the world was in a “systemic financial meltdown,” a call that presaged the collapse of financial institutions including Bear Stearns & Co. and Lehman Brothers Holdings Inc. Since then, the U.S. has entered the worst economic slowdown since the Great Depression, credit markets have tightened and asset prices have dropped as companies and funds sell portfolios to raise cash.

The 81-company Standard & Poor’s 500 Financials Index has dropped 62 percent since Sprott said on March 6 he was buying bullion and gold-producers’ shares, while shorting financial- sector stocks. Gold slipped 6.3 percent during the same period. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ao7hCvQA9QZ0

-James Turk interviewed on gold. ‘Buy gold, it’ll only rise from here.’ Read more here-http://www.dnaindia.com/report.asp?newsid=1230259&pageid;=0

-John Embry of Sprott talks about gold on BNN. Watch video here-http://watch.bnn.ca/commodities/february-2009/commodities-february-19-2009/#clip141495

and http://watch.bnn.ca/commodities/february-2009/commodities-february-19-2009/#clip141497

-Jay Taylor speaks about gold on BNN. Watch video here-http://watch.bnn.ca/#clip139229 and http://watch.bnn.ca/#clip139230

-Gold Demand Pushed Through $US100 Billion Barrier as Investors Turned to Recognized Store of Value. Read more here-http://biz.yahoo.com/bw/090218/20090217006742.html?.v=1

or http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=78660&sn;=Detail

-Gold Demand Rose 26% in Quarter on Investment Appeal. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aW4LBpx1MAUw

-Where do the gold ETFs really get their bullion? Read more here-http://www.gata.org/node/7169

-Did Japan Just Buy the IMF’s 400 Tonnes of Gold? Read more here-http://safehaven.com/article-12624.htm

-William Rees-Mogg: In crisis never forget value of gold. Read more here-http://www.gata.org/node/7175

-How significant is this bear market? It all depends on how you measure. When measured in US dollars, the Dow currently trades 44% off its October 2007 record high. However, when measured with that other world currency (gold), the bear market is much more significant. To help illustrate the point, today’s chart presents the Dow divided by the price of one ounce of gold.

This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 8.4 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the Dow from 1999 to today is down 81%! Chartoftheday.com

-US Mint Bullion Coin Sales. Read more here-http://www.zealllc.com/2009/mintcoin.htm

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,000 the silver price would be $12.50
Gold to silver ratio at 70 to 1 with gold at $1,000 the silver price would be $14.29
Gold to silver ratio at 60 to 1 with gold at $1,000 the silver price would be $16.67

Gold to silver ratio at 50 to 1 with gold at $1,000 the silver price would be $20.00
Gold to silver ratio at 15 to 1 with gold at $1,000 the silver price would be $66.67

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1234807880.php

-David Morgan silver commentary. Read more here-http://www.321gold.com/editorials/morgan/morgan021309.html

-Gold:silver ratio a pointer to higher prices all round? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=78388&sn;=Detail

-Silver and gold Break Through Resistance. James Turk-Read more here-http://goldmoney.com/en/commentary/2009-02-15.html

-Silver and gold Market Updates from Clive Maund. Read more here-http://www.321gold.com/editorials/maund/maund021609.html

DEFINITIONS-QUOTES-QUICK HITS

-Devaluation. A deliberate downward adjustment to a country’s official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country’s government (i.e central bank) can alter the official value of the currency. Contrast to “revaluation”.

There are two implications for a currency devaluation. First, devaluation makes a country’s exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country’s trade deficit. Investopedia.com-Read more here-

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

-”We are spending more money than we have ever spent before, and it does not work. After eight years we have just as much unemployment as when we started, and an enormous debt to boot.” US Treasury Secretary, Henry Morgenthau, May, 1939

-”O gold! I still prefer thee unto paper which makes bank credit like a bank of vapour.” Lord Byron

-”We’re talking about ordinary people not knowing what to do with their savings equity markets are suffering, housing markets are suffering and so they’re buying gold.”

Rozanna Wozniak the World Gold Council’s investment research manager

-Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund, summed up by saying, “I think $1,000 is pretty much almost in the cards here just given how strong the trend has been.” The demand for gold is “a reflection of just how concerned investors are becoming about the ongoing volatility in the equity market as well as the financial crisis,” Hicks added. Casey Daily Resource

-”The market might see a test of the $1,000 mark in the days ahead should risk aversion continue, however, $1,000 is an important psychological barrier and will be hard to breach at the first instance,” said Tobias Merath, head of commodity research at Credit Suisse Group in Singapore. Bloomberg

-In these unprecedented economic times, it is irresponsible and extremely high risk not to have an allocation to gold bullion in an investment portfolio. Gold.ie

-”Investor confidence is extremely shaky,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “People are still flocking to gold for its perceived safety.” Bloomberg

-”Gold has become, for all intents, the world’s second reserve currency.” Dennis Gartman economist and editor of the Gartman Letter

-”Everyone is looking for a safe haven, and gold is the safest and most-liquid haven of them all,” said James Turk founder of GoldMoney.com

-Gold bugs have been emboldened by news that Russia has accumulated 90 tonnes over the last 15 months. “We are buying gold,” said Alexei Ulyukayev, deputy head of Russia’s central bank. The bank is under orders from the Kremlin to raise the gold share of foreign reserves to 10 percent. Read more here-http://www.gata.org/node/7178 or http://news.goldseek.com/GoldSeek/1234965600.php

-While investment demand remains very strong and is increasing there are growing fears about the declining supply of gold – the world’s mine gold supply has been falling in recent years and it fell to 2,385 tonnes last year, down 3.6 per cent from 2007 (despite the rise in prices in recent years). This is a recipe for markedly higher prices in the coming months and the inflation adjusted high of some $2,400/oz looks more and more likely in the next few years. Gold.ie-Read more here-http://news.goldseek.com/GoldSeek/1234879200.php

-The collapse in silver prices from over $20 to below $9 last year saw a sharp rebound in the gold/silver ratio favouring gold over silver. This rally now appears to be over and the past several weeks have seen a shift back to favouring silver over gold. Investors should also maintain some exposure to silver. At a sharply lower price it gives true meaning to the term “poor man’s gold”.

The ratio charts are telling us that Gold is now favoured over the key asset classes of stocks, bonds and oil. We believe we are at or near the cusp of a period that could see the best gains in gold (and silver). Gold is money and investors need exposure to it to protect their assets in a period where things are going to get a lot worse before they get better. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1234565130.php

-”One of the critical factors about gold is that it’s not issued by a central bank,” Charles Kernot, a mining analyst at Evolution Securities in London, said in a Bloomberg Television interview. As governments devalue their currencies, “you want to have a completely independent hedge against that happening and gold really is such an independent hedge. There is still plenty of scope for a further uplift in the metal’s price.” Bloomberg

-”Gold is rallying against all currencies,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Up the road, you’re looking at governments devaluing their currencies to pay for the financial crisis. It’s the ultimate flight to safety for gold.” Bloomberg

-Dan Norcini, writing on jsmineset.com, noted that the flight is near-universal: “Once again gold scored brand new record all time highs when priced in both Euro terms and British Pound terms at the PM Fix. Euro gold was fixed at €740.094 while BP gold was set at £663.746. Canadian Dollar priced gold notched another all time high [Wednesday] over $1,170 and is on course to score yet another [on Thursday]. Aussie priced gold is perched just below its record all time high. Ditto for Russian ruble priced gold. Can someone say world-wide currency devaluation?” Casey Daily Resource-Feb 13 2009

-President Obama’s Economic Stimulus Plan finally passed at $787 Billion. So hear we go. Spend, Spend, Spend and it won’t be enough. What does this equate to? Long Term Inflation! And that should be extremely positive for Precious Metals. Precious Metals International-Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aONSBEtW5iOc

-Economic stimulus plans by governments around the world were likely to drive inflation, stoking demand for gold as a hedge, said Philip Gotthelf, the president of Equidex Brokerage Group Inc., in a Bloomberg Television interview.

“We’re probably going to have to print more and more money and the more money you print, the less valuable it is, so smart investors are moving into hard assets that can hedge against those kinds of devaluations,” he said. “Gold represents a safe haven in a deflationary panic market as well as in an anticipatory inflationary market.” Bloomberg

-China is right to have doubts about who will buy all America’s debt. Chinese doubts about the value of US Treasury bonds highlight a crucial question: who will buy the estimated $2.7 trillion (£1.9 trillion) to $4.2 trillion of debt expected to be issued over the next two years? Read more here-http://www.telegraph.co.uk/finance/breakingviewscom/4611408/China-is-right-to-have-doubts-about-who-will-buy-all-Americas-debt.html

-China bank regulator clarifies, says U.S. bonds are not only option. Read more here-http://www.gata.org/node/7171

-Ireland ‘could default on debt.’ Fears are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector. Read more here-

http://business.timesonline.co.uk/tol/business/economics/article5733723.ece

-Efforts to avoid a deflationary depression will probably produce the opposite a nasty bout of inflation, says John Williams of Shadow Government Statistics, who advises hoarding gold and even Scotch to barter. Watch video here-http://online.wsj.com/video/100-bills-as-toilet-tissue/46C4AF8C-4C1D-425E-9570-ADE365D5132C.html

-The number of Americans collecting unemployment benefits jumped to 4.99 million two weeks ago, breaking a record for a fourth straight time, signaling the job market is still deteriorating. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aF6×7A2eBvxU

-Job Losses Pose a Threat to Stability Worldwide. Read more here-http://www.nytimes.com/2009/02/15/business/15global.html

-”Worst Is Yet to Come:” Americans’ Standard of Living Permanently Changed. Read and watch video here-http://finance.yahoo.com/tech-ticker/article/176478/%22Worst-Is-Yet-to-Come:%22-Americans-Standard-of-Living-Permanently-Changed

-Greenspan Says U.S. May Not Be Doing Enough to Promote Recovery. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a2k6XOkp9NYA&refer;=home

-Recession will be worst since 1930s: Greenspan. Read more here-http://www.reuters.com/article/newsOne/idUSTRE51H0OX20090218

-Oil supply crunch in 2010? The International Energy Agency says that when the economy regains strength, demand for crude will pick up. Read more here-

http://money.cnn.com/2009/02/16/markets/iea_supply.reut/index.htm?postversion=2009021607

-China lends Russia $25 bln to get 20 years of oil. Read more here-http://www.reuters.com/article/marketsNews/idUSLH44422920090217

-Driving Fell, U.S. Auto Dealers Closed at Record Rates in 2008. U.S. motorists reduced driving by the most in 66 years in 2008 and auto dealerships closed in record numbers, reflecting a deepening recession that’s causing consumers to pull back.

Vehicle-miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report today. The Detroit-based consultant Urban Science said 881 dealers closed, with most coming the fourth quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aBdpMvHBYybk

-Synchronized Boom, Synchronized Bust. Bad U.S. monetary policy had global consequences. Read more here-http://online.wsj.com/article/SB123491436689503909.html

-Zimbabwe earns second place in hyperinflation history: economist. Read more here-http://www.lankabusinessonline.com/fullstory.php?nid=1309462463

-Miami banker gives $60 million of his own to employees. Read more here-http://www.miamiherald.com/news/miami-dade/story/904842.html

RARE COLORED DIAMONDS

-The Rare Colored Diamonds Historical Value Tracker system 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

-Rare colored diamond sales have been solid as a rock in recent months. In fact, the Wittelsbach blue diamond sold for $24.3 million at Christie’s in London on Dec. 11, 2008, setting a record price for any diamond or jewel sold at auction. The buyer was billionaire Laurence Graff. Christie’s Rahul Kadakia believes rare colored gems will remain at respectable price levels. “When it comes to colored diamonds, especially blues and pinks, those are rare in any market,” he says.

Says Lisa Hubbard of Sotheby’s, “Those appear to be holding their value, and they have not been subject to the ups and downs of the white diamond market.” Sotheby’s has also logged strong results in its recent colored diamond sales. An oval-shaped, vivid yellow diamond weighing 36.99 carats, internally flawless, sold at Sotheby’s New York in December 2008 for $71,870 per carat.

These gems are still the most sought after by famous private purveyors like the William Goldberg Diamond Corp. in New York, which has produced some of the most extraordinary colored diamonds in history, including the 30-carat, $50 million Blue Lili and the 5.11-carat, $20 million Red Shield, the largest red diamond ever graded by the Gemological Institute of America.

“I’ve heard different talk totally, about mines shutting down, like the Argyle mine in Australia,” says Barry Berg of the William Goldberg Diamond Corp., adding that he expects pink and blue diamonds to become ever scarcer. “It’s very hard to find a blue today, rough or polished,” he says. “Yellow is a little more available, but orange, I haven’t seen in ages.”

The Goldberg family business has seen prices for important stones remain strong. “We recently sold a 10-carat intense pink diamond for more than $8 million,” notes Eve Goldberg. “We also sold a bracelet with 58 carats of fancy colored diamonds, all over one carat, for close to $3 million.”

The company has moved from selling stones into jewelry and is pushing deeper into markets like Brazil, Russia, China and India in the hunt for new clients. Back in New York it’s opening the William Goldberg Diamond Corp. boutique, designed by William Green. This new apartment showroom above Fifth Avenue boasts an outdoor terrace. In contrast to street-level retailers like Harry Winston, Cartier and De Beers, the Goldberg showroom offers privacy and calm to clients ready to spend millions of dollars, protecting them from the prying eyes of the public.

Clients have started to ask the Goldbergs whether they should consider buying diamonds as an investment and a shelter from plunging markets. Sotheby’s Hubbard is not surprised. Diamonds have an international market, and they are seen as a way to preserve wealth, she says.

But with the economy as unstable as it is, it’s tough for both auction houses and retailers to know how to price their wares. “We’re putting together our spring sale, and it’s not easy,” notes Hubbard, “because values are in a state of flux.” Story here-http://www.forbes.com/2009/02/12/diamonds-jewelry-goldberg-lifestyle-collecting_0212_diamond_jewelry_print.html

-In Pictures: Diamonds That Rock. View diamonds here-http://www.forbes.com/2009/02/12/diamonds-jewelry-goldberg-lifestyle-collecting_0212_diamond_jewelry_slide_2.html?thisspeed=25000

-New Fund Projects Investment Opportunity in Colored Diamonds. Codiam Fund, which invests in high-end polished colored diamonds, is upbeat about the prospects for the colored diamond market, according to an announcement it released on Thursday. The fund, which launched in September, reported a 9 percent increase in its net asset value in the first three months of operation.

Mahyar Makhzani, managing director and cofounder of the fund, stressed the investment value of colored stones, whose prices have remained at a reasonable level through the financial crisis. “The investment in this category rather than white diamonds has been proven correct as we are not dealing nor speculating but intelligently investing in a very rare commodity,” he said.

The fund reported that colored diamonds have not decreased in price on a wholesale level in 35 years, and that their value has increased between 10 and 15 percent a year on average. “Colored diamonds have held their value and not suffered from the current economical crisis as other traditional assets have,” Codiam explained in its statement.

The fund was founded by Makhzani and Philip Baldwin, who have more than 50 years experience in the diamond and jewelry industry between them, having served in managerial positions at the likes of Bulgari, Tiffany & Co. and Habsburg. At Codiam, they have laid out a very clear investment strategy. They only look at polished colored diamonds, avoiding the riskier rough market and the volatile market for white stones. The fund therefore only buys intense colored diamonds larger than 1 carat, in the top colors, including red, intense purple, intense green, purple red, purplish-red, bluish-green, greenish-blue, pink, blue, orange and yellow.

The focus on colored diamonds has allowed it to capitalize on traders’ need for liquidity, particularly those with both white and colored diamonds in their inventory. They are still able to sell their colored stones at some profit, which is not the case with white diamonds, Makhzani explained. Codiam also sources stones from private sellers, and while it has in turn resold some of its stock to private buyers and to its own investors, the focus for now is on buying.

Having launched with an estimated kitty of more than $5 million, Makhzani reported that the fund has the cash to make the purchases for now. “We do not need to borrow at this stage to make purchases. What we raise is what we spend,” he added.

Which is not to say it has an open checkbook. The fund sticks to its strict purchasing guidelines, and Makhzani explained that its investment strategy extends beyond merely buying diamonds and hoping they rise in value. The increase in the fund’s net asset value, he noted, has resulted from creating collections by matching stones of different colors. “The sets are worth more than if we sold the stones individually,” he said. Makhzani stressed that the valuation was based on the opinion of third-party dealers.

Still, Codiam will be hoping the fund’s increase in net asset value, along with its spending power, will woo members of the colored diamond market, particularly at its next major stop, the BaselWorld Watch and Jewellery Show in late March. “We are ready for Basel,” Makhzani said. Diamonds.net-Story here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=25357

-A fund offering access to physical diamonds is being launched to take advantage of investors’ appetite for physical assets they hope will avoid the turbulence in securities markets — as illustrated by rise of physical gold prices to a seven month high.

The KPR diamond fund capitalizes on the price appreciation of top quality colorless diamonds. The diamond fund aims to provide returns which are not correlated with traditional asset classes, act as a hedge against inflation and benefit from the supply/demand imbalance over the long term. The fund, which is part of KPR Fund, a Cayman Islands open-ended investment company, launches on March 2 2009, with a minimum investment of $250,000. Read more here-http://www.wealth-bulletin.com/portfolio/products-and-strategies/content/1053384796/

HOW THE FINANCIAL WORLD ALMOST CAME TO AN END AT 2PM ON SEPT 18^TH 2008

-Youtube has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a “tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson:

On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it. We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment. Watch video here-http://zerohedge.blogspot.com/2009/02/how-world-almost-came-to-end-at-2pm-on.html or http://www.infowars.com/rep-kanjorski-550-billion-disappeared-in-electronic-run-on-the-banks/

or http://www.youtube.com/watch?v=pD8viQ_DhS4

FEDERAL OBLIGATIONS EXCEED WORLD GDP

-As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the “2008 Financial Report of the United States Government” as released by the U.S. Department of Treasury.

The difference between the $455 billion “official” budget deficit numbers and the $5.1 trillion budget deficit cited by “2008 Financial Report of the United States Government” is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur. Read more here-

http://www.worldnetdaily.com/index.php?fa=PAGE.printable&pageId;=88851

CRISIS WIPES $5.5 TRILLION OFF BANKS VALUE

-The financial crisis has wiped $5.5 trillion off the market value of the world’s banks, equivalent to 10 percent of global GDP, according to a report released on Wednesday. The Boston Consulting Group estimated the banking industry’s market value fell $4 trillion by the end of 2008, and lost a further $700 billion in the first three weeks of this year.

Banks were worth $8.8 trillion in the third quarter of 2007, when the financial crisis began in earnest. Only four banks had market values greater than $100 billion at the end of 2008 China’s ICBC and China Construction Bank, U.S. bank JPMorgan Chase and Britain’s HSBC compared with 11 at the end of 2007, the report said.

The market value of the 30 largest banks slumped 47 percent in 2008 to $1.7 trillion. JPMorgan Chase moved to third in the global rankings, behind China’s top two lenders.

Also moving up the rankings into the top 10 were U.S. lender Wells Fargo and Spain’s BBVA. Read more here-

http://www.reuters.com/article/gc06/idUSTRE51H4Z020090218

U.S. BANKS FAILURES-NATIONALIZE?

-Bank failures: 13 in 2009. Closures in Nebraska, Florida, Illinois and Oregon bring the number of bank failures to 13 this year as the financial crisis continues to roll. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aRgn03yslgCU or http://money.cnn.com/2009/02/13/news/economy/bank_failure/index.htm

-Large U.S. banks on brink of insolvency, experts say. Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent. Read more here-http://www.iht.com/articles/2009/02/13/business/13insolvent.php

-Nouriel Roubini trusts Timothy Geithner to get it right on US banks. Roubini can see that the ‘N’ word might be a little difficult for Western governments to swallow right now. But for him, it’s the right indeed, the only route to follow. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4639504/Nouriel-Roubini-trusts-Timothy-Geithner-to-get-it-right-on-US-banks.html

-Roubini tells Geithner to nationalise US banks. Tim Geithner must nationalise some of America’s biggest banks and take the total toll of the US bail-out to around $2 trillion, according to one of the world’s most prominent economists. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4634398/Roubini-tells-Geithner-to-nationalise-US-banks.html

-Nouriel Roubini, the New York University professor who predicted the global credit crisis, said a government-backed bank “may crack” as officials try to bail out their financial systems.

“The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,” Roubini wrote on his Web site today.

“At some point a sovereign bank may crack, in which case the ability of the governments to credibly commit to act as a backstop for the financial system including deposit guarantees could come unglued.” Roubini didn’t identify any sovereign bank that might run into difficulty. He also said he sees a 30 percent chance of an “L-shaped near-depression” without “appropriate and aggressive policy action” by the U.S. and other major economies to prevent a sovereign bank’s failure. Read more here-

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

-Greenspan backs bank nationalization. Read more here-http://www.ft.com/cms/s/0/e310cbf6-fd4e-11dd-a103-000077b07658.html

-Bank nationalization gains ground with Republicans. Read more here-http://www.ft.com/cms/s/0/2ad3b750-fd27-11dd-a103-000077b07658.html?nclick_check=1

-US banks under pressure from forensic hit-teams. American banking chiefs are facing the biggest, most nail-biting assessment of their lives: a series of financial “stress tests” by teams of government experts to see whether their institutions can be salvaged. Saving the banking system and boosting the economy is the first big challenge for Barack Obama’s new administration.

Forensic inspectors from at least four federal agencies will soon begin combing through asset registers, trading ledgers and balance sheets at the 18 or so biggest US banks. Line by line, the inspectors will tot up billions of dollars in liabilities. Read more here-http://www.guardian.co.uk/business/2009/feb/12/us-bank-bailout

-European banks sitting on 24 trillion of toxic assets. European bank bail-out could push EU into crisis. A bail-out of the toxic assets held by European banks’ could plunge the European Union into crisis, according to a confidential Brussels document.

“Estimates of total expected asset write-downs suggest that the budgetary costs actual and contingent of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html

A FRAUD BIGGER THAN MADOFF

-Senior US soldiers investigated over missing Iraq reconstruction billions. In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein. The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff’s notorious Ponzi scheme.

“I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad,” said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in “pallet upon pallet of hundred-dollar bills” to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown. One of the few visible signs of government work on Baghdad’s infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later. Read more here-

http://www.independent.co.uk/news/world/americas/a-fraud-bigger-than-madoff-1622987.html

STANFORD INTERNATIONAL BANK ACCUSED OF FRAUD

-Missing billionaire found in Virginia. The FBI locates and officially serves papers to financier Robert Allen Stanford, who is accused of running a $9.2 billion investment fraud scheme.

-Found! Accused Scammer Stanford Turns in Passport in Washington. SEC Moving to Seize Billionaire’s Planes, Yachts, Bank Accounts and Homes. Read more here-

http://www.abcnews.go.com/Blotter/story?id=6914758&page;=1

-Hunt for Allen Stanford and his billions. Read and watch video here-http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5762670.ece

-Allen Stanford ‘fraud’ uncovered by favor. Read and watch video here-http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5762578.ece

-Stanford International Bank Ltd., the Antigua-based affiliate of billionaire R. Allen Stanford’s U.S. investment firm, placed a 60-day moratorium on early redemptions of its certificates of deposit, people familiar with the matter said.

Stanford Group Co. financial advisers have told three clients that they can’t redeem CDs sold by the firm prior to their maturity date, according to the customers, who asked that their names not be used. The bank in the past let customers pay a three-month interest penalty to get their money back before the contractual maturity of the certificates, the people said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aeHvNZJLOWf0&refer;=home

-Stanford International Bank Ltd., accused by U.S. regulators of defrauding investors, relied on more than high interest payments to sell $8 billion of what it called certificates of deposit.

The Antigua bank, founded by Stanford Group Co. Chairman R. Allen Stanford, attracted clients with assurances that its CDs were as safe as U.S. government-insured accounts, if not safer, investors said.

“Security was the key aspect,” said Pedro, a 62-year-old software engineer in Mexico City who invested $150,000 in CDs issued by Stanford International. “They told me that they had insurance. The broker told me not to worry and that the bank was safe,” said Pedro, who asked that his last name not be used because he didn’t want to anger bank officials.

Most U.S. certificates of deposit are insured for as much as $250,000 by the Federal Deposit Insurance Corp. CDs issued by Stanford International, a foreign company, aren’t FDIC-protected. A Stanford International training manual obtained by Bloomberg instructed financial advisers to tell clients that “the FDIC provides relatively weak protection.”

While its marketing materials played up coverage, the bank didn’t explicitly guarantee investors’ funds. An “extensive insurance program has been in place for years and requires that a regular review of the bank’s risk management practices be conducted to determine that adequate safeguards are in place,” Stanford International said in a December newsletter signed by President Juan Rodriguez Tolentino. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=afAlQbj8CZ6A

-Stanford Bank Highlights Need for CD Investors to Check Bank’s FDIC Status. Michael, a former vice president of sales in Dallas, said he thought the certificates of deposit he purchased from Stanford International Bank were like any other CD issued by a U.S. bank, except for the high interest rates and lack of insurance provided by the Federal Deposit Insurance Corp.

“Obviously I was attracted by such high returns,” said Michael, 51, who invested $1.9 million in two 5-year CDs, which he said were supposed to provide annual yields of almost 10 percent. He declined to give his last name because he is trying to secure his funds. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aHEUTMzXJoGE&refer;=home

REAL ESTATE-MORTGAGES-FORECLOSURES

-Latest home prices: October December 2008. The median home price fell a record 12.4% year-over-year during the fourth quarter of 2008. Read more here-

http://money.cnn.com/2009/02/12/real_estate/Median_home_prices_in_record_plunge/index.htm

-U.S. builders broke ground in January on the fewest houses on record as a lack of credit and plunging sales exacerbated the worst real-estate slump since the Great Depression. Housing starts plunged 17 percent last month to an annual rate of 466,000, lower than projected, according to figures from the Commerce Department today in Washington.

A report from the Federal Reserve showed industrial output sank in January for the sixth time in seven months. Builders are struggling as record foreclosures swell the glut of homes on the market, undermining efforts to revive demand and lighten inventory by cutting prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aFULM7TWQGc8&refer;=home

-WL Homes LLC, the 161-year-old homebuilder, filed for bankruptcy protection from creditors with plans to focus on developments in Southern California. The company blamed its filing on the collapse of the real estate market, saying its 2007 sales had fallen by about half in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. The company listed assets of more than $1 billion and debt of $500 million to $1 billion.

The company said it has as many as 50,000 creditors. Irvine, California-based WL Homes, which also does business as John Laing Homes, traces its history to 1848, when its predecessor was a homebuilder in the U.K. WL Homes was formed in 1998 when John Laing merged with Watt Homes, according to court documents. In 2006 the company was purchased by Dubai-based Emaar Properties PJSC. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aTYGfS1m6PKE

-Commercial Property Prices in U.S. Fell 15% in 2008. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aVEeri_yi0gc

-TV’s Robin Leach Sues Deutsche Bank over Las Vegas Condo Delay. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a8Igsdf7qmZo&refer;=home

-Credit-crunched Russian billionaire asks for the £39million deposit he put down on world’s most expensive house. Read more here-http://www.dailymail.co.uk/news/worldnews/article-1148887/Credit-crunched-Russian-billionaire-asks-39million-deposit-worlds-expensive-house.html

-The Obama Administration wants banks to offer loans with easier terms to more than 2 million borrowers in danger of defaulting on their mortgages, twice as many as 2008. That won’t stem the foreclosure crisis if prices keep falling.

A third of owners will walk away when the value of their homes drops 20 percent or more below what they owe, even if they can afford the payments, a situation known as “rational default,” said Norm Miller, director of real estate programs at the University of San Diego School of Business Administration. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aIex9YRATOo8&refer;=home

-Obama Pledges $275 Billion to Stem U.S. Foreclosures. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5xBdiMqKaqY&refer;=home

-Mortgage Plan Effect May Be Limited, Analysts Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aAfRLFtvLfqw or http://www.bloomberg.com/apps/news?pid=20601087&sid;=a7oRhgLcILI8&refer;=home

-Riverton Apartments, a high-rise complex in Manhattan’s Harlem neighborhood, is set to be auctioned off Feb. 20 because owners Rockpoint Group LLC and Stellar Management have been unable to modify loan terms, according to Trepp LLC, a commercial real estate data company. A recent appraisal valued the property at $196 million, compared with a valuation of as much as $340 million when the complex was last appraised in December 2006, Trepp said in an e- mail citing loan servicer data.

The Riverton loan was packaged into bonds as part of a $6.6 billion commercial mortgage debt offering sold in March 2007 by Citigroup Inc. and Deutsche Bank AG, according to Bloomberg data. If the property were to sell for $196 million, the commercial mortgage bond trust would take a loss of $29 million plus expenses, according to Trepp estimates.

“The sale of the property, should it take place, will be closely watched by the CMBS market as investors try to get a sense of what properties like the Riverton are worth,” Trepp said. “The value of the Riverton in foreclosure would give the market a new benchmark.” Delinquencies on commercial mortgages bundled and sold as bonds may triple by late 2009 as large real estate loans default, Standard & Poor’s said today. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=apVy1vpZM8zY

-Foreclosures eased in January. Moratorium sends foreclosure filings down 10% for the month. Read more here-

http://money.cnn.com/2009/02/12/real_estate/January_foreclosures_ease/index.htm

-California Foreclosure Center Shows Obama Challenge. It has taken Susan Erb just three years to see the value of her Merced, California, home plunge by more than half to $350,000. Next month, her mortgage payment jumps 20 percent to $3,321 and she knows she can’t afford it. Her bank won’t rework the loan unless she stops paying altogether.

“Now I know how people feel when I go knocking on their door,” said Erb, 53, a real estate agent who works for a company that notifies residents in foreclosed properties that they must vacate. “I’m in their shoes.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aRI9yKRivnbY

60 MINUTES-HOW THE MORTGAGE INDUSTRY DESTROYED ITSELF

-How did the mortgage industry destroy itself and set off an economic collapse that ruined the finances of millions of Americans? Executives tend to hold themselves blameless, saying that no one could have seen the disaster coming.

Well, judge for yourself after you hear the story of Paul Bishop, who worked at the nation’s second largest savings and loan. World Savings Bank was among the industry’s most admired mortgage lenders. But Bishop says the kind of lending practices he saw were leading to a world of trouble that would ultimately result in billions in losses and a federal investigation.

What does Paul Bishop say he told executives at World Savings, three years before the crash?

“We’re breaking the law, okay? We’re breaking the law. You know we’re breaking the law. I know we’re breaking the law. What the hell do you think is going on here? You know, you’re granting too many people loans who simply can’t qualify,” Bishop told 60 Minutes correspondent Scott Pelley.

Bishop’s story is a rare inside look at forces that tore the economy apart, as seen by a plain-spoken loan salesman who is now suing World Savings, claiming that he was fired for telling executives what they didn’t want to hear. Read and watch video here-http://www.cbsnews.com/stories/2009/02/13/60minutes/main4801309.shtml

GEOPOLITICAL

-Financial Crisis Called Top Security Threat to U.S. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/02/12/AR2009021202365_pf.html

-U.S Intelligence underscores fundamental Russian challenges to US interests. Read more here-http://en.apa.az/news.php?id=97335

-Iran, Syria Withhold Cooperation on Atomic Inspections, UN Says. Iran and Syria are failing to cooperate with United Nations inspectors as they try to determine whether the countries are concealing nuclear weapons programs. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=absww1ngJGls

-Iran holds enough uranium for bomb. Iran has built up a stockpile of enough enriched uranium for one nuclear bomb, United Nations officials acknowledged on Thursday. Read more here-http://www.ft.com/cms/s/0/f367aada-fec8-11dd-b19a-000077b07658.html

-Iran Finishes Dome over Reactor, Thwarting IAEA Surveillance. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aXjV_8vnf08c

-Israel engaged in covert war inside Iran: report. Israel is involved in a covert war of sabotage inside Iran to try to delay Tehran’s alleged attempts to develop a nuclear weapon, a British newspaper said on Tuesday, quoting a former CIA agent and intelligence experts.

An intelligence source in the Middle East told Reuters last year Israel planned to target Iranian nuclear scientists with letter bombs and poisoned packages and had set off explosions in Iran. Analysts offered similar accounts and said such tactics would be credible, but no confirmation has been available.

Some analysts caution that reports of such a “dirty war” may form part of a psychological warfare campaign to unsettle Iran. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE51G1VR20090217

-President Barack Obama said the war in Afghanistan is “still winnable” as he signed an order increasing U.S. troops there by 17,000 combat and support personnel. Military force alone cannot adequately deal with the threat posed by a “resurgent” Taliban, Obama said in an interview with Canadian Broadcasting Corp.

The war is “still winnable in the sense of our ability to ensure that it is not a launching pad for attacks against North America.” Only a “comprehensive strategy” that also relies on diplomacy and development can halt the Taliban and the spread of extremism, the president said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a66BDTvdjWDY

The GoldBugg Report – February 24, 2009
Posted by Worldwide Precious Metals on Tuesday, February 24, 2009

The GoldBugg Report – February 17, 2009

February 17, 2009

WORLD FINANCIAL REPORT ON RADIO Feb 13 2009 SHOW

February 16^th, 2009

Memo to All Retail Dealers

This past week saw the following action (Friday to Friday Close)

	Feb.6^th 2009	Feb. 13^th 2009	Net Change
Gold	$915.00	$942.00	+ $27.00 (+2.95%)
Silver	$13.18	$13.65	+ 47¢ (+3.57%)
Platinum	$1,000.00	$1,070.00	+ $70.00 (+7%)
Palladium	$212.00	$218.00	+ $6.00 (+2.83%)
Net Change Near to Date
	Jan. 2^nd 2009	Feb. 13^th 2009	Net Change
Gold	$874.50	$942.00	+ $67.50 (+7.72%)
Silver	$11.14	$13.65	+ $2.51 (+22.54%)
Platinum	$935.00	$1,070.00	+$135.00 (+14.44%)
Palladium	$188.00	$218.00	+$30.00 (+15.96%)

Clearly this past 42 Days has been very positive for Precious Metals. This price activity has

taken place while the Dow Jones continues to loose ground and more importantly while the US Dollar has continued to

remain strong against other foreign currencies. As we have stated in the past, to us, this is indicative of

continued expansion of “Flight to Quality” as concerned private investors are turning to Precious Metals,

specifically Gold and Silver in Physical Product Accumulation.

President Obama’s Economic Stimulus Plan finally passed at $787 Billion. So hear we go. Spend,

Spend, Spend and it won’t be enough. What does this equate to?? – Long Term Inflation!! and that should be extremely

positive for Precious Metals.

Here are your short term support and resistance levels:

	Gold	Silver
Support	928/883/845	13.40/13.28/12.78
Resistance	943/955/980	13.64/13.93/14.22
	Platinum	Palladium
Support	1047/1011/1069	212/207/198
Resistance	1072/1122/1145	225/238/287

As we can see all products tested the first support levels discussed in our Memo of Feb.

7^th in Monday’s trading last week, and then rallied throughout the week to take out the next 2 resistance

levels.

As we stated in that memo “It looks quite possible, although we make no guarantees, that the

pattern we are seeing is reminiscent of typical 1^st quarter upside activity, such as we have seen almost

every year since early 2002.”

With the Us Markets closed to-day, we are left with Electronic Trading which is almost always

“Thin” (light volume). Therefore to-days price activity should be relatively narrow and of little importance over

the long term.

The long term picture for the economy, Equity Markets and Financials has never looked worse,

while for Precious Metals, specifically Gold & Silver it has never looked better.

We do not expect these current prices for Precious Metals to be available for much longer and

once prices move higher, we may never see them again.

The key is accumulation within one’s financial ability and not allowing over exposure of one’s

financial capabilities.

Trading Department – Precious Metals International

GOLD

-A rise in the gold price to $2 300/oz “would not be surprising”, US Global Investors portfolio manager Ralph

Aidis said on Wednesday. Aidis said, that it was not commodity demand that had fallen but rather the inability of

shippers to secure credit from stricken banks to finance the deliveries of the commodities.

“The dramatic correction has delayed but not destroyed the 20-year commodity cycle,” Aidis said. The world had

many economic stimulus coming through in addition to seasonal cycles, with gold demand building from August. “If you

plotted gold, the gold price went to its biggest extreme in 15 years inverse to the dollar and prompted people to

get some gold in their portfolio,” he added.

There were strong signals that gold should be added to investment portfolios. While in the short term the gold

price could pull back, gold was still a fairly safe investment in the longer term. “It would not surprise me”, Aidis

said, if the gold price rose to $2 300/oz. Read more here-http:/

/www.miningweekly.com/article/gold-price-of-2-300oz-would-not-be-surprising-us-global-2009-02-11

-Russia Sberbank gold sales jump during crisis. Russia’s biggest lender, Sberbank saw retail precious metal

accounts double in 2008 as people rushed to protect their savings in a time of financial and economic crisis, a bank

official said on Wednesday.

Russians opened 170,000 new accounts which track the price of precious metals last year, taking the total number

of such deposits at the state-controlled bank to around 300,000, said Vladimir Tarankov, the director of Sberbank’s

currency and non-trade operations department.

“We have clients who bought 200-300 kilograms of gold and a 10 kilogram gold coin only spent two days in our

safe,” he said. The instability of Russia’s 1000-plus banking system, a 30 percent depreciation of the ruble against

the dollar since August 2008 and double-digit inflation have left Russians seeking lasting value for their

investments. Read more here-

http://uk.reuters.c

om/article/rbssFinancialServicesAndRealEstateNews/idUKLB69916720090211

-John Embry February gold commentary. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf

-Let’s go back to a gold standard. Capitalism Needs a Sound-Money Foundation. Let’s give the Fed some

competition. Abolish legal tender laws and see whose money people trust. Read more here-http://online.wsj.com/article/SB12

3440593696275773.html?mod=googlenews_wsj

-Investors Boost Bets Gold to Reach $1,000 on Turmoil. Read more here-http://www.bloomberg.com/

apps/news?pid=20601213&sid;=a0z94R5G5qJc&refer;=home

-Gold poised. Experts predict $1000 plus. Many analysts and bankers now expect gold to break through $1,000 in

the near term and probably go higher on financial instability and potential US dollar weakness. Read more

here-http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78149&sn;=Detail

-Investors buy gold during recession. Read more here-http://www.timesonline.co.uk/tol/money/i

nvestment/article5682539.ece

-’A Perfect Storm Brewing for Gold’ BMO. BMO Global Commodity Strategist Bart Melek says gold will easily top

$1,000/oz next year, averaging $925/oz. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78267&sn;=Detail

-GFMS’ Paul Walker says gold’s good performance in the short-term plants the seed for a price correction going

forward. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78173&sn;=Detail

-Bullion sales hit record in rush to safety. Read more here-http://www.ft.com/cms/s/0/359da604-f6d4-1

1dd-8a1f-0000779fd2ac.html

-Japan investors turn to gold. Online traders are turning to commodities from FX, stocks and gold is the most

popular commodity product for online retailers. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page34?oid=78231&sn;=Detail

-GoldDrivers 2009 Extraordinary Bullish Outlook for Gold. Read more here-http://news.goldseek.com/EricHommelberg/1233939600.php

-Gold Disconnects From USDollar. Read more here-http://www.321gold.com/editorials/willie/willie020

609.html

-Gold fund manager expects Comex to default. Read more here-http://www.commodity

online.com/news/Paper-gold-market-will-crash-at-Comex-14981-2-1.html

-Big U.S. banks dominate COMEX gold, silver: Got Gold Report. Read more here-http:

//www.stockhouse.com/Columnists/2009/February/9/Big-U-S–banks-dominate-COMEX-gold,-silver–Got-Go

-IMF May Not Need to Sell Gold as Loan Demand Rises. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601012&sid;=aUVvmRQmM9c8 or http://www.gata.org/node/7160

-IMF confirms plan to sell 403 tonnes gold. Read more here-http://www.gata.org/node/7164

SILVER

Gold to silver ratio at 80 to 1 with gold at $5,000 the silver price would be $62.50
Gold to silver ratio at

70 to 1 with gold at $5,000 the silver price would be $71.43
Gold to silver ratio at 60 to 1 with gold at

$5,000 the silver price would be $83.33
Gold to silver ratio at 50 to 1 with gold at $5,000 the silver price

would be $100.00
Gold to silver ratio at 15 to 1 with gold at $5,000 the silver price would be $333.33

-Silver-Gold Ratio Reversion. Read more here-http://www.321gold.com/editorials/hamilton/ham

ilton020609.html

-The gold/silver ratio has fallen to around 70 ($950oz/$13.50/oz =70.37) today from around 80 in mid January. The

long term historical average is 15:1 and this is because it is estimated that geologically there are some 15 parts

of silver in the ground for every one part of gold.

It is important to note that silver, unlike gold, besides being a safe haven investment is also used in industry

and it is believed that since the dawn of the industrial revolution some 95% of the world’s silver has been used up

in industrial applications. Because of gold’s much higher value, it gets recycled and all the gold mined in the

world ever is still with us but photography and other industrial uses makes silver like oil when used it is gone

forever.

The 1970s saw an average gold to silver ratio of around 25:1 and fell below 20:1 when silver rose to over $45/oz

nominally. Thus it seems very likely that in the coming years, silver may well return to its long term historical

average of closer to 15:1. This means that silver is likely to continue to outperform even gold in the coming weeks

and months. Silver may return to its recent highs of over $20/oz in 2009 due to very strong supply demand

fundamentals.

It is also important to note that the CFTC investigation into artificial manipulation and suppression of the

silver market could potentially lead to a massive short squeeze. All investors should diversify within the precious

metals allocation in their portfolio and own silver as well as gold. Gold remains the ultimate safe haven while

silver is a safe haven but has the potential for very significant returns and growing wealth in the coming months.

Gold.ie

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1234207643.php

-Mexico strike hits Penoles silver, gold refining. Read more here-http://www.reuters.com/article/market

sNews/idUKN0953875920090209?rpc=44

PLATINUM-PALLADIUM

-Shortage of platinum after Japan buying spree. Families are rushing to invest in the metal as faith in the

Government’s ability to handle the economic crisis dwindles. Tokyo bullion dealers are reporting an unprecedented

drought of platinum ingots and coins, blaming the economic downturn and dwindling faith in the Government for a rush

by middle-class Japanese families to buy precious metal.

With dealers turning away would-be platinum customers for lack of stock, retail investment interest is turning

towards the even rarer Canadian Maple Leaf palladium coin. Some dealers are predicting volatile palladium prices as

Japanese investors compete with the car industry, palladium’s main industrial buyer. Read more here-http://b

usiness.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5704941.ece

-Is FT’s Lex Right to Favour Platinum Over Gold? Read more here-http://news.goldseek.com/GoldSeek/1234283124.php<

/p>

-Base metals, industrial metals, platinum are good value UBS. Utilizing industry cost curves and current spot

prices to derive an implied contraction in demand, UBS analysts say their methodology could shed light on emerging

metals values. Read more here-http://www.mineweb.com/mineweb/

view/mineweb/en/page67?oid=78148&sn;=Detail

-”We’re still in a commodities bull market” Barclays Capital. Director of commodities research at Barclays

Capital Kevin Norrish says the current difficult phase for commodities will pass. He sheds some light on industrial

metals’ recovery. Read more here-http://www.mineweb.com/mineweb/

view/mineweb/en/page67?oid=78218&sn;=Detail

HOW THE FINANCIAL WORLD ALMOST CAME TO AN END AT 2PM ON SEPT

18^TH 2008

-Youtube has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some

facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below,

Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a “tremendous

draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to

Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski

paraphrases the following disclosure by Bernanke and Paulson:

On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the

U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its

window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We

were having an electronic run on the banks. They decided to close the operation, close down the money accounts and

announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn

out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours

the world economy would have collapsed. It would have been the end of our economic system and our political system

as we know it. We are no better off today than we were 3 months ago because we have a decrease in the equity

positions of banks because other assets are going sour by the moment. Watch video here-http://zerohedge.blogspot.c

om/2009/02/how-world-almost-came-to-end-at-2pm-on.html or http://www.info

wars.com/rep-kanjorski-550-billion-disappeared-in-electronic-run-on-the-banks/

or http://www.youtube.com/watch?v=pD8viQ_DhS4

REVEALED-THE DAY U.K. BANKS WERE JUST THREE HOURS FROM

COLLAPSE

-Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon

Brown’s Ministers has revealed. City Minister Paul Myners disclosed that on Friday, October 10, the country was

‘very close’ to a complete banking collapse after ‘major depositors’ attempted to withdraw their money en masse.

The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all

customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals. Only frantic

behind-the-scenes efforts averted financial meltdown.

If the moves had failed, Mr. Brown would have been forced to announce that the Government was nationalizing the

entire financial system and guaranteeing all deposits. But 60-year-old Lord Myners was accused last night of being

‘completely irresponsible’ for admitting the scale of the crisis while the recession was still deepening and major

institutions such as Barclays remain under intense pressure. Read more here-http://www.dailym

ail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html

DEFINITIONS-QUOTES-QUICK HITS

-Keynesian economics is based on the ideas of twentieth-century British economist John Maynard Keynes. According

to Keynesian economics the state should stimulate economic growth and improve stability in the private sector

through, for example, adjusting interest rates and taxation and funding public projects. The theories forming the

basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published

in 1936. Read more here-http://en.wikipedia.org/wiki/Keynesian_economics<

/p>

-Keynesian economics, and socialist central planning, have trapped the Western economies into a slow death.

Wayne N. Krautkramer

-Gold will likely rise to levels in the coming years that seem unfathomable today. Gold.ie

-I want to be like hockey great Wayne Gretzky, who said: “I skate to where the puck is going to be, not where it

has been.” Warren Buffett

-”It’s not a matter of being pessimistic, but lucid and prudent, and to act accordingly. If we are lucky and the

crisis is shorter than what we were braced for, then we will get out of it that much better.” André

Desmarais President and co-chief executive officer of Power Corp-Read more here-http://www.globeinvestor.com

/servlet/story/RTGAM.20090210.wrdesmarais10/GIStory/

-What strange madness is this? Why would anyone think the economy will be made better off by squandering money

now on projects that were deemed unworthy or unaffordable only a few months ago? The country got into trouble

because people squandered too much money; now they think they will get out of trouble by letting the government

squander money. – Bill Bonner, The Daily Reckoning, February 10, 2009

-The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the

financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages. The

Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion

over the past two years and pledged up to $5.7 trillion more. Bloomberg

-U.S. citizens must retrench, stop borrowing, and save their way back to prosperity. Read more here-http://www.torontosun.

com/comment/columnists/eric_margolis/2009/02/08/8308201-sun.html

-Why saving is killing the economy. Saving more and cutting debt might sound like a good plan to deal with the

recession. But if everyone does that, it’ll only make matters worse. Read more here-http://money.cnn.com/2009/02/12/news/econ

omy/savings_rate/index.htm

-Gold will appreciate to $1224 and then to $1650. All this will be history by January 14th 2011. Jim Sinclair

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
Major TWO down from $1015 to $699, say

$700 (a decline of 31%);
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major

FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase,

same as ONE) Alf Fields

-McEwen, Goldcorp Founder, Bets Crisis Will Drive Gold to $5,000. Goldcorp Inc. founder Rob McEwen, who has more

than $100 million in gold investments, said he expects the metal to top $5,000 an ounce as governments increase the

money supply to combat recession. Bullion will more than double to $2,000 an ounce by the end of next year before

rising to McEwen’s target by the end of the cycle, which could take an additional four years, the investor said.

“Politicians around the world are listening to cries from their electorates and they’re giving money to all

callers,” McEwen said yesterday in a telephone interview from Toronto.

McEwen, who founded what is now the world’s second-largest gold producer by market value, owns stakes in three

Canadian precious-metal explorers worth more than $100 million. He said he also has a “big, big” holding in bullion.

Gold gained for the eighth straight year in 2008 amid investor concern the economy would collapse and government

efforts to prevent that would increase inflation.

McEwen said he started buying bullion in August 2007, at the beginning of the subprime mortgage crisis. Gold has

jumped 40 percent since Aug. 1 of that year, touching a high of $948.20 today, while the Standard & Poor’s 500

Index has dropped 43 percent. “I realized we had reached an inflection point regarding money,” McEwen said. “It was

all about protecting money, and gold served that purpose.” Read more here-http://www.bloomberg.co

m/apps/news?pid=20601082&sid;=adHg7t8BL5Bg&refer;=canada

-Murenbeeld reckons gold will reach $2,300. The gold price should average $945/oz during 2009 but rise to $995/oz

by the end of the year and average $1,050/oz during 2010.

Those are the latest predictions made by gold “guru” Martin Murenbeeld, chief economist for Dundee Wealth

Economics, speaking at the Mining Indaba being held in Cape Town.

But Murenbeeld added he believed gold would eventually reach $2,300/oz although he did not put a timeframe on

this prediction. The price level of $2,300/oz holds considerable significance for gold investors and analysts

because it represents the current, inflation-adjusted value of the price of $850/oz that gold reached early in

1980.

Interviewed after his presentation Murenbeeld said, “Over the long cycle gold will take out $2,300/oz but that

could take up to five years before it happens.” Read more here-

http://www.miningmx.

com/events/indaba_2009/murenbeeld-reckons-gold-will-reach-$2,300.htm

-Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is

at the beginning of an economic depression that will help gold prices more than double. Bullion may top $2,000 an

ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott

Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions

stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.

“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from

Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.” Sprott, who

manages $4.5 billion, said in March that the world was in a “systemic financial meltdown,” a call that presaged the

collapse of financial institutions including Bear Stearns & Co. and Lehman Brothers Holdings Inc. Since then,

the U.S. has entered the worst economic slowdown since the Great Depression, credit markets have tightened and asset

prices have dropped as companies and funds sell portfolios to raise cash.

The 81-company Standard & Poor’s 500 Financials Index has dropped 62 percent since Sprott said on March 6 he

was buying bullion and gold-producers’ shares, while shorting financial- sector stocks. Gold slipped 6.3 percent

during the same period. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=ao7hCvQA9QZ0

-”Safe-haven buying interest is prevalent,” says Peter Grant, senior metals analyst at USAGold. With central

banks around the world cutting interest rates, it “seems like the world will soon be awash in paper money, and that

is very bullish for gold.” Casey Daily Resource

-As the ever-astute Peter Spina, of Goldforecaster.com, summarized: “Gold continues to benefit from destructive

monetary policies which are being pursued globally. As capital seeks to preserve its purchasing power, currencies

once deemed more powerful than gold are now being questioned. The relative size of the gold market compared to

global monetary system reveals that only small fractions of this capital looking for safety will significantly boost

its value.

Gold is returning as the king currency and its scarcity will propel prices significantly higher. Currently record

highs from 2008 are back in focus, exceeding these levels will likely ignite another influx of demand which could

bring about $1,100 to $1,200 over the coming several months, if not sooner. We will continue to see strong bids on

pullbacks.” Casey Daily Resource

-”There’s a lot of investor anxiety out there and people are turning to gold for its perceived safety. With all

the money the government is planning to spend or print, at some point in the future, we’re going to hit the

inflationary wall.” Matt Zeman, of LaSalle Futures Group in Chicago-Casey Daily Resource

-With Treasury Secretary Geithner ducking questions on toxic debt, illiquid assets and home prices as he rolled

out his bailout plan on Tuesday, the “uncertainty increased risk aversion and continued a flight to a safe haven of

gold and platinum investments,” said Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich. Casey Daily

Resource

-Many technical analysts had been predicting stiff resistance at the $925 level for gold, but the metal blew by

that with ease. After breaching the $940 mark, it could rise to as high as $950 an ounce in the short term, said

Ashraf Laidi, of London-based CMC Markets. Casey Daily Resource

-The fall of Boaz Weinstein, once one of Wall Street’s hottest traders, speaks volumes about why financial firms

still are reeling from the shattered global markets. As a chess master, poker and blackjack devotee and top trader

at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for

the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8

billion in losses, erasing more than two years of trading gains.

-Rep. Michael E. Capuano (D-Mass) does a masterful job “raking over the coals” the CEOs of the major US banks.

Watch video here-http://www.youtube.com/watch?v=wN0TJ7qJ238

-IMF may run out of cash to fight crisis in six months, Strauss-Khan warns. The International Monetary Fund could

run out of cash to firefight the economic crisis in as little as six months, its managing director has warned. Read

more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4560897/I

MF-may-run-out-of-cash-to-fight-crisis-in-six-months-Strauss-Khan-warns.html

-China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless

policies,” said Yu Yongding, a former adviser to the central bank. The U.S. “should make the Chinese feel confident

that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World

Economics and Politics Institute at

the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He

declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt. Read

more here-http://www.bloomberg.com/apps/news?pid=2

0601087&sid;=aXWQEydhsoUI

-China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such

investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.

Read more here-http://www.gata.org/node/7166

-S&P; 500 Dividends May Decrease 13.3%, Most Since 1942. Read more here-http://www.bloomberg.com/

apps/news?pid=20601213&sid;=aeStJwRNjrjc&refer;=home

-Las Vegas Strip casino gambling revenue tumbled 23 percent in December, capping the worst annual decline on

record, as the city enters the second year of the U.S. recession with thousands more hotel rooms and fewer visitors

to fill them.

Gambling proceeds in the biggest U.S. gaming center slumped 10.6 percent to $6.12 billion last year, the steepest

decline since data started being compiled in the mid-1980s. Last year was bleaker than 2001, when the Sept. 11

terrorist attacks frightened travelers and led to a 2.1 percent drop, said Frank Streshley, an analyst at Nevada’s

Gaming Control Board. Read more here-http://www.bloomberg.com/apps

/news?pid=20601110&refer;=&sid;=aJ.QlbFmQMZs

-US could cut its gasoline 1/3 with ethanol study. Read more here-http://uk.reuters.com/article/oilRpt/idUKN10285040

20090210

-Florida gun dealers experiencing shortages of bullets. Read more here-http://www.orlandosentin

el.com/news/local/orl-bullets1009feb10,0,4930381,print.story

-China’s Vehicle Sales Top U.S. Tally for First Time. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=aO6D7VAni3ME

-A Bugatti sports car that was found after 50 years gathering dust in a garage in England sold last night in

Paris for 3.5 million euros ($4.53 million). The two-seat 1937 Bugatti Atalante 57S coupe was one of 17 vehicles of

its type produced by the Italian-based racing-car manufacturer.

It had been estimated to fetch between 2.75 million euros and 4 million euros at the Retromobile sale held by

London- based auction house Bonhams. The price included sale fees. “This was the creme-de-la-creme of late 1930s

sports cars,” said Simon Kidston, a Geneva-based classic car adviser, who attended the auction. “Of the examples

that have come on the market, this had by far the best history, prettiest body style and no one has seen it for 50

years.

Nothing drives collectors more crazy than a car they haven’t been able to buy.” Bonhams described it as “one of

the last great barn discoveries” in an e-mailed statement before the sale. Read more here-http://www.bloomberg.com/

apps/news?pid=20601088&sid;=aNLnZAT0n4Gs&refer;=home

-Muzak, Elevator Music Provider, Files for Bankruptcy. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=a7CiLt41ZK.w

RARE COLORED DIAMONDS

-The Rare Colored Diamonds Historical Value Tracker system 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/HistoricalV

alueTracker.html

-”People want to buy rarity. They want diamonds and color diamonds that are not easy to replace.” Rahul Kadakia,

Christie’s November 20, 2008 Reuters

-Gold move over introducing diamonds as a store of value. Although demand for white diamonds has decreased

Stephen Lussier, executive director of De Beers, expressed confidence in diamonds as a store of wealth long

term.

The economic crisis presents challenges for the luxury goods category as a whole, diamonds however are uniquely

positioned to withstand and emerge from the short-term uncertainty. Stephen Lussier, Executive Director of De Beers,

said at the Mining Indaba on Tuesday stating that diamonds will prove to be a store of value.

Lussier said that diamonds are a rare and finite treasure 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.

“As the hardest material on Earth, diamonds represent a reliable asset for people migrating away from debt, risk

and the complexity of the stock exchange,” said Lussier. Historically, there has been incremental growth and low

volatility in the prices of diamonds, making them attractive in the long term.

Diamonds are timeless, people still get engaged and married and diamonds are linked to the marriage tradition in

the US and emerging economies. There are only two things in life that last longer than time, love and diamonds.

Read more here-http://www.mineweb.co.za/mine

web/view/mineweb/en/page37?oid=78236&sn;=Detail

-Earnings from the Argyle mine were down 67 percent to $29 million due to higher costs and lower production

volumes as the mine transitions to an underground operation. Rio Tinto reported in January that it would slow the

Argyle underground mining project to only critical development activities because of the weak economic environment.

The company added that its diamond processing facilities at Argyle would undergo an extended maintenance closure of

up to three months beginning in March. Read more here-

http://www.diamonds.net/news/NewsItem.aspx?Article

ID=25278

EUROPEAN BANKS SITTING ON $24 TRILLION OF TOXIC ASSETS

-European bank bail-out could push EU into crisis. A bail-out of the toxic assets held by European banks’ could

plunge the European Union into crisis, according to a confidential Brussels document. “Estimates of total expected

asset write-downs suggest that the budgetary costs actual and contingent of asset relief could be very large both in

absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.

“It is essential that government support through asset relief should not be on a scale that raises concern about

over-indebtedness or financing problems.” The secret 17-page paper was discussed by finance ministers, including the

Chancellor Alistair Darling on Tuesday.

National leaders and EU officials share fears that a second bank bail-out in Europe will raise government

borrowing at a time when investors particularly those who lend money to European governments have growing doubts

over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.

The Commission figure is significant because of the role EU officials will play in devising rules to evaluate

“toxic” bank assets later this month. New moves to bail out banks will be discussed at an emergency EU summit at the

end of February. The EU is deeply worried at widening spreads on bonds sold by different European countries. Read

more here-

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-

banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html

PIMCO-WORLD ECONOMIC CRISIS FACES SECOND WAVE

-Pacific Investment Management Co., which runs the world’s biggest bond fund, said the global economy faces a

“second wave” of turmoil unless governments adopt larger spending plans. “The economic setback is still in its early

stages,” Koyo Ozeki, head of Asia-Pacific credit research at Pimco’s Tokyo office, wrote in a report published today

on the company’s Web site.

“Any further decline in housing prices could accelerate the downturn, intensifying the pernicious feedback loop

and possibly leading to a second wave in the financial crisis in the next six to 12 months.” The lack of specifics

in U.S. Treasury Secretary Timothy Geithner’s financial-system rescue plan triggered a 4.9 percent slide in the

Standard & Poor’s 500 Index yesterday, the steepest since President Barack Obama’s inauguration. Advanced

economies are in a “depression” that may get worse, Dominique Strauss- Kahn, Managing Director of the International

Monetary Fund, said on Feb. 7. Ozeki this month said investors may want to hold off buying Japanese corporate debt

until yields rise to reflect the full extent of the slump.

Pimco is also avoiding longer-maturity bonds elsewhere in Asia as governments increase spending, Douglas Hodge,

managing director for the region, said in an interview yesterday. Bill Gross, Pimco’s co-chief investment officer,

said on Feb. 5 the Federal Reserve will have to buy Treasuries to curb yields as debt sales increase. Read more

here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=aPdNhE2gob7g&refer;=home

MARC FABER-U.S. INFLATION COULD HIT 200%

-The US risks being hit by Zimbabwe-style hyperinflation and there are signs that the world’s biggest economy

risks turning into a banana republic, Marc Faber, author of the Gloom, Doom & Boom report, told CNBC’s “Asia

Squawk Box.”

“In the US, we have a totally new school, and it’s called the Zimbabwe school,” Faber said. “And it’s founded by

one of the great leaders of this world, Mr. Robert Mugabe, that has managed to totally impoverish his own country.

And that is the monetary policy the US is pursuing.”

The government’s increased intervention in the economy is likely to slow down economic growth because history

shows that every time the private sector shrinks to make way for the government sector, the economy suffers, he

said.

Asked whether the US risked being faced with 200 percent inflation, Faber answered: “Well, not yet. Not yet. But

I think eventually. If I look at government debt in the U.S., and debt in general, I think the only way they will

not default physically on their debt is to inflate.” Read and watch more here-http://www.cnbc.com/id/29047443 or http://www.youtube.com/watch?v=loa92ZG1KV8&eurl;=http://economicrot.blogspot.com/2009/

02/marc-faber-u-s-will-default-on-debt-or.html

U.S. BANK FAILURES-BAILOUT

-Three banks, two in California and one in Georgia, were seized by regulators, bringing this year’s tally of

closings to nine as a recession and record foreclosures extend the biggest financial crisis in more than 70 years.

County Bank of Merced, California, with deposits of $1.3 billion and assets of $1.7 billion, was shut yesterday

by the state’s Department of Financial Institutions, according to an e-mailed statement from the Federal Deposit

Insurance Corp. Westamerica Bancorporation, holding company for Westamerica Bank, acquired all the assets and

deposits.

The Georgia Department of Banking and Finance closed McDonough-based FirstBank Financial Services Inc., which had

$337 million in assets and $279 million in deposits as of Dec. 31, the FDIC said in a statement. The California

Department of Financial Institutions shut Culver City-based Alliance Bank, with assets of $1.14 billion and $951

million in deposits.

The FDIC was named receiver of the institutions, which will resume business as branches of the acquiring banks.

Regulators seized six banks in January, the largest monthly toll since 1993, including Salt Lake City-based

MagnetBank, which the FDIC closed Jan. 30 after being unable to find a buyer. The FDIC shuttered 25 banks last year,

matching the total for 2001 through 2007. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=aaLkBFzdzwmM

-As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the

height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets

analysts said. Most of the failures will probably occur at banks with less than $2 billion in assets as their

commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy

said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say

there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a

rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal

Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem”

institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter

financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said

failures through 2013 may cost more than the $40 billion estimated in October. The U.S. seized 534 lenders in 1989,

including 327 saving- and-loan associations, during the peak of a crisis among thrift institutions, FDIC data

showed. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a65LKxYZk4vw&refer;=home

-Peter Schiff: Stimulus Bill Will Lead to “Unmitigated Disaster.” Read more here-http://finance.yahoo.com/tech-ticker/article/169781/Peter-Schiff:-Stimulus-Bill-Will-Lead-to-%22Unmitigat

ed-Disaster%22

-Peter Schiff: Why I’m Right and My Critics Are All Wrong. Read more here-http://finance.yahoo.com/tech-ticker/article/169961/Peter-Schiff-Why-I%

27m-Right-and-My-Critics-Are-All-Wrong?tickers=^dji,^gspc,QQQQ,SPY,DIA,SHV,UDN

-Jim Rogers says Tim Geithner has been dead wrong about everything for 15 years in a row. He caused crisis, must

let banks fail. Read and watch more here-http://www.dailypaul.com/node/82373 or http://www.youtube.com/watch?v=q6sMOQCycpk

-U.S. Congressman Ron Paul Confronts Ben Bernanke, We’re Doing Exactly The Opposite Of What We Should Do. Watch

more here-http://www.youtube.com/watch?v=-5jZ7Y14cXA

-Why Obama’s new Tarp will fail to rescue the banks. Read more here-http://www.ft.com/cms/s/0/

9ebea1b8-f794-11dd-81f7-000077b07658.html?nclick_check=1

RECESSION-DEPRESSION

-Advanced economies are already in a “depression” and the financial crisis may deepen unless the banking system

is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said. “The worst cannot be ruled

out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia.

“There’s a lot of downside risk.”

Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World

War II. Stimulus packages alone won’t succeed in dragging the global economy out of recession unless confidence is

restored in the banking system, Strauss-Kahn said today. “All this will work if, and only if, the different

countries are likely to do what they have to do in terms of restructuring the banking sector,” he said. “And today

it’s not done.”

The U.S. economy has lost 3.57 million jobs since a recession started in December 2007, its biggest employment

slump of any economic contraction in the postwar period as companies from Macy’s Inc. to Caterpillar Inc. cut costs.

The U.K. economy will shrink this year by the most since 1946, the IMF forecasts.

“There is hope that the fiscal and monetary stimulus measures being implemented around the world can help turn

things around,” said David Cohen, Singapore-based director of Asian economic forecasting at Action Economics. “But

there is still the risk it can be short-circuited by further financial turmoil.” Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a6aaWZ8ab8yU&refer;=home

-The current global recession is “the most serious for over 100 years”, U.K. cabinet minister Ed Balls has said.

Mr. Balls, a former economic adviser to Gordon Brown, said it was “more extreme and more serious than that of the

1930s”, the Yorkshire Post reported.

He told a Labour conference that these were “seismic events that are going to change the political landscape”.

Shadow Treasury minister Phillip Hammond said the remarks were “staggering and very worrying”. Read more here-http://news.bbc.co.uk/2/hi/uk_news/politics/7880189.s

tm or htt

p://www.independent.co.uk/news/uk/politics/this-is-the-worst-recession-for-over-100-years-1605367.html

-Bank of England Governor Mervyn King said the U.K. is in a “deep recession” that may force policy makers to

create money and pump it into the economy after cutting interest rates to a record low.

“Further easing in monetary policy may well be required,” said King at a press conference in London after

presenting the central bank’s revised quarterly forecasts today. “That is likely to include actions aimed at

increasing the supply of money in order to stimulate nominal spending.” Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=aMxgEGM0k8co

-Recession? No, it’s a D-process, and It Will Be Long. Read more here-http://online.barron

s.com/article_print/SB123396545910358867.html?mod=googlenews_barrons

U.S. FISCAL-TRADE DEBT

-The U.S. budget deficit widened more than economists forecast last month as spending soared and corporate tax

receipts shrank, putting the Treasury on course for a record annual shortfall of more than $1 trillion.

The excess of spending over revenue in January rose to $83.8 billion, compared with a $17.8 billion surplus in

the same month a year earlier. Spending gained 30.6 percent, while revenue dropped 11.4 percent. Corporate tax

revenue in the past four months is down 44.3 percent from a year earlier.

The deficit four months into the 2009 fiscal year already is higher than the record for all of the previous year.

A recession now in its second year, rising foreclosures and 13 straight months of job losses are cutting tax

receipts. At the same time, the government is pledging hundreds of billions of dollars of taxpayer funds to arrest

the financial crisis. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=atwQ4pUtn6Y0&refer;=home or http://money.cnn.com/200

9/02/11/news/economy/treasury_budget_deficit_Jan09/index.htm

-The U.S. trade deficit narrowed less than anticipated in December to the smallest in almost six years as the

recession pushed oil prices and consumer spending lower, reducing imports.

The gap between imports and exports shrank 4 percent to $39.9 billion, the lowest since February 2003, from a

revised $41.6 billion deficit in November that was wider than previously estimated, the Commerce Department said

today in Washington. Imports fell to the lowest since 2005. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a_c6JKzOACyQ&refer;=home

CANADIAN DOLLAR

-Canada’s currency will return to par with its U.S. counterpart in as little as six months as commodity prices

rebound, pessimism peaks and the nation’s political turmoil abates, according to Dennis Gartman. “I can feel myself

getting ready to be quite bullish on the Canadian dollar,” said Gartman, an economist and the editor of the Gartman

Letter, who correctly predicted the currency’s most recent run to parity in 2007. “I have the sense that this might

be a move back towards par and beyond.”

The Canadian dollar reached equal value to the U.S. dollar in September 2007 for the first time in three decades

as prices soared for commodities such as crude oil, copper and aluminum, which account for about half the country’s

export revenue. It plummeted 18 percent last year, the most ever, as a global recession curbed demand for the same

commodities. The currency is down 1.6 percent this year. Read more here-http://www.bloomberg.co

m/apps/news?pid=20601082&sid;=aQqU07AMztnI&refer;=canada

REAL ESTATE-FORECLOSURES

-Home Prices in U.S. Slid 12% in Fourth Quarter, Most on Record. Home Prices Tumble in 88% of U.S. Cities. Home

prices fell in almost nine out of every 10 U.S. cities in the fourth quarter as foreclosure sales drove down prices.

The median price of a U.S. home declined 12 percent from a year earlier and sales of properties with mortgages in

default accounted for 45 percent of all transactions, the Chicago-based National Association of Realtors said today.

Prices fell in 134 U.S. metropolitan areas, rose in 18 and were unchanged in one, the biggest share of declines

in data going back to 1979. The worst U.S. housing slump since the Great Depression is deepening as foreclosures

drain value from neighboring homes and the economic recession worsens. Read more here-http://www.bloomberg.com/

apps/news?pid=20601087&sid;=axwYlbjBDoqQ&refer;=home

-U.S. Homeowners Will Lose Up to $10 Trillion, Talbott Estimates. Read more here-http://www.bloomberg.com/

apps/news?pid=20601088&sid;=ahOc6ZN_3HE0&refer;=home

-U.S. home prices will reach bottom by the end of the year, concluding a slide that will have cut values 36

percent, Moody’s Economy.com said today. “Notwithstanding the intensifying economic gloom, the bottom of the housing

downturn is within sight,” chief economist Mark Zandi said in a statement today. “Presuming we see strong action by

policymakers to help support the economy and the housing market, prices will begin to recover by the end of this

year.” Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=a5.ODjRGkehQ

-U.S. MBA’s Mortgage Applications Index Slid 24.5% Last Week. Read more here-http://www.bloomberg.com/ap

ps/news?pid=20601103&sid;=aUmOmm2Ag0SY&refer;=us

-Toll Brothers Inc., the largest U.S. luxury homebuilder, said first-quarter revenue plunged 51 percent as the

recession worsened the housing crisis. Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=aCUNOs9JcGTU

-Toll Brothers Inc., the largest U.S. luxury homebuilder, is slashing prices on its Brooklyn condominiums by as

much as 37 percent to spur sales after its unsold inventory spent two years on the market. Prices at the eastern

tower of the waterfront Northside Piers project in Williamsburg were reduced starting Feb. 3 for all types of

apartments, said Florence Clutch, the sales manager. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=ax0W80IYHJtE

-Boston Properties Inc., the biggest U.S. office landlord, plans to suspend construction on a $980 million

midtown Manhattan skyscraper after a law firm abandoned plans to lease space there. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=ar4_CtuX9SZY

-U.K. housing sales dropped to the lowest level since at least 1978 in the quarter through January as property

prices dropped further and Britain’s recession deepened, the Royal Institution of Chartered Surveyors said.

The average number of transactions in a survey of real- estate agents and surveyors dropped to 9.9 per

respondent, the lowest since the data began three decades ago, the group said today in London. A separate report

showed the slowest total retail sales annual increase since 1995 in January. Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=agE3eG0M1G2k

-The Downside for Condos in a Downturn. Read more here-http://www.nytimes.com/2009/02/08/re

alestate/08COV.html?pagewanted=print

-More families move in together during housing crisis. Read more here-http://www.usatoday.com/money/economy/housing/2009-02-02-housing-crisis-families-living-together_N.htm?csp=34

-U.S. Foreclosures Top Quarter-Million for 10th Straight Month. U.S. foreclosure filings exceeded 250,000 for the

10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac

Inc. said. A total of 274,399 properties got a default or auction notice or were seized by banks, the Irvine,

California-based seller of default data said in a statement today. It was the 37th straight year-on-year increase in

filings.

“This is tough to fix, because so many people are underwater,” Bruce Norris, president of the Norris Group, a

Riverside, California-based investment firm specializing in foreclosed properties, said in an interview. “Until debt

goes down or prices go up, this is going to be a mess.” The housing market lost an estimated $3.3 trillion in value

last year and almost one in six owners owed more than their homes were worth, online data provider Zillow.com said

last week.

The U.S. economy shrank 3.8 percent in the fourth quarter, the most since 1982, and payrolls plunged by 598,000

in January, pushing the jobless rate to the highest level since 1992. Home prices have fallen every month since

January 2007 and tumbled 18.2 percent in November, according to the S&P;/Case-Shiller index of 20 U.S. cities.

The GoldBugg Report – February 10, 2009

February 10, 2009

WORLD FINANCIAL REPORT ON RADIO Feb 6 2009 SHOW

GOLD

-Last month, the price for a single ounce of gold surpassed the S&P; 500 index for the first time in 18 years. Following the last such inflection point that occurred in 1973, gold surged ahead over 600%. With no clear picture for when the economy might turn around, and the future of gold looking bright, this “shifting of the tides” could be signaling a new era for gold. Casey’s Charts

-Eric Sprott commentary, You think 2008 was bad? Welcome to 2009. Read more here-http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

-Gold will touch a record this year as efforts to stem a worsening financial crisis spark “explosive” inflation, said Van Eck Associates gold-fund manager Joe Foster. When the global economy recovers from the current recession, shortages of commodities that helped push prices to record levels last year will return, said Foster, part of the team that manages $8 billion in assets including gold and commodities at New York- based Van Eck.

“Then you layer on top of that all the liquidity, the printing of money and the other measures the government is taking,” he said yesterday in an interview. “Once the velocity of that money starts to pick up in a more positive environment, it could create an explosive situation.”

Foster concurs with Eric Sprott, a Canadian money manager, that bullion may touch $2,000 an ounce. Gold gained for the eighth straight year in 2008, touching a record $1,033.90 an ounce in March, as investors bought the precious metal to store value amid a worsening economic slump.

Foster, whose Van Eck International Investors Gold Fund beat 93 percent of comparable funds in five years, said he is fielding an increasing number of calls from clients interested in gold. Van Eck has raised the proportion of gold investments in its non-specialist gold funds to the “high end” of a normal 10 percent to 20 percent range, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601082&sid;=axN4cvbL91lg&refer;=canada

-Gold prices may hit $1,500 an ounce in the next 12 to 15 months, Gary Dugan, the Chief Investment Officer (CIO) of Merrill Lynch, said yesterday. Dugan termed his apprehensions of gold striking such a high as a “fear” that may come true. He reasoned that such a price would mean the other commodities and streams of investments have been shunned by investors.

With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of “the most trusted currency”, Dugan said. “We have never seen such a rush to buy gold. It’s bringing in security and it’s still affordable.”

Merrill Lynch commodity price forecast authored by Dugan showed that gold prices can rise from the currently prevailing $913/oz to $1,100/oz in the first quarter of 2009 and to $1,150/oz in the second quarter. Read more here-http://www.business24-7.ae/articles/2009/2/pages/02032009_6fce22dd78604ed19eeb0ca3276fb9b0.aspx

-Investment bank Goldman Sachs raised its forecast for the price of gold to reach $1,000 an ounce in the next three months from its previous forecast of $700 due to rising investor demand for safe haven assets. “The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange-traded funds (ETFs), and futures contracts as

investors seek ‘a safe store of value’ amid the financial distress and inflation risks,” it said in a report. It also noted that a strong relationship between the price of gold in U.S. dollars and the exchange rate of the dollar against other currencies has begun to break down. Reuters

-Gold should remain a key component of all investors’ portfolios as the anti-dollar, anti-derivative, anti-LBO trade. At some point, sooner rather than later (i.e., within five years), gold will trade at $3,000 an ounce. Michael E. Lewitt-Read more here-http://www.forbes.com/2009/01/30/federal-reserve-bonds-personal-finance-investing-ideas_0130_economic_outlook.html

-RBC predicts $750-$1 000/oz, ’significant volatility’ for gold in ‘09. Read more here-http://www.miningweekly.com/article.php?a_id=152685

-Surging gold investment demand but high price volatility likely. Gold commentator Jeffrey Nichols reckons the yellow metal is suffering from a form of bipolar disorder and he and others look to a significantly higher price, but movements likely to be volatile. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=78009&sn;=Detail

-ETFs absorb more than $3 billion of gold so far this year. With the gold price reaching records in a number of important consuming nations, jewellery demand is stagnant but ETFs are soaring; are they establishing themselves as the west’s answer to small bars? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=78038&sn;=Detail

-2009 gold price estimates High $1345, Year End $1172, Average $992. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=77812&sn;=Detail

-Gold Disconnects from the U.S. Dollar. Read more here-http://news.goldseek.com/GoldenJackass/1233846218.php

-Gold could come into its own as true safe haven Scotiabank. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=77678&sn;=Detail

-Gold: The Protector and Creator of Jobs. Read more here-http://news.goldseek.com/GoldSeek/1233817800.php

-Overseas buyers start new gold rush. Read more here-http://www.stuff.co.nz/4834781a11.html

-Peak Gold and Silver. Read more here-http://news.goldseek.com/GoldSeek/1233538451.php

-Japan sewage yields more gold than top mines. Read more here-http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUST8310320090130

-Gold tiaras for rent for recession-hit Japan brides. Read more here-http://www.reuters.com/article/lifestyleMolt/idUSTRE5131XO20090204

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,500 the silver price would be $31.25
Gold to silver ratio at 70 to 1 with gold at $2,500 the silver price would be $35.71
Gold to silver ratio at 60 to 1 with gold at $2,500 the silver price would be $41.67
Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00
Gold to silver ratio at 16 to 1 with gold at $2,500 the silver price would be $156.25

-UBS sees silver averaging $14.75/oz in 2009. Read more here-http://www.platts.com/Metals/News/8333669.xml?sub=Metals&p;=Metals/News&?undefined&undefined;

-Update on the Gold Silver Ratio from Roland Watson. Read more here-http://www.321gold.com/editorials/watson/watson020209.html

-Huntington Asset Advisors Inc. is betting the widest gap between silver and gold prices in 14 years will narrow. Huntington’s Peter Sorrentino is looking at metals, where the gap between gold and silver prices grew to the widest since 1994 last quarter.

Gold rose 5.5 percent last year on the New York Mercantile Exchange’s Comex division, the eighth straight annual gain, because traders hoarded bullion as the U.S., Europe and Japan contracted simultaneously for the first time since World War II. Silver tumbled 24 percent on concern industrial demand will wane in a recession.

The price difference is more than 30 percent greater than the average in the previous 10 years, Bloomberg show data. Sorrentino stands to reap about $4.5 million in profits from a $10 million bet if the spread returns to its average. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=anLO8GN5iE_k&refer;=home

-Ted Butler silver commentary-Read more here-http://news.silverseek.com/TedButler/1233683504.php

DEFINITIONS-QUOTES-QUICK HITS

-Mark-to-market is an accounting methodology of assigning a value to a position held in a financial instrument based on the current market price for the instrument or similar instruments. For example, the final value of a futures contract that expires in 9 months will not be known until it expires. If it is marked to market, for accounting purposes it is assigned the value that it would currently fetch in the open market. Read more here-http://en.wikipedia.org/wiki/Mark_to_market

-The interventionist policy (big government) provides thousands and thousands of people with safe, placid, and not too strenuous jobs at the expense of the rest of society. Ludwig von Mises-Read more here-http://en.wikipedia.org/wiki/Ludwig_von_Mises

-There’s a rumour going around that states cannot go bankrupt,” German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. “This rumour is not true.” Of course she’s right. Countries can go bankrupt if they allow their deficit spending to spin out of control and are no longer able to service their interest payments.

Merkel’s comments can be read as a warning that countries need to keep their deficit spending in check. The message is: If governments go too far in trying to bail out companies and the economy, they could face insolvency themselves. Read more here-http://www.spiegel.de/international/world/0,1518,druck-604523,00.html

-With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of “the most trusted currency”. We have never seen such a rush to buy gold. It’s bringing in security and it’s still affordable. Gary Dugan, Chief Investment Officer, Merrill Lynch, February 3, 2009

-It would be absurd to think that Bernanke would be able to nail a 1 to 2 percent Goldilocks inflation rate coming out of this. What you have is competitive devaluation of all currencies around the world. Precious metals are the only hedge in this kind of environment. The trend of gold over the next five years is a straight line toward $1,700. John Brynjolfsson, Chief Investment Officer, Armoured Wolf LLC, Alis Viejo, California Bloomberg, January 29, 2009

-All this activity in precious metals has taken place while the US Dollar has remained strong. To us this indicates a disconnect for the Metals vs. the Dollar as the “Flight to Quality” seems to be gaining momentum. The 825 Billion Dollar “Stimulus” package, as predicted, is experiencing severe problems at the Senate Level. We have even heard some economists’ state that if this passes in its current form that the United States will be experiencing inflation at the 20 to 25% level prior to 2012.

Meanwhile, President Obama is doing everything he can to pressure its passage in its current form. This is so typical of a Democratic Government, Spend, Spend, Spend and Print, Print, Print. Let’s not learn from our mistakes, let’s just repeat the same mistakes of the “Carter Administration”.

So hold on to your Hats its going to be a wild 4 years under Obama. One thing seems certain, Precious Metals look to be one of the only safe places to put your money and prices are attractive for accumulating. We wouldn’t be surprised to see a rapid upward price movement once the next resistance levels are penetrated. Precious Metals International Ltd

-On gold, Harry Schultz writes: “Mathematically it will need a U.S. $2,300 gold price to equal the $800 gold peak of 1980. So, gold is cheap today, is well under half its 1980 worth in inflation-adjusted dollars.” He cites one technical indicator: “Basis on French Curve chart projection, gold will reach $3,500 by 2012, then fall to $2,500 (29%), then rise to $10,000.

There are a lot of projections around by some able technicians. If we go into Weimar inflation, the sky is the limit. But, we will play it a stage at a time, by the charts, because being overconfident about any future prices has been the undoing of many souls.” Read more here-http://www.marketwatch.com/news/story/A-great-month-gloom-doomers/story.aspx?guid={B5EBCB7B-D416-4ADD-B956-75DAC1D125C5}

-I believe that both gold and silver prices will rise to new highs in the coming year. That would be in excess of $1000/ounce for gold and $20/ounce for silver.

John Hathaway manager of the Tocqueville Gold Focus Fund-Read more here-http://news.goldseek.com/PeterCooper/1233759718.php

-”Worldwide, gold is seen as a safe place to be,” said Frank Lesh, a trader at FuturePath Trading in Chicago. “It’s one of the few assets that made money last year. Everybody wonders: Where should I go with my money this year? When you look around, gold is one of the few recipients.” Casey Daily Resource

-”The search for safe havens is still a major factor driving investor decisions,” said James Turk, founder of Goldmoney.com. “Gold is the safest haven of all. Gold will continue to benefit from all the monetary turmoil and worries about insolvent banks.” Casey Daily Resource

-As Joel Crane, of Deutsche Bank in New York, put it: “Central banks are going to start printing money and it’s not an ideal place for investors to be. People don’t have faith in currencies at the moment. There is still an underlying faith that gold will go higher.” Casey Daily Resource

-”Demand remains very high internationally for ETFs, gold certificates and bullion coins and bars,” said Mark O’Byrne, of Gold and Silver Investments. He’s seen “continuing safe haven demand for gold” due to the “sharp deterioration in the global economy.” Casey Daily Resource

-Of interest to coin fanciers will be stats from the U.S. Mint showing that it stamped out 94,500 gold Eagles in January. Well, if so, then where are they? That is not a small number, especially for January, but none of the several dealers we contacted has seen any, nor have they been informed as to when the 2009 Eagles will be available. Very peculiar, as they say. Casey Daily Resource

-UBS AG expects gold to average $1,000 an ounce this year, up 43 percent from its previous forecast, as investment demand will likely double in 2009 compared with 2007. Investment in exchange traded funds backed by bullion, such as the SPDR Gold Trust, has climbed to a record. Bloomberg-Read more here-http://www.platts.com/Metals/News/8333669.xml?sub=Metals&p;=Metals/News&?undefined&undefined;

-”The government can print endless money, but they cannot increase the supply of gold,” said Michael Pento, chief economist at Delta Global Advisors Inc. in Huntington Beach, California, who is doubling holdings of the precious metal to 8 percent of his $1.5 billion in assets. “Anything the government cannot replicate by decree, I want to own.” Investors typically buy gold during times of financial turmoil as a store of value.

The commodity has gained in five of the past six U.S. recessions. To rescue the U.S. economy, the Federal Reserve reduced its target interest rate for overnight loans between banks to as low as zero percent, more than doubled its total assets during the past year and agreed to buy long-term Treasuries. The government pledged $8.5 trillion on behalf of American taxpayers and spent $350 billion so far under the Troubled Asset Relief Program to bail out banks. Bloomberg

-The U.S. Mint suspended sales of American Buffalo 1-ounce gold coins in September after supplies ran out. The Perth Mint, producer of so-called Kangaroo and Nugget coins in Australia, said in October that it doubled output in six months. Muenze Oesterreich AG, the Austrian mint, almost quadrupled production of its Philharmonic coin in the first nine months of 2008.

Holdings in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, exceed the gold reserves of all but five central banks and the IMF. Switzerland’s Zuercher Kantonalbank in October said its gold vault was full.

Investment demand for gold bars may climb 49 percent to 201 metric tons in the first half of 2009, according to London-based researcher GFMS Ltd. Frederic Panizzutti, senior vice president at Geneva bullion refiner MKS Finance SA and the most accurate forecaster in the 2008 London Bullion Market survey, said the peak will be breached before July. Bloomberg

-Bullion is already up 16 percent since December 2007, the date that the Cambridge, Massachusetts-based National Bureau of Economic Research says was the start of the current recession. The biggest gain came in the 1973-1975 slowdown, when gold advanced 88 percent. Bloomberg

-”Gold is the ultimate currency hedge,” said Michael Darda, chief economist at research company MKM Partners LP in Greenwich, Connecticut, who expects gold to surpass $1,000 this year. “If central banks are going to shovel massive amounts of paper out there, gold will ultimately respond to that.” Bloomberg

-Chinese Cautious on Treasury Notes. China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.

“Whether we will buy more U.S. Treasury bonds, and if so by how much we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said. His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt. Reuters

-General Motors Corp. and Ford Motor Co. said U.S. sales plummeted at least 40 percent in January and Toyota Motor Corp. dived by almost a third, dragging the world’s biggest auto market toward the worst month since 1982.

The declines were 49 percent at GM, the largest U.S. automaker; 40 percent at Ford and 55 percent for Chrysler LLC. Toyota dropped 32 percent, Honda Motor Co. fell 28 percent and Nissan Motor Co. was down 30 percent.

Today’s reports showed the toll of sinking confidence among car and truck buyers. GM, Ford and Chrysler said January deliveries may have tumbled to an annual rate of fewer than 10 million vehicles, after full-year sales averaged about 16 million this decade. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aZHdANy2NHFc

-Deutsche Bank posts first loss since WWII, rejects state aid. Read more here-http://www.breitbart.com/article.php?id=CNG.c3b86e67d015d664d720fa421d679c0f.631&show;_article=1

-84% of U.S. cities in money trouble. Some 84% of cities say they are facing financial difficulty, according to new survey. Things won’t improve this year. Read more here-

http://money.cnn.com/2009/02/04/news/economy/city_troubles/index.htm?postversion=2009020412

-Global recession where did all the money go? Read more here-http://www.guardian.co.uk/business/dan-roberts-on-business-blog/interactive/2009/jan/29/financial-pyramid

-Dr. Ron Paul, U.S. Congressman says end the Fed. Watch video here-http://news.goldseek.com/RonPaul/1233588530.php

-Glenn Beck: The Inconvenient U.S. Debt: A Detailed Look at the Latest Monetary Base Figures. Read more here-http://www.youtube.com/watch?gl=CA&hl;=en&v;=FgJYCpRr5yI

-A Response to My Critics from Peter Schiff. Read more here-http://news.goldseek.com/EuroCapital/1233299220.php

-Zimbabwe, which has the world’s highest inflation rate, slashed 12 zeroes off its currency and announced measures to make trade in foreign exchange more transparent, Gideon Gono, the central bank governor, said.

The central bank revalued the currency at a rate of 1 trillion Zimbabwe dollars for one, Gono said in a statement on the Reserve Bank of Zimbabwe’s Web site today. The central bank also lifted all restrictions on foreign currency cash withdrawals. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_UGbP7DrrbI or

http://www.channel4.com/news/articles/politics/international_politics/zimbabwe+dispatches+the+value+of+money/2920357

-Iran says Obama’s offer to talk shows US failure. Read more here-http://www.breitbart.com/article.php?id=CNG.073ba2ee2f1f00668848a4655420fedc.411&show;_article=1

-Iran says US must accept nuclear programme. Read more here-http://www.ft.com/cms/s/0/6c33dd74-f2eb-11dd-abe6-0000779fd2ac.html?nclick_check=1

-Cheney warns of new attacks. Former Vice President Dick Cheney warned that there is a “high probability” that terrorists will attempt a catastrophic nuclear or biological attack in coming years, and said he fears the Obama administration’s policies will make it more likely the attempt will succeed. Read more here-

http://www.politico.com/news/stories/0209/18390.html

WWW.RARECOLOREDDIAMONDS.COM

-Wealthy clients investing in significant jewels. One ray of light in an economy dominated by a plunging stock market and failing real estate sector stands to be a boon for jewelers: High-end customers are turning to significant gemstones as investments, independents recently told National Jeweler. Industry leaders report similar patterns throughout the marketplace.

“Historically, diamonds have been a proven asset on multiple levels, and independent jewelers are seeing this trend today,” says Sally Morrison, director of the Diamond Information Center.

“In extremely soft economic times, people look to very hard assets, and diamonds prove to be less volatile than pretty much anything else I can think of.” Levinson Jewelers in South Florida has seen a 100 percent increase in sales of jewelry for investment purposes, says owner Mark Levinson. He says clients like to add jewels to their investment portfolio especially because the asset is easily transportable to the best market.

“If the euro is stronger than the dollar, you can have your diamond in pocket and take advantage of that,” Levinson says. “You can’t put gold or platinum or real estate in your pocket. But you can put millions of dollars of diamonds in your pocket. In that way, it is discreet it’s not like a piece of real estate you have to register. Plus, it’s an investment category that is fun and exciting. If you own a stock, you get a certificate.

With a beautiful diamond, you can wear and enjoy and have fun with it.” B.W. David Leavitt, owner of Antique and Estate Jewelry in Rancho Santa Fe, Calif., says business has been booming among his high-end customers who are scooping up significant investment jewels. “All of the biggest diamonds I’ve ever sold have been to men who buy as investments to hoard,” Leavitt says. “If it’s over 20 carats, it’s for an investment. They don’t let their wives wear it even if it is in a ring.

Today, there is more interest in that than in the past. People understand that diamonds are a good investment, and they’re hedging against inflation.” “In the 1987 stock crash, everyone stopped buying jewelry,” Leavitt says. “People were just blindsided. But now people are more world-savvy and are looking for other ways to invest.” Historically, significant diamonds have proven to be much more solid investments when compared with their smaller counterparts.

The Rapaport Group reported that as of Sept. 15, half-carat diamond prices were up 9 percent over the previous year, while 5-carat diamond prices were up a whopping 40 percent during the same period. Prices are poised to grow by double to $40 billion by 2016, while mine production is projected to grow by just 50 percent to 20 million carats, according to Rapaport Group, which forecasts diamond demand. Read more here-http://www.nationaljewelernetwork.com/njn/content_display/independents/market-developments/e3if2aba79ad08ad34ce699bacd6b341b2c?imw=Y

-Diamonds remain timeless and a good investment. The late Houston grand dame Mary Owen Greenwood wore her diamonds anytime, anywhere. When New York gossip columnist Suzy chided her for wearing big sparklers during daylight hours, Greenwood replied, “That’s what I thought, honey, until I had ‘em.”

Nowadays, industry experts say jewelers are holding their own by touting diamonds as a good investment. “I wish my 401k was in diamonds,” says Sally Morrison, director of the Diamond Information Center. Read more here-http://www.chron.com/disp/story.mpl/life/style/gloss/6244364.html

-”I don’t know how many newspapers you read, but if you look at page 2 of the NY Times or the LA Times you’ll note that every day there are ads for big diamonds. Plus ads shouting, “We want to buy your jewelry.” Who the devil is buying big diamonds these days? These daily ads are expensive to place, so they must be paying off.

Question why are we seeing ads for big diamonds every day? The answer is that major national and international money, important money, is buying diamonds as a store of value. They’re swapping fiat “junk” currency for diamonds. Why diamonds? Investment-grade diamonds are the new “concentrated form of gold.” I’m not talking about the kind of diamonds you see in the window of your local jeweler.

Most of those are what I call “junk diamonds.” There’s no decent resale market for those small, low-grade diamonds. But if we’re talking about a ten-carat G-color VVS1-clarity diamond, believe me there’s a market for it in the hundreds of thousands of dollars. Richard Russell-Dow Theory Letters

-In Shift, Chinese Move More Money Overseas. In Hong Kong, wealthy mainlanders are turning up at jewelry stores in growing numbers seeking diamonds, big ones. “They’re looking for five-carat diamond rings and six-carat diamond earrings three carats for each ear,” said Yollanda Lam, the marketing manager for the King Fook jewelry store chain here. Read more here-http://www.nytimes.com/2009/02/03/business/worldbusiness/03yuan.html

U.K. PM SUGGESTS WORLD HEADING FOR DEPRESSION-U.K. RECESSION

-Gordon Brown appeared to acknowledge for the first time that the world economy was heading for a 1930s-style “depression”. Mr. Brown stumbled slightly over his words at Commons question time, just a week after admitting that Britain was facing a “deep” recession. As the financial gloom deepens, he told the Tory leader David Cameron today: “We should agree, as a world, on a monetary and fiscal stimulus that will take the world out of depression.”

The comment went unnoticed during rowdy question time exchanges between Mr. Cameron and Mr. Brown, which centered on protectionism and the Prime Minister’s use of the phrase “British jobs for British workers”. Ironically, the exchange ended with Mr. Brown accusing the Tory leader of deliberately “talking Britain down”.

A No 10 spokesman said that Mr. Brown’s use of the word “depression” was not deliberate. “And he does not think it.” The term “depression” refers to sustained recessions characterized by high unemployment and a severe lack of business confidence rather than regular cyclical downturns. It has not been used by British policymakers during the current downturn except by way of warning and comparison with the Great Depression of the early 1930s. Read more here-http://www.timesonline.co.uk/tol/news/politics/article5660573.ece

-The British economy will shrink until the fourth quarter of this year as the world endures the slowest growth since the end of World War II, the National Institute of Economic and Social Research said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aRjy8HxTEBNs&refer;=home

-KPMG Says 5,000 U.K. Companies May File for Bankruptcy in 2009. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=alAM0hb78zDo

-George Soros, the billionaire investor, has been selling off sterling. George Soros, the billionaire investor famed for “breaking the Bank of England” has launched another assault in recent months, cashing in as Britain’s currency slid. Read more here-http://www.telegraph.co.uk/finance/financetopics/recession/4376432/George-Soros-the-billionaire-investor-has-been-selling-off-sterling.html

REVEALED-THE DAY U.K. BANKS WERE JUST THREE HOURS FROM COLLAPSE

-Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown’s Ministers has revealed. City Minister Paul Myners disclosed that on Friday, October 10, the country was ‘very close’ to a complete banking collapse after ‘major depositors’ attempted to withdraw their money en masse.

The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals. Only frantic behind-the-scenes efforts averted financial meltdown.

If the moves had failed, Mr. Brown would have been forced to announce that the Government was nationalising the entire financial system and guaranteeing all deposits. But 60-year-old Lord Myners was accused last night of being ‘completely irresponsible’ for admitting the scale of the crisis while the recession was still deepening and major institutions such as Barclays remain under intense pressure. Read more here-http://www.dailymail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html

KRUGMAN-OBAMA SHOULD NATIONALIZE U.S. BANKS

-President Barack Obama shouldn’t hesitate to nationalize the banks that need to be bailed out, Nobel Prize-winning economist Paul Krugman said. “If taxpayers are footing the bill for rescuing the banks, why shouldn’t they get ownership, at least until private buyers can be found?” Krugman wrote in a column in the New York Times published today. “But the Obama administration appears to be tying itself in knots to avoid this outcome.”

His remarks echo those of Nassim Nicholas Taleb and Nouriel Roubini, who said last week that nationalizations will be necessary to bring the U.S. banking system out of insolvency. Obama will require banks to bolster lending in return for government aid, lawmaker Barney Frank said this week, stopping short of taking full ownership.

Krugman said the U.S. government’s rescue plan appears to put banking risk with taxpayers when loans go bad while giving the rewards to executives and shareholders when things go well. He cited newspaper reports that Obama’s rescue plan will include government purchases of troubled bank assets and guarantees against losses. Treasury Secretary Timothy Geithner said on Jan. 28 that U.S. officials will “do our best” to preserve the banking system run by private shareholders. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=a4Tl65kFU96s&refer;=home

BANKS IN FLORIDA-MARYLAND-UTAH SHUT

-Banks in Florida, Maryland and Utah were closed as regulators wrapped up the busiest month for failures since the housing slump began in 2006. Ocala National Bank in Florida and Suburban Federal Savings Bank of Crofton, Maryland, were shut by federal regulators, according to statements sent by the Federal Deposit Insurance Corp. MagnetBank of Salt Lake City was seized by the Utah Department of Financial Institutions. The banks had total assets of $876.4 million and deposits of $790 million.

Six banks have failed this month as tumbling home prices and a 16-year high in unemployment boost foreclosures. The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the previous period amid the worst housing crisis since the Great Depression. Regulators closed 25 U.S. banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. Ocala and Suburban Federal combined will cost the FDIC fund about $225.6 million, the regulator said.

No estimate was provided for MagnetBank. Suburban Federal’s seven offices were scheduled to open today as branches of The Bank of Essex of Tappahannock, Virginia, which acquired the deposits. The Office of Thrift Supervision said it seized the bank because of more than a year of losses stemming from soured residential, construction and land loans. “The OTS determined that Suburban was critically undercapitalized and in unsound condition,” the regulator said in an e-mailed statement. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aIfyJ5j8OHTM

U.S. STIMULUS-BAILOUT

-Bill Gross, co-chief investment officer of Pacific Investment Management Co., said the U.S. may slump into a “mini depression” unless policy makers spend trillions of dollars to spur growth. “This economy needs support from the government, a check from the government in the trillions,” Gross said today in a Bloomberg Television interview from Pimco’s headquarters in Newport Beach, California. “There is a potential catastrophe if the U.S. government continues to focus on billions of dollars.” Read more here-

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

-World worries how U.S. will pay for stimulus. Even as the U.S. Congress looks for ways to expand President Barack Obama’s $819 billion stimulus package, the rest of the world is wondering how Washington will pay for it all. Few people attending the World Economic Forum question the need to revive America’s economy, the world’s largest, with a package that could reach $1 trillion over two years.

But the long-term fallout from increased borrowing by the U.S. government, and its potential to drive up inflation and interest rates around the world, seems to be getting more attention here than in Washington. “The U.S. needs to show some proof they have a plan to get out of the fiscal problem,” said Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. “We, as developing countries, need to know we won’t be crowded out of the capital markets, which is already happening.”

Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because the dollar was a reserve currency for the rest of the world. Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status. Read more here-http://www.iht.com/articles/2009/01/30/business/borrow.1-419211.php?page=1

-Add this to the list of complaints about the government’s Wall Street bailout: When Washington was buying pieces of banks last year, it may have overpaid, by as much as 30 percent. A regulator overseeing the government’s $700 billion bailout testified Thursday that the Treasury Department paid $254 billion for $176 billion of assets an overpayment of $76 billion.

“Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value,” said Elizabeth Warren, chairwoman of the Congressional Oversight Panel examining the Troubled Asset Relief Program, or TARP. She cited a valuation study as evidence of the overpayment.

The figures were calculated by studying 10 transactions and then extrapolating their results to all of the TARP purchases in 2008, Ms. Warren said. “There may be good policy reasons for overpaying,” Ms. Warren said. “But without a clearly delineated reason, we can’t know.” Read more here-

http://www.nytimes.com/2009/02/06/business/economy/06tarp.html?partner=rss&emc;=rss

-Meredith Whitney: Why TARP I & II Won’t Work. Wednesday morning, Oppenheimer & Co. banking analyst Meredith Whitney sent out a note that had better be on the Blackberries of Timothy Geithner and Barack Obama. The note is a summary of a conversation that Whitney and her team had with Michael Cavanaugh, chief financial officer of JP Morgan Chase. The flaws of TARP are instantly revealed.

No amount of capital infusions from the government will get JP Morgan to lend more, says Cavanaugh. The bank simply has no appetite for risk in a recession. This is as clear a signal that JP Morgan can send as TARP II is implemented JP Morgan will take the money, but it’s not going to lend it out soon.

Cavanaugh does say that a US sponsored bad bank will provide, in Whitney’s summary, “relief to the system and free up lending at peer banks,” implying that this might help Morgan’s competitors and get them lending but that Morgan won’t increase its lending because of it. Also, he says, suspending mark-to-market accounting rules will have no effect on Morgan’s balance sheet.

So there you go, a barely coded message to Geithner: changing accounting rules won’t help, setting up a bad bank might, and if the banks that take public money follow JP Morgan’s “fortress balance sheet” approach then banks will not simply be a conduit for turning taxpayer money into consumer loans. Instead, banks will keep the money.

Geithner has one option, of course put conditions on any future capital infusions, demanding a certain percentage of lending increases in exchange for funding. But even on that front, Cavanaugh has a warning the cost of consumer credit is going to go up. Story here-http://blogs.forbes.com/trailwatch/2009/02/meredith-whitney-why-tarp-i-ii-wont-work.html

-It’s A Bailout World from David Chapman. Read more here-http://news.goldseek.com/UnionSecurities/1233558360.php

-Uncharted Waters. These are uncharted waters, indeed. The shenanigans being foisted upon us by Washington are unprecedented at least since World War II, and probably ever. There is so much complexity, if not sheer trickery, going on that it becomes increasingly difficult to make any sense of what’s happening, much less what the net effect is going to be. Read more here-http://www.321gold.com/editorials/casey/casey020109.html

U.S. RECESSION-JOBS-BANKRUPTCIES

-Slim chance of a turnaround in 2009. Consumers and businesses have retrenched so deeply that it will take a long time for the economy to stage a meaningful comeback. Read more here-http://money.cnn.com/2009/01/30/news/economy/Karydakis_turnaround.fortune/index.htm?postversion=2009013016

-US credit card delinquencies at record highs. Read more here-http://www.reuters.com/article/marketsNews/idUSN0428871920090204

-Consumer spending in the U.S. fell in December for a record sixth consecutive month, capping the worst year since 1961, a slump that is likely to persist as companies slash payrolls. The 1 percent drop in purchases was larger than forecast and followed a 0.8 percent decrease in November, the Commerce Department said today in Washington. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=a4wAvtbTYx8U&refer;=home or http://money.cnn.com/2009/02/02/news/economy/personal_income_spending/index.htm

-The number of Americans filing first- time claims for jobless benefits unexpectedly jumped last week to a 26-year high, signaling a deepening deterioration in the labor market. Initial jobless claims increased by 35,000 to 626,000 in the week ended Jan. 31, the highest level since October 1982, the Labor Department said today in Washington. The total number of people collecting benefits jumped to a record 4.788 million a week earlier. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aYUd8snLZgo0&refer;=home

-Unemployment rises in 98% of cities. Metropolitan unemployment up in 363 of 369 regions in December. Some 40 cities report jobless rates higher than 10%. Read more here-

http://money.cnn.com/2009/02/04/news/economy/metropolitan_unemployment/index.htm?postversion=2009020411

-Companies in the U.S. cut an estimated 522,000 jobs in January as the economy weakened at the start of the year, a private report based on payroll data showed today. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=alV5yqCR0DTY&refer;=home

-Massive job losses: What’s left to cut? It’s been a solid year of slow sales and job cuts and businesses are running out of options for further cutbacks. Read more here-

http://money.cnn.com/2009/02/04/smallbusiness/layoffs_continue.smb/index.htm

-Personal bankruptcy filings in the U.S. rose 34.4 percent in January as the deepening economic crisis drove many to seek court protection from creditors. Individual bankruptcy filings rose to 88,773, up more than a third from a year earlier and higher than the 84,926 filings in December, according to the National Bankruptcy Research Center. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aOnsz9q3r8_8

-Expectations for U.S. business bankruptcies continue to show a rising and accelerating trend. A recent study by the global credit insurance provider Euler-Hermes forecast a 45% year-over-year increase in U.S. business bankruptcies for 2008 and a 50% increase on top of that for 2009 hardly the ingredients for a rebounding U.S. economy. Casey’s Charts

WORST JANUARY EVER FOR THE DOW AND S&P; 500

-Stocks wrapped up their worst January on record with a final plunge on Friday. The Dow Jones Industrial Average finished January down 8.84% on the month. Previously, the worst January for the Dow had been that of 1916, when it fell 8.64%. Friday, the Dow dropped 148.15 points to 8000.86 after briefly dipping below the 8000 mark. The Dow has fallen five straight months and in 12 of the last 15.

The S&P; 500-stock index lost 2.28% Friday to end at 825.88, for cumulative losses in January of 8.57%. Until Friday, its worst January from 1929 onward occurred in 1970, when it lost 7.65%. Both stock-market indexes are off by more than 40% from their 2007 highs. Read more here-http://online.wsj.com/article/SB123331631097133089.html or http://money.cnn.com/2009/01/30/markets/markets_newyork/index.htm?postversion=2009013018

-The Standard & Poor’s 500 Index will fall, wiping out its 9.8 percent gain since November, as President Barack Obama’s so-called bad bank plan takes months to carry out and the recession worsens, Barclays Plc said.

“We suggest putting down the champagne glass and drinking a cup of coffee,” Barry Knapp, chief U.S. equity strategist at Barclays said in a report dated Jan. 30. “The policy euphoria associated with the ‘bad bank’ plan will prove to be short lived.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aUHSFL9hJb78

-Russian and eastern European equities may fall further because earnings and other fundamental measures mean little in the current economic turmoil, said Nouriel Roubini, the New York University professor who forecast a U.S. recession two years ago. “In market dynamics, prices can move far below what fundamentals justify,” Roubini said in an interview in Moscow. “There is still a massive downside for equities in the region.” Read more here-http://www.bloomberg.com/apps/news?pid=20601085&sid;=aWHaLfV69mFI&refer;=europe

INTEREST RATES

-The Bank of England cut the benchmark interest rate to the lowest since the bank was founded in 1694 to help drag the British economy out of the deepening recession. The nine-member Monetary Policy Committee, led by Governor Mervyn King, reduced the bank rate to 1 percent from 1.5 percent. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=afu0SjkxN42w&refer;=home

-The European Central Bank kept interest rates unchanged after four reductions since early October as officials gauge the severity of the recession before cutting borrowing costs again.

Policy makers meeting in Frankfurt left the benchmark lending rate at 2 percent, as forecast by all but one of 53 economists in a Bloomberg News survey. The ECB will cut the rate to a record low of 1.5 percent in March, another survey shows.

ECB President Jean-Claude Trichet has signaled a reluctance to follow the U.S. Federal Reserve in lowering rates to close to zero, even as Europe finds itself in the grips of its worst recession since World War II. At the same time, Trichet signaled as recently as Jan. 28 that the slowdown will probably force the ECB to act again next month.

“They really haven’t grasped the severity of the recession,” said Laurent Bilke, an economist at Nomura International Plc in London, who used to work as a forecaster at the ECB. “Rates should be at 0.5 percent. They should have used the room they have much more forcefully.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=akVwrFJj.5mY

-Australia’s central bank cut its benchmark interest rate to the lowest level in 45 years and the government announced it will spend a further A$42 billion ($27 billion) to ward off a recession.

Governor Glenn Stevens lowered the overnight cash rate target to 3.25 percent in Sydney today, saving borrowers with an average A$250,000 home loan more than A$120 a month. Treasurer Wayne Swan said the government will spend A$12.7 billion in handouts to families and A$28.8 billion on infrastructure, sending the budget into its first deficit since 2001-2002.

SHADOW STATS

REAL ESTATE-MORTGAGE TIME BOMB-FORECLOSURES

-The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said. The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.

“It’s like a runaway train gaining momentum,” Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. “It’s difficult to say when we’ll see a bottom to the housing market.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=akmNU0mqCLtc

-Home prices fell in 24 of 25 U.S. metropolitan areas in November from a year earlier as the recession and tighter lending spurred record foreclosures. The San Francisco area saw the biggest drop, with the average price per square foot falling 36.8 percent, New York- based Radar Logic Inc. said in a report today. Phoenix had the next biggest decline, falling 34.6 percent, and Las Vegas slumped 32.4 percent. Milwaukee, Wisconsin was the only area where prices rose, gaining 2.4 percent, Radar Logic said.

Sales of existing homes rose in December, propelled by a 15 percent drop in prices, the National Association of Realtors said on Jan. 26. The number of “motivated sales,” such as foreclosure auctions, helped increase November transactions in 13 metropolitan areas of the 25 Radar Logic tracks. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aOHec_7mOt8k&refer;=home

-A record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall. The fourth quarter’s all-time high was 6.7 percent above a year ago when 17.8 million properties were vacant, the U.S. Census Bureau said in a report today. The vacancy rate, the share of empty homes for sale, rose to 2.9 percent in the last quarter, the most in data that goes back to 1956.

The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and make it more likely owners will walk away from properties worth less than their mortgages. About a third of owners whose home values drop 20 percent or more below their loan principal will “hand the keys back to the bank,” said Norm Miller, director of real estate programs for the School of Business Administration at the University of San Diego.

“When you’re underwater and prices continue to fall, you tend to walk,” Miller said in an interview. “It’s a downward spiral that’s tough to stop because it feeds on itself. Foreclosures encourage other foreclosures and falling prices discourage buying.” There were 2.22 million new foreclosures in 2008, an average of 6,090 a day, according to Washington-based Hope Now Alliance. Those resulted in 917,000 property sales, according to the group that represents 27 mortgage lenders and servicers.

U.S. banks owned $11.5 billion of homes they seized from delinquent borrowers at the end of the third quarter, according to the Federal Deposit Insurance Corp. in Washington. That’s up from $5.4 billion a year ago. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKufqJK9j1cY&refer;=home

-New York the next housing bust? The city has fallen on hard economic times, and that could bring its high-priced housing market back down to Earth. Read more here-

http://money.cnn.com/2009/01/30/real_estate/New_York_next_bust/index.htm?postversion=2009013016

-High-End Housing Market Ravaged by Stock Selloff. Read more here-http://www.cnbc.com/id/28977233

-The number of California homes sold for $1 million or more plunged to a five-year low in 2008 as banks tightened lending, data provider MDA DataQuick said. A total of 24,436 homes in California, the most populous U.S. state, sold for at least $1 million last year, down 43 percent from 2007, San Diego-based MDA DataQuick said today in a statement.

It was the lowest sales count for million-dollar homes in the state since 2003. “A lot of home sales in the upper half of the market have been on hold for months, waiting for financing,” MDA DataQuick President John Walsh said in the statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aO92FOi0iJuc

-The cost of a Golden Gate Bridge view from the top of San Francisco’s tallest residential building just got 15 percent cheaper. Prices of all condominiums in the downtown Millennium Tower will be cut amid the city’s biggest housing glut since the dot-com crash in 2001, according to city planning data. The offer includes apartments already sold in the 60-story, 419- unit high-rise being built in the South of Market area.

“We believe it’s the right thing to do,” Richard Baumert, managing director of New York-based developer Millennium Partners LLC, said in an interview. “It’s the price we ask in the marketplace today.” Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=a.l_gBfpOQrs&refer;=home

-London luxury-home prices had the second-biggest decline on record in January as would-be buyers struggled to secure mortgages from banks hurt by the global financial crisis. The average value of homes costing more than 1 million pounds ($1.4 million) in London’s most expensive neighborhoods fell 3.7 percent from a month earlier, Knight Frank LLP said in an e-mailed statement today. In the past 12 months, prices have slumped 21 percent, the biggest annualized drop recorded by Knight Frank. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aM9uEAUYNgvI

-U.K. house prices ‘could fall 40 per cent without loan boost.’ Read more here-http://www.independent.co.uk/money/mortgages/house-prices-could-fall-40-per-cent-without-loan-boost-1523110.html

-U.S. Housing Slump Has ‘Just Begun,’ Says Forecaster John Talbott. Talbott’s latest predictions are sobering. The U.S. is only halfway through the total potential decline in housing prices, he says. Home values will continue to deteriorate for four to five years, he forecasts. Adjustable-rate mortgages issued in 2004 and 2005, for example, are only now resetting for the first time, he notes.

Bankers may “try to blame the crisis on poor Americans with bad credit histories, but that is not the real cause of the housing crisis,” he says. “The greatest home-price appreciations and the homes most subject to price readjustment are in America’s wealthiest cities and its glitziest neighborhoods.”

At the end of 2008, a record 19 million U.S. homes stood empty and homeownership sank to an eight-year low as banks seized homes faster than they could sell them, the U.S. Census Bureau said this week. Almost one in six owners with mortgages owed more than their homes were worth, Zillow.com said the same day.

By the time the crash ends, Talbott predicts, homeowners will have lost as much as $10 trillion, with investors and banks worldwide losing almost $2 trillion. And just as the U.S. starts getting over a prolonged recession, the first big wave of baby boomers will retire, depriving the economy of their productivity (and high consumption), he says. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8mdg7z0u7Dw

-Banks Sitting On An Inventory Time Bomb. An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data. Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I’m wondering why? Why are the banks sitting on all these properties instead of listing them for sale? Read more here-http://www.cnbc.com/id/28898377

-U.S. Mortgage Time Bomb Needs Defusing Yesterday. When talking about the U.S. home market, mentioning “the other shoe to drop” was quaint about a year ago. Now we are referring only to bombs. The latest ordnance is the option adjustable-rate mortgage, one of the many sucker loans marketed during the housing boom. Option ARMs basically gave borrowers four ways to pay back, most of them involving low initial outlays that would reset at much higher monthly amounts at a future date.

Of the $200 billion of these loans outstanding, almost $30 billion is due to reset this year and $67 billion in 2010, according to Fitch Ratings, a New York-based ratings company. The resets inflict more trauma on the U.S. housing market. The average option ARM monthly payment will soar 63 percent or $1,052. Although there was a slight increase in home sales in November, prices fell 18 percent from a year earlier, according to the S&P;/Case-Shiller Index.

The pain continues. Since most option ARM borrowers will be unable to refinance because of lowered credit ratings or lack of home equity, many of those resets will result in more foreclosures and further depress home prices. Ultimately, the option-ARM resets might plunge 8 million more households into foreclosure. That’s in addition to the 2.3 million facing home loss last year, says Eric Rothmann, an analyst for Zacks Investment Research in Chicago. Read more here-

http://www.bloomberg.com/apps/news?pid=20601039&refer;=columnist_wasik&sid;=a8vqJQKnq3iw

-Hovnanian CEO Gets Bonus as Company Value Drops 76%. Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, gave its chief executive officer a 20 percent pay raise in 2008, including an almost $1 million performance bonus, as the company lost three-quarters of its market value. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ad5a0nJfglXQ&refer;=home

The GoldBugg Report – February 10, 2009
Posted by Worldwide Precious Metals on Tuesday, February 10, 2009

The GoldBugg Report – February 3, 2009

February 3, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 30 2009 SHOW

GOLD

-Gold continues to be maligned by many and the world’s exposure to it remains very low. The conditions that we are seeing develop have never been more bullish for gold. Sprott Asset Management said in their December letter that “we have never been more bullish” on gold. It may be the only place left to hide as we go into 2009.

The conditions are deteriorating even faster than we expected. What started as a potentially bad recession is now showing signs of turning into a full-blown depression. But the massive monetary and fiscal stimulus being created by the authorities almost guarantees that going forward Gold and bullion will be the key place to be.

Investors should now have at least 25 per cent of their portfolios invested in Gold and Bullion. The evidence is mounting that the economic downturn will be severe. We are only awaiting the numbers to show that indeed we might be able to say “It’s a Depression”. Not a pretty thought. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1232742134.php

-Gold Breaks above $850. James Turk-Read more here-http://goldmoney.com/en/commentary.php#current

-Gene Arensberg: Gold price thrusts through resistance. Read more here-http://www.stockhouse.com/Columnists/2009/Jan-1/26/Gold-price-thrusts-through-resistance–Got-Gold-Re

or http://www.gata.org/node/7124

-Getting a Grip on Gold’s Price. Read more here-http://online.wsj.com/article/SB123308288034720495.html

-Global Currency and Gold. Read more here-http://news.goldseek.com/GoldSeek/1233083811.php

-Forecasting the gold price expert panel predicts $1074 high, Mineweb readers $1305. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=77325&sn;=Detail

-The Economy the Titanic & The Life Rafts of Gold & Silver. Read more here-http://www.321gold.com/editorials/schoon/schoon012809.html

-Bond markets have risen to all time record highs in recent weeks and there is a concern that there may be a bubble in some government debt markets. Especially as governments are engaged in an unprecedented bailout of much of the western financial system and there are increasing fears that much of the western banking system will be partially nationalized.

Bernanke’s and others’ proposals to print money to buy their own bonds shows they believe that government bonds are overvalued and will likely come under serious selling pressure at some stage in the coming months. It shows how most government bonds (particularly long dated bonds) are not a safe haven. As this realization sinks in, gold’s safe haven qualities will be more greatly appreciated in the coming months and should see gold rise above $1,000/oz sooner than most expect in 2009.

Fears of a sharp selloff in bond markets is what has led to Ben Bernanke and others to suggest printing money to buy their own government bonds as it is hoped that this intervention or market manipulation would artificially keep bond prices high and yields low. Most astute observers see it as another shortsighted panacea that may be effective in the short term but is likely to lead to a far more serious problem down the road the likely downgrading of the US government debt, a possible default and likely double digit inflation and interest rates. Stagflation or virulent 1970s style macroeconomic conditions would again see gold’s safe haven qualities come centre stage. Gold.ie

-The bottom line is inflation and deflation are and always have been purely monetary in nature. Supply and demand can drive prices all over the place, but it is only a changing money supply that can truly spawn inflation or deflation. And the money-supply data is crystal clear. The Fed is growing the fiat-dollar supply by frightening rates, all the way from double-digit broad-money growth down to a scary doubling of the monetary base!

This means big inflation is coming, it’s already baked into the pipeline. Too distracted by deflationists who have no dictionaries and hence don’t even know what the word “deflation” really means, Wall Street hasn’t realized the real threat is inflation yet. But when it does, capital should rapidly flood into investments that thrive in inflationary times. Of these, gold remains the king. Its bullish potential in the years ahead is vast. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton012309.html

-Rare gold coin sells for £20,000. Read more here-http://news.bbc.co.uk/2/hi/uk_news/england/7851238.stm

SILVER

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

Gold to silver ratio at 80 to 1 with gold at $1000 the silver price would be $12.50
Gold to silver ratio at 70 to 1 with gold at $1000 the silver price would be $14.29
Gold to silver ratio at 60 to 1 with gold at $1000 the silver price would be $16.67
Gold to silver ratio at 50 to 1 with gold at $1000 the silver price would be $20.00
Gold to silver ratio at 16 to 1 with gold at $1000 the silver price would be $62.50

-Why do I still recommend silver, given its poor performance compared to gold since summer? Silver is still down 45% from its highs, while gold is only down 10%. Silver has rebounded over 35% from its lows, while gold is up about 28%. Typically, when gold goes up, silver goes up by a larger percentage. I think that will be the case again this year as investors focus less on silver’s industrial demand and focus more on its investment potential and lower cost to gold.

Another factor is that about 80% of silver is mined as a byproduct of other metals mining. Many mines are being shut down or production curtailed for tin, copper, zinc, etc. I expect this will reduce the supply of newly mined silver in 2009. That should be enough to offset the reduction in industrial demand. Timothy Silvers-Read more here-http://www.silverbrothers.com/012409.html

-Think Gold Premiums Are High? Wait Till You See Silver! Read more here-http://news.silverseek.com/SilverSeek/1233069588.php

-Gold/Silver Market Updates from Clive Maund. Read more here-http://www.321gold.com/editorials/maund/maund012609.html

-Aden sister’s commentary on silver and gold. Read more here-http://www.kitco.com/ind/Aden/aden_jan262009.html

-Silver and the Chinese. Bloomberg put out some interesting news regarding the silver market stating that refined silver output in China has peaked and it could stop growing because less will be produced as a result of halting of mine expansions, higher costs for production and lower prices received for the metal itself. Read more here-

http://news.silverseek.com/SilverInvestor/1232693400.php

-Relax: There Will Be No Depression gold and silver will outperform. LA-based gold commentator Kenneth J. Gerbino tells us why he feels there won’t be a depression but we will be faced with inflation, and markets in general, and bonds in particular, will prove to be bad buys, while gold and silver will perform best of all. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=77453&sn;=Detail or http://www.321gold.com/editorials/gerbino/gerbino012609.html

-Ted Butler silver commentary-Read more here-http://news.silverseek.com/TedButler/1232994713.php

-New Inventory High at the Silver ETF. Read more here-http://news.silverseek.com/SilverSeek/1233078852.php or http://uk.reuters.com/article/allBreakingNews/idUKLS63875420090128?rpc=401

-Silver investigation: Stakes are enormous. Read more here-http://www.gata.org/node/7118 or http://www.investegate.co.uk/invarticle.aspx?id=66609

PLATINUM-PALLADIUM

DEFINITIONS-QUOTES-QUICK HITS

-Collateralized Debt Obligation-CDO. An investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds.

Similar in structure to a collateralized mortgage obligation (CMO) or collateralized bond obligation (CBO), CDOs are unique in that they represent different types of debt and credit risk. In the case of CDOs, these different types of debt are often referred to as ‘tranches’ or ’slices’. Each slice has a different maturity and risk associated with it.

The higher the risk, the more the CDO pays. Investopedia.com-Read more here-http://en.wikipedia.org/wiki/Collateralized_debt_obligation or Everything You Wanted to Know about Credit Default Swaps but Were Never Told-Read more here-http://www.rgemonitor.com/globalmacro-monitor/255257/everything_you_wanted_to_know_about_credit_default_swaps–but_were_never_told

-When people fear their government, there is tyranny. When governments fear the people, there is liberty. Thomas Jefferson

-We were poor when I was young, but the difference then was that the government didn’t come around telling you were poor. Ronald Reagan

-”Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria” John Templeton

-Mike Milken back in the 80’s said the banks were levered four times and he could not sleep at night. Lehman, Merrill, Bear Stearns, they were levered 24 times.” Frank Holmes, chairman of U.S. Funds

-”Manipulation of markets is about the fight between limited government and unlimited government.” Chris Powell, secretary of 10-year-old Gold Anti Trust Action Committee

-”Hope is a wonderful thing to have spiritually. It is a terrible thing to have for investments.” Peter Grandich of Grandich Letter

-”Wall Street is a bunch of sociopaths. You can’t grow a conscience if you don’t have one.” Trace Mayer of RunToGold.com

-”I am not relishing the prospect of a world with $3,000 gold. But I am prepared for that day.” Thom Calandra of Stockhouse.com

-A vital function of the free market is to penalize inefficiency and misjudgment and to reward efficiency and good judgment. By distorting economic calculations and creating illusory profits, inflation will destroy this function. Henry Hazlitt-Read more here-http://en.wikipedia.org/wiki/Henry_Hazlitt

-”Investors are looking to shelter their wealth and gold is one of the few choices they have in these unstable markets. Wealth preservation is 2009’s theme.” Peter Spina, of GoldSeek.com

-The next two magnets for Gold above $887.50 are the following: 1-$1060 2-$1245. Jim Sinclair

-At present governments are printing money like fury and little is happening to their economies because banks, companies and individuals are hoarding cash. But eventually pulling on this string will work, and money will flood into the economy in an uncontrollable way. It is at this point that gold prices will go ballistic. That should not be more than nine months to a year away based on past precedent. Peter Cooper-Read more here-http://news.goldseek.com/PeterCooper/1233239604.php

-Greenlight Capital Inc. founder David Einhorn, 40, is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.

Since Einhorn was 10 years old, his grandfather has warned him that investing in bullion and gold-mining stocks was the only “sensible” thing to do given the threat of inflation and the risks of so-called fiat currencies, New York-based Greenlight said in a Jan. 20 letter to clients. The firm had never before considered buying bullion or shares of miners.

“To everyone’s dismay, we believe some of Grandpa Ben’s predictions are playing out,” Greenlight said in the letter, a copy of which was obtained by Bloomberg News. “The size of the Fed’s balance sheet is exploding, and the currency is being debased.”

Greenlight is turning to the centuries-old currency to mitigate the effects of the economic collapse and government efforts to end it. Bullion gained for the eighth straight year in 2008 as governments in Europe and the U.S. rescued banks from collapse. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aqvwUIqllyRc

-I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded,”said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey. Sowanick believes gold can move up to around $1700 per ounce. Gold hit an all-time high of $1030.80 on March 17, 2008, following the collapse of Bear Stearns. Reuters-Gold attracts more flows amid recession-Read more here-http://uk.reuters.com/article/personalFinanceNews/idUKLNE50R00P20090128?sp=true

-Barrick Gold Corp. Chairman Peter Munk said gold prices will top $1,000 an ounce as investors buy the metal to guard against “uncertainty” from financial-market turmoil. “Do I personally believe gold will break through $1,000?” Munk said. “It’s not a question of if, it’s a question of how soon.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601082&sid;=aXnrEDX4tvtU&refer;=canada

-Barrick chairman speculates China will dump dollars for gold. Read more here-http://www.gata.org/node/7134

-”They are printing trillions of dollars worth of currencies, and there is no real asset behind it. So every single dollar in my pocket is going to be worth less and less every day,” said Robert Lutts, chief investment officer of $400 million Cabot Money Management in Salem, Massachusetts. Reuters

-”It’s a flight from all cash to gold in any currencies right now, because it becomes obvious that everybody wants to inflate out of this problem,” said Axel Merk, portfolio manager of the $310 million Merk Hard Currency and Asian Currency Funds in Palo Alto, California.

Merk said investors recently allocated more weight into gold because it has no counterparty risk, unlike traditional asset classes. Gold, which produces zero interest yield, also became more attractive as governments in the industrial world slashed interest rates to the bone, Merk said.

-”You will have people buying gold with the gut feeling that there is still a lot of tough times ahead. All the money that went into notes and bonds is now going into gold and other hard assets because yields are ridiculously low.” Matt Zeman, of LaSalle Futures Group in Chicago

-The next threshold for gold is the $930 mark, in the opinion of Mark O’Byrne, of Gold & Silver Investments. “A daily or weekly close above that level would likely lead to gold retesting the psychologically important mark of $1,000 an ounce again.” Casey Daily Resource

-”Massive injections of liquidity into the global banking system will serve to drive gold prices higher.” Dennis Gartman, editor of the Gartman Letter

-”Widespread global economic gloom and ultra-low global interest rates. As the price of money [interest rates] is held down by central banks, the price of its competitor [gold] pushes higher on the lack of yield reward in monetary alternatives.” Ashraf Laidi, of CMC Markets in London

-”Investors are starting to see that the yellow metal is one of the few havens for protection from what is an inevitable wave of inflation.” “Technically, gold is surging through some key levels, along with silver, and we are starting to see investors dip their toes back in the market. Kevin Kerr, editor of Global Commodities Alert

-Julian Phillips, of Goldforecaster.com, has lost none of his enthusiasm for gold as he asks, “can we say the $:Gold link is breaking? It looks to be so! Gold was consolidating as the $ fell but rose previously as the $ rose. Gold is looking more like the place to be both in deflation and uncertainty and in inflation. Long-term investors have been buying well over 50 tonnes of gold in the last three weeks, confirming this. This amount of buying is certainly swamping central banks gold sales and is showing investors the way forward.” Casey Daily Resource

-Germany, the world’s second-largest holder of gold after the U.S., has denied rumors that it is selling gold from its vaults to make up for its growing deficit. The rumor had been circulating that the Bundesbank was selling gold, possibly to help fund a second fiscal stimulus worth about €50 billion.

The ruling Christian Democratic Union party had earlier advanced the proposition that the Bundesbank should sell some of its gold reserves, which amount to about 3,400 tons, to help reduce debt. But Finance Minister Peer Steinbrueck rejected that proposal in Wednesday’s Berliner Zeitung newspaper, and Bundesbank spokeswoman Madleen Petschmann reiterated that the rumors were unfounded. Casey Daily Resource

-This prompts the question: which of the major markets are presently in long-term upward trends relative to gold? The answer is: none of them. Over the past decade there were multi-year periods during which various markets trended higher in gold terms, but the relative gains achieved by these markets rapidly evaporated last year.

To put it another way, a good case can be made that gold is the only long-term bull market ‘on the go’ at this time. Moreover, based on the information presently at hand we suspect that this will remain the case over the coming decade or until there’s an upside blow-off in the gold price. Steve Saville-Read more here-http://www.321gold.com/editorials/saville/saville012709.html

-My absolute favourite saying is, “Put 10% of your entire net worth into precious metals and pray that they go to zero.” Does anyone ever purchase fire insurance and then get upset if their house does not burn down? Precious metals are financial insurance. If your precious metals lose value it normally means that the other six classes (or the other 90% of your wealth) are smoking hot and doing quite well.

However, when the other 90% of your investments are in the toilet it is that little 10% invested in precious metals that will save you and allow you to start over. Do not skimp and buy a cheap lifeboat with a storm on the horizon. If you feel the risk of financial strife is great right now move up to a 15 or 20% allocation in precious metals until the storm passes.

Investing without a portion of your wealth in precious metals is simply investing without a net. Remember to invest a portion in all seven classes to one degree or another. King Solomon was indeed both wealthy and wise. Larry LaBorde-Read more here-http://www.321gold.com/editorials/laborde/laborde012609.html

-If you are among the newly unemployed and you want to see just how soon Obama’s bailout and recovery program is going to succeed, take a pail down to the ocean and start bailing. When you have stopped the tide, that’s when the government will have fixed the problem. Bob Moriarty-321gold.com-Read more here-

http://www.321gold.com/editorials/moriarty/moriarty012609.html

-Merrill Lynch chief economist David Rosenberg fired out a note Monday after a marketing visit to European institutions and opened with the observation: “Portfolio managers seem to think they are taking a bigger risk with their careers by missing the rallies than by missing the selloffs. I can tell you that this is not a condition from a sentiment standpoint that terminates bear markets.”

Mr. Rosenberg is no fan of portfolio managers being fully invested. The Merrill Lynch economist is calling for a 20 per cent decline in the S&P; 500, and a further 15 per cent fall on U.S. home prices. That’s a huge hit to household worth a loss of $20-trillion (U.S.) that’s “proportionally on par with the 1930s experience.” Read more here-

http://www.theglobeandmail.com/servlet/story/RTGAM.20090126.WBstreetwise20090126134251/WBStory/WBstreetwise/

-The global economy will slow close to a halt this year as more than $2 trillion of bad assets from the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said. Bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion, the IMF said in a report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=aVCWqf3qtdpc&refer;=home

-Confidence among U.S. consumers unexpectedly fell in January to a record low as job prospects remained dim. The Conference Board’s index of consumer confidence fell to 37.7, from a revised 38.6 in December, the New York-based private research group said today. Records began in 1967. Measures related to Americans’ views on incomes deteriorated. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aw.LoDkJtM.I

-Government regulators aided IndyMac coverup maybe others. Read more here-http://www.gata.org/node/7120

-Money-Fund Returns Drop to Record Low, Follow Treasury Yields. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=arXbpqJmXbws&refer;=home

-SocGen’s Montier Sees 42 Stocks That May Cause ‘Permanent’ Loss. See list here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ass9Orylzl.A

-Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history.

The second-biggest U.S. automaker also pared first-quarter North American output and won concessions from the United Auto Workers. While Ford pruned its projection for 2009 domestic industrywide sales to as few as 11.5 million vehicles, that figure is about 1 million more than other estimates.

“Their forecast is still too rosy,” John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Massachusetts, said today in an interview. “They’ll need money from the government by midyear.” Ford posted a quarterly net loss of $5.9 billion, or $2.46 a share. Excluding costs Ford considers one-time expenses, the loss was $1.37 a share. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=afkU3HbQIUEY

-Nations turn to barter deals to secure food. Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars. Read more here-http://www.ft.com/cms/s/0/3e5c633c-ebdc-11dd-8838-0000779fd2ac.html

-Britain is facing return of three-day week. The prospect of the three-day week returned to haunt Britain yesterday as it emerged that ministers are considering paying firms to cut hours in order to survive the recession.

Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat. But as the country comes to terms with the reality of a recession, it emerged that the Government is looking at compensating employees, through their firms thereby drawing comparisons with the shutdowns of the 1970s. Read more here-

http://www.independent.co.uk/news/uk/politics/britain-is-facing-return-of-threeday-week-1515307.html

-Peter Schiff: Oh, he saw it coming. ‘Dr. Doom’ became a star by predicting last year’s market meltdown. And now his 2009 forecast is even scarier.

http://money.cnn.com/2009/01/20/magazines/fortune/okeefe_schiff.fortune/index.htm

-’Uranium For Iran Nuke In 2009′. Read more here-http://news.sky.com/skynews/Home/World-News/Nuclear-Weapon-From-Iran-Within-A-Year-Expert-Says-Country-Will-Have-Enough-Uranium-For-Warhead/Article/200901415211260

-Ahmadinejad Urges Obama to Apologize for ‘Crimes’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_nJyasKjye4

-Holocaust a ‘big lie’: Iran govt spokesman. Read more here-http://www.breitbart.com/article.php?id=CNG.dcc1dae7280236f3833645ed9fa891cb.5e1&show;_article=1

-Israeli election front-runner Benjamin Netanyahu told a session of the World Economic Forum on Thursday that preventing Iran from obtaining nuclear weapons ranks far above the global economy among the challenges facing leaders of the 21st century. Read more here-http://news.yahoo.com/s/ap/20090129/ap_on_re_eu/davos_forum_netanyahu

-To Combat Obama, Al-Qaeda Hurls Insults. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/01/24/AR2009012401703_pf.html

-Madoff’s Tactics Date to 1960s When Father-in-Law Was Recruiter. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=at1ierlaVQyg&refer;=home

-Madoff ‘Red Flags’ Could Have Been Raised by Software. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aSgLL64U0Lxc&refer;=home

-Madoff’s ‘Dull’ Returns, Investigation Didn’t Alarm Notz Stucki. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aTin2dVRnU.k&refer;=home

-A parade of Ponzis. The boom years were the perfect time for Ponzi schemers, and now the time is ripe for them to blow up. Read more here-

http://money.cnn.com/2009/01/28/news/newsmakers/ponzis.fortune/index.htm

-Troubled Times Bring Mini-Madoffs to Light. Read more here-http://www.nytimes.com/2009/01/28/business/28ponzi.html?pagewanted=print

-For American Jews, the Bernard Madoff scandal has not just caused deep financial pain. It also has been deeply personal. The accused swindler managed money for numerous Jewish charities and wealthy Jews who are reeling from their monetary losses as well as a sense of betrayal that a fellow Jew could have harmed so many people. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE50K6BO20090122

-Ebola may have passed from a pig to a human. Read more here-http://www.iht.com/articles/2009/01/23/healthscience/24ebola.php

-China reports 6th human bird flu case this year. Read more here-http://uk.reuters.com/article/worldNews/idUKTRE50O0K220090125

-Bird flu scare hits northeast India. Read more here-http://www.cnn.com/2009/WORLD/asiapcf/01/22/india.bird.flu/index.html?iref=newssearch

-Study finds troubling pattern of Southern California quakes. The southern stretch of the San Andreas fault has had a major temblor about every 137 years, according to new research. The latest looks to be overdue. Read more here-http://www.latimes.com/news/local/la-me-fault-quakes24-2009jan24,0,7734479.story

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

-Rio Tinto’s iconic Argyle pink diamonds were the focus of much red carpet activity at the finale of the 2009 G’Day USA Australia Week events in New York. Commenting on the presence of Argyle Pink Diamonds at the Gala Dinner, Jean-Marc Lieberherr, General Manager of Rio Tinto’s Diamonds Sales and Marketing notes, “Argyle Pink Diamonds are both symbolic culturally and highly prized globally. We are delighted to be here to tell the remarkable story of the world’s rarest diamonds and to display these fine examples of truly master craftsmanship.” Read more here-http://www.pitchengine.com/riotinto/red-carpet-provides-unique-opportunity-to-showcase-rare-argyle-pink-diamonds-/3700/

-Champagne diamonds from Rio Tinto’s Argyle Diamond Mine have been the inspiration for unique pieces of jewellery and objects d’art on display in New York this week. Read more here-http://www.pitchengine.com/riotinto/champagne-diamonds-inspire-jewelry-designers/3693/

-Rio Tinto Group, the world’s third- largest mining company, may sell shares to help cut debt by $10 billion after failing to meet asset-sale targets. Rio doesn’t “rule out the potential to issue equity as one of the options it has available,” the London-based company said in a statement. No decision has been made yet, it said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601081&sid;=aN7wHl._Ba0c&refer;=australia

REVEALED-THE DAY U.K. BANKS WERE JUST THREE HOURS FROM COLLAPSE

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

CALIFORNIA BANK SHUT DOWN

-First Centennial Bank of Redlands, California, was seized by a state regulator, the third U.S. bank to fail this year, as the recession deepens and the slump in the housing industry sends home foreclosures to records.

First Centennial, with $803.3 million in assets and $676.9 million in deposits, was shut by the California Department of Financial Institutions and the Federal Deposit Insurance Corp. was named receiver. First California Bank, based in Westlake Village, will assume deposits and open the failed bank’s 6 offices near Los Angeles and San Diego on Jan. 26 as branches, the FDIC said.

“Depositors of the failed bank will automatically become depositors of First California,” the FDIC said in an e-mailed statement. “There is no need for customers to change their banking relationship to retain their deposit insurance coverage.”

Regulators closed 25 banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. National Bank of Commerce in Berkeley, Illinois, and Bank of Clark County in Vancouver, Washington, were shuttered by regulators on Jan. 16.

First California will buy $293 million in assets and pay a premium of 5.3 percent to assume the failed bank’s insured deposits, the FDIC said. The cost to the deposit insurance fund, supported by fees on insured banks, will be an estimated $227 million, the agency said. First Centennial had about $12.8 million in deposits that exceeded insured limits, the FDIC said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aIFeOX9TTZbE&refer;=worldwide

ROUBINI-NOWHERE TO HIDE FROM GLOBAL SLOWDOWN

-Global stock market declines are increasingly correlated and emerging economies will follow developed nations into a “severe recession,” according to New York University Professor Nouriel Roubini. Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added.

“There is nowhere to hide,” Roubini, an economics professor at NYU’s Stern School of Business who predicted the financial crisis, said from Zurich in an interview with Bloomberg Television. “We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession.”

Roubini said the U.S. government should nationalize the biggest banks because losses will exceed assets, threatening to push them into bankruptcy. The banks could be privatized again in two or three years, Roubini said. The professor reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and that global equities will fall 20 percent this year from current levels. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aryXdRCs.Tow&refer;=home

U.S. FINANCIAL BAILOUT

-Bank bailout could cost $4 trillion. Banks don’t have enough capital to fix their problems, which means the Obama administration may need a lot more money to clean up the financial mess. Read more here-http://money.cnn.com/2009/01/27/news/bigger.bailout.fortune/index.htm

-Nationalization of U.S. banks gets a new, serious look. Read more here-http://www.iht.com/articles/2009/01/26/business/26banks.php

-How a ‘perfect storm’ led to the economic crisis. Read more here-http://www.cnn.com/2009/US/01/29/economic.crisis.explainer/index.html

U.S. DEBT PROBLEMS

-The World Won’t Buy Unlimited U.S. Debt. Read more here-http://online.wsj.com/article/SB123266988914308217.html

-Six years ago, Peter Orszag, President Obama’s new budget director, co-authored a Brookings Institution study that concluded: “Balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending.” It’s getting worse: Today entitlements eat up 40% of the federal budget and are growing. Read more here-http://www.marketwatch.com/news/story/five-reasons-population-boom-biggest/story.aspx?guid={66A7D394-5E73-4D74-8C22-4E1BC7BFB98B}&dist;=TNMostRead

INTEREST RATES

-Fed Keeps Rate Near Zero, Prepared to Buy Treasuries. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNh1RmFyX20E&refer;=home

-Trichet Says Next Important Rate Meeting Is in March. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDsBljqDWzw4

-New Zealand Cuts Interest Rate to 3.5% as Recession Deepens. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=akOnc7bel_VY

MASS LAYOFFS IN U.S.

-The number of Americans receiving unemployment benefits soared to a record, as companies slash jobs to lower costs in a deepening recession. Read more here-

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

-Mass layoffs hit seven-year high. Sweeping layoffs hit manufacturing and Midwest in 2008: government. Read more here-http://money.cnn.com/2009/01/28/news/economy/mass_layoffs/index.htm

-Bloody Monday: Over 71,400 jobs lost. Seven companies announce massive job cuts in a scary start to the week. Read more here-http://money.cnn.com/2009/01/26/news/economy/job_cuts/index.htm?postversion=2009012617

-Employers cut 14,100 more jobs. Labour hits keep on coming as several large companies push workforce reductions. Read more here-

http://money.cnn.com/2009/01/28/news/economy/Boeing_job_cuts/index.htm?postversion=2009012818

-Starbucks Corp., the world’s largest chain of coffee shops, said it will cut 6,700 jobs and close 300 more stores after reporting first-quarter profit that fell more than analysts estimated.

The company plans to close 200 locations in the U.S. and 100 overseas, in addition to the 600 Starbucks said it would close last year. The workforce reduction will eliminate 6,000 café positions and 700 corporate jobs, the Seattle-based chain said today in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=awnHShCwkA8I

REAL ESTATE-FORECLOSURES

-Home prices fell in 34 U.S. states in 2008 as it became harder to get a mortgage and foreclosures hammered property values, First American CoreLogic said. Prices for single-family detached houses fell a record 10.6 percent nationally, the biggest annual decline in data that goes back to 1976, Santa Ana, California-based First American said today in its year-end report.

“The geographic breadth of the decline expanded in 2008,” Mark Fleming, First American’s chief economist, said in an interview. Even markets with few foreclosures ”are being drawn in by fundamental economic conditions.” The U.S. economy is ”deteriorating rapidly” after 2.6 million job losses in 2008, Christina Romer, President Barack Obama’s pick to head the Council of Economic Advisors, said Jan. 15. First American, which sells mortgage data, reported defaults or foreclosures on 3.4 million properties in 2008, up 76 percent from 2007.

U.S. home prices have dropped 18.5 percent from their peak in July 2006 and are now at May 2004 levels, First American said. California led last year’s decline with a 27 percent drop, followed by Nevada at 23 percent, Arizona at 19 percent and Florida at 18 percent, First American said. Prices tumbled 14 percent in Rhode Island, 10 percent in Minnesota, 9 percent in Wyoming, New Hampshire and Maryland and 8 percent in New York. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aUGiC5MPmXZA&refer;=home

-Home prices in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank. The decrease in the S&P;/Case-Shiller index was in line with forecasts and followed an 18.1 percent drop in October. The gauge started falling in January 2007, and year-over-year records began in 2001.

Record foreclosures have contributed to more than $1 trillion in losses worldwide that have prompted banks to shut off access to credit. While plunging values have made homes more affordable, they have also hurt household wealth, contributing to a slump in spending that’s likely to continue for the first half of the year.

“The housing market has not yet reached its bottom,” Neal Soss, chief economist at Credit Suisse Holdings in New York, said in an interview on Bloomberg Television. “People have to be in a position where they are not afraid of their most significant asset.”

Economists forecast the 20-city index would fall 18.4 percent from a year earlier, according to the median of 27 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 20 percent. Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in November, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aGkgDqBf769g&refer;=home

-California home prices plunged 42 percent in December from a year earlier as the U.S. housing slump deepened and foreclosures hit record levels. The median price for a single-family home in the most populous U.S. state dropped to $281,100 from $480,820 a year earlier, the Los Angeles-based California Association of Realtors said in a statement. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_GHuixiR3Pk

-Sales of new homes in the U.S. fell in December to the lowest level on record after banks tightened lending and job losses mounted. Purchases dropped a more-than-forecast 15 percent to an annual pace of 331,000, the lowest level since at least 1963, according to a report from the Commerce Department today in Washington.

Other reports showed orders for durable goods slumped for a fifth month and a record number of Americans were collecting jobless benefits. The drop in home purchases indicates the housing slump at the center of the global credit crisis and economic downturn will persist well into 2009. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=alipKvn3NBxg&refer;=home

-Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged. Purchases rose 6.5 percent to an annual rate of 4.74 million from 4.45 million in November that was less than previously estimated, the National Association of Realtors said today in Washington.

The median price dropped 15 percent from a year ago, the biggest decline since records began in 1968 and probably the biggest in seven decades, according to the group. “You have to put it in the context of an even steeper decline for the previous month,” said David Sloan, a senior economist at 4Cast Inc. in New York, who had the highest projection in the Bloomberg News survey.

“The net trend is still negative. It does seem that some cheap prices are attracting buyers. I don’t think it’s a clear sign of a revival in the housing market. The housing market is very weak.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a9w6qyDggjL0&refer;=home

-Maul Market: Cincinnati Mall Sells on the Cheap. Read more here-http://online.wsj.com/article/SB123308296078020497.html

-Home prices in the Hamptons, New York’s oceanside resort favored by financiers and celebrities, fell 14 percent in the fourth quarter as Wall Street cut jobs and the U.S. recession spurred sales to plunge.

The median price in Long Island’s Hamptons and the North Fork slid to $690,000 from $800,000 a year earlier, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The number of sales dropped 41 percent and the inventory of properties rose 19 percent.

“The market is in stagnation,” said Paul Brennan, regional director for the Hamptons at Elliman. “If you sell in this market, it’s usually one of the three D’s: death, divorce or debt.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8PWXxTZCdIU

-U.K. house prices had the biggest annual decline since at least 2001 in January as the recession worsened and banks curtailed lending, Hometrack Ltd. said. The average cost of a home in England and Wales fell 9.4 percent from a year earlier to 158,300 pounds ($216,000), the London-based property researcher said in a report today. The monthly decline of 1 percent was led by London, where prices slid 1.1 percent from December. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=arsPbNYBTFF8&refer;=home

-Flood of foreclosures: It’s worse than you think. Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate. Read more here-http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?cnn=yes

-Fannie Mae, the largest source of home-loan money in the U.S., said it will need to tap as much as $16 billion in emergency funds from the U.S. Treasury Department to stay afloat as deterioration in the housing market persists.

Fannie’s planned request, announced today, follows Freddie Mac, which said Jan. 23 that it will need as much as $35 billion more in federal aid. Unprecedented mortgage losses drove the net worth of both companies below zero last quarter, they said in separate securities filings. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aS99YT_58YqY&refer;=home

-Fannie Mae Foreclosure Sale at 50 Cents on $1 Shows Price Reset. With a sharp nod, Robert Parkin bids $500,000 at the auction of a brick colonial house in Upper Marlboro, Maryland, that the builder once valued at $1.1 million. Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit on the unfinished, 4,878- square-foot property with a stop-work order taped to the window.

This auction, 19 miles (30.6 kilometers) southeast of Washington, is one of hundreds a day carried out on front lawns and in hotel ballrooms nationwide by liquidators such as Williams & Williams Marketing Services Inc. of Tulsa, Oklahoma. With 2.3 million residences in foreclosure, the sales are pushing down prices to early 2004 levels in the hunt for new buyers.

“If you’re looking for expediency to get people back in homes, un-board neighborhoods, clean up the rats, this is it,” says Pamela McKissick, 62, the president of closely held Williams & Williams. Banks, brokerages and government-sponsored mortgage finance companies such as Fannie Mae hire the company to sell houses one at a time or to liquidate entire portfolios.

Auctions are resetting real estate values at the neighborhood level, while President Barack Obama tries to find a way to limit foreclosures and revitalize the worst housing market since the Great Depression. Bargain hunters such as Parkin, a 50- year-old aerospace engineer who is shopping for a personal residence, and mom-and-pop investors on the prowl for rental properties, aren’t waiting for federal aid.

They are buying foreclosed properties for as little as 10 cents on the dollar. Lenders seized 9,787 houses a day in December, or almost seven a minute. Even after the 26 percent drop in residential prices since June 2007, there are enough unsold homes to last 9.3 months at the current sales rate. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aOBlBuWQf9ko&refer;=home

The GoldBugg Report – February 3, 2009
Posted by Worldwide Precious Metals on Tuesday, February 3, 2009

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