Newsroom
The Goldbugg Report – June 30, 2009
June 30, 2009
WORLD FINANCIAL REPORT ON RADIO JUNE 26 2009 SHOW
-Glittering gold all the rage.
-Silver investment demand to overtake gold in 2009?
-David Morgan explains why silver remains the ‘people’s metal’ and why it may be a better investment than gold.
GOLD
-Choppy times ahead for gold in near term BMO’s Melek. While gold may be vulnerable to a near-term pullback, BMO’s Bart Melek believes there are long-term motivations to hold the precious metal. “Notwithstanding any possible short-term correction, gold’s impressive seven-year run is expected to continue well into 2011. Inflation concerns are likely to heat up once U.S. growth and monetary velocity start recovering.”
“Gold typically leads inflation by 12-18 months, so investors would be well advised to look toward improvements in monetary aggregates as leading indicators of inflation and higher gold prices. BMO Research expects higher trend inflation over the longer term.” In his research, Melek asserts “central banks could be very gold positive.”
“In addition, central banks around the world will likely put more gold in their reserves,” he suggests. “Russian central bank authorities have already stated that future current account surpluses will be allocated toward gold purchases.”
“Even more importantly, China has been acquiring gold in its official reserve. The fact that China has boosted its gold reserves is very material for the precious metal and currency markets. This may mute any possible correction, as there is likely a large buyer waiting in the wings,” he advised. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85418&sn;=Detail
-Gold Investment ‘no longer the preserve of the wealthy.’ Emma Plumpton, manager of the Grampian branch of the UK firm, noted that central governments are furiously printing money in order to “basically inflate their way out of debt.” With the yellow metal traditionally moving in the opposite direction to the dollar and favoured as a hedge against inflation, Ms. Plumpton believes now is a good time to Buy Gold.
“Investing in gold is no longer the preserve of the wealthy,” she told the Press and Journal. “The sheer size of the expected government deficits in the UK and America resulting from the stimulus measures look unsustainable.” She added: “The investment case for the precious metal is also supported by the fact that global gold-mine production peaked in 2001 and has declined an average of eight percent year-on-year since.” Read more here-http://goldnews.bullionvault.com/Goldbug/gold_investment/gold_investment_no_longer_the_preserve_of_the_wealthy_19230572
-Glittering gold all the rage. Gold has done everything investors could have asked for over the last 12 months. As financial markets collapsed, gold kept its value and proved its worth as a safe haven. Now it is on another roll. It came close to breaching the magic level of US$1,000 an ounce once again last week, and the record nominal high of US$1,033 an ounce is also in sight. Will it keep going up or is the end of the bull market in sight? A gold bull offers his views.
John Embry says investors should buy gold for one obvious reason: It always does well when it re-establishes itself as a currency. Clearly, that is happening right now as the U. S. dollar and other currencies look more dubious by the day, and gold emerges as the logical safe haven. “It’s not gold that has changed, it’s the value of paper money,” he says. “Relative to the overall financial sphere, gold is a small asset class. So it doesn’t take a lot of money moving in its direction out of paper to have an outsized impact.”
Mr. Embry, chief investment strategist at Sprott Asset Management and one of the world’s most outspoken gold bugs, has been active in the bullion market since the 1970s and has gotten progressively more bullish in recent years. His arguments are straightforward: Central banks are printing trillions of dollars, many of which are bailing out failed financial institutions. The logical results are currency debasement and extreme inflation.
The former is already happening; he figures the latter is just around the corner, and will be like “nothing we’ve ever seen before.” In a hyper-inflationary environment, investors will continue to pour money into stores of value like gold, he says, more than offsetting any declines in physical demand for the metal. Add in the fact that mine production has steadily declined over the past few years, and you have more investor dollars chasing fewer available ounces of gold.
The result can only be higher prices. “I think US$1,500 [an ounce] is certainly achievable in the next 12 to 18 months. Beyond that, who knows,” he says. Another bullish signal he loves to talk about is the central banks. Mr. Embry firmly believes Western central banks have clandestinely dumped gold on the market for years to keep the price suppressed, and their holdings are now far lower than they let on.
(He thinks they may have less than a third of the 31,000 tonnes they claim.) At the same time, Eastern powers such as China cannot be happy with all the U. S. dollars they are holding in their central banks, and it only makes sense for them to diversify their reserves by buying gold. Read more here-
http://www.canada.com/business/fp/money/Glittering+gold+rage/1689346/story.html
-Clive Maund gold market update. Read more and view charts here-http://news.goldseek.com/CliveMaund/1245598737.php
-If History Repeats, Gold Will Surge Soon. After the recent turn of events that closed the door on a new high for the price of gold this spring, attention turns to a very encouraging historical pattern that has developed during the current decade surges late in the odd-numbered years of 2001, 2003, 2005, and 2007 leading to much higher levels after the snow melts.
Will the 2009-2010 period produce a similar result? We’ll find out soon enough. Read more here-http://seekingalpha.com/article/144285-if-history-repeats-gold-will-surge-soon
-No Gold, No Bullets: Now It’s Personal. Read more here-http://news.goldseek.com/DollarCollapse/1245697526.php
-Ned Schmidt’s Gold Thoughts. Read more here-http://news.goldseek.com/NedSchmidt/1245737040.php
-The golden wall of worry. Commentary: Gold timers have quickly retreated, which is a good sign. Read more here-
http://www.marketwatch.com/story/story/print?guid=D7E574FE-E5B9-4F5D-A9F0-13FCE52DD93D
-When is the Best Time to Buy Gold? Read more here-http://news.goldseek.com/GoldSeek/1245704122.php
If inflation returns, or even hyperinflation
If the economic crisis persists and gets worse
If uncertainty and fear continue, and chaos and rioting begin
If stock markets languish or suffer another meltdown
If the recovery spending of the world’s governments proves futile
If government interference in the economy continues to increase
If the value of the U.S. dollar takes a major fall
If world recovery from the current recession/depression takes years
If you’re still wondering whether you have enough “safe” money
-World Gold Council expects no impact from IMF sales. Read more here-http://www.gata.org/node/7513 or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85262&sn;=Detail
-Warren Bevan: China and IMF gold sales the real story. Read more here-http://www.gata.org/node/7525
-Michael Kosares: As gold’s champion, China transforms market. Read more here-http://www.gata.org/node/7532
-GFMS still expects fresh gold peak in H2 09. Read more here-http://www.miningweekly.com/article/gfms-still-expects-fresh-gold-peak-in-h2-09-2009-06-25
-Gold Prepares For The Big One. We’ve all been patiently waiting for gold to breakout through strong resistance levels between $1,007 and $1,032. When the price has closed firmly and decisively over $1,032.50, we should expect $1,050, $1,150, $1,250-$1,260 and a potential for $1,375. Read more here-
http://www.kitco.com/ind/Wieg_cor/roger_jun252009.html
-Gold still a ‘safe haven’: analyst. Read more here-http://www.theajmonline.com.au/mining_news/news/2009/june-25th-09/other-top-stories/gold-still-a-2018safe-haven2019-analyst
-Gold can add returns with no extra volatility. The judicious use of gold as part of an investment portfolio can add to returns without significantly adding to risk. The Jaffe study concluded that adding gold and gold stocks to a large portfolio increases both risk and return, but that the additional return from these non-correlative assets more than compensates for the additional risk.
During the study period, gold bullion saw an average monthly return of 1.56 percent, considerably better that the 1.06 percent average monthly return for common stocks represented by the S&P; 500. Gold stocks shone even brighter, returning an average of 2.16 percent per month. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85360&sn;=Detail
-Billionaire Paulson’s big gold stake looks lacklustre. Holdings likely gained 2% this quarter as feared inflation remains dormant. Read more here-
http://www.marketwatch.com/story/story/print?guid=87959249-1FE7-425D-BB1C-2A5FB1B2AD84
-Gold To Go’ vending machines could be coming to Britain. A German company plans to expand its network of gold vending machines. Read more here-
SILVER
Gold to silver ratio at 80 to 1 with gold at $2,400 the silver price would be $30.00
Gold to silver ratio at 70 to 1 with gold at $2,400 the silver price would be $34.29
Gold to silver ratio at 60 to 1 with gold at $2,400 the silver price would be $40.00
Gold to silver ratio at 50 to 1 with gold at $2,400 the silver price would be $48.00
Gold to silver ratio at 15 to 1 with gold at $2,400 the silver price would be $160.00
-Fortis bank June metals monthly. Read more here-http://www.virtualmetals.co.uk/pdf/FMM0609.pdf
-Gene Arensberg: Gold, silver coin premiums back to normal. Read more here-http://www.gata.org/node/7523
-History of Silver, Part I: the Metal of the Moon. Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/7772-history-of-silver-part-i-the-metal-of-the-moon
-History of Silver, Part II: the great “build”. Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/8240-history-of-silver-part-ii-the-great-build
-History of Silver, Part III: inventories gone! Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/8715-history-of-silver-part-iii-inventories-gone
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1245598577.php
-Silver investment demand to overtake gold in 2009? Read more here-http://www.commodityonline.com/news/Silver-investment-demand-to-overtake-gold-in-2009-18862-3-1.html
-Silver and the US Dollar. Read more here-http://www.321gold.com/editorials/watson/watson062309.html
-David Morgan explains why silver remains the ‘people’s metal’ and why it may be a better investment than gold. Read more here-
http://www.thedailybell.com/bellPage.asp?nid=424&fl;
-David Morgan Interviewed by Nancy Massicotte of The Opportunity Show. Read more here-
http://news.silverseek.com/SilverInvestor/1245387889.php
-David Morgan: We Could See Silver Outperform Gold 2:1. Read more here-http://news.silverseek.com/SilverInvestor/1245788577.php
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1245778743.php
-Silver/Gold Ratio Reversion 2.
Back in early February when I wrote the original essay in this series, the SGR was running near 72 which wasn’t much above the panic average. Today, about 4.5 months later, it is near 65. Since silver was radically more oversold than gold during the stock panic, it is rallying much faster than gold emerging out of the panic. So before this year is out the SGR should again converge with its 55 historical average.
This means even if gold does nothing, which is highly unlikely given the coming inflation scare, silver has plenty of room to run higher this summer. Despite recovering considerably already, it still remains way too cheap relative to gold. At $925, $950, $975, and $1000 gold, the long-term 54.9 average SGR yields near-term silver target prices of $16.85, $17.30, $17.76, and $18.21. All of these are nice gains over today.
But for a variety of reasons I doubt the SGR will conveniently stop at its average. First, note the SGR’s rising secular support line above that was broken by the panic. It showed a long-term tendency for silver to rise a bit faster than gold. And this makes sense since silver is such a small market. If investor interest and capital deployed in gold and silver each grow by a similar amount, silver will rise faster. If you extend that SGR support line, it hits 50 now and about 48 by the end of 2009. Let’s call it 49.
At 49 SGR secular support, at $925, $950, $975, and $1000 gold, silver would trade at $18.88, $19.39, $19.90, and $20.41. These prices are obviously even more attractive and much higher than today’s. But even this is nowhere close to the best-case scenario. Even with flat gold, the SGR could very well shoot a lot higher than 49, at least temporarily.
Once a long-standing equilibrium (a 55 SGR) is disrupted in the markets, there is usually a countermove in opposing proportion to the original disruption. Visualize a playground swing. Hanging straight down is equilibrium. If you pull the swing 1 foot in your direction and let it go, it will initially swing about 1 foot in the opposite direction before normalizing. But if you pull it 10 feet in your direction, a bigger disruption, the counterswing will be proportionally larger. The SGR was dragged far off equilibrium by the panic.
So it would not surprise me one bit to temporarily see the SGR swing proportionally in the opposite direction. Silver was so beaten down in the panic that the return of silver speculators will probably drive it far higher than gold would suggest is prudent. I don’t know how high the SGR could go in such a silver greed spike, but examine the chart above and make a guess. We could be in for a major silver spike before SGR equilibrium is restored, which would be wildly profitable for those long silver.
But perhaps the most bullish thing of all about this SGR reversion is that all my analysis so far assumes gold merely stays flat. But this is very unlikely. Not only are the yellow metal’s fundamentals very bullish today, but the Fed’s recent doubling of the US monetary base will soon stoke the biggest inflation fears since the 1970s. When mainstream investors start reallocating capital into gold, all bets are off the table on how high silver could go. Gold is the big silver wildcard right now, and it is an exceedingly bullish one. Read more here-
http://www.321gold.com/editorials/hamilton/hamilton061909.html
CHART OF THE WEEK-QUOTES-QUICK HITS
-Everyone knows that banks are going to take a bath on their credit card portfolios. The question is: How bad will it get. Not surprisingly, we’ve already reached an all-time high charge-off level, but nobody expects it to peak anytime soon. Bankruptcy filings, meanwhile, are creeping back up, but are still well below the levels seen before the law changed. Chart here-
http://www.businessinsider.com/chart-of-the-day-credit-card-loss-rate-at-all-time-high-2009-6
-US credit card chargeoffs break new record Moody’s. The U.S. monthly credit card chargeoff rate surpassed 10 percent and hit a sixth straight record high in May, Moody’s Investors Services said on Wednesday, as unemployment grew to a 26-year high. The chargeoff rate index which measures credit card loans the banks do not expect to be repaid rose to 10.62 percent in May from 9.97 percent in April. Read more here-http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN2415584020090624
-”Whatever the mind of man can conceive and believe, it can achieve. Thoughts are things! And powerful things at that, when mixed with definiteness of purpose, and burning desire, can be translated into riches.” Napoleon Hill-http://en.wikipedia.org/wiki/Napoleon_Hill
-”At the end of the day, there are four things about people that drive our economy. How many people there are, what age they are, what they are buying, and where they live or are moving.” Harry S. Dent, Jr.-Bio here-http://en.wikipedia.org/wiki/Harry_Dent
-Today it is not big business that we have to fear. It is big government. Wendell Phillips-Bio here-http://en.wikipedia.org/wiki/Wendell_Phillips
-The past seventy-five years have seen the growth of government from a relatively small entity charged with defending the borders, adjudicating disputes and delivering the mail; to a bloated nightmare creature whose tentacles reach into every corner of our existence. Doug Hornig, Casey Research
-Government has no wealth of its own. Before it gives anything to anyone, it must take it from those who produce it. John Stossel
-Freedom is never more than one generation away from extinction. We didn’t pass it to our children in our bloodstreams. It must be fought for, protected, and handed on for them to do the same. Ronald Reagan
-”I think we’re going to have some of the worst inflation, with all the printing presses around the world running 24/7.” David Dreman-Read more here-
http://www.reuters.com/article/ousiv/idUSTRE55M4YZ20090623
-Gold Will Hit $2,000 on ‘Confetti Paper’ Fears: Strategist. Gold is the safest asset to buy in these times as, despite reassurance from central banks, inflation is likely to crop up again next year or in 2011, Philip Manduca, investment manager at ECU Group, told CNBC Thursday.
Monetary authorities have printed so much money that price rises in the future are inevitable, he said. “You’ve got a lot of confetti paper fears out there as a consequence, you’ve just got to be bullish on gold even at these levels,” Manduca said.
“It’s going to go to $2,000 next year,” Manduca said. “In the currencies and the companies, you’ve got political and corporate risk, go buy the pure asset.” Read more here-
http://www.cnbc.com/id/31422228
-China Should Buy Gold to Hedge Dollar Fall: Researcher. China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday.
Li Lianzhong, who heads the economic department of the Party’s policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets. Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities.
“Should we buy gold or U.S. Treasurys?” Li asked. “The U.S. is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice.” Read more here-http://www.cnbc.com/id/31535631 and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85486&sn;=Detail
-Many analysts are now thinking that gold may have found a floor. Among them, Russell Browne, strategist at ScotiaMocatta, said that gold “has found support” near $927 an ounce, which marks a 50 percent retracement of its rally from $865 in mid-April to $990 this month. Browne cited Fibonacci analysis. Gold traded as low as $925.80 on June 15, but has generally honored its 100-day moving average, currently at $926.41.
That “100-day moving average near $925 has held firm despite a bearish move in gold from $990 to $927,” said Browne. Fibonacci analysis, according to Bloomberg, “uses a mathematical formula based on the theory that prices may rise or fall by certain percentages after reaching a high or low. A break of one level indicates an asset may move to the next, while a failure suggests a trend may stall.” Casey Daily Resource
-’Adjustments’ needed in dollar’s value, IMF economist says. An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.
“For the U.S., it is absolutely no question that a sustained recovery has to come from a large increase in exports. That may not be very easy to do. This may require fairly substantial adjustments in the dollar,” he told a conference. Read more here-http://www.gata.org/node/7520
-Economist Phelps Says U.S. Wealth May Take 15 Years to Rebound. U.S. households may take as long as 15 years to rebuild wealth lost in the recession, said Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006.
“The only way we’re going to get a healthy, full recovery is over a long period of time, involving households rebuilding their balance sheets and companies in trouble rebalancing their balance sheets,” Phelps said in an interview today with Bloomberg Television. “There’s no silver bullet that’s going to get us into good shape quickly.”
U.S. household wealth fell by $1.3 trillion in the first quarter of this year, with net worth for households and non- profit groups falling to its lowest level since 2004, according to a Federal Reserve report released June 11. Wealth dropped by a record $4.9 trillion in the last quarter of 2008. Read more here-
http://www.bloomberg.com/apps/news?pid=20601103&sid;=aKMxwUC4D3nw
-World Bank Says Global Economic Recession to Deepen. The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.
The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington- based lender said in a report today. Growth will be 2 percent next year, down from a 2.3 percent prediction, the bank said.
The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin this year, impoverished economies will lag behind rich nations in benefiting. The lender called for “bold” actions to hasten a rebound and said the prospects for securing aid for the poorest countries were “bleak.”
“The recovery is not going to be V-shaped,” said Alvin Liew, an economist at Standard Chartered Bank in Singapore. “We may see slower consumer demand over a prolonged period.”
The bank is more pessimistic than its sister organization, the International Monetary Fund. The IMF, which is forecasting a global contraction of only 1.3 percent this year and growth of 2.4 percent in 2010, said June 19 that it plans to revise estimates “modestly upward.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5J9B_l2qURQ
-U.S. recession to bottom out this year: OECD. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55N1IX20090624
-Soros says worst of global crisis is “behind us”. Read more here-http://www.reuters.com/article/ousiv/idUSTRE55K1OE20090621
-Oil, Rates May Stifle Recovery: Roubini. Watch video here-http://www.cnbc.com/id/15840232?video=1160074276&play;=1
-Bank of Canada Rate Should Remain 0.25% Through 2010, OECD Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a4V.Dfshby.M
-U.S. Fed keeps interest rates at 0.25%. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aVkQkByhQ.jo or
http://www.bloomberg.com/apps/news?pid=20601087&sid;=ajyETdAxywT8
-Nowotny Expects ECB to Keep Rates Steady Into 2010. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=adD4Yd.uAHPM
-UK borrowing reaches record in May as the red ink gets deeper. Government borrowing shot to a record monthly level of £19.9bn in May as soaring spending and dwindling tax receipts put another dent in the national accounts. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5570014/UK-borrowing-reaches-record-in-May-as-the-red-ink-gets-deeper.html
-Can they pay it back? The U.S. is about to go broke and they’ll take Canada down with them. Read more here-
http://www2.macleans.ca/2009/06/22/can-they-pay-it-back/print/
-State shutdowns loom as deadlines near. At least 19 states still have to approve their fiscal 2010 budgets before next Tuesday. If they don’t, staffers might not be paid and services might shut down. Read more here-http://money.cnn.com/2009/06/24/news/economy/Clock_ticking_on_state_budgets/index.htm?postversion=2009062417
-States Turning to Last Resorts in Budget Crisis. Read more here-http://www.nytimes.com/2009/06/22/us/22states.html
-California set to issue IOUs as fiscal crisis weighs. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55O07Q20090625
-Numbers On Welfare See Sharp Increase. Read more here-http://online.wsj.com/article/SB124562449457235503.html
-U.S. Jobless Claims Rise, Total Benefit Rolls Climb. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=anCtVrRFvn1U
-Mass layoffs match record high. Job cuts involving at least 50 people from a single employer rise in May to highest level since 1995. Read more here-
http://money.cnn.com/2009/06/23/news/economy/mass_layoffs.reut/index.htm
-Jobless rate in Western US tops 10 percent. Read more here-http://finance.yahoo.com/news/Jobless-rate-in-Western-US-apf-3224283879.html?x=0
-Al Qaeda says would use Pakistani nuclear weapons. Read more here-http://in.reuters.com/article/worldNews/idINIndia-40495320090621?sp=true
-Kim Jong Il Close to Ceding Power, South Korea Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aX5XZmSEnKHk
-North Korea threatened an “all-out war” against the U.S. as Kim Jong Il’s regime ratcheted up its anti-American rhetoric to mark the 59th anniversary of the start of the Korean War. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aN9xu8lzEd50
-Russia, Venezuela sign $4 bln joint bank deal. Russia and Venezuela signed a deal Tuesday to set up a new bank with starting capital of four billion dollars (2.9 billion euros) to fund joint projects as Moscow ramps up its role in South America. Read more here-http://www.breitbart.com/article.php?id=CNG.1debc0c644600c07a24e054a4ded5f8d.71&show;_article=1
-CDC sees “something different” with new flu. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55H5DB20090619
-Tracking the progress of H1N1 swine flu. See map here-http://flutracker.rhizalabs.com/
-Millionaires’ Club Shrank at Record Rate in 2008, Merrill Says. The ranks of the world’s millionaires shrank at the fastest rate in 2008, with North America suffering the biggest wealth loss worldwide, according to a survey by Capgemini SA and Merrill Lynch & Co.
The global slump in property and equity markets last year cut the number of millionaires by 15 percent to 8.6 million, wiping out two years of increases, the firms said in their 13th annual World Wealth Report published today. The value of the world’s millionaires’ assets slid 20 percent to $32.8 trillion, after a 9.4 percent increase the previous year, the survey said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aLE9ncbh8IY0
-R. Allen Stanford, the Texas financier accused of swindling investors in a $7 billion Ponzi scheme, pleaded not guilty to fraud. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aTUidWKc9QQw
-Must watch comedy video-US to Trade Gold Reserves for Cash through Cash4Gold.com. Watch video here-http://www.youtube.com/watch?v=6JPcimrnXGA
-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/HistoricalPriceTrackingsystem.html
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html
and http://www.youtube.com/watch?v=BWYMJnEz-n4
-Rio Tinto’s Pink Diamonds Play Tribute to Grand Passions & Great Loves. Rio Tinto’s 2009 Argyle Pink Diamond Tender is set to celebrate the 25th anniversary of its iconic offering of pink diamonds with an exceptional collection, including four outstanding heart-shaped gems. Suitably titled “Grand Passions,” this year’s tender collection comprises 43 of the rarest and the best pink diamonds from Rio Tinto’s Argyle Diamond Mine in Western Australia. With around 10 years of production remaining for the Argyle Diamond Mine, these rare pink diamonds will be keenly contested for by investors, collectors and diamond experts from around the world.
Josephine Archer, business manager for Argyle Pink Diamonds, commenting on the 2009 collection, said, “the pink diamonds selected for this year’s tender are a fitting tribute to the artistry and passion of all those who worked to bring them to the marketplace. These diamonds are for appreciators of the truly exceptional, and we are delighted to be showcasing them to the world.”
Included in this year’s collection is a magnificent 2.61-carat, intense pink, heart-shaped diamond named Argyle AmourTM. The Argyle AmourTM is the most valuable heart-shaped pink diamond ever produced from the Argyle mine. Exuding passion, romance and warmth, this extraordinary diamond captures all that is Amour. The two other “hero” stones set to captivate bidders are the Argyle ShalimarTM diamond, a 1.25-carat, purplish-pink round diamond named after the exotic garden sanctuary built by Indian emperor Jahangir for his beloved wife, and, in keeping with the theme of legendary passions, the Argyle ScarlettTM diamond, a 1.10-carat red oval diamond.
According to Jean-Marc Lieberherr, general manager for sales and marketing of all diamonds from Rio Tinto’s diamond mines, “excitement around this tender collection is understandable. The rarity of Argyle pink diamonds has created a connoisseurship for them, and there is a growing recognition that the earth will not produce pink diamonds for that much longer.”
This will be the first year that the Argyle Pink Diamond Tender will be presented in Mumbai. Also for the first time, Argyle Pink Diamonds Select Ateliers in London, Sydney and Perth will showcase these rare diamonds to their respective clients at in-store preview events. Tender viewings will held be in Mumbai, from August 6 to 10, Perth, from September 1 to 11, and Hong Kong, from September 19 to 27. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=26551 or http://www.idexonline.com/portal_FullNews.asp?id=32447
WARREN BUFFETT-U.S. ECONOMY IS IN SHAMBLES-NO SIGN OF RECOVERY-MORE STIMULUS MAY BE NEEDED
-Warren Buffett to CNBC: U.S. Economy In “Shambles” No Signs of Recovery Yet. Read more and watch video here-http://www.cnbc.com/id/31526130
-Buffett Tells CNBC U.S. Economy Shows ‘No Bounce.’ Billionaire investor Warren Buffett said a recovery in the U.S. economy will take time as he’s not seeing signs of a rebound at his businesses spanning retailing, manufacturing and energy.
“In terms of the economy coming back, it takes a while,” Buffett told CNBC. “Everything we see about the economy is we’ve had no bounce.” Buffett is the chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc.
The U.S. gross domestic product plunged in the first quarter, dropping at a 5.7 percent annual pace, the Commerce Department said May 31. Buffett, who oversees candymaking, energy and manufactured-housing units, reported Berkshire’s first loss since 2001 in the first three months of the year. “Industrial demand is down like we’ve never seen it,” Buffett said. A recovery “will happen but it hasn’t happened yet.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ax72Awx7CPQ4 and http://www.reuters.com/article/wtUSInvestingNews/idUSTRE55N4BN20090624
-Buffett Says U.S. May Need More Stimulus as Unemployment Climbs. Billionaire investor Warren Buffett said the U.S. may need a second economic stimulus package as unemployment is poised to continue rising.
“It looks like we’re going to need more medicine, not less,” Buffett said today in a Bloomberg Television interview. “We’re going to have more unemployment. The recovery really hasn’t got going.” Buffett is chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc.
President Barack Obama signed a $787 billion stimulus bill in February, which included tax cuts and spending on infrastructure projects intended to save or create 3.5 million jobs. In the first quarter, the U.S. gross domestic product plunged, dropping at a 5.7 percent annual pace, and Berkshire reported its first loss since 2001.
The economic rebound “will be a slow process,” said Buffett, who predicted the joblessness rate will exceed 10 percent. “It hasn’t turned yet. There’s no telling how long it will take. It will happen.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aS58Up2i8RFE
HARRY SCHULTZ PAINTS A GRIM PICTURE OF THE FUTURE
-In its current issue, HSL reports rumours that “Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that ’something’ is about to happen within 180 days, but could be 120-150 days.”
Yes, yes, it’s paranoid. But paranoids have enemies and the Crash of 2008 really did happen.
HSL’s suspicion: “Another FDR-style ‘bank holiday’ of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it).”
HSL is still sticking with its 20-year “V” formation forecast, but emphasizes that within the current 10-year downtrend phase there will be rallies that will “last 1-2 years.” It attributes its current success to “successfully trading almost daily, especially in commodity stocks (coal/potash/energy/ fertilizer/gold). Take profits constantly and rebuy on mini pullbacks. Prefer non-U.S. dollar companies; many such companies are listed in U.S. & Canada or Australia.”
HSL says: “The world is staggering today between stagflation and net deflation right now; it varies widely around globe. Net deflation is a maybe 35% risk, due to toxics and/or deepening depression. Bit more likely, we’ll slowly creep up to a dangerous 4.5% inflation on average, medium-term. But the wild card is the currency risk, which has a 50% (?) chance of boiling over and causing literally overnight (i.e. 24 hours) mega inflation in the asset markets.” Read more here-
http://www.marketwatch.com/story/story/print?guid=C6166A8F-4020-4BA6-880C-E99288B10B0F
JOHN WILLIAMS-U.S. ECONOMY MUCH BLEAKER THAN OFFICIAL STORY
-To the power brokers in Washington or on Wall Street, John Williams is little more than an annoying crank, a bona fide member of the lunatic fringe. A U. S. network television interviewer once slammed the Oakland, Calif.-based economist as a “grassy knoll theorist.” USA Today dismissed him as a purveyor of “gloom and doom,” and the bureaucrats who analyze U. S. economic data believe he’s “full of sh–,” he readily admits.
But that hasn’t stopped the 60-year-old Williams a veteran consultant to Fortune 500 companies, and founder of the Shadow Government Stats website www.shadowstats.com from continuing his crusade. Put simply, Williams says the official economic data reported by various U. S. government agencies is so heavily manipulated, it no longer reflects what’s really going on in the world’s largest, most indebted economy.
Under a string of Democratic and Republican regimes dating back to the 1960s, Williams says there has been a steady push to alter the way in which inflation, unemployment, economic output and other variables are measured or reported. The end result? The official numbers are heavily cooked, he says, and deliberately designed to put the sunniest spin possible on the state of the economy.
Although even the official government data confirms the U. S. has been in recession since the end of 2007, Williams says the downturn has been far deeper, and the prognosis is much bleaker, than the official stats show. Williams, a Dartmouth College economics grad who ran his family’s chainsaw-importing business before he became a consultant in the 1980s, says the U. S. is effectively bankrupt.
It’s in so deep, the federal government’s total debt including future unfunded liabilities for Medicare and Social Security is now approaching $75 trillion US, he says, or more than five times GDP (gross domestic product). According to his analysis, the real U. S. unemployment rate is closer to 20 per cent than 10 per cent, and the severe peak-to-trough contractions in everything from housing starts to retail sales, durable-goods orders and consumer net wealth show the U. S. is in a depression.
Once foreign investors stop buying U.S. government bonds a process that’s inevitable, he figures, with China already hoarding commodities as a hedge the U.S. will be forced to devalue its currency, crank up the printing presses, and steel itself for hyperinflation. “I think you’re going to see inflation move up to 20 per cent, possibly within the next year,” he says. “And I don’t give it more than five years before foreign investors just dump their U.S. treasuries, we see a collapse in the credibility of the dollar, and it essentially becomes worthless.” Read more here-http://www.edmontonjournal.com/business/Gary+Lamphier+prognosis+much+bleaker+than+official+story+economist+warns/1731480/story.html
INFLATION-HYPERINFLATION WATCH
-Hyperinflation Could Hit US In 5-10 Years: Dr. Doom. The US is headed toward hyperinflation, and within five to 10 years it could have inflation rates of 10 to 20 percent, said Marc Faber, editor and publisher of the Gloom, Boom & Doom Report. “In every society, when you have large fiscal deficits combined with easy monetary policies the likelihood that you will have high inflation is very, very high,” Faber said. “And it happens very quickly.”
These numbers rise so speedily because the government “massively” understates the country’s rate of inflation, Faber said. To get a true reading, he said, people need to ditch core inflation numbers and include CPI in their analysis. “It’s a lie what they publish,” said Faber. “If you underweigh education costs, and if you underweigh health care costs, then you come to a totally different result.” Read more and watch video here-http://www.cnbc.com/id/31450173
-30 Years of Inflation Coming, But “Deflation Scare” Not Over Yet, Cycle Maven Says. Everyone is right to fret about inflation but the “deflation scare” isn’t over yet, says Charles Nenner, founder of the Charles Nenner Research Center.
Renowned for his cycle work, Nenner sees deflation remaining dominant until year-end and inflation not picking up for another 18 months. But that will be the start of a 30-year (yes, year) upcycle for inflation says Nenner, who spent 12 years as a market-timing consultant for Goldman Sachs.
For those who believe the dollar is doomed, Nenner notes “all currencies are bad.” In other words, currency trading will be a game of relative bets vs. a one-way trade against the greenback, as so many expect. Read more here-http://finance.yahoo.com/tech-ticker/article/267557/30-Years-of-Inflation-Coming-But-%22Deflation-Scare%22-Not-Over-Yet-Cycle-Maven-Says?tickers=GDX,XME,TIP,TBT,NEM,^DJI,^GSPC?sec=topStories&pos;=9&asset;=&ccode;
-Fed’s Hoenig says inflation a longer-term issue: report. Read more here-http://www.reuters.com/article/ousiv/idUSTRE55I2Y320090619
-Inflation sparks glowing on the horizon. Read more here-http://www.reuters.com/article/ousiv/idUSTRE55K20K20090621
-Inflation or Hyperinflation? Read more here-http://news.goldseek.com/MerkInvestments/1245860864.php
40 U.S. BANK FAILURES IN 2009
-40 banks failures in 2009. Banks in Georgia, North Carolina and Kansas are closed by regulators as the financial crisis takes a toll on local banks across the nation. Read more here-
http://money.cnn.com/2009/06/19/news/companies/bank_failure/index.htm
-North Carolina, Georgia, Kansas Bank Seizures Cost $363 Million. Banks in North Carolina, Georgia and Kansas with combined assets of $1.5 billion were seized by regulators last week, costing the U.S. insurance fund $363 million and pushing this year’s tally of failures to 40.
Southern Community Bank of Fayetteville, Georgia, and 111- year-old Cooperative Bank in Wilmington, North Carolina, were closed June 19 by state officials, and the Office of the Comptroller of the Currency shut First National Bank of Anthony, Kansas. The Federal Deposit Insurance Corp. was named receiver.
Southern Community’s $307 million in deposits were bought by United Community Bank of Blairsville, Georgia, and most of Cooperative’s $774 million in deposits went to First Bank in Troy, North Carolina, the FDIC said. Bank of Kansas in South Hutchinson acquired First Bank’s $142.5 million in deposits. The acquiring banks are assuming a combined $1.47 billion in assets, mostly loans, and signed agreements with the FDIC to share more than 80 percent losses with the government.
“The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector,” the FDIC said in each statement. “The agreement also is expected to minimize disruptions for loan customers.”
Regulators this year have closed the most banks since 1993 as a loss of 6 million jobs since the recession began contributes to mounting home foreclosures and loan delinquencies. The U.S. economy contracted at a 5.7 percent annual pace in the first quarter. More than a quarter of all states have unemployment rates higher than 10 percent, the Labor Department said last week. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aeKCvrtGsrhY
U.S. DOLLAR
-Fading of the Dollar’s Dominance. The days of calling the dollar almighty may be numbered. Since World War II, when the dollar eclipsed the British pound as the king of world currencies, the United States has reaped the rewards of its monetary strength. The greenback’s sense of indestructibility allowed the U.S. government to borrow cheaply and gave rise to an era of rich American globetrotters toting the world’s most easily convertible form of cash.
But the financial crisis that started in the United States is dramatically intensifying the debate over the future of the dollar, and whether it can, or should, remain at the top of the financial food chain. Although a meaningful shift away from the dollar is likely to take years or more, some analysts believe that the debate is now reaching a tipping point. Read more here-
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303397_pf.html
-The U.S. dollar is clearly coasting on its legacy. The Obama Administration’s actions have eroded confidence to the point that the rapidly developing BRIC membership has risked its own substantial stake in dollar investments to publicly call for an alternative.
These comments are the tip of the iceberg. Behind the scenes, we can bet that creditor states are preparing for flight. Though the dollar’s slide has been stayed by pronouncements of confidence from Russia, Japan, China, and others, there will come a time when the pain is too great and the outcome too certain. Private investors who haven’t already left the collapsing dollar ballroom may be crushed when the big players stampede for the door. John Browne-Read more here-http://www.321gold.com/editorials/browne/browne061809.html
-Moody’s Says World Has ‘No Credible Alternative’ to U.S. Dollar. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aGlxDLf7cVZY
-Deficits, the Dollar and Exit Strategies. The government is pushing the limits on how much debt it can incur. During the past 25 years, the private sector in the United States pushed the limits on debt, and when this experiment in debt-fuelled consumption came to its crescendo, it sent shock waves throughout the global economy. Now it appears that the U.S. government is trying to push those same limits.
As you can see in the table below, during the 1950s it took $1.36 of debt to generate $1.00 of gross domestic product. However, that ratio has crept up over time, and in the current decade, it’s thus far taken $5.81 of debt to generate that same $1.00 of GDP. And now it’s apparently the government’s turn to ramp up debt. Read more here- http://www.schwabinsights.com/2009_06/strategy.html
STOCK MARKET
-Nouriel Roubini’s Three Reasons Why Stocks Are Bound to Fall. Believe it or not, Nouriel Roubini professor at NYU’s Stern School and Chairman of RGE Monitor has some good news: Aggressive government intervention prevented a great depression. The bad news: Roubini says the stock market rally is long in the tooth. (They don’t call him Dr. Doom for nothing.) He points to three factors that will lead to a correction in the near future.
1. Volatility and Uncertainty Will Increase. Note: the CBOE Volatility Index is currently down more than 50% since the October panic.
2. Corporate Earnings Will Disappoint. He says the market is pricing in a robust ‘V’ shape recovery. However, when earnings miss expectations, buyers will turn into sellers, as was the case this week with FedEx. (Research In Motion shares were down early Friday after the firm’s guidance failed to live up to expectations.)
3. The Global Financial System Still Faces Serious Problems. Roubini thinks unemployment will rise to 11%, bank losses will increase across the globe, and the recession in Europe will get worse.
The silver lining: Roubini isn’t convinced the market will retest the lows. Read more and watch video here-http://finance.yahoo.com/techticker/article/266832/Nouriel-Roubini%27s-Three-Reasons-Why-Stocks-Are-Bound-to-Fall
-Insiders Exit Shares at the Fastest Pace in Two Years. Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.
Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.
Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P; 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.
“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a5gNM5hd9W94
-Short Selling of S&P; 500 Increases for First Time since March. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=ak6sp8AYk0NU
-For some long-term perspective, today’s chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s.
Also, the inflation-adjusted Dow is now less than double where it was at its 1929 peak and trades a mere 30% above its 1966 peak not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 30.7% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today. Read more here-http://www.chartoftheday.com/20090619.htm?T
38 YEARS OF BAILOUTS
-In the wake of Penn Central filing for bankruptcy, America’s largest rail company at the time, Congress passed the Rail Passenger Service Act of 1970 and Amtrak was born. The new federal monopoly was expected to be self-sufficient by 1974.
Today, 38 years of federal subsidies and over $33 billion tax dollars later, the company has yet to turn a profit. So what is Congress’s solution? Throwing the dysfunctional enterprise $13 billion more tax dollars over the next five years, plus another $1.3 billion towards infrastructure and security. If the bureaucrats’ ongoing experiment with Amtrak is any indication of GM or Chrysler’s future, then American taxpayers are in for a world of hurt. Read more here-http://caseyresearch.com/displayCcs.php?e=true
REAL ESTATE-MORTGAGE-FORECLOSURE
-Many believe homeownership is no longer a way to build wealth: survey. Read more here-http://www.marketwatch.com/story/story/print?guid=B40E52D1-0065-40E5-B29E-E9561D794AC7
-California, Las Vegas Home Prices Decline on Foreclosure Sales. Home prices throughout California and in the Las Vegas area fell from a year earlier in May as a rise in foreclosures pushed down the value of single-family houses and condominiums.
The median price for an existing, single-family detached home in California declined 30 percent to $267,570, the California Association of Realtors said today in a statement. In the Las Vegas area, the median price for houses and condominiums fell 44 percent to $135,000, San Diego-based MDA DataQuick said in a separate statement today.
About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, and such sales accounted for 51 percent all existing-home transactions in California, MDA DataQuick said. Foreclosure sales represented 40 percent of California resales a year ago, the research company said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ap29J9krkBY0
-Housing Eludes Recovery as Job Losses, Foreclosures Climb. Unemployment and consumer debt are putting home ownership beyond the reach of would-be buyers even as U.S. home prices reset to 2003 levels, according to a report today by Harvard University’s Joint Center for Housing Studies.
“Clear signs of a recovery have yet to emerge, and job losses and the steady stream of foreclosures are keeping many markets under pressure,” researchers for the Cambridge, Massachusetts-based center wrote. “Sales of both new and existing homes continued to struggle to find a bottom.”
Tight residential real estate markets and low mortgage rates fuelled a five-year property boom as the number of U.S. households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007, the researchers said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aw.NN1SqL7xk
-U.S. homes recovery distressingly slow: Reuters/UMich. A “distressingly slow” U.S. housing recovery, with inflation-adjusted home values expected to decline over the next five years, makes it unlikely that housing wealth will drive consumer spending in the next decade, a Reuters/University of Michigan survey found.
Consumers are apt to maintain their renewed emphasis on savings and paring debt, Richard Curtin, director of the survey, said in a June home price update on Friday. Housing wealth changes have a lagged impact on spending, and the influence of declines seen in 2008 will depress growth in consumer spending in 2009 and 2010, the survey said. Read more here-
http://www.reuters.com/article/ousiv/idUSTRE55I3CJ20090619
-U.S. home prices fell 6.8 percent in April from a year earlier as rising unemployment and record foreclosures kept buyers out of the market. Measured monthly, the average price fell 0.1 percent from March, the Federal Housing Finance Agency in Washington said today. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aLU_yVWfAiFE
-Home resales in the U.S. rose in May for a second month as record foreclosures caused prices to drop. Sales prices of existing homes dropped 17 percent in May from a year before, spurring a second straight gain in purchases and helping reduce the nation’s glut of unsold properties.
Purchases rose 2.4 percent to an annual rate of 4.77 million, lower than forecast, the National Association of Realtors said in Washington. The median price drop was the third-deepest on record. Separate figures showed home values nationally fell 0.1 percent in April from a month earlier. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aTaoPl2uei3s
-Purchase of new homes in the U.S. unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven slump in prices for resales. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aHnkmpfcRwEA
-Pulte Expects Home Sales Will Languish for Months. New home sales in the U.S. likely will remain little changed in coming months because of low consumer confidence and the difficulty would-be buyers have getting loans, Pulte Homes Inc. Chief Executive Officer Richard Dugas said at an investor conference today.
“Buyers are unwilling and unable to take on new mortgages,” Dugas said at a Wachovia Corp. conference in Boston. “Despite the record fall in prices and the tremendous deal that consumers get relative to the 30-year mortgage rates where they are today, we’re still having difficulty convincing people to get into the market.”
New home sales are down 75 percent from their 2005 peak and consumer confidence is 51 percent below its five-year high, data compiled by Bloomberg show. Record foreclosures have helped push the median new home price down 20 percent from its 2007 high as builders are forced to compete with a glut of unsold property. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=a04AejfFSpvo
-Worse than subprime? Other mortgages imploding slowly. Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump.
The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.
Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages. However, interest rates dropped to historic lows, and that delayed the detonation of what many housing analysts still see as a ticking time bomb.
“They’re probably going to default at a rate that makes subprime look like a walk in the park,” warned Rick Sharga , senior vice president for RealtyTrac, a foreclosure research firm in Irvine, Calif. Read more here-http://news.yahoo.com/s/mcclatchy/20090618/pl_mcclatchy/3255357
-Fannie, Freddie asked to relax condo loan rules: report. Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said. Read more here-
http://www.reuters.com/article/GCA-Housing/idUSTRE55L39120090622
-Not paying mortgage, yet stuck with keys. Backlog of seriously delinquent mortgages imperils recovery. Read more here-
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500_pf.html
-There may be another culprit scuttling a U.S. housing recovery: low home appraisals. Flawed appraisals are derailing real estate sales and depressing values across the U.S., the National Association of Realtors said yesterday as it reported that existing home prices declined 17 percent in May from a year earlier.
“It’s pointing to thousands of delayed or cancelled transactions,” Lawrence Yun, chief economist of the Chicago- based Realtors group, said in an interview. “We’ve had a massive inundation from members saying this is a big problem.”
Appraisal rules that went into effect on May 1 require lenders that sell loans to Fannie Mae or Freddie Mac to set up a firewall between appraisers and loan officers to prevent improper influence. The rules are the result of an agreement between the mortgage buyers and New York Attorney General Andrew Cuomo, who said an investigation found appraisers inflated values under pressure from lenders.
The agreement mandates that banks order a second appraisal on 10 percent of the loans they sell to Fannie Mae and Freddie Mac, and warns against accepting the higher of any two valuations. The guidelines have led to more conservative valuations by many appraisers and a “chill” in lending, according to John Brennan, research director at the Appraisal Foundation, a Washington-based trade group. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aacHqlTB6jTg
-Government Pamphlet Taught Banks How To Finance A $70,000 Home With A $500 Downpayment. Read more here-
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – June 30, 2009
Posted by Worldwide Precious Metals on Tuesday, June 30, 2009
The Goldbugg Report – June 23, 2009
June 23, 2009
WORLD FINANCIAL REPORT ON RADIO JUNE 19 2009 SHOW
“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Money and Wealth in the New Millennium, by Norm Franz
-John Embry Expects $1,500 Gold and Early Stage Hyperinflation by Year End.
-David Morgan silver commentary, is silver money?
GOLD
-John Embry Expects $1,500 Gold and Early Stage Hyperinflation by Year End.
TGR: If you project gold going to $1,500 by the end of the year, are you projecting that the inflationary period will begin before the end of this year too?
JE: Not in a dramatic way. It will be in the early stages. This obviously presupposes that the dollar will fall in that environment, but yes, as the dollar falls, you’ll start to see more inflationary implications in my opinion. There will still be a lot of people out of work and it will start affecting those who are working. I think that will have a rather negative impact on the overall U.S. economy as well.
TGR: What are the implications of all of this on investments, be they in gold or whatever else?
JE: Personally, I have a significant proportion of my own wealth in gold and gold shares. I like most hard assets. What I wouldn’t own are financial assets, such as bonds or bank deposits and certainly not banks and financial institutions. If what I foresee comes to pass, there will be rewards for being in hard assets. That will protect you.
TGR: What would you advise investors who are just coming into the gold market?
JE: I was responding to a questionnaire recently about how to construct a gold portfolio in today’s market. If you’re being relatively conservative, you would always have a solid core in bullion. I don’t mean ETFs. I mean real bullion or a vehicle where you can audit the fact that the gold is there and not just trust someone saying that it is.
TGR: How much would you put in that core holding?
JE: Physical gold would be 20% to 25% of my portfolio. Read more here-http://news.goldseek.com/GoldSeek/1244827800.php
-Gold sold like chocolate from German vending machines. Shoppers in Germany will soon be able to buy gold as easily as bars of chocolate after a firm announced plans to install vending machines selling the precious metal across the country. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5554972/Gold-sold-like-chocolate-from-German-vending-machines.html or http://www.nytimes.com/2009/06/18/business/global/18gold.html
-Bargain-Hunting for Gold: Seasonal Price Trends Look Favourably on Summer Purchases. Read more here-http://news.goldseek.com/GoldSeek/1211224662.php
-Russia wants gold incorporated in SDRs. Read more here-http://www.gata.org/node/7501
-New gold reserve discovery remains well below the industry’s ongoing needs. In a recently released study, Canada’s Metals Economics group shows that the major gold miners are not replacing resources through new exploration, but rather through acquisition, expansion and upgrading of existing or already known operations. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=84977&sn;=Detail
-Mike Zielinski: U.S. Mint ends gold, silver coin rationing. Read more here-http://www.gata.org/node/7503
SILVER-PLATINUM-PALLADIUM
Gold to silver ratio at 80 to 1 with gold at $2,300 the silver price would be $28.75
Gold to silver ratio at 70 to 1 with gold at $2,300 the silver price would be $32.86
Gold to silver ratio at 60 to 1 with gold at $2,300 the silver price would be $38.33
Gold to silver ratio at 50 to 1 with gold at $2,300 the silver price would be $46.00
Gold to silver ratio at 15 to 1 with gold at $2,300 the silver price would be $153.33
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1245173905.php
-David Morgan silver commentary, is silver money? Read more here-http://news.silverseek.com/SilverInvestor/1244782032.php
“The major monetary metal in history is silver, not gold.” Noble Laureate Milton Friedman in an interview with James U. Blanchard III for the 20th Anniversary New Orleans Investment Conference, November 7, 1993.
“To 250 million persons in 51 countries the word for money is the same as the word for silver and silver literally means money.” Silver Profits in the 80’s, by Jerome F. Smith and Barbara Kelly Smith, copyright © 1982, ERC Publishing Company, page 43.
“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Money and Wealth in the New Millennium, by Norm Franz, copyright © 2001, Whitestonepress, page 154.
-The price of silver will rise further in 2009 following a sharp rally in May, fueled by a combination of rising investor interest, recovering industrial demand and flat industry output, the chief executive of Coeur d’Alene Mines Corp said on Monday.
“Silver is now being looked at as a separate asset class and as a safe haven, and some sense that the economy may be bottoming,” CEO Dennis Wheeler of the Idaho-based silver producer told Reuters in an interview. “Silver is demonstrating its advantage both for investors and as a leading industrial metal,” Wheeler said. “Silver has a stronger base because of its industrial demand feature. So, I am not surprised that we have seen this price performance for silver compared to gold,” Wheeler said.
Wheeler forecasts silver to rise to a range between $16 and $18 an ounce for the rest of 2009, with a degree of price volatility. “This is an uncertain world that we are living in. Who knows what may trigger more investment into silver and gold as inflation hedges or secured asset buys,” Wheeler said. “You will undoubtedly see some price swings from time to time.”
Wheeler expected that both silver and gold to be supported by similar factors such as declining supply, very few new discoveries and shrinking reserves. “Nothing on the horizon is going to change that (flat supply), so we are going to have silver deficits over the long term by a considerable margin,” he said.
The worst economic crisis since the Great Depression has forced many silver mines to shut due to falling demand and lower metal prices. Silver output is expected to drop further because of the loss as a by-product from base metal mines. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=84191&sn;=Detail
-Roland Watson silver market update. Read more here-http://news.silverseek.com/SilverSeek/1245094693.php
-Gene Arensberg: Unshakeable confidence in gold, silver. Read more here-http://www.gata.org/node/7497
-London and Zurich silver ETFs grow by 3 million ounces in May. Europe’s silver ETFs showed sharp growth in May as investors moved into the most volatile of the precious metals. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=84228&sn;=Detail
-Platinum and palladium the ‘other’ precious metals. Read more here-http://www.moneyweek.com/investments/precious-metals-and-gems/platinum-and-palladium-the-other-precious-metals-14770.aspx
-Why platinum and palladium prices have risen despite GM bankruptcy. It may seem strange that platinum and palladium prices have been on the rise given the turmoil in the U.S. Auto industry and the GM bankruptcy. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=84960&sn;=Detail
DEFINITIONS-QUOTES-QUICK HITS
-Readers of The Economist magazine will be familiar with the Big Mac Index, its clever chart showing the price of a McDonald’s Big Mac in various countries, as a crude way of measuring the purchasing power of various currencies. Gregor Macdonald has taken the idea in a different direction, looking at how many Big Macs you could buy for a barrel of oil, at average prices throughout the year.
Says Gregor: “Two aspects of this chart surprised me. First, even as oil began to take off in 2004 there was still a trailing stability in its relationship to the Big Mac. A barrel of oil could still be purchased for less than 15 Big Macs throughout much of 2004.
The second insight I gleaned from this chart is that despite the advance in the price of the Big Mac since 2001, and equally despite the spectacular price crash of oil from the highs of 2008, a barrel of oil still costs nearly 20 Big Macs. In some sense, therefore, we can think of Oil as having moved from a previous pricing era of 10 Big Macs, to a new era of 20 Big Macs.” View chart here-http://www.businessinsider.com/chart-of-the-day-big-macs-to-oil-2009-6
-“Why don’t somebody print the truth about our present economic condition? We spent years of wild buying on credit, everything under the sun, whether we needed it or not, and now we are having to pay for it, howling like a pet coon. This would be a great world to dance in if we didn’t have to pay the fiddler.” Will Rogers
-There ain’t no rules around here! We’re trying to accomplish something. Thomas Edison
-Find out what any people will quietly submit to, and you have found out the exact measure of injustice and wrong which will be imposed upon them and these will continue, until they are resisted with either words, or blows or both. Frederick Douglass-Bio here-http://en.wikipedia.org/wiki/Frederick_Douglass
-A senior figure at the Sovereign Society claimed June 16th that Gold Prices could increase by as much as 50 percent in the next two years. Eric Roseman, investment director at the firm, has explained in an open letter on SovereignSociety.com that “one of the worst bouts of inflation America has ever seen” is on its way.
With investors traditionally Buying Gold as a hedge against inflation and demand far outweighing supply Mr. Roseman believes that a sustained rise for the yellow metal makes “perfect sense.” He wrote: “Right now, gold is poised to fly past $1,000 per ounce. Over the next 12 to 24 months, I wouldn’t be surprised to see it surge by 50 percent or more.” Read more here-
-Investors view precious metals as a safe haven amid turbulent markets and a hedge against inflation. “The most important driver for gold is the expectation that the trillions of dollars in bailouts that are being created in Washington will lead to a much lower U.S. dollar, which means a much higher gold price,” said John Ing, president of Toronto investment dealer Maison Placements. “Less gold is coming to market, while demand is growing. That can only mean one thing. The price of gold will go higher.” Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=84877&sn;=Detail
-The last two years have taught so many the virtues of gold and the gold price has reinforced these. Prudence and perspicacity demand that competent investors hold at least a good portion of their wealth in gold and silver. In a worst case environment gold and silver have proved many times that they rise considerably with a real appreciation. Fundamentally, it is now time for gold and silver to take an important place in the world of real value as paper values are sincerely questioned.
We are of the belief that gold will continue on its upward path until there is substantial and convincing evidence that we have a monetary system that can withstand the potential systemic failures on the horizon now. Julian D. W. Phillips-Read more here-http://news.goldseek.com/GoldForecaster/1244828343.php
-“We consider this our only stretch target, as we are raising our year-end gold target to $1,200/oz. Thousand-dollar gold has provided mighty resistance but, considering that it is the only commodity or asset class to still be in a long-term uptrend since 2001, we believe it will ultimately push through this level on the fifth or sixth try. This is the ‘golden age’ for gold, with financial turmoil (bankruptcies and near-bankruptcies at major financial institutions) acting as the catalyst.” Desjardins Securities-Read more here-
http://www.globeinvestor.com/servlet/story/RTGAM.20090616.wdesjardins0616/GIStory/
-My belief is that the green shoots will be killed off by inflation and/or higher interest rates. The fact is that interest rates must increase dramatically, which will either put us in the same situation as the summer of 2007 thru the spring of 2009, or the inflation tactic will be sought to lower the value of debt.
The former scenario will lead to a deflationary recession/depression which will be favourable to cash and the dollar. The latter scenario which the Fed and Administration have shown conclusively to favour will send gold above $1,500 an ounce and oil to $200 per barrel just for starters. It will also mean the end of the US dollar as the world’s reserve currency. In either case, the resulting economic shock will be severe and the difference it will make to your investment strategy is impossible to overstate. Michael Pento-Read more here-
http://www.321gold.com/editorials/pento/pento061609.html
-Nothing will unnerve the paper gold and silver shorts more quickly and do more to undercut their confidence, than to strip them of the real metal and force them to come up with more hard gold and silver bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold and silver longs to the paper gold and silver shorts. Dan Norcini, jsmineset.com
-“Gold has reasons to rally,” said Stephen Platt, an Archer Financial Services commodity analyst in Chicago. “The dollar is pretty risky to be in and Chinese demand for gold seems to be better than expected.” Platt backed his assessment with a prediction that gold will probably trade at “$990 in a couple of weeks.” Casey Daily Resource
-“The dollar is likely to provide much of gold’s short-term direction,” wrote James Moore, of TheBullionDesk.com. “We expect the current theme of dip buying to continue.” And many dips there are likely to be, considering that we are entering the summer season, traditionally a period of the doldrums for gold. Casey Daily Resource
-The USDollar will suffer the brunt of USTreasury rescues, either by brute force futures contracts, or coordinated central bank interventions. Numerous factors read bearish on the billboard for the beleaguered USDollar: huge USGovt debt issuance, weak USEconomy, rising specter of price inflation, questionable bank leadership, foreign revolt in the form of reserves diversification, and calls for a new & improved global reserve currency to de-throne the USDollar. The chart for the DX index could not be more vulnerable.
The next targets are 77 and then 72. Watch for a 20-wk moving average crossover below the more stable 50-wk moving average, a powerful technical signal to sell the US$ down hard! It is coming like night follows day. The current bounce is dead on arrival, obstructed by the 81 level resistance from December, and the falling moving averages overhead. As the credit derivative issue, complete with fresh publicized losses, raises its ugly head, the USDollar will be the bigger loser.
The US banks are extremely vulnerable to additional credit derivative losses. Insolvency could quickly turn into a skein of bank failures. The mysterious rise in the crude oil price confirms great risk and weakness built into the USDollar. The Powerz can blame the speculators, but the true risk is with the USDollar. Crude oil confirms the US$ weakness. Jim Willie-Read more here-http://www.321gold.com/editorials/willie/willie061209.html
-Now that the Fed is halfway through its money printing binge, it may soon have to decide whether to up the ante, by ramping-up its Treasury debt purchases to as much as $1-trillion. But of course, the big risk with massive QE overdoses is that the gambit could end-up crushing the value of the US-dollar and intensify inflation fears that are festering in the bond market, pushing yields higher. In other words, massive money printing could send crude oil prices to $100 per barrel. Gary Dorsch-Read more here-
http://www.321gold.com/editorials/sirchartsalot/dorsch061109.html
-The next major move in the stock market will be down. We are seeing the last vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to 8500 will end as soon as all the financial institutions that need to sell what stock is necessary to bolster their balance sheets. Our guess is the rally has been aided in a big way by short covering and the participation of the US government.
Those who believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken during the summer as volume dries up during the vacation season. In addition, second quarter earnings will be very disappointing, especially in the financial segment. Unemployment continues to worsen and capacity utilization is at its lowest level in years.
Banks continue to cut credit lines and not lend nearly as much as they did before. Citigroup’s earnings should turn down again. They won’t have another $2.7 billion gain or another $400 million mark-to-market fictitious gain. Absent those gains they would have lost $2.8 billion. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1245260833.php
-China sells US bonds to ’show concern’. A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday. The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction.
“China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar,” He Maochun, a political scientist at Tsinghua University, told the Global Times. According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.
It was the first month since June 2008 that Beijing failed to purchase more US T-bills. Zhang Bin, a researcher at the Chinese Academy of Social Sciences, said China’s move showed a more cautious attitude. “It is unclear whether the reduction will continue because the amount is so small. But the cut signals caution of governments or institutions toward US Treasury bonds,” Zhang told Xinhua news agency. Read more here-http://www.breitbart.com/article.php?id=CNG.6cc88b76aff9be3f90f62526a3107ec9.31&show;_article=1
-IMF official says U.S. dollar reserve status to stay. Read more here-http://www.reuters.com/article/topNews/idUSTRE55E3R920090615
-Russia has full confidence in the dollar and there are no immediate plans to switch to a new reserve currency, Finance Minister Alexei Kudrin said. “It’s too early to speak of an alternative” to the dollar, Kudrin said in Lecce, Italy, in a television interview today after meeting with finance chiefs from the Group of Eight nations. The fundamentals of the dollar are still in “good shape.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=abKnXn3puSjY
-Medvedev Reiterates Russian Aim to Create Supranational Currency. President Dmitry Medvedev reiterated Russia’s intention to push for the creation of a global reserve currency to replace the U.S. dollar.
“The strengthening of the international currency system” requires first creating regional reserve currencies and then a “supranational currency,” Medvedev told leaders of the member states of the Shanghai Cooperation Organization in Yekaterinburg, Russia, today. “Reinforcing the international currency system should not be done through reinforcing only the dollar,” Medvedev said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=auA59hCyoDV4
-Suitcase With $134 Billion Puts Dollar on Edge. It’s a plot better suited for a John Le Carre novel. Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?
The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid;=a62_boqkurbI
-20 Things You Didn’t Know About Money. Read more here-http://www.dollarcollapse.com/iNP/view.asp?ID=97
-Credit card defaults keep climbing. Default rates in May continue to rise as borrowers struggle with the weak job market. Read more here-
http://money.cnn.com/2009/06/16/news/companies/credit_card_losses/index.htm?postversion=2009061615
-Huge job cuts for U.K. public sector. As many as 350,000 public sector jobs could be lost over the next five years, the Chartered Institute of Personnel and Development (CIPD) is warning. Read more here-http://news.bbc.co.uk/2/hi/business/8102121.stm
-UK jobless total at 12-year high. Read more here-http://news.bbc.co.uk/2/hi/business/8104546.stm
-UK public sector borrowing was the highest on record in May, the Office for National Statistics said. Public sector net borrowing was £19.9bn in May, and has already reached £30bn in the first two months of the financial year.
This is double the level of one year ago, and even higher than the £19bn borrowed in March. The total outstanding government debt has risen to £774.8bn, £150bn more than one year ago, equal to 54.7% of UK GDP. In April’s budget, the Chancellor, Alistair Darling, forecast that borrowing this year would reach £175bn. Read more here-
http://news.bbc.co.uk/2/hi/business/8106607.stm
-U.S. poised for weak recovery UCLA forecast. Read more here-http://www.reuters.com/article/governmentFilingsNews/idUSN124751620090616
-Posen Says U.S. Economy ‘Bouncing Back,’ Sees W-Shaped Recovery. The U.S. economy is “bouncing back” but still faces a “bumpy ride” out of the recession, said Adam Posen, who will become a Bank of England policy maker in September.
Posen told a conference in Dublin today that he expects a “W-shaped” recovery by the U.S. economy, meaning he sees a “double dip” in which the recovery temporarily reverses before resuming. U.S. economic growth is expected to be “solidly positive” from the second half of this year, he added.
Posen said he’s “trying to resuscitate the good name of W” in describing the economic recovery. Some recent data indicate the U.S., the world’s largest economy, may be over the worst of the slump. Housing starts jumped more than forecast last month and confidence among U.S. consumers rose for a fourth straight month in June. Still, mounting unemployment and tight credit mean the recovery will be slow. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=agqS2gLC4lvw
-U.S. likely to lose AAA rating: Prechter. Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.
Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.
Despite the government and Federal Reserve’s massive rescues for financial companies and securities markets, Prechter expects credit markets to clam up again as they did in the first phase of the global financial crisis and for the U.S. economy to sink into a depression. Read more here-
http://www.reuters.com/article/InvestmentOutlook09/idUSTRE55E6BM20090615
-Roubini sees weeds amid green shoots. The U.S. economy will not recover until the end of this year, and even then growth will remain meek and vulnerable to higher interest rates and commodity prices, economist Nouriel Roubini said on Tuesday.
Roubini, who rose to prominence for predicting the global credit crisis, tore down the “green shoots” theory that a rebound is imminent, saying there was a significant risk of a “double-dip” recession where the economy expands slightly only to begin contracting again. “In addition to green shoots there are also yellow weeds,” he told the Reuters Investment Outlook Summit in New York.
He pointed to the growing divergence between business sentiment surveys, which have been improving in recent months, and industrial production, which is down sharply and receded another 1.1 percent in May.
Roubini, the head of economics research firm RGE Global Monitor, said the U.S. jobless rate, already at a 26-year high of 9.4 percent, would reach 11 percent before it begins to ease. He added that he saw few engines for growth given that U.S. consumers are tapped out
As a result, Federal Reserve policy-makers, whom Roubini says completely missed the magnitude of the crisis at its inception, face an unenviable set of policy choices. He said weak growth would allow the U.S. central bank to leave interest rates near the current rock-bottom levels for the foreseeable future. Eventually, however, trillions of dollars of unprecedented emergency measures to heal the financial system will need to be mopped back up to prevent an upsurge in inflation.
Rampant inflation could lead to negative economic cycles like the ones that plagued much of the industrialized world in the 1970s. “That’s the challenge the Fed is facing,” Roubini said. Read more here-http://www.reuters.com/article/InvestmentOutlook09/idUSTRE55F4ET20090616
-IMF chief warns it too soon to roll back stimulus. The head of the IMF warned on Monday it was too soon to discuss rolling back stimulus spending, saying the world economy had yet to weather the worst of a recession that has hammered industrial output and claimed a record number of European jobs.
“We first have to exit the crisis before we can implement an exit strategy, and we haven’t exited the crisis yet,” International Monetary Fund chief Dominique Strauss-Kahn said during a visit to Kazakhstan. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE55E0BJ20090615
-Bank Rescue Costs EU States $5.3 Trillion, More Than German GDP. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aI.TvvSBYXBM
-King Says U.K. Banks May Need More Capital to Finance Recovery. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZNaIn.9PBJo
-U.K. Bank of England pours cold water on economic recovery. Read more here-http://business.timesonline.co.uk/tol/business/economics/article6519170.ece
-More auto industry bankruptcies loom. Auto parts manufacturer trade group predicts widespread bankruptcies after the government rejects request for $8 billion to $10 billion in additional help. Read more here-http://money.cnn.com/2009/06/16/news/companies/suppliers_plea_rejected/index.htm
-Nearly 30 Airlines Have Vanished in the Last 18 Months. Read more here-http://www.nytimes.com/2009/06/15/business/global/15ravsqueeze.html
-Oilman says his ‘Pickens plan’ will be good for Canada. Read more here-http://www.globeinvestor.com/servlet/story/GAM.20090618.RPICKENS18ART1938/GIStory/
-T.Boone Pickens: $300 oil. Watch video here-http://money.cnn.com/video/fortune/2009/06/16/fortune.bg.061609.tboone.cnnmoney/index.html
-Poll: Half of Israelis back bombing if needed to stop Iran nukes. Read more here-http://www.cnn.com/2009/WORLD/meast/06/14/israel.iran.poll/index.html
-Iran 101: Understanding the unrest. Read more here-http://www.cnn.com/2009/WORLD/meast/06/18/iran.101.explainer.qa/index.html
-Warning: Counterfeit dollars from N. Korea. Treasury Department says the country could use financial deception to get around sanctions. Read more here-
http://money.cnn.com/2009/06/18/news/international/Treasury_warning_North_Korea/index.htm
-North Korea may fire a long-range ballistic missile toward Hawaii in early July, a Japanese news report said Thursday, as Russia and China urged the regime to return to international disarmament talks on its rogue nuclear program.
The missile, believed to be a Taepodong-2 with a range of up to 4,000 miles (6,500 kilometers), would be launched from North Korea’s Dongchang-ni site on the northwestern coast, said the Yomiuri daily, Japan’s top-selling newspaper. It cited an analysis by the Japanese Defense Ministry and intelligence gathered by U.S. reconnaissance satellites. The missile launch could come between July 4 and 8, the paper said. Read more here-http://apnews.myway.com/article/20090618/D98T1AR00.html
-U.S. may be within N. Korea missile range in 3 years, official warns. The West Coast may be vulnerable to an attack, the vice chairman of the Joint Chiefs of Staff says. However, North Korea is unlikely to be able to develop a nuclear warhead by then. Read more here-http://www.latimes.com/news/nationworld/world/la-fg-north-korea-missiles17-2009jun17,0,6692726,print.story
-Defense Secretary Robert Gates said he has ordered the U.S. military to take defensive measures should North Korea attempt to fire a ballistic missile toward Hawaii, even as officials express scepticism of the possibility. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aJd3FMsNStZ0
-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
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/articles/index.html and http://www.youtube.com/watch?v=BWYMJnEz-n4
-Christie’s New York sale amounts to $11,367,875. The top lot was a 6.29-carat, pear-shaped internally flawless blue diamond. The Christie’s New York Jewels auction generated sales worth $11,367,875. Reports say, that the sale was 91 percent sold by lot and 86 percent sold by value. An anonymous bidder bought the top lot a 6.29-carat, pear-shaped internally flawless, fancy intense blue diamond, for $3,554,500.
The piece was carrying a presale estimate of $3.3 million to $5.5 million. A 46.72-carat, modified rectangular-cut, SI1, fancy yellow diamond featured amongst the top 10 lots, and sold for $602,500, within its presale estimate of $500,000 to $700,000.
Another amongst the top 10 lots was a 10.01-carat, pear-shaped F diamond, which topped the Christie’s presale estimate of $200,000 to $300,000. It was bought by a private buyer from the U.S. for $458,500. The sale took place on June 11, 2009, and indicated that the markets are looking up. Read more here-http://diamondworld.net/contentview.aspx?item=3899
or http://www.israelidiamond.co.il/english/News.aspx?boneId=918&objid;=5209 or http://www.diamonds.net/news/NewsItem.aspx?ArticleID=26691
-Colored diamonds sold at the Christie’s New York sale. View here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22124#action=refine&intSaleID;=22124&sid;=248e604a-530c-4494-a4b0-c59066523f29&selectedids;=55215
-Are Larger Stones Making a Comeback? Christie’s Auction Says Yes. Christie’s London Sale Wednesday, June 10, made several sellers very happy. A highlight of the sale was an Art Deco pendent containing a circular-cut fancy yellow, SI1 diamond weighing 44.14 carats, estimated at $327,000-$408,750. The piece reached an impressive price of $865,324 or $19,600 per carat. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=32479
HYPERINFLATION WATCH
-Exploding Money Supply, But No Inflation Just Yet. In theory, the massive creation of money will lead to inflation. Indeed, everyone’s fretting about all the Fed’s printing. But according to traditional inflation metrics, it’s not here yet. Today’s chart shows how severely the money supply and inflation are going in fiercely opposite directions. Now, looking at inflation in terms of commodity prices, you get a different story. Read more here-http://www.businessinsider.com/chart-of-the-day-money-supply-vs-inflation-2009-6
-36 South Investment Managers Ltd., whose Black Swan Fund gained 234 percent in 2008, is raising money for a new hedge fund, betting that government efforts to pump money into economies could result in hyperinflation.
The Excelsior Fund targets returns that will be five times the average annual rate of inflation of the Group of Five economies France, Germany, Japan, the U.K. and the U.S. should the rate exceed 5 percent, Jerry Haworth, co-founder of the firm, said yesterday. Raising $100 million for the fund would be a “good” amount, he said.
“There is a sharply increased risk of greater than 5 percent inflation starting from now,” Haworth said in a telephone interview from London. “We are in the lag period between when the seeds of inflation are sown and when their off spring, that is higher prices, are evident for all to see.”
U.S. President Barack Obama is selling record amounts of debt to try to end the steepest U.S. recession in 50 years, while Japanese Prime Minister Taro Aso has unveiled three stimulus packages worth 25 trillion yen ($261 billion) since taking office in September. Governments around the world selling record amounts of debt may devalue currencies against assets and spark inflation. Most investors are underestimating the risk of inflation, Haworth said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aku06Rgam3n0
CHART OF THE DAY-RECESSION
-While the stock market has rallied nicely since bottoming on March 9th, the economy continues to struggle. For some perspective on the current economic recession, today’s chart illustrates the duration of all US recessions since 1900. As today’s chart illustrates, the five longest recessions all began prior to 1930. The length of the current recession (now in its 18th month) is above average and the longest recession since the Great Depression. Read more here-http://www.chartoftheday.com/20090612.htm?T
U.S. RECOVERY OVERLY OPTIMISTIC
-This chart from innocentbystander.net clearly shows Team Obama’s projections in the American Recovery and Reinvestment Plan are overly optimistic. May’s 9.4% unemployment rate, a 25-year high, far exceeded expectations. But don’t worry, your tax dollars are hard at work.
About 1.6 million jobs were shed since the stimulus bill was passed in February, while the roughly $44 billion borrowed and spent from the recovery act has “saved or created 150,000 jobs,” claims the White House.
REAL ESTATE-FORECLOSURES
-Millionaire Homes’ May Lose Value Until 2012. Prices for the most expensive U.S. homes may not reach bottom for another few years, according to JPMorgan Chase & Co. analysts.
“Currently, we have national home prices bottoming in 2011,” they said. “However, prices for more expensive homes may not bottom out until 2012, and ultimately result in peak-to- trough declines in excess of 60 percent (compared to 40 percent nationally).”
“California is probably worse than other states, but higher-priced homes in general are going to be a problem,” Sim said in a telephone interview today. The state’s median sales price for existing single-family homes fell 37 percent in April from a year earlier, to $256,700, according to California’s Association of Realtors. Nationwide, the price fell 15 percent to $169,800, according to the National Association of Realtors. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aXQ2MXGoSysw
-New York Home Prices Forecast to Drop 40%. Read more here-http://www.time.com/time/printout/0,8816,1905085,00.html
-Is the housing bust about to take Manhattan? Read more here-http://www.reuters.com/article/newsOne/idUSTRE55D1ON20090614
-California’s Unending Housing Problem. We keep hearing that the economic problems won’t go away until the housing crisis is over. And if you believe this chart, put together by Mark Hanson of the Field Check Group, that won’t be for a long time.
Here’s the problem: Foreclosures are still occurring more than twice as often as sales. In other words, the inventory just keeps piling up, month after month. And with the Option ARM resets still on the horizon, the mess is only getting worse. Bring out the bulldozers. Read more here-
-US cities may have to be bulldozed in order to survive. Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html
-Spain April Home Sales -48%; Highlight Deep Recession. Read more here-http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=bb833661-225e-4eb1-a083-0c69bc82f58a
-New wave of foreclosures hits US. Read more here-http://news.bbc.co.uk/2/hi/business/8102408.stm
-Property tycoon loses his £21m home in Britain’s biggest ever repossession. Read more here-http://www.dailymail.co.uk/news/article-1193116/Property-tycoon-21m-home-taken-Britains-biggest-repossession.html
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – June 23, 2009
Posted by Worldwide Precious Metals on Tuesday, June 23, 2009
The Week in Review – ALERT
June 19, 2009
Another extremely volatile week comes to a close. Please note we are using Thursday’s closing prices due to the importance of this memo:
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More bankruptcy filings occurred this week, with Six Flags and Eddie Bauer chief among them. A judicial body is now urging Congress to authorize new bankruptcy judgeships to keep up with the surge in filings.
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This year’s peak home-buying season is being described as “lackluster” by Coldwell Banker Real Estate. Homeowners are still having a difficult time selling their current homes, so the usual “move-up” buyers, those looking to trade up to a larger home, were absent this year.
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First time claims for unemployment rose slightly, staying above 600,000 for the twentieth straight week. Continuing unemployment claims decreased slightly leading to mixed views on the job market prospects.
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The Treasury announced on Thursday that they would be auctioning a record setting 104 billion in debt next week. Treasuries moved down and fears over further weakness in the dollar cropped up anew in reaction to the news.
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Militants in Nigeria threatened to sabotage more oil facilities and the protests over election results in Iran continued. The tensions in these two countries appear to be keeping oil above the 70 dollar mark.
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In the Frankfurt airport, passengers can now pay 30 euro for 1-gram wafers of gold. The supplier’s mark-up is about 20% above current market prices, making the case for acquiring gold from professional wholesale suppliers.
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The dollar saw light gains against the euro, and began creeping higher on the yen. Worries about a decrease in Treasury buying could weaken the dollar further though.
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President Obama announced sweeping new changes in regulation, turning the Fed into a super-regulator. He also announced plans to dismantle the Office of Thrift Supervision this week. Already the lawmakers in Washington D.C. are beginning to argue the merits of such sweeping changes, and one can’t help but suspect that the confusion that will ensue will lead to even more volatility in the stock market as the rules and regulations governing it become unclear.
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For the most part, the media has been curiously silent over the seizure of 134.5 billion in bearer bonds in Italy. The bonds were found in a false bottom of a briefcase carried by two men on the border of Italy and Switzerland. A Treasury spokesman has said that the bonds are counterfeit but their existence, fake or no, calls into question whether other such instruments are out there. Such uncertainty could lead to even more weakness in the US Dollar.
Friday to Thursday Close
Here are your Short Term Support and Resistance Levels for the upcoming week.
Volatility should still be expected to continue. Some analysts feel that the recent downward retracement, specifically in the prices of gold and silver, is now in the bottom end of the retracement and that we may not see prices go much lower. In fact, there is now a strong consensus that gold and silver are actually poised for an explosive move to the upside as more and more countries begin to question the use of the dollar as their currency for trade. As we feel that current prices are very attractive for long term appreciation, acquisitions at this time for gold and silver seem to be very much warranted and those looking to acquire at lower prices may not have the opportunity to do so. Just remember: never over-extend yourself and keep your ability to stay the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Week in Review – ALERT
Posted by Worldwide Precious Metals on Friday, June 19, 2009
The Goldbugg Report – June 16, 2009
June 16, 2009
WORLD FINANCIAL REPORT ON RADIO JUNE 12 2009 SHOW
-Clive Maund gold market update.
-China to consume 40% of global gold production.
-Silver’s scarcity premium should have it outperform gold.
GOLD
-Gold has overcome Warren Buffett’s disparagement. Read more here-http://www.gata.org/node/7481
-Clive Maund gold market update. Read and view charts here-http://news.goldseek.com/CliveMaund/1244406591.php
-Gene Arensberg: Commercial short position in gold resembles 2005. Read more here-http://www.gata.org/node/7483
-Ned Schmidt’s Gold Thoughts commentary, read more here-http://news.goldseek.com/NedSchmidt/1244527380.php
-China gold reserves hit 33.89 million ounces in April. Read more here-http://www.commodityonline.com/news/China-gold-reserves-hit-3389-million-ounces-in-April-18458-3-1.html
-China to consume 40% of global gold production. Read more here-http://www.commodityonline.com/news/China-to-consume-40-of-global-gold-production-18368-3-1.html
-Kremlin aide sees gold gaining importance in reserves. Read more here-http://www.gata.org/node/7473
-Cenbanks could justify sharp rise in gold holdings-WGC. Read more here-http://www.forbes.com/feeds/afx/2009/06/11/afx6534033.html
-Czech to mint gold, platinum, silver coins for Pope. Read more here-http://www.commodityonline.com/news/Czech-to-mint-gold-platinum-silver-coins-for-Pope-18443-3-1.html
-Bill Murphy of GATA interviewed on the gold market. Read more here-http://www.hardassetsinvestor.com/features-and-interviews/1/1604-bill-murphy-manipulation-of-the-gold-market.html
-The federal government has asked the RCMP to launch an investigation into the tens of millions worth of precious metals that have gone missing from the Royal Canadian Mint. The announcement comes after an external audit was launched to reconcile the mint’s records with the physical stock of metals. And it comes after the Star revealed today that the value of the missing metal was worth more than $10 million. Read more here-http://www.thestar.com/printArticle/647671
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
-Silver’s scarcity premium should have it outperform gold. In terms of the distribution of silver and gold in the earth’s crust, there’s about 15 times more silver than gold. If you look at the market price for the last 100 years, the ratio has trended a lot higher than that. You usually have about a 50-to-1 ratio of gold price to silver price. And so I think you’re going to find that there’s going to be a narrowing of that gap.
Part of the reason that silver has been at such a discount to gold is the impression that it’s plentiful, which is just not the case. In fact, we know in the United States, for example, there was a 5-billion ounce inventory of above-ground silver, and that’s been almost entirely depleted in the last 30 or 40 years. Now there’s perhaps about 300 or 400 million ounces of documented silver inventories and I do not think new mine production will be able to keep up with demand in the years ahead. There is going to be a shortage.
Most of the gold that has been mined since the beginning of history is still sitting in bullion form some place in the world. Whereas, most of the silver that has been mined has been consumed in various industrial applications and is effectively gone forever. It’s in such small quantities that it’s not easily recycled and restored back to the market.
So, I think as you see silver decline in availability, you’re going to see it close that gap in pricing compared to gold. I think gold is going to be rising rapidly, as I mentioned earlier, from monetary pressures-inflation and the economy. Silver should rise more rapidly just on the scarcity premium as less and less silver is available to meet worldwide demand.
These are the kind of things that will be driving factors to make silver outperform gold, and both are going to be excellent investments in the future. But I really believe that silver is going to be a much stronger performer. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=84641&sn;=Detail or http://news.silverseek.com/SilverSeek/1244583240.php
-Investors see more sheen left in silver. Investors who put money on silver, are not sulking for having missed out on the recent stock rally. Shooting silver prices have generated
handsome gains and there could be some upside left. The ratio of gold to silver price, which indicates the amount of silver needed to buy an ounce of gold, has narrowed, and is now at 62, near “the normal average” of 50-55.
Since gold is unlikely to soften, experts think that the ratio’s movement toward the normal average may be driven by a rise in the silver price. In early 2009, the ratio touched 85 following a surge in gold price. A wide gold to silver ratio indicates that silver is undervalued.
According to Debjyoti Chatterjee, an analyst with brokerage Admisi Commodities, the financial crisis has triggered a safe-haven interest in gold, but silver’s gain has been comparatively less. “Silver is still undervalued and has the potential to gain in the near-term,” he said. Read more here-http://economictimes.indiatimes.com/Investors-see-more-sheen-left-in-silver/articleshow/4637511.cms
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1244406467.php
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1244574104.php
-Silver Slips Out Of Backwardation. Read more here-http://news.silverseek.com/SilverSeek/1244407285.php
-Now silver is nearing a new high. It went as low as a little over $9, and is now almost $16. It’s a long ways from being too late to buy in. Some of you are asking me about storing metals with the seller or buying ETFs. No! No! No! That’s paper metal, and there is no way to ensure they are actually putting aside the metal. Howard Ruff-Read more here-
http://www.kitco.com/ind/Ruff/ruff_jun082009.html
-Silver Flirts With $16 Mark. What it Means and Where Silver Trades From Here. Looking ahead, I think we are just seeing the beginning of the price move. Silver has the potential to double or even triple the percentage move in gold because of its dual role. (Remember, it’s a precious metal and an industrial metal.) There’s no reason we couldn’t be talking about the $20 level in the next month, and by the end of the year that move could be exponentially higher.
Some experts believe we could see the price reach triple-digits or even break $1,000 over the course of several months. While I’m not sure that we’ll see $1,000, I have confidence that silver will be an important investment theme in the coming weeks and months. And that makes silver a hot sector for your portfolio. Don’t let silver’s move occur without claiming your profits and protecting your investments. Zachary Scheidt-Read more here-http://www.kitco.com/ind/Scheidt/jun022009.html
QUOTES-QUICK HITS
-Trying to get government to be as efficient as business, is as hopeless as trying to teach cats to bark and dogs to meow. Walter Williams-Bio here-
http://en.wikipedia.org/wiki/Walter_E._Williams
-The proud American will go down into his slavery without a fight, beating his chest and proclaiming to the world how free he really is. The world will only snicker. Stanislav Mishin pravda.ru June 1 2009
-In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” Alan Greenspan in a 1967 speech
-Upon further review, April Factory Orders were revised lower, to -1.9% from -0.9%. Oops! Ben Bernanke better spread more fertilizer because his ‘green shoots’ are wilting. Bill King the King Report 04 June 2009
-Goldman Sachs CEO Lloyd Blankfein said on Wednesday he believed a current upturn in world markets was probably not a full recovery from crisis and said he expected a further long recession.
“I think it’s going to be a long protracted recession,” he told an international regulators conference in Tel Aviv. Addressing a current upturn in markets, he said: “There is no reason to think this is it. So many things have to be sorted out. Why would this be the recovery? Read more here-http://www.reuters.com/article/usDollarRpt/idUSLA103954120090610
-Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=alC3LxSjomZ8
-Bank of Israel Governor Stanley Fischer said the U.S. Federal Reserve will “want to be careful” not to raise interest rates prematurely because people are “yelling” about inflation. Bloomberg
-“Gold will likely be increasingly used as a safe-haven monetary asset to protect and bolster national currencies as it has been throughout history.” Mark O’Byrne, executive director at Gold and Silver Investments Ltd
-”As the common currency to the world [the dollar] devalues, then gold by extension has to gain in value.” Marcus Hudson, president at Hudson & Associates
-U.S. Rep. Kirk says China is investing away from dollar and has purchased enough gold to fill up Ft. Knox twice. Read more here-
-The Federal Reserve’s balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant’s Interest Rate Observer, told CNBC. With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview.
“If the Fed examiners were set upon the Fed’s own documents unlabeled documents to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.” Read more and watch video here-http://www.cnbc.com/id/31204170
-For the majority of his career, Jim Rogers has had both long and short positions. As of this interview, this is one of the few times Jim Rogers does not have a short position. Among the reasons for Jim not having any shorts is a possible currency crisis and thus should avoid shorting the market. The last time Jim had no shorts was the market crash of 1987.
Among other things Jim Rogers continues to be “wildly” bullish on China, “wildly” bullish on commodities. Specifically, Jim likes Silver over Gold, Natural Gas and Cotton. “I’m afraid they’re printing so much money that stocks could go to 20,000 or 30,000” Jim Rogers-Read more and watch video here-http://www.allthingsjimrogers.com/2009/06/05/jim-rogers-on-cnbc-i-have-no-short/
-One manager looking long term is Jean-Marie Eveillard, the senior investment adviser for the $7 billion First Eagle Global Fund, who says the fund is 10-12% invested in gold and gold-mining securities. “It’s insurance to protect against the fact that current policies by the American government and the Fed are potentially wildly inflationary.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aEU0bZH.sWhc
-James Moore, an analyst at TheBullionDesk.com, had some mixed messages of his own, writing that “for the moment the traditionally inverse relationship [gold/dollar] appears to be back in place.” While, “Short-term we still view the market as overbought. Dips continue to be limited by strong buying interest as inflation fears overshadow economic ‘green shoots’ sentiment,” Moore said. Casey Daily Resource
-Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.
Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money. The question now is who could or would counterfeit or smuggle these non-negotiable bonds. Read more here-http://www.asianews.it/index.php?l=en&art;=15456&size;=A
-Airline losses worldwide may total $9 billion in 2009, nearly double a previous forecast, as an outbreak of swine flu compounds the effects of the recession, the industry’s main trade group said. Sales may fall 15 percent to $448 billion this year from $528 billion in 2008, the International Air Transport Association said in a statement distributed at its annual meeting in Kuala Lumpur today.
“This is the most difficult situation that the industry has faced,” IATA Chief Executive Officer Giovanni Bisignani said. “Our future depends on a drastic reshaping by partners, governments and industry.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aQSs9CGd9Auc&refer;=canada
-American common equity is increasing for the first time in five years, threatening to dilute corporate profits as companies sell a record amount of stock and cut dividends the most since 1938. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aCYuw3iBBUmM
-Credit card delinquency on the rise. Reporting agency says 11% increase could be an indication that tax refund checks are being used to cover daily living expenses. Read more here-
http://money.cnn.com/2009/06/08/pf/credit_card_delinquency/index.htm
-Temp work covers up depth of unemployment. Adding in discouraged, part-time employees almost doubles national rate. Read more here-http://www.msnbc.msn.com/id/31127909
-Rupert Murdoch: Unemployment Will Reach 10 Or 11 Percent. Watch video here-http://www.youtube.com/watch?v=Ax1OCiGe28A
-One in nine Americans on food stamps, USDA says. Read more here-http://news.yahoo.com/s/nm/20090603/us_nm/us_food_usa_stamps
-Benefit spending in U.S. soars to new high. Read more here-http://www.usatoday.com/news/washington/2009-06-03-benefits_N.htm
-The U.S. Economy Is Still at the Brink. Read more here-http://www.nytimes.com/2009/06/07/opinion/07cohanWEB.html?_r=1&ref;=opinion&pagewanted;=print
-ECB fears bank crisis in 2010 as recession drags on. The European Central Bank is paying close attention to mounting difficulties at 25 banks deemed crucial to the health of the eurozone financial system, fearing another wave of bank turmoil next year if the recession drags on. Read more here-
-The depression quietly deepens. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5461562/Merkels-inflationary-fretting-may-wake-the-bears-from-hibernation.html
-Americans $1.7 trillion poorer. Americans’ net worth falls for the second straight quarter as home and stock prices decline. Read more here-
http://money.cnn.com/2008/06/05/news/economy/fundflows/index.htm or http://www.bloomberg.com/apps/news?pid=20601087&sid;=aHrP.PRcaWVU
Smart Money magazine has published a profile of John Williams, proprietor of the Shadow Government Statistics Internet site, who long has documented how the U.S. government has been falsifying economic statistics. The profile is headlined “True or False: U.S. Government Statistics Lie,” and you can find it at the Smart Money site here-
http://www.smartmoney.com/investing/stocks/True-or-False-U-S-Economic-Stats-Lie/
-CNN’s Fareed Zakaria talks to ‘Liar’s Poker’ author Michael Lewis about the economic crisis and future of Wall Street. Read more here-
http://us.cnn.com/video/#/video/us/2009/06/07/gps.michael.lewis.int.cnn
-North Korea would use nuclear weapons in a ‘merciless offensive’. Read more here-http://www.independent.co.uk/news/world/asia/north-korea-would-use-nuclear-weapons-in-a-merciless-offensive-1700590.html
-CIA chief says bin Laden in Pakistan. Read more here-http://www.reuters.com/article/latestCrisis/idUSN11512545
-WHO declares first 21st century flu pandemic. The World Health Organization declared the first flu pandemic of the 21st century on Thursday, Sweden’s health ministry said. The health ministry said the United Nations agency was raising its pandemic flu alert to the top phase 6 on a six-point scale, indicating the first influenza pandemic since 1968 is under way. Read more here-http://www.reuters.com/article/topNews/idUSTRE55A1U720090611?feedType=RSS&feedName;=topNews or http://www.bloomberg.com/apps/news?pid=20601087&sid;=aQFT.hrAp_5s
-Tel Aviv search for mattress containing $1M life savings. Read more here-http://www.cnn.com/2009/WORLD/meast/06/10/israel.mattress.money/index.html
-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
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.youtube.com/watch?v=BWYMJnEz-n4
and http://www.rarecoloreddiamonds.com/articles/index.html
-Christie’s Jewels: The London Sale was 84 percent sold by lot and garnered a total of $6.1 million (GBP 3.7 million). The top lot was a 44.14-carat circular-cut, fancy yellow, SI1 diamond set in an art deco mount, which fetched $865,324, or $19,600 per carat. A 10.09-carat, cushion-shaped, F, VS2 diamond sold to an Asian private for $414,064, and a 4.99-carat brilliant-cut, F,VS2 diamond sold to a member of the U.S. trade for $135,460.
Keith Penton, Christie’s head of London Jewels, said, “The appetite for fine quality period jewelry with provenance was reflected in the 10 June sale. The Barberini sapphire and diamond jewels sold for $248,600 (GPB 152,000). A stunning antique brooch set with six historic diamond drops from the reign of Louis XV, fetched $374,415 (GBP 229,000). Important diamonds continue to generate fierce demand.” Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=26653 or http://www.idexonline.com/portal_FullNews.asp?id=32479
-Christie’s London Jewels Sale diamond info here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22215#action=removecoa&intSaleID;=22215&sid;=f09fa168-e3e6-44d8-b9f9-dc390ba36f96&selectedids;=55215 and http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22215#action=refine&intSaleID;=22215&sid;=f09fa168-e3e6-44d8-b9f9-dc390ba36f96&selectedids;=2241
INFLATION STORM COMING
-At the height of the stock panic in late November, the flagship S&P; 500 stock index had plunged 49% year-to-date. Fully 2/3rds of this decline happened in the 9 weeks leading into the panic lows! Naturally the psychological impact of such an epic selloff was utterly massive. Fear exploded to unprecedented extremes.
A stock panic is a bubble in fear, and succumbing to this overwhelming fear leads to irrational selling near lows. But interestingly at the time, investors failed to recognize this truth. They sold aggressively, and they wrongly assumed their selling was rational. Of course the only thing that would warrant a 38% loss in the stock markets in just over 2 months was a new depression. So depression fears mushroomed.
With a depression comes deflation, so deflationary theories became widely accepted in December and January. Yet there was one big problem. Deflation is purely a monetary phenomenon. If prices of anything are falling simply for their own intrinsic supply-and-demand reasons, and not as a consequence of monetary contraction, then it is not deflation. In reality, the money supply was skyrocketing in the panic.
Nothing like this has ever happened before, not even in the 1970s during the last inflation scare. So the inflationary impact of a doubling of narrow money in 4 months will certainly be serious. Exacerbating this effect, as consumer spending recovers and bids on now-depleted inventories of consumer goods, prices will also be rising for pure supply-and-demand reasons. This will be perceived as inflation by most people, so we’re probably facing a perfect storm of inflation. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton060509.html
-Get Ready for Inflation and Higher Interest Rates. The unprecedented expansion of the money supply could make the ’70s look benign. Read more here-
http://online.wsj.com/article/SB124458888993599879.html
37th U.S. BANK FAILS
-Bank of Lincolnwood in Illinois was closed by a state regulator, pushing the toll of failed U.S. lenders to 37 this year as unemployment and home foreclosures continue climbing amid the worst recession since the 1930s. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=adl5eDHfDbYw
-FDIC Closes Seized Silverton Bank After Failing to Sell Assets. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aSbNovPANHOE
CALIFORNIA NEARS FINANCIAL MELTDOWN
-California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.
Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said. He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.
“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement. California’s revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn. Read more here-
http://www.reuters.com/article/topNews/idUSTRE55974820090610
-State Revenues Buffeted by Downturn. The carnage in state budgets is getting worse, a report said Thursday, with places like Arizona being hurt by falling revenue on multiple fronts, like personal income and sales taxes. Other states are having mixed experiences, with some tax categories stable, or even rising, even as others fall off the map. Read more here-
http://www.nytimes.com/2009/06/05/us/politics/05states.html
-Schwarzenegger threatens to shut down state government. The governor says that if a budget deal isn’t reached, he won’t approve emergency borrowing to tide California over. Read more here-http://www.latimes.com/news/local/la-me-arnold-budget11-2009jun11,0,1278719,print.story
U.S. DEBT-DEFICIT-TRADE GAP-BANKRUPTCIES
-The next great crisis: America’s debt. At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse. Read more here-http://money.cnn.com/2009/06/05/retirement/next_crisis_americas_debt.fortune/index.htm
-U.S. Posts Record May Budget Gap of $189.7 Billion. The U.S. budget deficit, already approaching $1 trillion so far this fiscal year, widened in May from a year earlier as the recession subtracted from revenue and the government spent more to rejuvenate the economy.
The excess of spending over revenue climbed to $189.7 billion, a record for the month and compared with a gap of $165.9 billion a year earlier, the Treasury said today in Washington. Spending rose 5.8 percent to $306.9 billion and revenue fell 5.7 percent to $117.2 billion. For the fiscal year to date, the shortfall totalled a record $991.9 billion.
While the worst recession in five decades has shown signs of easing, the jobless rate is the highest in almost 26 years and companies haven’t yet seen a sustained increase in demand, cutting individual and corporate tax receipts. The Obama administration raised its borrowing estimate by $196 billion for this quarter to help the Federal Reserve keep programs aimed at reviving the financial system.
“The alternative would have been worse if we didn’t see the government step in and stop the economy from sliding,” said Gary Thayer, senior economist at Wells Fargo Advisors in St. Louis, before today’s report. “The problems would have been much deeper than the problem we have with the deficit.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=ajwwFxVHdBBs or http://money.cnn.com/2009/06/10/news/economy/treasury_budget_may/index.htm?postversion=2009061015
-How Trillion-Dollar Deficits Were Created. Read more here-http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html
-The U.S. trade deficit widened in April for a second month as exports dropped to the lowest level in almost three years and some of the largest economies continued to contract. The gap between imports and exports grew 2.2 percent to $29.2 billion, in line with forecasts, from a revised $28.5 billion in March that was larger than previously estimated, the Commerce Department said today in Washington. Foreign demand for U.S. goods dropped 2.3 percent, exceeding a decrease in imports. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aafmOqYK2v6Q
-U.S. bankruptcies highest since 2005. Read more here-http://www.reuters.com/article/smallBusinessNews/idUSTRE5583H120090609
-Bankruptcy filings rise to 6,000 a day as job losses take toll. Read more here-http://www.usatoday.com/money/economy/2009-06-03-bankruptcy-filings-unemployment_N.htm
ROUBINI-9 REASONS THE RECOVERY WILL BE A BUST
-The still-pessimistic Nouriel Roubini offers nine reasons for pessimism.
First, employment is still falling sharply in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.
Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.
Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.
Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.
Fifth, weak profitability, owing to high debts and default risk, low economic — and thus revenue — growth, and persistent deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest.
Sixth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending and even lead to sovereign refinancing risk.
Seventh, monetization of fiscal deficits is not inflationary in the short run… slack product and labor markets imply massive deflationary forces. But if central banks don’t find a clear exit strategy from policies that double or triple the monetary base, eventually either goods-price inflation or another dangerous asset and credit bubble (or both) will ensue.
Eighth, some emerging-market economies with weaker economic fundamentals may not be able to avoid a severe financial crisis, despite massive IMF support.
Finally, the reduction of global imbalances implies that the current-account deficits of profligate economies (the U.S. and other Anglo-Saxon countries) will narrow the current-account surpluses of over-saving countries (China and other emerging markets, Germany, and Japan). But if domestic demand does not grow fast enough in surplus countries, the resulting lack of global demand relative to supply — or, equivalently, the excess of global savings relative to investment spending — will lead to a weaker recovery in global growth, with most economies growing far more slowly than their potential.
So, green shoots of stabilization may be replaced by yellow weeds of stagnation if several medium-term factors constrain the global economy’s ability to return to sustained growth. Unless these structural weaknesses are resolved, the global economy may grow in 2010-2011, but at an anemic rate. Read more here-http://blogs.wsj.com/economics/2009/06/09/roubini-those-are-yellow-weeds-not-green-shoots/ or http://www.businessinsider.com/henry-blodget-roubini-9-reasons-the-recovery-will-be-a-bust-2009-6
STUDY-U.S. DOLLAR SERIOUSLY OVERVALUED-FOREIGN CURRENCY
-The U.S. dollar is “seriously overvalued,” mostly against the Chinese renminbi and some other Asian currencies, according to a new study published on Wednesday. The Peterson Institute for International Economics, a Washington-based think tank, said the majority of the 29 currencies it studied need to appreciate against the dollar, with a large rise especially needed by the Chinese currency.
“The principal counterpart to the overvalued dollar is the undervaluation of the Chinese renminbi, which would have needed to appreciate about 21 percent on a weighted average basis and about 40 percent against the dollar to achieve equilibrium,” said the study by economists William Cline and John Williamson.
Investor flight to the dollar safe haven since last year has pushed the U.S. currency up by about 10 percent, which on top of an estimated overvaluation of about 7 percent a year ago made for an overvaluation of about 17 percent by March this year, the study said.
But the dollar slid to its low in 2009 on June 1 against the euro and a basket of currencies amid optimism the prospect of a global economic recovery boosted riskier assets. Despite the dollar’s recent slump, the study said the currency remained “substantially overvalued.” Read more here-
http://www.reuters.com/article/reutersEdge/idUSTRE55301520090604
-Senior Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a Republican congressman said. “We heard across the board in private substantial, continuing and rising concern,” Representative Mark Kirk said after a trip to China that included talks with government officials and central bank chief Zhou Xiaochuan.
“It’s clear that China would like to diversify from its dollar investments,” the lawmaker said at the Center for Strategic and International Studies, a Washington think-tank. Kirk’s assessment differed with that of Treasury Secretary Timothy Geithner, who said last week on a separate visit that Chinese leaders had expressed “justifiable confidence” on the future of the recession-hit US economy.
Kirk traveled with Representative Rick Larsen, a member of President Barack Obama’s Democratic Party, who also painted a less gloomy picture of Chinese officials’ views. China is the largest creditor to the United States with some 700 billion dollars invested in Treasury bonds. Zhou earlier this year floated the idea of replacing the dollar with a basket of currencies as the benchmark global unit.
Kirk said that Chinese leaders were sharply critical in private of the US Federal Reserve’s policy of “quantitative easing” — a form of flooding the financial system with cash, which critics deride as printing imaginary money. Read more here-http://www.breitbart.com/article.php?id=CNG.59d40e44d29fb24306de4a8aee8d691e.891&show;_article=1
-IMF Says New Reserve Currency to Replace Dollar Is Possible. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aUYeJEwZaQrw
-The dollar’s status as the world economy’s sole reserve currency may deteriorate, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.
“We may see complementary reserve currencies,” Roubini said at a conference today in Athens. While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aRMZbES7DNFc
-A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency. Read more here-http://www.reuters.com/article/newsOne/idUSTRE5561QK20090607
-Russian President Dmitry Medvedev questioned the U.S. dollar’s future as a global reserve currency and said using a mix of regional currencies would make the world economy more stable. Russia may consider ruble-yuan swaps. The dollar “is not in a spectacular position, let’s be frank, and its prospects cause various questions as do the prospects for the global currency system,’’ said Medvedev. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=anvHhN4CqQOE
-Russia May Swap Some U.S. Treasuries for IMF Debt. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=ap2Aq3GZySvE
INTEREST RATES
-Pacific Investment Management Co., which runs the world’s biggest bond fund, said the economic outlook “looks bad” for most of the world and central banks will refrain from raising interest rates. “Rate hikes will be some time in coming,” Andrew Balls, a managing director for the company in London, wrote in a report on the company’s Web site. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=apSiuh9eDtFE
-New Zealand’s central bank kept its benchmark interest rate unchanged for the first time in a year amid signs that a pickup in the housing market may bring the worst recession in more than three decades to an end.
“We expect the New Zealand economy to begin growing again toward the end of this year, but the recovery is likely to be slow and fragile,” Reserve Bank Governor Alan Bollard said in a statement in Wellington today after leaving the official cash rate at 2.5 percent. “It’s likely to be some time before monetary policy support can be withdrawn.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aGuhF21ksZ9k
-Bank of Korea Keeps Rate Unchanged at Record-Low 2%. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=accR85HmVWqY
-European Central Bank Governing Council member Axel Weber said central banks may have to raise interest rates before inflation risks materialize as a precaution to prevent future crises. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aJjYH6BdK6CI
OIL-NAT GAS
-Pricey oil bringing revolution in lifestyle, writer says. Say goodbye to winter trips and millions of cars, Jeff Rubin warns. Read more here-
-Looming oil shock means globalization’s end. Triple-digit oil prices are once again around the corner and will sound the death knell for globalization, an audacious but sometimes prescient Canadian economist predicts in a new book.
Jeff Rubin, who until two months ago was the chief economist and strategist at investment bank CIBC World Markets, argues that the days of cheap oil are over, making the global economy unsustainable and turning back the clock on the way we live.
“Everything we have taken for granted is about to change,” Rubin said in an interview with Reuters a few days after the publication of his book “Why your world is about to get a whole lot smaller: Oil and the end of globalization”.
“Our cars, our homes, our whole world has been getting bigger in the cheap-oil era. Now it is about to get smaller, And, greener. Much greener,” Rubin said. In his book, Rubin argues that an ever-decreasing amount of supply but ongoing insatiable demand for oil will propel prices to highs not yet seen. Read more here-
http://www.reuters.com/article/GCA-Oil/idUSTRE54P4O520090526
-Predictions of $250 a barrel on fears for oil reserves, hopes of economic recovery and hedging against weak dollar. Read more here-
http://www.guardian.co.uk/business/2009/jun/10/oil-market-reserves
-Crude oil is set to “spike” without new investments and a price surge is in the making, Royal Dutch Shell Plc Chief Executive Officer Jeroen van der Veer said. The global energy industry is facing “severe challenges” and the world needs unconventional energy supplies to meet rising demand, he said at the Asia Oil and Gas Conference in Kuala Lumpur today.
Oil’s decline to about $32 a barrel in December from a record $147.27 reached in July prompted explorers to delay or halt projects, a move that will cut supplies and push prices higher as the global economy recovers. Crude has since rebounded, gaining 52 percent this year on signs of economic growth and record production cuts by the Organization of Petroleum Exporting Countries.
“The economy will turn, demand will come back and the overcapacity of supply will disappear,” van der Veer said. Oil and natural gas won’t be able to meet all the additional demand that’s required, van der Veer said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aDn4zJ9bhRag
-The decline in crude oil prices that began in mid-2008 was historic plunging over $90 per barrel in just eight months. Over the past four months, however, crude oil prices have spiked up nearly $30 per barrel. Today’s chart provides some perspective on the historic decline and recent spike with a long-term view of inflation-adjusted West Texas Intermediate Crude.
Today’s chart illustrates that most oil price spikes were a result of Middle East crises and often preceded or coincided with a US recession. It is also interesting to note that the recent spike in oil prices has brought the price of oil back to a relatively high level a level that was surpassed only during the major price spikes of 1979-1982 and 2005-2008. Read more here-
http://www.chartoftheday.com/20090605.htm?T
-This year’s 34 percent decline in natural gas made it the worst performing commodity and the cheapest next to oil since the fall of the Soviet Union. That’s about to change, if history is any guide.
Natural gas lost 73 percent in 11 months as the U.S. fell into the deepest recession in 50 years and drillers failed to idle rigs fast enough to control inventories. Stockpiles are 22 percent larger than the five-year average, the Energy Department said. Oil costs 18 times more than gas, the biggest gap since 1992, when the collapse of communism cut supplies from Russia, according to data compiled by Bloomberg.
Now, gas drillers are tightening their grip on production just as the economy shows signs of improving. The number of U.S. rigs plunged 56 percent in nine months, the steepest drop in two decades, Baker Hughes Inc. said. Gas may rise 38 percent in the second half, while oil will gain 22 percent, according to Bloomberg analyst surveys.
“The scope for gas to rally before the end of the year is bigger than for oil,” said Ben P. Dell, an energy analyst with Bernstein Research in New York. “The gas market is playing out as expected. Supplies are getting drastically reduced because of falling rig counts, and demand is showing some signs of stabilization.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=ao8VzWCo7.90
-The surplus in natural gas may stay longer than expected as the U.S., Australia and Qatar boost output from unconventional sources and in liquefied form, Morgan Stanley said. “I will expect gas to stay in excess for years to come, even after the economic recovery,” William Wicker, Morgan Stanley’s managing director and vice chairman of global natural resources, told the Asian Oil & Gas Conference in Kuala Lumpur today. “This is not a short-term phenomenon.”
There may be an excess of as much as 2.5 trillion cubic feet of gas this year, he said in a presentation, as the global recession contracts output and reduces demand for electricity. Gas supplies may be around 110 trillion cubic feet compared with 106.5 to 108.5 trillion in demand, he said.
“One of the most significant things to happen is shale gas production in the U.S.,” he said. Output rose from 1 billion cubic feet a day in 2000 to about 8 billion cubic feet a day, Wicker’s presentation showed. The U.S., Europe, Russia, Japan and Latin America, which account for 69 percent of the global gas market, are contracting, he said. Japan, the world’s biggest buyer of liquefied natural gas, may see imports decline to 61 million metric tons this year from 69 million last year, he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601072&sid;=a7Dn17iAbUEo&refer;=energy
STOCK MARKET CHARTS
REAL ESTATE-MORTGAGES-FORECLOSURES
-Shiller Says Home Prices in U.S. May Decline for ‘Some Time.’ Shiller noted that U.S. home prices didn’t begin moving up, “even incrementally,” until six years after the end of the prior housing boom in 1990-91. Home prices in Japan fell every year for 15 years after the 1991 bursting of Japan’s real estate bubble, he wrote in the column.
While long price declines appear to defy common sense and traditional economic laws, Shiller writes that most homeowners don’t behave like investors trying to time the market. Decisions to buy or sell homes are more frequently tied to life-style changes or growing pressures of economic necessity, further reason why a buying decision would be delayed at a time when unemployment is at quarter-century highs. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=azlxhEqiym6Q
-House Prices Likely To Crash Through Fair Value And Bottom Down 45%-50%. Read more here-http://www.businessinsider.com/henry-blodget-house-prices-will-crash-through-fair-value-and-bottom-down-45-50-2009-6
-The Five Waves of the Housing Collapse. Read more here-http://www.businessinsider.com/henry-blodget-the-five-waves-of-the-housing-collapse-2009-6
-Option ARMs Threaten U.S. Housing Rebound as 2011 Resets Peak. Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt, California, in 2007. The 73-year-old widow may see it jump to $3,500 a month in two years. Breitmaier took out a payment-option adjustable rate mortgage, a loan popular during the housing boom for its low minimum payments before resetting at higher costs later.
About 1 million option ARMs are estimated to reset higher in the next four years, according to real estate data firm First American CoreLogic of Santa Ana, California. About three quarters of those loans will adjust next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, the data show.
Option ARM borrowers hit with unaffordable monthly payments are another threat to the housing recovery and the economy, said Susan Wachter, a professor of real estate finance at the University of Pennsylvania’s Wharton School in Philadelphia. Owners who surrender properties to the bank rather than make higher payments for homes that have plummeted in value will further depress real estate prices and add to the inventory of properties on the market, she said.
“The option ARM recasts will drive up the foreclosure supply, undermining the recovery in the housing market,” Wachter said in an interview. “The option ARMs will be part of the reason that the path to recovery will be long and slow.” Option ARM recasts will mean more pain for California, the state with the most foreclosures in the U.S. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aQ_ZgC75Zfyw
-Some owners who used homes to buoy finances are sinking. They relied on cash-out refinancing or took out home equity lines of credit to get capital during the easy-money era, but now many are underwater on their loans. Read more here-http://www.latimes.com/business/la-fi-loans9-2009jun09,0,2313433,print.story
-U.S. Commercial Mortgage Defaults May Rise to 17-Year High. Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid;=a7pUfRPFjS7Q&refer;=us
-MetLife Says Commercial Mortgage Defaults Will Rise. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aoyMd8TReXo8
-Foreclosure crisis spreads from subprime to prime mortgages. Read more here-http://www.usatoday.com/money/economy/housing/2009-06-08-home-loan-foreclosures-subprime_N.htm
-May U.S. foreclosures third highest on record. U.S. Foreclosure Filings Top 300,000 as Bank Seizures Loom. U.S. foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million by the first half of the year, RealtyTrac Inc. said.
A total of 321,480 properties received a default or auction notice or were repossessed last month, up 18 percent from a year earlier, the Irvine, California-based seller of default data said today in a statement. One in 398 U.S. households received a filing last month.
“The foreclosure bucket is filling faster than it’s emptying,” Jay Brinkmann, chief economist of the Washington- based Mortgage Bankers Association, said in an interview. “It will continue through next quarter at least.”
Job losses and falling property prices are delaying the housing recovery as more homeowners are unable to pay the mortgage or have difficulty selling or refinancing. The unemployment rate climbed to 9.4 percent in May, the highest since 1983, the Labor Department said last week. Prices in 20 U.S. cities dropped 18.7 percent in March, according to the S&P;/Case-Shiller home-price index. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aHEpXU3Pg_oU or http://www.reuters.com/article/newsOne/idUSTRE55A0NS20090611
-RealtyTrac’s Sharga Interview on Foreclosures. Watch video here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aKxTrhYN0blY
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – June 16, 2009
Posted by Worldwide Precious Metals on Tuesday, June 16, 2009
The Goldbugg Report – June 9, 2009
June 9, 2009
WORLD FINANCIAL REPORT ON RADIO JUNE 5 2009 SHOW
-How much gold should be in your portfolio? Financial advisers often suggest maintaining at least some part of one’s investment portfolio in gold as a diversifier, stabilizer and inflation hedge but how much makes sense?
-World Silver Survey 2009 Commentary. It is important to stress that investment demand is now dominating silver.
-Precious Metals ETFs Lack Proper Insurance.
June 5th 2009
The Week in Review
Another extremely volatile week comes to a close:
GM filed for bankruptcy and announced that they would be selling their Hummer division to Chinese owned heavy machinery company Tengzhong, who have aspirations of becoming a car maker.
New and existing home sale numbers were up (though Tim Geithner hasn’t seen the benefit of them, since he’s been unable to sell his own home). Despite the figures, as mortgage rates begin to climb, mortgage applications have been declining. If the rates continue their rise, it could forestall the recovery of the housing industry.
Initial jobless claims were down for the third week in a row, but the week covered the Memorial Day holiday, which could have had an effect on the numbers. Continuing jobless claims fell for the first time since January 3rd, and this was the first time in almost 17 weeks that the number did not set a record. Despite good news on this front, unit labor costs, which are used as a gauge of inflation and profit pressure, rose 3 % in the first quarter, which was more than expected. Figures released Friday show unemployment at 9.4%. Job losses came in at 345,000, less than the 502,000 that had been forecast. March and April’s job losses were revised down to show smaller declines as well. These numbers make absolutely no sense when balanced against the 9.4% unemployment figure, and just stand out as an example that the steady stream of numbers being released by the government cannot be taken at face value.
The SEC charged Countrywide’s ex-CEO with insider trading, and he is most likely only the first target. Further shake ups in boardrooms across the business world could lead to further uncertainty in the stock market.
Goldman Sachs raised its forecast on oil to 85 dollars a barrel from 65 dollars for the end of the year and withdrew its prediction that prices will dip prior to a rally. US oil inventories showed a 6.2 million barrel increase, and overall petroleum inventories rose much more than expected.
In Europe, the European Central Bank said it expected a much sharper recession this year in the euro zone than earlier forecast and stated that it will keep rates unchanged for the time being. The ECB president Jean-Claude Trichet and German Chancellor Angela Merkel are beginning to argue publicly over monetary policy. The Bank of England also announced they will be keeping rates at .5 percent, which seemed to be lost in news of the political shakeup happening over abuse of Parliament expense accounts as Parliament members begin to resign their positions.
The dollar index fell to its lowest level since mid-December earlier in the week before clawing its way up to a minor degree after our good friend Mr. Bernanke spoke for over an hour on Wednesday. Thursday saw additional weakness.
Gold, Silver, Platinum and Palladium continued to rise again this week over continuing concerns of the weakening dollar and uncertainty in the stock market.
Friday to Friday Close
Here are your Short Term Support and Resistance Levels for the upcoming week.
Volatility should be expected to continue as tensions look poised to continue to rise among Europe’s governments over monetary policy and political scandals. The confidence in governments across the globe is being shaken to the core, which could lead to further declines in both currencies and the stock market. We feel that current prices are very attractive for long term appreciation. Just remember not to over-extend your ability to stay the long term.
Trading Department – Precious Metals International, Ltd.
GOLD
-Today’s chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home-gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes 192 ounces of gold to buy the median single-family home.
This is considerably less that the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 68% from its 2001 peak and remains within the confines of its four-year accelerated downtrend. Chartoftheday.com-Read more here-http://www.chartoftheday.com/20090529.htm?T
-Either Stocks Will Fall 37% Or Gold Will Rally 60%. Read more here-http://www.kitco.com/ind/Summers/jun012009.html
According to Dr Marc Faber, editor of the Gloom Boom Doom Report, gold and stocks move in distinctive long-term trends. Over the last 110 years, these trends has staged six major phases:
1900-1929: stocks outperform gold
1929-1932: gold outperforms stocks
1932-1966: stocks outperform gold
1966-1980: gold outperforms stocks
1980-2000: stocks outperform gold
2000-???: gold outperforms stocks
Overall, the median stock to gold ratio for the last 106 years is 5.4. In other words, throughout the 20th century, on average 5.4 ounces of gold would buy one unit of the DJIA. Today, gold trades at $980. The DJIA trades at 8,500. This puts the ratio of gold to stocks at 8.6. Thus, the DJIA needs to fall to 5,292 (a 37% drop from today’s level), gold needs to rally to $1,574 (a 60% rally from today’s level), or some combination of the two, in order for gold to be appropriately priced relative to stocks again.
-Following their government, Chinese catching gold fever. Read more here-http://www.gata.org/node/7455
-Gold and base metals predicted to carry on rising but beware the Kondratieff Wave! Ian Gordon of Bolder Investment Partners is very much a Kondratieff Wave theorist and believes the 4th Kondratieff winter will decimate stocks and last to 2020.
In his view the Kondratieff Wave is on a 60 year cycle with the last wave downturn ending in 1949 and the new one staring now, with the recent stock market upwards correction just that and drew a parallel with the 1932 upturn which suckered people back into the markets only for the stock indices to crash far further subsequently.
Stock prices fell 90% in the Great Depression and this time around it could be even worse and he felt that the housing price crash is also still far from over. "Debt is what brings the system down" he said and U.S. debt he reckoned was closing in on 400% of GDP a far worse situation than in the 1930s.
A commodity price crash would, he felt, be mitigated by the anticipated decline in the value of the dollar. But, for the gold bugs he did offer some cheer as this is the money of last resort the most liquid of assets in a depression. People trust gold when all else fails them. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=84230&sn;=Detail
-A significant quantity of gold, silver, and other precious metals is unaccounted for at the Royal Canadian Mint. External auditors are investigating a discrepancy between the mint’s 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa. The mystery raises possibilities from sloppy bookkeeping to a gold heist. Read more here-http://www.gata.org/node/7470 or http://www.ottawacitizen.com/Business/Mint+account+missing+gold/1656084/story.html
-Changes to Indian gold market could bode well for demand. Bringing more uniformity to Indian gold prices could boost local demand as it should bring transparency to a market in which there have historically been bouts of uncertainty over regional price variations and also in which the issues of purity and weight have been issues in the past. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=84222&sn;=Detail or http://www.gata.org/node/7460
-How much gold should be in your portfolio? Financial advisers often suggest maintaining at least some part of one’s investment portfolio in gold as a diversifier, stabilizer and inflation hedge but how much makes sense? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=84224&sn;=Detail
-The privately owned hedge fund sponsor Paulson & Co. added over $3.7 billion in new gold positions during the first quarter of 2009, increasing its total investment to $4.3 billion. About 46% of the equity portfolio is now allocated towards gold and gold stocks. Not familiar with Paulson & Company, or founder John Paulson? You should be, and here’s why-
http://caseyresearch.com/displayCcs.php?e=true
SILVER
-White metal looks to outpace gold again, thanks to its industrial uses. Silver’s use in a range of industries from photography to electronics to medical applications, as well as its attraction as a store of wealth when inflation heats up, could keep propelling its outperformance, analysts say.
Carlos Sanchez, an analyst at New York-based metals consultancy CPM Group, said silver could surpass last year’s 28-year high of $20.92 in the second half of this year if investors remain optimistic about an economic recovery and the U.S. dollar keeps falling. Since silver, like most other commodities, is denominated in dollars, a drop in the greenback drives prices of the commodity higher.
"It’s definitely possible that prices pass that level to above $20," said Sanchez. "You have stock markets rising, you have industrial demand expected to pick up later this year, and investment demand will continue rise." An advance to above $20.92 an ounce would represent a more than 30% gain from current levels. Read more here-http://www.marketwatch.com/story/story/print?guid=BD3D53E9-7F12-4644-BFE5-9348C5B91BFB
-World Silver Survey 2009 Commentary. It is important to stress that investment demand is now dominating silver. Any fall off in that demand will undermine the silver price. A continuation or rise in that demand will send the silver price to much higher levels. As the economic recovery takes hold other demands for silver [which have fallen only slightly in this recession] are expected to rise healthily.
As silver has shown itself in India to be the poor man’s gold now, we expect that source of demand to keep on rising. This bodes well for 2009, so much so that we believe that silver will rise to its historic highs $25 plus by the end of 2009. Julian D. W. Phillips-Read more here-http://news.silverseek.com/SilverSeek/1243863210.php
-Where Is Silver Heading? Those who buy silver now and have a 10-20 year horizon will not be disappointed. Roland Watson-Read more here-
http://news.silverseek.com/SilverSeek/1243831522.php and http://news.silverseek.com/SilverSeek/1244123828.php
-Ted Butler silver commentary. The spirited price rally in silver and gold carried further in the past week. In silver, the rally in May was the best in 22 years, and the price has reached its highest level in ten months, as foretold by the nice market structure set up back in April. From the price depths of last fall, to the recent highs, silver has climbed 75%.
Relative to gold, silver is at its best price ratio since September. This means that anyone who did buy silver, instead of gold over the past ten months has had a better return. Read more here-http://news.silverseek.com/TedButler/1243963795.php
-David Morgan, silver in the long term. Read more here-http://news.silverseek.com/SilverInvestor/1243604997.php
-Peter Cooper, silver shines and will continue to outperform gold. Read more here-http://news.silverseek.com/SilverSeek/1243717428.php
-Silver a far better investment than gold in 2009. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=84321&sn;=Detail
-Silver’s new boost comes from rising solar industry. Read more here-http://www.commodityonline.com/news/Silver%E2%80%99s-new-boost-comes-from-rising-solar-industry-18265-3-1.html
-Silver nanoparticles aid clotting therapy. Scientists in India report the discovery of a potential alternative to aspirin and other anti-platelet agents used to prevent blood clots. The researchers said they’ve found the use of silver nanoparticles might prevent blood clots in coronary artery disease, heart attack and stroke patients. Read more here-
-The new gold standard in health is silver. A British scientist says the use of silver in healthcare and hygiene is increasing, frequently because of a shortage of new antibiotics. A research review conducted by Professor Valerie Edwards-Jones of Manchester Metropolitan University found advances in technology, particularly nano-technology, are allowing scientists to increasingly apply silver’s benefits in more areas.
"In simple terms, silver ions are highly effective and eliminate bacteria rapidly," said Edwards-Jones. "Silver ions enter the bacterial cell where they are able to deactivate important functions inside. This helps to shut down the bacteria’s ability to reproduce which, depending on the type of bacteria, prevents the spread of infection or the development of odor."
She said one of silver’s most important benefits is its low allergenic properties. Surgeons using silver treated bandages in wound care, including treatment of severe burns, do so because of the low incidence of irritation and allergy that patients often suffer, she said.
Edwards-Jones also said for the first time ever in Europe, silver is being used in a new deodorant. The silver ions neutralize the bacteria that cause body odor, stopping it before it begins.
The research review is reported in the journal Letters of Applied Microbiology. Read more here-http://www.upi.com/Science_News/2009/06/01/The-new-gold-standard-in-health-is-silver/UPI-54251243871372/
-Precious Metals ETFs Lack Proper Insurance. Read more here-http://seekingalpha.com/article/140839-precious-metals-etfs-lack-proper-insurance
DEFINITIONS-QUOTES-QUICK HITS
-Double Dip Recession. When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.
The causes for a double-dip recession vary but often include a slowdown in the demand for goods and services because of layoffs and spending cutbacks from the previous downturn. A double-dip (or even triple-dip) is a worst-case scenario. Fear that the economy will move back into a deeper and longer recession makes recovery even more difficult. Read more here-
http://www.investopedia.com/terms/d/doublediprecession.asp
-U.S. economy at risk of double-dip recession. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54P2ZC20090526
-Roubini says U.S. economy may dip again next year. Read more here-http://www.reuters.com/article/newsOne/idUSTRE54R1U120090528
-"The American people will never knowingly adopt socialism. But under the name of ‘liberalism’ they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened. I no longer need to run as a Presidential candidate for the Socialist Party. The Democrat Party has adopted our platform. Norman Thomas, six-time U.S. presidential candidate for the Socialist Party, 1944.
-"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium." Murray N. Rothbard-Bio here-http://en.wikipedia.org/wiki/Murray_Rothbard
-Insurance giant bets on gold for first time in 152 years. Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines. "Gold just seems to make sense. It’s a store of value," Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn.
"In the Depression, gold did very, very well." Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. "The downside risk is limited but the upside is large," Zore said.
"We have stocks in our portfolio that lost 95 percent." Gold "is not going down to $90." Policyholder-owned Northwestern Mutual, based in Milwaukee, ranks third by 2008 life insurance premiums according to data from the National Association of Insurance Commissioners. The data excludes annuities. Read more here-http://www.gata.org/node/7464 or http://www.bloomberg.com/apps/news?pid=email_en&sid;=ajf0L9wTPq6Y
-U.S. Bubble Collapse to Be Worse Than Japan’s, CLSA’s Wood Says. The U.S. is facing a deflationary collapse more severe than the crash that hobbled Japan’s economy in the 1990s, leaving gold as the only defensive play for investors, according to CLSA Ltd.’s Christopher Wood.
The housing recession in the U.S. led to a crisis in the banking system as lenders became saddled with illiquid mortgage assets, souring the securitization industry that helped drive credit growth in recent years. The nation’s retail sales fell 10.5 percent in December as consumers became more pessimistic and scaled back purchases.
“The collapse of securitization is a much more deflationary situation in the U.S. than anything seen in Japan when the bubble collapsed in the early 1990s,” Wood, Institutional Investor’s top-ranked Asia strategist, said at a conference in Tokyo sponsored by CLSA. “What we need in the future is a more fundamentally disciplined system, even at the cost of higher levels of growth.”
Gold may be the safest haven for investors as policy makers accelerate responses to the crisis, devaluing currencies versus hard assets such as gold in the process, said Wood. Gold is likely to more than quadruple from the current level of $986 per ounce currently to $3,500 in 2010, he said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aU6QD7.BBkO8
-Black Swan Fund Makes a Big Bet on Inflation. A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation.
The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller "The Black Swan," which describes the impact of extreme events on the world and financial markets. Funds run by Universa, which is managed and owned by Mr. Taleb’s long-time collaborator Mark Spitznagel, last year gained more than 100% thanks to its bearish bets. Read more here-http://online.wsj.com/article/SB124380234786770027.html
-The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.” Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=avgZDYM6mTFA&refer;=home
-You Should Be Worried About Inflation, Not Deflation, Says Paul Kasriel. Read more here-http://finance.yahoo.com/techticker/article/257623/You-Should-Be-Worried-About-Inflation,-Not-Deflation,-Says-Paul-Kasriel
-Bill Gross, founder of Pacific Investment Management Co., advised holders of U.S. dollars to diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits. The U.S.’s “fortune-producing capabilities seem to be declining, which might suggest that its relative standard of living is doing so as well,” Gross wrote in his June investment outlook posted today on the Newport Beach, California-based firm’s Web site.
“If so, the implications are serious.” Gross, manager of the world’s biggest bond fund, said on May 21 that the U.S. will “eventually” lose its AAA credit rating after Standard & Poor’s lowered its outlook on the U.K.’s AAA to “negative” from “stable” amid an escalating ratio of debt-to-gross domestic product.
While U.S. marketable debt is at about 45 percent of GDP, annual deficits of 10 percent will push the amount to 100 percent within five years, a level that rating companies and markets view as a “point of no return,” he said. Government spending will push the budget deficit to $1.75 trillion in the year ending Sept. 30, according to the Congressional Budget Office’s forecast. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKNFgoTAf39s
-For those who placed bets that the gold-silver ratio had risen too far have been well rewarded. An ounce of gold now buys about 61.5 ounces of silver, the lowest ratio since September. That compares with almost 84.4 in October, the highest since March 1995. That reflects their respective spot price performances, with gold up 11% so far this year vs. 37% for silver. Casey Daily Resource
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
-Silver has benefited from its dual nature. “The $15 level is a break-out area for silver,” said George Gero, of RBC Capital Markets. “Silver is not a pure precious metal. It’s also an industrial. So what helps silver is the fact that there could be a recovery.” Casey Daily Resource
-I think we’re ready for a real increase in the price of gold, which is why I am looking at more modest targets, such as $1,300 to $1,400, happening fairly quickly, probably bouncing plus or minus $200 or $300, around that level, but it’s a real price increase without a corresponding catastrophic collapse in the U.S. dollar or hyperinflation descending upon us. If it breaches $1,000, I think it’ll very quickly go to $1,300-$1,500 and establish that as a new base. John Kaiser-Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page31?oid=84082&sn;=Detail or http://www.commodityonline.com/news/Gold-price-to-touch-$1-400-in-six-months-18253-3-1.html
-”The market is certainly overdue for a downside correction,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. “Longer-term, we still see the market as being supported, with an advance above $1,000 an ounce possible over the next few weeks. Support will come from weakness in the dollar and from ongoing inflows of investment to commodities.” Bloomberg
-”Gold has traditionally done well during periods of inflation and I believe we are entering a period of hyperinflation,” James Turk, the founder of GoldMoney.com, said today at a conference in London. “We are going to see clear signs of inflation by the end of the year. The Federal Reserve is trying to destroy the dollar to save the economy.” Bloomberg
-Richard Davis, co-manager of the £1.6bn BlackRock Gold & General fund which has returned more than 685pc in the past decade said investors are the key force behind what he sees as an ongoing long-term gold bull market. Unlike those buying for jewellery purposes about two-thirds of annual global demand investors are less price sensitive.
The supply of gold, meanwhile, is so inelastic that "even if gold went to $2,000 per ounce for 10 years" it would not have a big impact on the amount of new gold mined. "We probably passed ‘peak gold’ back in 2000-01," Mr Davis said, meaning key mines that are getting older in places such as South Africa are not being replaced by new ones as resource rich.
Telegraph.co.uk
-Daniel Sacks, manager of the £50m Investec Global Fund, said professional and retail investors typically still have a relatively small percentage of their wealth in gold, giving potential for more money to go that way, encouraged by the fact that, on an inflation-adjusted basis, gold is well off its 1980 price of $2,500 per ounce.
"Gold appears to be benefiting both from being the traditional hedge for inflation hawks, some of whom are now beginning to worry about the risk of hyperinflation, and from the mistrust of some investors towards cash assets and government obligations. It would probably only require a minority of investors to believe that they need to continue to allocate more towards gold to have a significant price impact." Telegraph.co.uk
-Let me start with gold. It remains an essential insurance element in portfolios today as a hedge against inflation, currency devaluation and general chaos. I look for higher prices over the next few years. The US dollar’s position as the sole reserve currency is being called into question as never before and the Chinese are putting their heads above the parapet for the first time.
They quietly doubled their gold holding between 2003 and 2007 and I believe they have continued to build them since then. It is the same for the Russians and must only be a matter of time before other Asians and Middle East governments do the same. William Thompson Chairman Private Capital Ltd
-Chinese students laugh at Geithner’s assurances that China’s huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency. Read more here-
-Schwarzenegger says day of reckoning for California is here. The state wallet is empty. The bank closed. Credit has dried up, Gov. Arnold Schwarzenegger told lawmakers in a special Tuesday morning address at the Capitol.
“California’s day of reckoning is here,” he said. With no action, the state could run out of cash in 14 days. Three months after the state budget was approved, California faces a $24 billion deficit. Schwarzenegger has already proposed massive cuts to education, health care and prisons. Now he’s looking for structural reform to make government more efficient and stretch taxpayer dollars. Read more here-http://www.bizjournals.com/sacramento/stories/2009/06/01/daily29.html?t=printable
-The 10 largest U.S. bankruptcies. From Lehman to Texaco, the mighty have fallen, taking down billions and billions with them. Read more here-
http://money.cnn.com/galleries/2009/fortune/0905/gallery.largest_bankruptcies.fortune/index.html
-GM Files Bankruptcy to Spin Off More Competitive Firm. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aA1LQFDhqkJ0&refer;=canada and
http://money.cnn.com/2009/06/01/news/companies/gm_bankruptcy/index.htm
-Firing Wagoner Became Necessary for GM CEO in Denial. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=aPSsqtu_9M0c
-There goes another $30 billion. With GM set to receive another round of federal financing in its bankruptcy, the auto bailout is quickly becoming one the largest aspects of the TARP program. Read more here-http://money.cnn.com/2009/06/01/news/economy/gm_auto_bailout/index.htm
-Detroit’s Woes Wound an Army of Suppliers. Read more here-http://www.nytimes.com/2009/06/03/business/03suppliers.html
-GM, Citigroup Replaced in Dow by Cisco, Travelers. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aKJur2r3zEnc
-World’s cheapest car coming to US. India’s Tata Motors hopes to offer the Nano, which costs $2,300, to Americans within two years. Read more here-
-The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans’ income is now coming in the form of a federal or state check or voucher. Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports.
That’s the highest percentage since the government began compiling records in 1929. In all, government spending on benefits will top $2 trillion in 2009 an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008. Read more here-http://www.usatoday.com/news/washington/2009-06-03-benefits_N.htm
-Manipulation: How The Stock Market Really Works. Read more here-http://www.baltimorechronicle.com/2009/052909Lendman.shtml
-Ireland set to go bust, claims economic historian. A dire warning that the Republic is a prime candidate to go bust has come from one of the world’s leading economic historians. "The idea that countries don’t go bust is a joke," said Niall Ferguson, Harvard professor and author of The Ascent of Money.
"The debt trap may be about to spring" he said, "for countries that have created large stimulus packages in order to stimulate their economies." His chosen prime candidate to go bust is "Ireland, followed by Italy and Belgium, and UK is not too far behind".
Argentina is top of his list of shaky countries but "the argument that it can’t happen in major western economies is nonsense". Professor Ferguson believes the economists are ill qualified to analyse the current economic situation since they lack the overview of historians such as himself. Read more here-
-Obama Calls for New Beginning Between U.S., Muslims. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a9GyYP6sbSzY
-Ahmadinejad says Holocaust a ‘big deception.’ Read more here-http://ph.news.yahoo.com/afp/20090603/twl-iran-vote-ahmadinejad-holocaust-575b600.html
-Al-Qaeda chief Osama bin Laden criticized President Barack Obama’s stance on the Muslim world in an audiotape released as the U.S. leader began a Middle East tour with a visit to Saudi Arabia, Al Jazeera television said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=awo74Xb5DpEA
-Al Qaeda eyes bio attack from Mexico. Read more here-http://www.washingtontimes.com/news/2009/jun/03/al-qaeda-eyes-bio-attack-via-mexico-border/print/
-U.S. Accidentally Releases List of Nuclear Sites. Read more here-http://www.nytimes.com/2009/06/03/us/03nuke.html
-Flu Is No Typical Pandemic; WHO Tries to Reassure. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aT9sIzRoUnNo
-Swine Flu ‘Overwhelmed’ U.S. Health-Care System, Report Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ah5TJ82PZ_T0
-The food industry’s newest smell test. Manufacturers are experimenting with aroma infusions that can trick our brains into thinking we are tasting certain flavours. Read more here-
http://money.cnn.com/2009/05/29/news/companies/smell_test.fortune/index.htm
-The risk of El Nino weather developing this year has increased, Australia’s Bureau of Meteorology said, raising the chance of drought in Australia and parts of Asia, and potentially curbing agricultural output. The odds of El Nino in 2009 are now likely to be greater than 50 percent, more than double the normal risk in any year, the bureau said today in an e-mailed statement.
“If recent trends in Pacific climate patterns were to be maintained, an El Nino event would be established by mid- winter,” David Jones, head of climate analysis at the bureau’s National Climate Center, said in the statement. Mid-winter is July in the southern hemisphere. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ax5gZU.7LS_0 or
http://en.wikipedia.org/wiki/El_Nino
-New Solar Cycle Prediction. Read more here-http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm
-Colorado State University today cut its hurricane forecast for the 2009 Atlantic season to five, from a prediction of six in April. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=alk9jbwDYaYo
-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
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.youtube.com/watch?v=BWYMJnEz-n4
and http://www.rarecoloreddiamonds.com/articles/index.html
-Rio Tinto Group, the third-largest mining company, is considering a plan to raise as much as $15 billion in a stock sale after rejecting an investment from Aluminium Corp. of China, two people involved in the talks said. Rio Tinto owns the Argyle mine that produces 90 percent of the worlds pink diamonds. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=al9VS7cGXGeQ
-The story of the Hope diamond. Harry Winston first displayed the Hope Diamond in his Fifth Avenue salon in New York. After putting it on display at various charity shows, he sent it by registered mail in a plain brown wrap, to the Smithsonian Institution in 1958. The stamps cost him $145.00, $2.44 postage and the rest for insurance of $1,000,000. It is now on display at the Smithsonian Institute in Washington. Read more here-http://en.wikipedia.org/wiki/Hope_Diamond
-More Big Blue Diamonds Up For Auction. At auction over the past six months blue diamonds have been hot. SInce the record-setting sale of the Wittelsbach diamond, more blue diamonds have been seeing strong results on the auction block. Christie’s New York Jewels Sale on June 11 will include four blue diamonds. Natural blue diamonds are among the rarest of colored diamonds, getting their blue shading from the introduction of boron into the crystal structure of the stone during its formation.
Blue diamonds including the famous Hope diamond belong to the extremely rare Type IIb category of diamonds and are semi-conductors of electricity, the only diamonds with that characteristic. The Christie’s sale will offer a superb fancy intense blue pear-shaped internally flawless diamond of 6.29 carats estimated at $3.3-5.5 million and a fancy dark gray-blue rectangular-cut diamond ring, SI2 clarity, of 3.28 carats estimated at $250,000-350,000.
The showstopper is a diamond pendant necklace that puts two fancy intense blue pear-shaped rose-cut diamonds of 5.01 and 2.03 carats on either side of a fancy intense pink hexagonal-cut diamond of 3.01 carats on a platinum chain. The price hasn’t been listed for the piece but it should be the top lot in the auction. Read more here-
http://www.luxist.com/2009/06/03/more-big-blue-diamonds-up-for-auction/
-Christies London Vintage Auction. Among the jewelry is an Art Deco colored diamond and onyx pendant, circa 1925, containing a 44.14 carat fancy yellow circular-cut diamond, estimated at: £200,000-£250,000 ($330,260-$ 412,825). Read more here-http://www.idexonline.com/portal_FullNews.asp?id=32448
-Rio Tinto’s Pink Diamonds Play Tribute to Grand Passions & Great Loves. Rio Tinto’s 2009 Argyle Pink Diamond Tender is set to celebrate the 25th anniversary of its iconic offering of pink diamonds with an exceptional collection, including four outstanding heart-shaped gems. Suitably titled "Grand Passions," this year’s tender collection comprises 43 of the rarest and the best pink diamonds from Rio Tinto’s Argyle Diamond Mine in Western Australia. With around 10 years of production remaining for the Argyle Diamond Mine, these rare pink diamonds will be keenly contested for by investors, collectors and diamond experts from around the world.
Josephine Archer, business manager for Argyle Pink Diamonds, commenting on the 2009 collection, said, “the pink diamonds selected for this year’s tender are a fitting tribute to the artistry and passion of all those who worked to bring them to the marketplace. These diamonds are for appreciators of the truly exceptional, and we are delighted to be showcasing them to the world.”
Included in this year’s collection is a magnificent 2.61-carat, intense pink, heart-shaped diamond named Argyle AmourTM. The Argyle AmourTM is the most valuable heart-shaped pink diamond ever produced from the Argyle mine. Exuding passion, romance and warmth, this extraordinary diamond captures all that is Amour. The two other “hero” stones set to captivate bidders are the Argyle ShalimarTM diamond, a 1.25-carat, purplish-pink round diamond named after the exotic garden sanctuary built by Indian emperor Jahangir for his beloved wife, and, in keeping with the theme of legendary passions, the Argyle ScarlettTM diamond, a 1.10-carat red oval diamond.
According to Jean-Marc Lieberherr, general manager for sales and marketing of all diamonds from Rio Tinto’s diamond mines, “excitement around this tender collection is understandable. The rarity of Argyle pink diamonds has created a connoisseurship for them, and there is a growing recognition that the earth will not produce pink diamonds for that much longer.”
This will be the first year that the Argyle Pink Diamond Tender will be presented in Mumbai. Also for the first time, Argyle Pink Diamonds Select Ateliers in London, Sydney and Perth will showcase these rare diamonds to their respective clients at in-store preview events. Tender viewings will held be in Mumbai, from August 6 to 10, Perth, from September 1 to 11, and Hong Kong, from September 19 to 27. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=26551 or http://www.idexonline.com/portal_FullNews.asp?id=32447
OIL
-Goldman Raises Year-End Crude Forecast by 31% to $85. Goldman Sachs Group Inc. raised its forecast for U.S. benchmark oil by 31 percent to $85 a barrel for the end of 2009 and predicted further gains next year as demand recovers and supplies shrink.
“As the financial crisis eases, an energy shortage lies ahead,” Goldman analysts Jeffrey Currie in London and David Greely in New York said in a report e-mailed today. The bank set a 12-month price target of $90 a barrel for West Texas Intermediate crude, up from $70, and introduced a forecast of $95 for the end of 2010. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a1Ev4HxCKXRI
-Oil to Reach $70-75 by Year End, OPEC’s El-Badri Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_Z3wakEALrU or http://www.reuters.com/article/GlobalEnergy09/idUSTRE5513BW20090602
-OPEC’s Oil Output Rose 1.5% in May, Survey Indicates. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a7.8kUhvVvXk
-JPMorgan Hires Supertanker for Storage, Brokers Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ar.MDg1.RGBg
U.S GOVERNMENT OWES 63.8 TRILLION
-U.S. Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows. The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.
That’s the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003. The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That’s quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.
"We have a huge implicit mortgage on every household in America except, unlike a real mortgage, it’s not backed up by a house," says David Walker, former U.S. comptroller general, the government’s top auditor. USA TODAY used federal data to compute all government liabilities, from Treasury bonds to Medicare to military pensions. Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion. Read more here-http://www.usatoday.com/news/washington/2009-05-28-debt_N.htm
-Bernanke Warns Deficits Threaten Financial Stability. Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.
“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”
Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability. He warned the financial industry remains under stress and the credit crunch continues to limit spending. The Fed chief said in his prepared remarks to the House Budget Committee that deficit concerns are already influencing the prices of long-term Treasuries. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=agmj05AcqWHo
INTEREST RATES
-The Bank of Canada kept its key lending rate at a record low as expected, cautioning that the strengthening currency could “fully offset” recent improvements in financial markets and consumer confidence, and prolong the recession.
The target rate for overnight loans between commercial banks remains at 0.25 percent, a decision forecast by all 22 economists surveyed by Bloomberg News. Policy makers also reiterated they have no plan to change the rate over the next year, and that they still have “flexibility” to use other measures should more stimulus be needed.
The world’s eighth-largest economy shrank at a 5.4 percent annual pace in the first quarter, less than the 7.3 percent central bankers had predicted, a sign the recession is easing. The strengthening Canadian dollar, which posted its biggest monthly gain in more than 50 years in May, is hobbling a return to growth by reducing demand for the country’s already frail exports of goods such as cars and lumber to the U.S.
“If the unprecedentedly rapid rise in the Canadian dollar, which reflects a combination of higher commodity prices and generalized weakness in the U.S. currency, proves persistent, it could fully offset these positive factors,” the Bank of Canada said in a statement today from Ottawa. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=atZJpH6RMzVU
-The European Central Bank kept its benchmark interest rate at a record low of 1 percent today after first signs of an economic recovery emerged. President Jean-Claude Trichet also said the ECB will start its plan to buy 60 billion euros ($85 billion) of covered bonds in the primary and secondary markets next month.
“The current rates are appropriate,” Trichet said at a press conference in Frankfurt. “For the remainder of the year economic activity will decline with much less negative rates.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8B1TJc.u.As
-The Bank of England left the benchmark interest rate at a record low and kept up its plan to buy bonds with newly created money to pull the economy out of the worst recession in a generation.
The nine-member Monetary Policy Committee, led by Governor Mervyn King, reiterated its plan to buy 125 billion pounds ($205 billion) of government and corporate bonds. Policy makers also kept the bank rate at 0.5 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aRJ84QFnxAQk
-Australia Keeps Benchmark Rate at 3% for Second Month. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aSr5GAexitgo&refer;=home
-Iceland’s central bank lowered the benchmark interest rate by a percentage point, defying the International Monetary Fund, as the economy slumps into its worst recession in 60 years.
The repo rate was cut to 12 percent from 13 percent, Reykjavik-based Sedlabanki said on its Web site today. The rate cut is the fourth since the island received a $5.1 billion IMF- led bailout in November.
Policy makers bowed to pressure from labor unions and businesses for lower rates to soften a recession that the bank estimates will culminate in an economic contraction of 11 percent this year. IMF Mission head to Iceland, Mark Flanagan, last week advised against a cut, arguing a planned gradual easing of capital controls requires higher krona returns. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aC7JBbDSkKlM
REAL ESTATE-MORTGAGES-FORECLOSURES
-Pending U.S. Home Resales Surge the Most Since 2001. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aUox8hHm9OqY&refer;=home
-U.K. House Prices Unexpectedly Jumped by 2.6% in May. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aZ8TtCGSJNe0 and
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aZV86G8u9.kE and http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8LFsNSxQxY4
-London Luxury Homes Fall 20%, Smallest Drop This Year. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aI8pH7esVmsQ
-The $4 trillion housing headache. House prices have returned to 2002 levels, but mortgage debt hasn’t deflated from its bubbly highs. Read more here-
http://money.cnn.com/2009/05/27/news/mortgage.overhang.fortune/index.htm?postversion=2009052716
-Is a commercial real estate bust inevitable? The government hopes to restore lending via cheap financing. Skeptics say programs aimed at restarting the market haven’t worked yet. Read more here-http://money.cnn.com/2009/05/28/news/commercial.mortgages.fortune/index.htm?postversion=2009052803
-Lost resorts: The Credit Suisse loan debacle. Eight luxury resorts backed by the bank are either in foreclosure, bankruptcy or liquidation. Read more here-
http://money.cnn.com/2009/05/29/news/companies/creditsuisse_luxury.fortune/index.htm
-Foreclosures Hit ‘Milestone’: 1 Million in ‘09. Here’s a bleak milestone: there’s been more the 1 million foreclosures filed in the U.S. so far this year, according to a count by the Center for Responsible Lending. Not all of those foreclosures will result in evictions, but the statistic offers a sobering illustration of the magnitude of the problems that still face the housing market. Read more here-http://blogs.wsj.com/developments/2009/06/03/foreclosures-hit-milestone-1-million-in-09/
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – June 9, 2009
Posted by Worldwide Precious Metals on Tuesday, June 9, 2009
The Goldbugg Report – June 2, 2009
June 2, 2009
The Week in Review – May 29th 2009
It was a short and volatile week in the stock market, but a long week in terms of news!
Monday the NY stock market was closed for Memorial Day. North Korea took advantage of the holiday to do an underground test of a nuclear weapon. This follows a previously performed nuclear test nearly 3 years ago on July 4 (again, on an American holiday). Their initial test was followed up by 5 short range missile tests launched from their eastern coast into the sea. When South Korea announced they would be joining the US led initiative to stop ships that are suspected of transporting technology and materials for weapons of mass destruction, the North declared it was essentially an act of war, that they would attack any vessel that tried to stop one of their ships and that the truce that ended the Korean War in 1953 was no longer valid. The aggressiveness of North Korea’s actions could lead to much more fear, uncertainty and volatility in all markets.
As we suggested might happen in our May 22nd memo; the GM bondholders are getting the exact same treatment that Chrysler’s did. The difference is that a committee of bondholders decided to go along with their “sweetened” deal at the last minute saying “While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class — rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the committee is unwilling to take”. Under the new deal, the bondholders get the 10% of the company they were initially offered, with an option to buy another 15% at a deep discount. Even with the committee’s acceptance of the deal, it looks like GM may still file for bankruptcy. Many retail bondholders still oppose the deal saying the new offer remains unfair and that the UAW is still getting preferential treatment (the UAW will be getting 17.5% of the company under the new deal).
Chrysler is slated to come out of bankruptcy soon if the deal with Italian automaker Fiat comes through. If not, then expect Chrysler to be sold off piece by piece. If the Fiat deal does close, Chrysler will emerge as a four headed monster owned in part by the US Government (8%), the Canadian government (2%), Fiat (an initial 20% with an option to increase to 51%) and the United Auto Workers Union (an initial 55% stake). Senior lenders will be getting a whopping “recovery” of 29 cents on the dollar if the deal goes through as planned (this looks like a possible 116%, but that’s not possible. Or is it, considering the US Government is involved? )
On Wednesday, Moody’s affirmed that the AAA credit rating the US currently enjoys is still safe…for now. They made no assurances for the future saying “While our outlook for the US rating is stable, a reassessment of the long-term growth prospects of the economy and the ability of the government to return to a sustainable debt trajectory could put negative pressure on the rating in the future. How the economy and fiscal policy fare after the recession will be key.”
Consumer confidence numbers came out this week and were better than expected, supposedly leading to an early rally in the stock market. If that truly is the reason for the early rally then we see it as further proof that the stock market is trading entirely on emotion and could remain extremely volatile in the near term.
Oil prices surged to new 6 month highs on news that the US inventory fell by much more than analysts had expected due to refineries stepping up output to get ready for summer. OPEC also announced that they would leave output unchanged. With gas prices in the US already heading higher ahead of summer as they usually do and oil prices on their way back up, this could be another hit against consumer spending.
The US dollar is down 11% for the month, falling to 5 month lows against a basket of currencies helping to push Gold up to 3 month highs.
All commodities, with the exception of sugar, are up this week.
Here are your Short Term Support and Resistance Levels for the upcoming week.
Volatility should be expected to continue as geopolitical issues and tensions around North Korea increase. Given that such situations typically lead to an increase in prices as investors seek to own hard assets, we feel that current prices are very attractive for long term appreciation. UBS analyst John Reade also stated in a note this week “a combination of a weaker dollar and rising inflation expectations would represent the perfect storm for gold.” Just remember that in volatile markets such as these, never over-extend your ability to own and hold for the long term. As we stated in our April 30th memo, we see the potential of continuing price increases for Precious Metals throughout the months ahead.
Trading Department – Precious Metals International, Ltd.
WORLD FINANCIAL REPORT ON RADIO MAY 29 2009 SHOW
Worldwide Precious Metals will be at theWorld Resource Investment Conference in Vancouver
June 7th & 8th
www.cambridgehouse.ca
-The Aden Sisters say buy gold now!
-Why Gold Will Rise to at Least $6,000 per Ounce.
-Rogers: Choose Silver Over Gold. Watch video
GOLD
-Peter Brimelow: Gold on verge of historic breakout? Read more here-http://www.gata.org/node/7444
-Ambrose Evans-Pritchard: Gold bugs at last have their perfect trinity. The world’s top hedge fund manager, John Paulson, has built a gold position of at least $5.5billion, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993. Read more here-http://www.gata.org/node/7440
-The Aden Sisters say buy gold now! Read more here-http://www.kitco.com/ind/Aden/aden_may272009.html
-Why Gold Will Rise to at Least $6,000 per Ounce. Read more here-http://www.kitco.com/ind/Sabrin/printerfriendly/may262009.html
-Gold may target a record $1,250 an ounce as a continuation head-and-shoulders pattern may be forming within a longer-term trend, Standard Bank Group Ltd. said, citing trading patterns. A break and close above $1,050.40 “provides warning that an important breakout” has occurred, Darran Grabham, the bank’s technical analyst, wrote in a note yesterday.
A head and shoulders pattern is formed when a commodity makes three consecutive peaks, with the middle being the highest. It forms during a series of increases over time. “The positive implications are substantial, with the minimum objective situated at $1,250,” Grabham wrote. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=acOqxFBkiRbw
-A Novice’s Guide to Precious Metals (Part I). Read more here-http://seekingalpha.com/article/139415-a-novice-s-guide-to-precious-metals-part-i
-Gold Headed to $200 or $10.000 part III. Read more here-http://news.goldseek.com/EricHommelberg/1243344052.php
10 fundamental reasons to own gold
Gold remains ultimate form of payment No counter party risk
Currency debasement US Dollar losing status as world reserve currency
Gold crawling back into the monetary system
Negative real rates
Falling gold supply vs. increased investment demand
Gold & Historic averages gold should be trading above $2,500 these days
DOW/GOLD ratio points to $5,000+ gold before 2015
Gold & US public debt gold prices required to counter balance all US public debt held in foreign hands exceed the $10,000 mark
Large short positions half of all central bank’s gold has been leased into the market. (about 15.000 tons). Covering these short positions is not possible without catapulting gold prices to unimaginable highs.
Gold acting as safe haven in times of rising geopolitical tensions
-John Embry: China, Western central banks out of sync on gold. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf
-Bob Moriarty of 321gold.com is convinced that the markets crash still has much further to go as more ‘Black Swans’ appear and investment in commodities notably gold and silver may be the only way for investors to protect themselves. Interview with The Gold Report. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=83729&sn;=Detail
-The demand for gold coins has hit an all time high, the South Africa Gold Coin Exchange said on Friday. “The rapidly growing demand for gold coins strongly suggests that the gold bull market is well set to extend itself strongly into the future,” said chairman Alan Demby in a statement.
An increasing number of analysts and commentators were predicting strong gold price advances, Demby added. He said during the course of 2008, the value of the exchange’s sales of gold coins, primarily Krugerrands, was a substantial 80% higher than in 2007. Read more here-http://www.bi-me.com/main.php?c=3&cg;=4&t;=1&id;=36726
-South Africa’s gold output down 10%. South Africa’s overall gold output in 2008 fell to its lowest level in 86 years due to the power shortage and dwindling grades, which lowered it to the world’s number three producer behind China and the United States. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=83788&sn;=Detail
-Gold, silver surge as buck battered: Got Gold Report from Gene Arensberg. Read more here-http://www.stockhouse.com/Columnists/2009/May/26/Gold,-silver-surge-as-buck-battered–Got-Gold-Repo
-Gold ETF holdings begin to climb again as price strengthens. With the gold price moving back over $950 late last week, and stock markets showing renewed signs of weakness, safe haven buying of gold is back in vogue. Read more here-http://mineweb.net/mineweb/view/mineweb/en/page34?oid=83755&sn;=Detail
SILVER
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1243360187.php
-Rogers: Choose Silver Over Gold. Watch video here-http://www.24hgold.com/english/news-gold-silver-rogers-choose-silver-over-gold.aspx?contributor=Jim+Rogers&article;=2063652980G10020
-Fortis bank metals monthly report. Read more here-http://www.virtualmetals.co.uk/pdf/FMM0509.pdf
-NanoMarkets, a leading industry analyst, today announced the release of “Silver Markets for Photovoltaics.” This report is one of a series of “Metals in PV” reports examining opportunities for various metals in the photovoltaics industry. This report contains an analysis and market projections of silver inks, pastes and other related materials based on NanoMarkets’ ongoing research on materials used in photovoltaics (PV).
PV is the fastest growing application for silver; NanoMarkets’ research suggests that the volume of silver used for photovoltaics will reach over 24 million troy ounces in 2016.
NanoMarkets believes that thin-film PV and organic PV both will account for 27 percent of silver used by PV in 2016. Read more here-
http://www.azom.com/news.asp?newsID=17308
MARC FABER-U.S. INFLATION TO APPROACH ZIMBABWE
-The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.” Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=avgZDYM6mTFA&refer;=home
-The costs of things as measured by the consumer price index have risen twentyfold since the Federal Reserve Act of 1913. This act empowered the central bank to create and control a new currency for the United States, the Federal Reserve Note. Over this same period, the federal deficit soared from $2 billion to over $11 trillion. Coincidence? We think not.
After President Nixon cut the dollar’s ties to gold, funding the whims of government was no longer burdened by the need for higher taxes. Now any gaps in the budget can be filled by simply printing more dollars. And as you can see, the politicians didn’t hesitate to meet the challenge. Price levels and federal debt have risen hand-in-hand ever since. Casey Charts
DEFINITIONS-QUOTES-QUICK HITS
-The United States government debt, commonly called the “public debt” or the “national debt”, is the amount of money owed by the federal government of the United States to holders of U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held in the Social Security Trust Fund.
Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities. As of May 25, 2009, the total U.S. federal debt was $11,305,673,498,034.18, or about $37,095 per capita. Read more here-http://en.wikipedia.org/wiki/United_States_public_debt
-New American debt clock. Watch the big numbers fly by here-http://www.usdebtclock.org/
-General Motors Corp., the world’s largest automaker until its 77-year reign ended in 2008, plans to file for bankruptcy protection on June 1 and sell most of its assets to a new company, people familiar with the matter said.
GM’s path will be smoothed by an accord Thursday giving some of its biggest bondholders an equity stake in the reorganized automaker. The U.S. Treasury is requiring that an unspecified percentage of debt holders accept the terms by 5 p.m. New York time on May 30, Detroit-based GM said in a regulatory filing. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a26dHH0N6LvY&refer;=home
-General Motors Corporation (GM) (NYSE: GM), is a global automaker founded in 1908 with headquarters in Detroit, Michigan. It is the world’s second-largest automaker after Toyota, ranked by 2008 global unit sales. GM was the global sales leader for 77 consecutive calendar years from 1931 to 2007. It manufactures cars and trucks in 34 countries.
GM employs 244,500 people around the world, and sells and services vehicles in some 140 countries. In 2008, 8.35 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. Read more here-http://en.wikipedia.org/wiki/General_Motors
-There is all the difference in the world between treating people equally and attempting to make them equal. F.A. Hayek-Bio here-http://en.wikipedia.org/wiki/Friedrich_Hayek
-The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. Ernest Hemmingway-Notes on the Next War: A Serious Topical Letter 1935
-“I do think that the world economies are going to be very weak for years to come, and therefore stock markets will have a very difficult time. I expect stocks markets to go up and down so we will have rallies we’ve just had a huge one and then the markets will sell off again.” Jean-François Tardif-Read more here-
http://www.globeinvestor.com/servlet/story/RTGAM.20090526.wtardif0526/GIStory/
-My belief is that we’re now nearing the beginning of the third speculative phase of the great gold bull market. If June gold can close above $1,003, I believe that will signal the beginning of gold’s third speculative phase. Richard Russell, 26 May 2009
-The reaction of the central banks to rising gold. Keep it down, knock it down, flood it with shorts, talk it down, manipulate it down, scare it down by announcing coming large sales of gold. The outstanding features of the market today were a sinking dollar, fading bonds, and the persistent rise in gold. It’s interesting that as gold rises daily, there’s surprisingly little attention directed at its impressive action. Richard Russell, 22 May 2009
-Now I want to be much more committed to the precious metals, as it seems even more obvious to me that they will be the beneficiaries of money printing. Bill Fleckenstein-Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/why-this-downturn-is-different.aspx?page=all
-Hyperinflation is caused by the central bank buying the debt of a government for which spending is out of control, and then turning that debt into currency, which describes what is happening in the US today. So falling dollar exchange rates as we have seen in recent weeks is a normal response to the Fed’s actions. And the more Treasury paper the Fed buys, the lower the dollar will fall in the foreign exchange markets and more to the point, the higher gold will rise. James Turk-Read and view updated charts here-
http://goldmoney.com/en/commentary/2009-05-25.html
-What should a Gold investor being doing now? First, hold your Gold. Second, build cash for any period of price weakness that might develop this Summer. Now would be a good time to review holdings of paper equities, selling any inappropriate ones that have benefited from the most recent bear market rally.
Hold that cash in a suitable vehicle with which to later buy Gold. Non U.S. dollar investors should be using any weakness in the price of Gold brought on by the recent rally in non dollar currencies to add to holdings. One need only look about at the leadership failures in current U.S. and U.K. governments to realize that Gold should indeed be in your portfolio.
Ned W. Schmidt-Read more here-http://news.goldseek.com/NedSchmidt/1243317900.php
-Buffett Aide Sokol Says Housing, Economy Aren’t Near Recovery. The U.S. housing market is nowhere near recovery and signs of stabilization are premature, said David Sokol, a top aide to billionaire investor Warren Buffett who oversees the nation’s second-largest real estate brokerage. Sokol was among money managers who told an investment conference in New York the economy is still deteriorating and they don’t have a lot of confidence in President Barack Obama’s economic policies.
“We’re not seeing the green shoots,” said Sokol, head of MidAmerican Energy Holdings Co., which owns HomeServices of America Inc. “We don’t see improvement.” MidAmerican is owned by Buffett’s Berkshire Hathaway, and Sokol is considered a possible successor to Buffett as head of Berkshire. Sokol spoke before reports today showed new-home sales posted their second increase in three months during April, and mortgage delinquencies and foreclosures rose to records in the first quarter.
Homes in the process of foreclosure are creating a “shadow backlog” of unsold properties that will continue to hang over the market, Sokol, 52, said in a speech yesterday at the Ira W. Sohn Investment Research Conference in New York. While official statistics show a 10- to 12-month supply of unsold homes, “we believe the backlog of homes for sale is twice that.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=as5eaFiSGc5I&refer;=home
-In the technicians’ view, “Gold prices are expected to continue on their upward path in the near term, with the next key resistance offered at $970 from the March 20 high,” wrote Tom Pawlicki, of MF Global. Casey Daily Resource
-Julian Phillips, of Goldforecaster.com, is highly bullish, writing that, “Gold has broken out of its long consolidation and looks set to take on $1,000 again.” Phillips takes on the historical question, saying that, “This time of the year the gold market moved into the ‘summer Doldrums,’ but the last two years has seen this seasonality fade as investment demand knocked away this seasonality.
With Indian buyers virtually absent from the international gold market since October 2008 until April this year we could have expected ‘Doldrums’ during that time. Now their absence is unnoticed as investment demand took the reins of the gold market and looks like holding them. So expect those Trade Winds to blow during summer and make the gold market an exciting place to be.” Casey Daily Resource-Read more here-http://www.kitco.com/ind/AuthenticMoney/may152009.html and http://www.kitco.com/ind/AuthenticMoney/may222009.html
“With crude oil breaking out above the $60 level and with index funds pouring money into the entire commodity sector, it is very difficult for the commodity bears to gain much downside traction,” wrote Dan Norcini on jsmineset.com. “The sum of money flowing into tangibles is enormous as a great deal of those funds were sitting in cash on the sidelines and waiting for a signal to get long. That they have done and are now doing and that is where the buying pressure is originating from across the entire commodity complex.
Keep in mind that they will buy until they get their allocation done irrespective of any particular fundamental factors. Technical money flows more and more dominate the world of trading and investing and arguing against that kind of money is worse than spitting into the wind. Just like when they are blindly selling these guys blindly buy and very few are willing to step in front of such a freight train whether it is coming or going.” Casey Daily Resource
-Why Wall Street is deserting Treasuries and the dollar. Read more here-http://latimesblogs.latimes.com/money_co/2009/05/this-week-couldnt-end-fast-enough-for-the-treasury-bond-market-or-the-dollar-both-of-which-were-hammered-again-today-as-inv.html and http://www.gata.org/node/7439
-New Investor Worry: Treasury Selloff Spiking Interest Rates. Read more here-http://www.cnbc.com/id/30968861
-Talking on CNBC about “the new normal”, Pimco’s founder and co-CIO Bill Gross, said “the Dow isn’t going back to 14K, and investors shouldn’t expect double-digit returns on stocks. Gross also said that “corporate profits in terms of their margins will be half of what they were several years ago and that P/E ratios will be significantly lower than what we’re used to”. Watch video here-http://wallstreetpit.com/4618-pimcos-bill-gross-on-economy
-Clive Maund, If you are long the broad US stockmarket Prepare To Get Buried. Read more here-http://www.kitco.com/ind/maund/may252009.html
-This is Not a Bull Market, Stocks Are Not Up, and They’re Heading Even Lower. Read more here-http://www.kitco.com/ind/Summers/may252009.html
-The two-month rally in U.S. stocks is in its final stages and a correction will take place in the coming weeks, according to a technical analyst at Aurel BGC. “The speed of the market’s gains is slower and slower,” Paris-based Alexandre Le Drogoff said in a phone interview yesterday. “Mathematical indicators are showing the market losing steam.”
The Standard & Poor’s 500 Index has surged 32 percent from a 12-year low on March 9 as investors speculated the global recession is easing and earnings at companies from Ford Motor Co. to Wells Fargo & Co. beat analysts’ estimates. Technical analysts look at price charts to forecast so called resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines.
Le Drogoff said his next resistance level for the S&P; 500 is 924 and his next support is 875/878, though he hasn’t set a time frame for either prediction. “Excessive overselling has driven a powerful rebound,” Le Drogoff said. “We’re near the end of the rally. The message is one of caution.” Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a68ndLIv7BeM&refer;=home
-John Bogle Says Stocks May Take 10 Years to Reach New Records. John Bogle, who created the $73.3 billion Vanguard 500 Index Fund in 1976, said the Standard & Poor’s 500 Index may advance an average of 7 percent annually and could take 10 years to climb above its October 2007 record.
“Is it possible when we get to 2020 the S&P; won’t be much above 1,550? You’re darn right it is,” Bogle, who was named one of the industry’s four “Giants of the 20th Century” by Fortune magazine in 1999, said in an interview at a conference in Chicago sponsored by research firm Morningstar Inc. “Could corporate earnings grow 7 percent a year from here? They could. Maybe it’s even a good bet, but no certainty.”
The benchmark index for U.S. equity gained an average of 15 percent annually during the 1990s and returned 18 percent on average yearly when dividends are included. Bogle said he expects the dividend yield on the S&P; 500 to average 3.5 percent annually through 2020. Stocks are still a more attractive investment than government bonds, he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8KEMw6IRvrM
-The Second Crash On the Way and Unstoppable. Read more here-http://www.kitcocasey.com/articles/2761/the-second-crash-%E2%80%93-on-the-way-and-unstoppable/
-Deficit woes likely to dog dollar for some time. It was an awful week for the dollar, which sank to its lowest level of the year last week, and with markets now focused on a trillion-dollar-plus U.S. deficit, the greenback’s sharp slide is not over yet.
Unlike in the recent past, when investors terrified of a global financial meltdown sought safety in Treasury bills and other dollar assets, the greenback is now being driven by its own fundamentals, and all of them look fairly bleak. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54O48M20090525
-Dollar’s fall reflects loss of haven appeal. Read more here-http://www.ft.com/cms/s/0/3e25ee68-466a-11de-803f-00144feabdc0.html
-Bets against dollar highest since start of economic crisis. Read more here-http://www.ft.com/cms/s/0/88e09848-49fa-11de-8e7e-00144feabdc0.html
-China warns Federal Reserve over ‘printing money.’ China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed’s direct purchase of US Treasury bonds. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html
-No dethroning dollar despite risks: China FX official. Read more here-http://www.reuters.com/article/ousiv/idUSTRE54Q0SW20090527
-Canadian household debt swells to $1.3 trillion. Read more here-http://www.cbc.ca/consumer/story/2009/05/26/canada-household-debt854.html
-Americans’ credit scores fall as they struggle to pay bills. Read more here-http://www.usatoday.com/money/perfi/credit/2009-05-26-credit-scores-recession_N.htm
-Credit Card Debt Swallows American Households. Read more here-http://www.businessinsider.com/chart-of-the-day-credit-card-debt-vs-median-household-income-2009-5
-This year, the government is borrowing 50 cents of every dollar it spends. If that were just a blip caused by a historic financial crisis that necessitated a $787 billion fiscal stimulus and a $700 billion bank rescue in the space of about three months, there would be little cause for concern.
But it is not a blip. It is a relentless curve of red ink that will, within the decade, take U.S. debt levels to the record reached at the end of World War II, from 40 percent of the nation’s output now to 80 percent, and then rapidly thereafter into the realm of banana republics.
“We are accumulating a massive debt. We owe about half of that debt to foreigners, including the Chinese and others whose foreign policy is not always well aligned with ours,” said Isabel Sawhill, a former Clinton administration budget official who now co-directs the Center on Children and Families at the Brookings Institution. “So we are really losing control of our economic destiny and possibly losing control of our foreign policy as well.”
Japan has lost its AAA credit rating, the United Kingdom may soon follow, and there is talk that the United States is headed fast down the same path. The markets fired a warning shot last week when the Treasury Department announced a huge sale of new debt $162 billion as part of its financing of the government’s $1.8 trillion deficit this year. That’s as much as the entire government spent just eight years ago. Within hours, interest rates on U.S. Treasuries shot up.
In recent weeks, the prices of credit default swaps on U.S. government debt – a measure of the risk that the government could do the unthinkable and default have risen to record levels. Read more here-http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/24/MN2B17PDPL.DTL&type;=printable
-John Taylor: Exploding debt threatens America. Read more here-http://www.gata.org/node/7453
-IRS tax revenue falls along with taxpayers’ income. Read more here-http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm
-Early retirement claims increase dramatically. Instead of working longer as the economy worsens, more Americans are calling it quits before age 66. The ramifications could be profound for the retirees, families, government and social institutions. Read more here-http://www.latimes.com/news/nationworld/nation/la-na-retirement24-2009may24,0,3371288,print.story
-U.K. Treasury warns of £70bn hole in Budget forecasts. Alistair Darling faced fresh embarrassment last night when the Treasury’s own survey of economic forecasts contradicted the Chancellor’s and raised the possibility of a £70bn hole in the public finances. Read more here-http://www.telegraph.co.uk/finance/economics/5389398/Treasury-warns-of-70bn-hole-in-Budget-forecasts.html
-British banks revolt against Obama tax plan. British banks and stockbrokers may refuse to take on American clients if new international tax proposals outlined by President Obama are passed. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5374095/British-banks-revolt-against-Obama-tax-plan.html
-Furor grows over partisan car dealer closings. Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.
The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008? Read more here-http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Furor-grows-over-partisan-car-dealer-closings-46261447.html
-Half of all listed shipping companies may go bust. Read more here-http://www.lloydslist.com/ll/news/half-of-all-listed-shipping-companies-may-go-bust/20017653938.htm;jsessionid=955BBDDA70F0D8B886B2BAA7963C0D6A
-South Africa Falls Into First Recession in 17 Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aI2FNutyJ1cM&refer;=home
-Cold, hunger and job losses ignite dissent in Russian town. Impoverished workers resort to eating salads of weeds and nettle soup. Read more here-
-Mafia Cash Increases Grip on Sinking Italy Defying Berlusconi. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aHtly5QjUYzo&refer;=home
-The dangers of printing money. View photo essay here-http://www.time.com/time/photogallery/0,29307,1879735_1846041,00.html
-GPS system ‘close to breakdown.’ Network of satellites could begin to fail as early as 2010. Read more here-
http://www.guardian.co.uk/technology/2009/may/19/gps-close-to-breakdown
-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
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.youtube.com/watch?v=BWYMJnEz-n4
and http://www.rarecoloreddiamonds.com/articles/index.html
-Christie’s Hong Kong Jewels Sale Tops $33M, 90% Sold by Lot. Christie’s Hong Kong jewelry sale reported strong results with 90 percent of the lots sold for a total of $33,067,728. The top lot sold for $3,328,182 to an Asian private and featured a diamond pendant set with two pear-shaped D, flawless type IIa diamonds of 20.70 carats and 10.02 carats.
Other diamond highlights included a number of stones that sold for more than $1 million. A suite of vivid and intense colored diamonds, 14.67 total carat weight, sold for $1,886,742. A rectangular-cut, 15.02 carat, D, flawless type IIa diamond sold for $1,670,526 or $111,200 per carat. A pear-shaped 14.43 carat, D, internally flawless type IIa diamond ring by Cartier sold for $1,598,454 or $110,700 per carat.
A circular-cut 12.10 carat, F, flawless diamond sold for $1,238,094. A pair of pear-shaped 10.03 carat and 10.02 carat diamond ear pendants sold for $1,207,206, and a briolette-cut 14.99 carat, D, internally flawless diamond sold for $1,083,654. A jadeite double cabochon ring fetched $1,310,166 from an international private. Asian privates dominated most of the diamond sales.
Vickie Sek, director of Christie’s Asia jewelry and jadeite department, noted, “The May 26th Hong Kong jewelry auction reaffirmed the unquestionable health and strength of the diamond market with as much as $111,000 per carat paid for a perfect rectangular-cut diamond of 15.02 carats. The 95 percent sell-through rate is further proof of the enthusiasm of Asian collectors for fine gems as well as quality jewels. A packed saleroom with competitive bidding resulted in almost half of the lots exceeding their high estimates.” Diamonds.net
-See all 30 colored diamond lots from the Christie’s Hong Kong jewelry sale here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22528#action=refine&intSaleID;=22528&sid;=2e63f7bd-1da0-4133-bf5d-a3f7469a7f35&selectedids;=55215
TWO MORE U.S. BANKS FAIL-36 FOR THE YEAR-ZOMBIE BANKS-PROBLEM BANKS RISE
-Two Illinois Banks Seized, Bringing U.S. Tally This Year to 36. Two Illinois banks with combined assets of almost $1 billion were closed by regulators, pushing the toll of failed U.S. lenders to 36 this year amid the longest recession since the 1930s.
Strategic Capital Bank in Champaign and Citizens National Bank in Macomb were closed and the Federal Deposit Insurance Corp. was named receiver of both, the FDIC said. Strategic Capital’s deposits were assumed by Midland States Bank of Effingham, Illinois, and deposits at Citizens National were purchased by Morton Community Bank. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said.
Regulators are closing banks at the fastest pace in 15 years, including BankUnited Financial Corp. in Florida yesterday, and pumped $200 billion into the biggest banks in a Treasury rescue program. Costs from closing banks in the second quarter climbed to more than $8 billion, including $4.9 billion for BankUnited, from $2.28 billion in the first, FDIC data show.
Midland States will buy $536 million of Strategic Capital’s $537 million in assets, with the FDIC sharing losses on about $420 million of them, the regulator said. Midland States will assume all of the failed bank’s $471 million in deposits. Strategic Capital’s lone office will open on May 26 as a branch of Midland States. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a42Xg57jVTzM or http://money.cnn.com/2009/05/22/news/companies/bank_failure/index.htm
-Zombie banks walk among us. Small banks facing severe loan losses and in need of capital continue to operate, indicating a reluctance on behalf of regulators to shut them down. Read more here-http://money.cnn.com/2009/05/22/news/companies/zombie_banks/index.htm
-U.S. ‘Problem’ Banks Rise to 15-Year High, FDIC Says. U.S. “problem” banks climbed 21 percent to the highest total in 15 years in the first quarter as provisions set aside for loan losses weighed on earnings, the Federal Deposit Insurance Corp. said.
The FDIC classified 305 banks as “problem” and their total assets rose 38 percent to $220 billion, the highest since 1993, the agency said without identifying any lender. The FDIC said its insurance fund slumped 25 percent to the lowest level in 15 years. “The banking industry still faces tremendous challenges,” FDIC Chairman Sheila Bair said today at a briefing in Washington. “Asset quality remains a major concern.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKMYRsSE4vqM&refer;=home
DOUBLE DIP RECESSION
-U.S. economy at risk of double-dip recession. The U.S. economy appears destined for several years of weak growth and high unemployment that leave it vulnerable to a recession relapse after the massive dose of government stimulus wears off. While tepid growth looks likely to resume late this year and build modestly into 2010, the credit bust has left households and businesses unable or unwilling to borrow and spend as freely as they did before the crisis.
The U.S. government has stepped in as lender and spender of last resort, but its deep pockets are not bottomless. Waning political and investor appetite for taking on more debt could stand in the way of any additional big spending plans. “When you remove the government stimulus, what the private sector can generate in terms of growth feels like a recession,” said Jeffrey Rosenberg, head of global credit strategy at Banc of America Securities Merrill Lynch in New York.
Rosenberg thinks the U.S. economy may trudge along at a sluggish growth rate somewhere in the range of 0.5 percent to 1.5 percent while banks recover from the credit crisis, which could take another three years. “If that’s what you’re able to generate, that economy is not generating the job growth required to bring the unemployment rate down,” Rosenberg said. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54P2ZC20090526
-Roubini says U.S. economy may dip again next year. Nouriel Roubini, the famously glum economist who predicted the financial crisis, said that while the recession in the United States may well be over at the end of the year, another dip was still possible next year.
“I still expect that economic growth in the U.S. is going to be negative through Q4, and that we’ll see positive growth in Q1,” Roubini told Reuters in an interview on the sidelines of the Seoul Digital Forum.
“The U.S. recession is going to be U-shaped, lasting roughly 24 months,” he added. “Compared to the current consensus that says we are practically at the end of the recession … my view is: no, it’s going to last another six to nine months before it’s over.” Read more here-http://www.reuters.com/article/newsOne/idUSTRE54R1U120090528
S&P; 500 PE IS SKY HIGH
-Today’s chart illustrates how this plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the current plunge in earnings and the recent 2.5 month stock market rally, the PE ratio has spiked to the low 120s a record high.
OIL
-Saudia Arabia: $200 Oil in 2 Years. Read more here-http://money.cnn.com/news/newsfeeds/siliconalley/green-tech/saudia_arabia_200_oil_in_2_years_2009_5.html
-Saudi Arabian oil minister Ali al- Naimi said the price of oil will climb to $75 a barrel when demand picks up. “We’ll get there eventually,” al-Naimi told reporters in Rome today where he will attend meetings with energy ministers from the Group of Eight industrialized nations. “The trick is keeping it between $70 and $80. It will be achieved as demand rises and the fundamentals are better than they are now.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=awtQr3leXiOk&refer;=worldwide
-OPEC Is Seeking $70 Oil, Venezuela Minister Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ahxTnbKqMGVU
-Oil to ‘Correct’ Drop, Target $77: Technical Analysis. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=axR5n1YXEcXk
-Oil prices will return to $110 a barrel by 2015 as a rebound in economic growth worldwide boosts consumption, a U.S. Energy Department bureau said. Prices, which rose to a six-month high of $62.45 yesterday in New York Mercantile Exchange trading, will continue climbing past 2015 to $130 by 2030, as India, China and other developing nations use more oil, the Energy Information Administration said today in its annual International Energy Outlook report.
Oil prices have tumbled from an all-time record $147.27 a barrel in July as industries and consumers pulled back after credit markets froze and the global economy fell into its first recession since World War II. Energy demand will remain weak “in the near term” until the global economy begins to rebound, which may happen as early as next year, the agency said.
“With economic recovery anticipated to begin within the next 12 to 24 months, most nations are expected to see energy consumption growth at rates anticipated prior to the recession,” the agency said in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ap1Vblzb.ET0
-G8 Encourages Energy Investment to Prevent Surge in Oil Prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ahFUHxcHDhPw&refer;=home
-Oil Above $50 Saves Gulf States During Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aiEExZkE_oS4&refer;=home
-The forbidding landscape of the Arctic contains 13 per cent of the world’s remaining undiscovered oil and as much as 30 per cent of its natural gas deposits, a new study from the U.S. Geological Survey says.
The updated estimates of the North’s promising oil and gas resources comes as Canada and its polar neighbours aggressively pursue their competing claims to vast areas of continental shelf under the Arctic Ocean. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20090528.warcticoil0528/GIStory/
REAL ESTATE-FORECLOSURES
-Peter Schiff, housing’s big picture is not pretty. While economists and real estate investors “celebrate” the slight deceleration in the pace of home price declines in the recent data, a quick look at home price trajectories over the past 100 and 50 years reveals little to cheer about and much to be feared.
More significant than small month-to-month changes is the flow of home price patterns over decades. In his book Irrational Exuberance, Robert Shiller determined that in the 100 years between 1900 and 2000, home prices in the U.S. increased by an average of about 3.4% per year. These figures have not been adjusted for inflation. If they had, home prices would have outpaced inflation by only the slimmest of margins.
This 100-year period includes the Great Depression, when home prices sank significantly, and it also involves decades in which our current home mortgage infrastructure simply did not exist. The second half of the century, with its baby boom, heightened inflation, suburban expansion and institutionalized mortgage apparatus, was much kinder to home prices. Even so, in the 50 boom years between 1950 and 2000, home prices increased an average of 4.4% per year. Even this pace barely beat inflation.
By all accounts, the home price boom that began in late 1997 (when the high of the previous 1989 peak was finally eclipsed) and topped out in June 2006 was extraordinary. The Case-Shiller 10-City Index, an amalgam of the home price trends in 10 of the largest U.S. cities, gained on average 19.4% per year during that time. The movements had very little to do with market fundamentals and everything to do with distortive government policies, a national mania for real estate wealth and a torrent of temporarily easy credit.
If we assume that the bubble was artificial, we can instead imagine that home prices should have followed the more typical path during that time. When you do these extrapolations, a very sobering picture emerges. Read more here-http://www.europac.net/commschiff.asp?id=16291
-The Housing Hurricane Will Howl Again. This is only a lull in the housing hurricane. We’re out of the eye of the hurricane, but here comes the back half of the storm. A lot of people think that we’ve seen the worst of the housing crisis. They’re talking about green shoots and glimmers of hope, when they should be back in the storm shelter, preparing for a flood of inventory that will overwhelm the markets and produce another round of falling prices
For the past few months there has been a semi-moratorium on foreclosures. Most institutions with delinquent mortgages didn’t foreclose. The signs that blanket many neighborhoods have been posted by a fraction of the lenders. Now the rest of the banks are rushing to get their properties on the market. Read more here-
http://online.barrons.com/article_print/SB124303112018248371.html
-Homes: Almost 20% cheaper. S&P;/Case-Shiller index reports huge decline of 19.1% for the first quarter. Read more here-
http://money.cnn.com/2009/05/26/real_estate/CaseShiller_home_prices_Q1/index.htm or http://www.bloomberg.com/apps/news?pid=20601087&sid;=aJjnVOs7SUW8&refer;=home
-San Francisco Home Prices Fall 41% on Foreclosures. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=atBfoEWN00Ww&refer;=home
-The average price of a U.S. home fell 7.1 percent in the first quarter, slower than the fourth quarter’s 8.3 percent drop that was the largest on record, the Federal Housing Finance Agency in Washington said today. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=alTt9qEQPL1I&refer;=home
-Housing Hitting Bottom Means Fewest Starts Since 1945. The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups.
Existing home sales probably won’t reach pre-boom levels until the third quarter of 2010 and housing starts won’t surpass 1 million until 2011, a barrier last broken six decades ago, the economists said. “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s.
The rebound will be so anemic that 2009 building starts will total about 496,000 homes, the lowest since the end of World War II in 1945, according to the economists’ forecasts. Foreclosures on pay option adjustable-rate mortgages and a backlog of bank-owned properties will slow any revival and keep housing from playing its traditional role of boosting economic recovery.
Residential construction and home sales led the way out of the previous seven recessions, with housing starts improving an average seven months and resales gaining strength about four months before the economy picked up. Read more here-http://bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=adbBR4rdQqag
-Purchases of new homes in the U.S. rose in April for the second time in three months as lower prices and cheaper financing stabilized demand. Sales increased 0.3 percent to an annual pace of 352,000, lower than forecast, after a 351,000 rate in March, the Commerce Department said today in Washington. The median sales price decreased 15 percent from April 2008, while the number of homes on the market fell to the lowest level in almost eight years. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=a_syIHolWEnY&refer;=home
-Home resales in the U.S. gained in April as foreclosure auctions and improved affordability spurred bargain hunters. Purchases increased 2.9 percent to an annual rate of 4.68 million, close to forecasts, from 4.55 million in March, the National Association of Realtors said today in Washington. The median price slumped 15 percent from a year earlier, the second- biggest drop on record, and distressed properties accounted for 45 percent of all sales. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNhCunu0zbD0&refer;=home
-Housing bubble begins to burst across the globe. Read more here-http://www.dailymail.co.uk/money/article-1187530/CITY-FOCUS-Housing-bubble-begins-burst-globe.html
-Dubai, home to the man-made Palm Jumeirah and World island developments, suffered the biggest reversal among global housing markets following the collapse of an investment bubble, Knight Frank LLP said.
House prices in Dubai, the second-largest of the seven sheikhdoms that make up the United Arab Emirates, fell 32 percent in the 12 months ended March 31, according to a report by the London-based property broker published today. A year earlier, homes appreciated at an annual rate of 48 percent.
Dubai “is in a mess,” said Nick Barnes, head of international residential research at Knight Frank. “A lot will depend on developers and how long they can hold on before getting into fire-sale territory.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aAcg3k55CWBA&refer;=home
-U.K. House Prices May Drop 14% in 2009, JLL Forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aKI8JqPhJj2A or http://www.telegraph.co.uk/finance/economics/houseprices/5388738/House-prices-may-fall-another-14pc-by-2010.html
-1 in 8 U.S. homeowners late paying or in foreclosure. One of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process in a crisis that will persist for at least another year until unemployment peaks, the Mortgage Bankers Association said on Thursday. Read more here-
-Job Losses Push Safer Mortgages to Foreclosure. Read more here-http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html
-Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March as the government’s effort to revive the housing market lost momentum.
The U.S. delinquency rate climbed to a seasonally adjusted 9.12 percent and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972. Fixed rates rose to 4.91 percent, Freddie Mac said. New home sales fell 34 percent from April 2008, the Commerce Department said.
The three-year housing slump is proving resistant to efforts by the Federal Reserve and the Obama administration to lower rates and keep homeowners from failing on their mortgages. One in every eight Americans is now late on a payment or already in foreclosure as mounting job losses cause more homeowners to fall behind on loans, the MBA said.
“If people don’t have a paycheck they can’t support a mortgage,” Jay Brinkmann, the MBA’s chief economist, said in an interview. “The longer the recession lasts the more people run through their savings reserves, leading to higher delinquencies and higher foreclosures.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aUW60TAkQ5EM&refer;=home
-Recession Turns Malls into Ghost Towns. Read more here-http://online.wsj.com/article/SB124294047987244803.html
-It’s Tee Time. Where Is Everybody? Off the turnpike here in central Florida, hidden behind stucco walls, sits a sprawling Tuscan-style clubhouse on a hill overlooking a string of lakes, a golf course and green fields. This 1,900-acre property, called Bella Collina, was designed to hold 800 homes. Today, only 48 houses dot the landscape, and just three are occupied.
The clubhouse, though open, is eerily quiet, and a promised swimming pool and equestrian center have yet to be built. Bella Collina, the brainchild of Edward Robert Ginn III, looks like a ghost town. So does Tesoro, another resort opened by Mr. Ginn near Port St. Lucie, where just 150 houses sit on 900 lots. And the Conservatory in Palm Coast, also from Mr. Ginn, is even more barren: 335 out of 340 lots are empty. As the real estate boom expanded in recent years, developers and home buyers believed that residential golf resorts were a sure-fire bet.
Many buyers looked to buy properties that they could flip for a quick profit. Others were lured by stunning views, club services and security. While there is no reliable data on the growth in residential golf resorts, analysts say the market is well past its peak particularly in the Sun Belt and there is now an overabundance of developments. Read more here-
http://www.nytimes.com/2009/05/24/business/24golf.html?pagewanted=all
-Amid Housing Bust, Phoenix Begins a New Frenzy. Read more here-http://www.nytimes.com/2009/05/24/business/24phoenix.html
-Realtors are abandoning a listing ship. Read more here-http://www.latimes.com/business/la-fi-realtors25-2009may25,0,7207801.story
GEOPOLITICAL NEWS
-The unchecked spread of nuclear weapons technology to nations or groups is more of an “imminent threat” to the U.S. than North Korea’s nuclear test and its firing of five short-range missiles, the Obama administration’s National Security Adviser James Jones said.
The detonation and missile firings don’t in themselves “constitute an imminent threat,” Jones said yesterday in Washington, referring to North Korea’s May 25 explosion of a nuclear device and the subsequent missile launchings.
“They still have a long way to go” to create a nuclear weapon and “have a delivery system” for it, Jones told an audience of the Washington-based Atlantic Council during a question-and-answer period after he gave a speech. “That’s obviously a very worst-case scenario and one that we very much hope to avoid,” he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aR8xFfOaB27E&refer;=home
-Obama says North Korea nuclear test a “grave concern.” Read more here-http://www.reuters.com/article/politicsNews/idUSTRE54O14220090525?feedType=RSS&feedName;=politicsNews&rpc;=22&sp;=true
-Russia fears Korea conflict could go nuclear. Read more here-http://in.reuters.com/article/worldNews/idINIndia-39913120090527
-Secretary of State Hillary Clinton said North Korea must face consequences for its “belligerent and provocative behavior” after Kim Jong Il’s regime threatened military action against South Korea.
Clinton spoke in Washington after North Korea’s official news agency said Kim’s government would no longer abide by the 1953 armistice that ended the Korean War and may respond militarily to South Korea’s participation in a U.S.-led program that would block ships suspected of carrying nuclear weapons or material for export.
The U.S. takes “very seriously” its commitments to defend South Korea and Japan, its principal allies in the region, Clinton said. She called on North Korea to return to the so called six party talks aimed at dismantling its nuclear arms program.
North Korea has continued to ratchet up tension since it tested a nuclear weapon on May 25, drawing international condemnation and the prospect of increased sanctions against the communist nation. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aAjZnKdP7mlE&refer;=canada
-Iran’s Ahmadinejad rejects Western nuclear proposal. Iran’s President Mahmoud Ahmadinejad on Monday rejected a Western proposal for it to “freeze” its nuclear work in return for no new sanctions and ruled out any talks with major powers on the issue. Read more here-http://www.reuters.com/article/newsOne/idUSTRE54O25V20090525 and
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a2WCDzDHASdk&refer;=worldwide
-Iran sends warships to Gulf of Aden. Iran has sent six warships to international waters, including the Gulf of Aden, to show its ability to confront any foreign threats, its naval commander said on Monday.
Admiral Habibollah Sayyari, quoted by the ISNA news agency, made the announcement five days after Iran said it test-fired a surface-to-surface missile with a range of 2,000 km putting Israel and U.S. bases in the area within reach. Read more here-http://in.reuters.com/article/worldNews/idINIndia-39868320090525
-Israeli document: Venezuela sends uranium to Iran. Venezuela and Bolivia are supplying Iran with uranium for its nuclear program, according to a secret Israeli government report obtained Monday by The Associated Press.
The two South American countries are known to have close ties with Iran, but this is the first allegation that they are involved in the development of Iran’s nuclear program, considered a strategic threat by Israel. Read more here-http://www.breitbart.com/article.php?id=D98DEPH80&show;_article=1
-Half of Israelis back immediate strike on Iran. Read more here-http://www.breitbart.com/article.php?id=CNG.278ae37b736a0478b7223156a3bcf18a.401&show;_article=1
-Army chief says US ready to be in Iraq 10 years. The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.
Gen. George Casey, the Army chief of staff, said the world remains dangerous and unpredictable, and the Pentagon must plan for extended U.S. combat and stability operations in two wars. “Global trends are pushing in the wrong direction,” Casey said. “They fundamentally will change how the Army works.” Read more here-
http://news.yahoo.com/s/ap/20090526/ap_on_go_ca_st_pe/us_us_iraq_6
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The Goldbugg Report – June 2, 2009
Posted by Worldwide Precious Metals on Tuesday, June 2, 2009
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