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The Goldbugg Report – July 28, 2009

July 28, 2009

- Gold Will Hit $2,000 on ‘Confetti Paper’ Fears

- Gold the King of metals will keep its crown Grandich.

- D-I-V-O-R-C-E – The much talked about Ted Butler article

GOLD

-Greenlight Holds Bullion, Buys Reinsurance Stocks. Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter. “At a minimum this will provide some savings as the costs of storing gold are less than the fees” for the SPDR Gold Trust, the New York-based firm said yesterday in a letter to investors.

Einhorn, 40, told clients in January he was buying gold for the first time amid the threat of inflation from higher government spending. The firm, started in 1996, held 4.2 million shares of SPDR Gold Trust in the first quarter, making the gold- backed ETF its biggest holding. Gold has climbed 5.8 percent this year. Read more here – http://www.bloombergnews.com/apps/news?pid=20601213&sid;=arz6MqVbTVBs or http://www.gata.org/node/7593

-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

-Following is a selection of analysts’ views on the outlook for gold, silver, platinum and palladium prices, gathered as part of the Reuters precious metals price poll for 2009 and 2010.

The survey was carried out over the last three weeks. Read more here – http://in.reuters.com/article/domesticNews/idINLF27496720090716 or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86383&sn;=Detail

-What Will it Take for Gold to Overcome $1000? In our articles and our newsletters we regularly highlight gold’s solid fundamentals.

World financial/economic crisis may have culminated and greatest risks have been averted but it is still very far from over
US dollar continues in its multi-year downtrend
World governments are committed to issue huge volume of government debt for many years to come
Quantitative easing debt monetization is becoming a routine practice of the Fed
President Obama’s plans for government spending are making Bush deficits seem like child’s play

The list goes on and on. Most of gold bugs’ economic projections made years ago have come true, but gold has been stuck at a seemingly impregnable level of $1000 for almost 18 months. Will this level be overcome and when? Boris Sobolev-Read more here – http://www.321gold.com/editorials/sobolev/sobolev072009.html

-Eckart Woertz: Gulf should follow China into real assets, gold. Read more here – http://www.gata.org/node/7614

-Erste Group Research, a division of Erste Group Bank AG in Vienna, Austria, has just published a 53-page special report on gold. Special Report Gold 2009: “In Gold we trust.” We continue to see an outstanding risk/return profile for gold investments. We regard the current consolidation as good buying opportunity and envisage higher gold prices in the medium to long term.

The infamous USD 1,000 per ounce threshold should be clearly passed again in 2009, and positive seasonals should lend further support to the price from the third and fourth quarter. Passing USD 1,300 is our first target, in the long run the price may well pass the inflation-adjusted all-time-high of USD 2,300.

-Gold the King of metals will keep its crown Grandich. Market analyst Peter Grandich, sees good opportunities for investors who want to “buy things on the cheap” and also sees bright prospects for gold Interview with The Gold Report. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86272&sn;=Detail

-What now for gold as it holds up well in the weak price season? Many had predicted a sharp decline in the gold price during the traditionally weak northern summer period, but this hasn’t happened so what is seen to lie ahead for the yellow metal. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86499&sn;=Detail

-WGC study shows gold outperforms other traditional inflation hedges. The Word Gold Council has released its latest Gold Investment Digest and a report on gold as an inflation hedge.

-Which is best investment top gold ETF or physical bullion? On news that the biggest investor in the SPDR Gold Shares switched its $390 million ETF holding into bullion, Julian Murdoch examines which, in reality, makes most sense for the gold investor. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86520&sn;=Detail

-Swiss banks running out of storage space for gold bullion. Worries about the economy and the success in marketing gold ETFs has seen Swiss banks finding difficulty in meeting secure storage requirements for gold bullion. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86392&sn;=Detail

-Gold bars can, for the first time in almost a century, once again be bought locally as an investment. “South Africans were for a long time unable to share in the country’s gold wealth. The only possibility was to invest in gold companies or in Krugerrands, or to buy Mandela coins or jewellery, said Bernard Stern, chief executive of Metal Concentrators (MetCon).

Stern explains that large fines or even imprisonment could be imposed on individuals who violated the law. As a result South Africans could not hide gold “under their pillows or in a safe” for the lean years, a common practice in Europe and India. Read more here – http://www.miningmx.com/news/gold_and_silver/207371.htm

-In an essay posted this week at Seeking Alpha, J.S. Kim, proprietor of the SmartKnowledgeU investment advisory service, brilliantly skewers the gold and silver exchange-traded funds as likely frauds, perpetrators of a system of fractional-reserve gold and silver banking that is built on conflict of interest. Kim quotes the research of silver market analyst Ted Butler and GATA board member Adrian Douglas. Read more here – http://www.gata.org/node/7603

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,600 the silver price would be $32.50

Gold to silver ratio at 70 to 1 with gold at $2,600 the silver price would be $37.14
Gold to silver ratio at 60 to 1 with gold at $2,600 the silver price would be $43.33

Gold to silver ratio at 50 to 1 with gold at $2,600 the silver price would be $52.00
Gold to silver ratio at 15 to 1 with gold at $2,600 the silver price would be $173.33

-China offers silver bullion for investment. China has introduced its first-ever investment opportunity for silver bullion. The bars are available in 500 grams, 1 kilogram, 2 kilograms and 5 kilograms with a purity of 99.9 percent.

Figures show that gold was 50 times more expensive than silver in 2007. But now that figure has reached to over 70 times, the highest in the past five years. Analysts say that silver has been undervalued in recent years. They add that the metal is a wise investment for individual investors, and could be a good way to cash in.

Wang Chunli, GM of Beijing Caibai Shopping Mall said “We are the first to offer silver bullion as an investment opportunity. The price for the first batch of the bullion is set very low, close to the cost of the raw material. The investment threshold is not high, and is more suitable for the general public. Silver is much cheaper than gold.” Read more here – http://www.cctv.com/program/bizchina/20090723/101308.shtml

-”But sometimes something comes along that makes me think about silver, such as David Morgan of the silver-investor.com site reporting that “during the past ten years, silver’s use in industry has gone from roughly 35% of the entire annual production in silver, to greater than 50%. Not only that, but it is the fastest growing area of the silver market.”

“So how much silver was mined? Well, the commoditynewscenter.com notes that “According to the US Geological Survey, about 672m ounces of silver was mined in 2008. And with an average silver price of $14.94 per ounce, if all mined silver was sold at spot, the entire supply chain would generate revenues of only about $10 billion.”

“It is statistics like these, coupled with the dismal fact of the virtual elimination of above-ground stocks of silver as the myriads of electronic devices produced over the decades consumed it all, that makes me look at the world with suspicious distrust, my eyes narrowed to slits and my hand inching under my jacket to the shoulder holster in case I have to blast my way out as I realize to my dismay that the creatures of this planet are so stupid that they can look at this silver thing, and yet not start buying silver right away! Richard Daughty-Read more here – http://www.kitco.com/ind/Daughty/jul172009.html

D-I-V-O-R-C-E – The much talked about Ted Butler article, http://news.silverseek.com/TedButler/1248708118.php

-Ted Butler silver commentary. Read more here – http://news.silverseek.com/TedButler/1248196925.php

-Ted Butler interview on why silver is a screaming buy. Read more here – http://www.thedailybell.com/bellPage.asp?nid=453&fl;

-Roland Watson silver commentary. Read more here – http://news.silverseek.com/SilverSeek/1248370061.php

-If you have ever considering buying silver, I recommend you do it soon, says Dr. David Eifrig, editor of the Retirement Millionaire newsletter, in Steve Sjuggerud’s Daily Wealth. Read more here – http://goldnews.bullionvault.com/buying_silver_072020091

-New and accessible silver investment trust goes live in the US. Gold and silver ETF investment has slowed recently as the markets have become more cautious; does the market have room for another instrument and are either silver or gold top-heavy? Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=86662&sn;=Detail

-Silver is set to outperform gold, argued Citigroup in a note published Thursday, with the broker saying investment flows into gold are moderating while the outlook for silver is improving. The ratio for gold-to-silver prices should return to its historical norm between 55 and 60 from the current 70, it said. Read more here – http://www.marketwatch.com/story/story/print?guid=AE0D158D-A227-4D9D-9A3E-3DCF5F454F02

-A case for silver’s quiet strength. The price of sterling has historically followed the price of gold; right now it’s lagging. Gold gets all the glamour when it comes to precious metals, but it’s not the only thing you can hide under your mattress as a hedge against financial ruin. Silver is just as much money as gold. The French word for money is, after all, argent, or silver. Like gold, the metal is a store of money that protects against the frailties inherent in paper currency.

Those frailties are fairly obvious today, with the printing presses running at a high pitch and trillions in notional derivatives outstanding. Money supply is growing quickly and while official (and in my opinion “massaged”) inflation numbers don’t register it, it’s not hard to imagine that prices will move higher as the value of money falls. It just makes sense that if you multiply the supply of money available, it will lose its value.

So the case for precious metals is easy to make. The case for silver is, too: silver prices have a long correlation to gold prices, but that link has broken down recently. The price ratio between the two has averaged about 70:1 over the past year. The average going back 200 years is about 32:1. If the ratio were to revert to that average, silver would outperform gold by a factor of two times.

In fact, during the highly inflationary 1970s, the ratio was 16:1. Interestingly, the physical ratio of silver to gold in the Earth’s crust is about the same. The basic idea is that silver has the same investing attributes as gold but it might be relatively cheap if history is a guide. Fabrice Taylor-Theglobeandmail.com

-I believe the situation is even more dire in silver than in gold because gold is not being consumed but rather is becoming scarce because it is being hoarded by more and more smart investors. Silver is becoming scarce because it is both being hoarded by smart investors and being consumed by industry and ending up in landfills never to be recovered.

The U.S. Geological Survey estimates that silver will become extinct by 2020 just 11 years from now all silver in the earth’s crust will have been mined and consumed. Yet silver now is trading at only its cost of production. The world cannot live without silver. Paper derivatives can not be used to make cell phone batteries or RFID transmitters or electrical solder, etc.

Adrian Douglas-Read more here – http://www.gata.org/node/7559

CHART OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: This Is a Misery Index. Remember the Misery Index? It adds together unemployment and inflation to get a quick and dirty measure of, well, misery. But by this measure, since we’re in deflation, the current recession doesn’t look so bad.

So HuffingtonPost came up with its index, which uses the broader measure of unemployment (U6), along with a more narrow basket of prices on essential goods, adding in other things like food stamps and credit card delinquencies. We think HuffPo’s does a much better job of capturing the current misery than the old one. Read more here – http://www.businessinsider.com/chart-of-the-day-misery-by-huffpo-2009-7

-”A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston Churchill-Bio here – http://en.wikipedia.org/wiki/Winston_Churchill

-”There’s no reward in life without risk.” Barry J. Farber-http://en.wikipedia.org/wiki/Barry_J._Farber

-”You are the way you are because that’s the way you want to be. If you really wanted to be any different, you would be in the process of changing right now.” Fred Smith-Bio here – http://en.wikipedia.org/wiki/Frederick_W._Smith

-It is hard to imagine a more stupid or more dangerous way of making a decision than by putting those decisions in the hands of people who pay no price for being wrong. Thomas Sowell-Bio here – http://en.wikipedia.org/wiki/Thomas_Sowell

-There is only one way to kill capitalism by taxes, taxes and more taxes. Karl Marx-Read more here – http://en.wikipedia.org/wiki/Karl_Marx

-While the crash only took place six months ago, I am convinced we have now passed through the worst and with continued unity of effort, we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us. Herbert Hoover, President of the United States May 1, 1930-Bio here – http://en.wikipedia.org/wiki/Herbert_Hoover

-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

-Another massive injection of liquidity by the Federal Reserve is a near certainty as the calendar moves through the second half of the year. Foreign investors have for some time indicated a growing unwillingness to finance the failing economic policies of the U.S. The Federal Reserve may have to monetize a half trillion dollars of U.S. debt in coming months.

That flood of dollars can only send the value of the U.S. dollar down on foreign exchange markets. With that development will come a renewal of the bull market in $Gold. The Federal Reserve and the Obama Regime may be only months away from making $1,000 the new floor for $Gold. Ned W. Schmidt-Read more here – http://www.kitco.com/ind/Schmidt/jul202009.html

-Eric Sprott July commentary. We are now in the early stages of a depression. The economic indicators we follow to track real economic activity are all signalling a slowdown of massive proportions. You wouldn’t know it reading the mainstream papers of course they all focus on the relative decline in the slowdown’s intensity. Reading about the slowdown ‘slowing down’ is not the same as growth however, and does not warrant excitement in our opinion.

Our title this month paraphrases one of Bill Clinton’s presidential campaign messages from 1992. As one of the three key themes in Clinton’s campaign, “The economy, stupid” was printed on a sign in his headquarters in Little Rock to help campaign workers stay on message. This month we’re keeping it simple by focusing on the real economy and its implications for the stock market. Here is the real economy summarized in numbers, read more here – http://www.sprott.com/Docs/MarketsataGlance/July_2009.pdf

-Marc Faber says ultimate crisis still coming. The world has not seen the end of the financial crisis and the recent surge in markets was a result of excess liquidity coming from central banks, Marc Faber told CNBC in an interview. “If you pump money into the system and you create large fiscal deficits, you create volatility,” Faber, author of the Gloom, Boom and Doom Report, told CNBC in remarks reported on its website.

“We’ve seen an intermediate low in March, we’ll rally for a year or so or maybe 18 months the ultimate crisis will happen much later, and the ultimate crisis would clean the system,” he added. Faber, who did not forecast a precise time for that crisis, told CNBC that firing half the government workers in the world would be one way of dealing with the crisis. “If you shift government activity to the private sector the economy becomes more dynamic,” Faber said. Read more here – http://www.reuters.com/article/bondsNews/idUSBNG41907420090717

-The Financial Crisis Isn’t Over: Stephen Roach. The CIT Group woes show that the financial crisis is not over as more writeoffs are on the way, Stephen Roach, chairman at Morgan Stanley Asia. “Sorry to break to the news, but the financial crisis is not over, à la CIT. You’ve got plenty more writeoffs of bad paper to come,” Roach told CNBC.

“75 percent of the world’s economies today are still contracting and the biggest piece on the demand side of the global economy is the American consumer, who is dead in the water,” he added. The markets’ reaction to the “anemic character of the recovery” is pretty euphoric, and it actually is a manifestation of the excess liquidity poured into the system by monetary authorities, according to Roach. “Liquidity is seeking return and right now these markets are priced for a recovery that’s going to end up disappointing,” he said. Read more here – http://www.cnbc.com/id/31938270

-Roubini Says Risk of ‘Double Dip’ Global Recession. The global economy may fall back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth, said Nouriel Roubini, the New York University economist who predicted the credit crisis.

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labour market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.” Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aeY.UV6r3uiE

-Roubini: Economic Recovery to Be ‘Very Ugly’. Watch video here – http://www.cnbc.com/id/32012679

-Harvard’s Feldstein Sees Risk of ‘Double-Dip’ Recession in U.S. The U.S. recession may not be coming to an end and there is a risk the economy may experience a “double-dip” contraction, said Martin Feldstein, a professor of economics at Harvard University.

“There is a real danger this is going to be a double dip and that after six months or so we’ll have some more bad news,” Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. “We could slide down again in the fourth quarter.”

The economy could “flatten out” or “even be positive” in the third quarter, and then it’s likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.

“There isn’t going to be enough to sustain a really solid recovery,” he said, even though recent data has provided some “good news” on the economy. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a3IpfKeeveVM

-U.S. recession easing but likely not over: survey. The National Association for Business Economics’ quarterly industry survey found that demand is stabilizing, but a small majority of the 102 respondents said their firms had not yet seen the bottom. Read more here – http://www.reuters.com/article/newsOne/idUSTRE56J0OR20090720

-National unemployment is now officially reported to be between 9.5% and 10%. If we study the rules for counting these numbers its readily apparent the answers are way-off. The birth-death government model is absolute fiction. True national unemployment is now nearing 20%. We forecast the actual national jobless rate to peak at 30% to 35% within two years.

Roger Wiegand-Read more here – http://www.kitco.com/ind/Wieg_cor/roger_jul172009.html

-Unemployment could undercut U.S. recovery: Bernanke. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56K0AI20090721

-Michigan Jobless Rate Tops 15%, California Sees Record Level. Six U.S. states posted record unemployment rates in June, while Michigan became the first to top 15 percent in a quarter century, threatening to deepen budget crises in capitals across the nation.

The total number of states with at least 10 percent joblessness rose to 15, the Labour Department reported today in Washington. Georgia, Nevada, Rhode Island, South Carolina, Florida and Delaware all reached their highest level of joblessness since records began in 1976. Today’s figures are a blow to states already hammered by falling income and sales-tax receipts. California suffered the biggest drop in payrolls among all states. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOor3cUkmexE or http://money.cnn.com/2009/07/17/news/economy/state_unemployment_report/index.htm

-Americans Pay Back Debts Most Since ‘52 as Jobless Spur Savings. For the first time since Harry S. Truman was in the White House, Americans are paying back their debts, a phenomenon that just might help keep interest rates low as the Treasury sells a record $2 trillion of bonds and rising unemployment increases U.S. savings. Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=arUgjalkdR2g

-Canada Keeps Rate at 0.25%, Says Dollar Slows Rebound. Read more here – http://www.bloomberg.com/apps/news?pid=20601082&sid;=ak7dyddHZVm0

-Ron Paul Opening Statement Fed Hearing 07/21/2009. Ron explains the financial mess we are in today. Must watch video here – http://www.youtube.com/watch?v=pSRvnXtrmtE&eurl;=http%3A%2F%2Fgoldismoney.info%2Fforums%2Fshowthread.php%3Ft%3D393008&feature;=player_embedded

-2004-2009 Pompous Prognosticators Revisited. “We’re probably somewhere pretty close to a bottom.” Fund manager Barton Biggs September 2008. Read more here – http://news.goldseek.com/GoldSeek/1247208300.php

-Clinton stirs Israeli fears US will accept nuclear Iran. Secretary of State Hillary Clinton on Wednesday stirred Israeli fears that Washington would accept a nuclear armed Iran when she raised the idea of a US “defence umbrella” for Gulf allies. However, Clinton, during a visit to Thailand for an Asian security conference, said later that she was not announcing a new policy and simply wanted to turn Iran away from pursuing a nuclear weapon.

Clinton told Thai television in Bangkok that President Barack Obama’s administration was still open to engage Iran in talks about its nuclear programme but warned that Tehran would not be safer if it obtains a bomb. Read more here – http://www.breitbart.com/article.php?id=CNG.5fce011c9a76f3468914821101a3f8a5.381&show;_article=1

-Diplomats: Iran has means to test bomb in 6 months. Iran is blocking U.N. nuclear agency attempts to upgrade monitoring of its atomic program while advancing those activities to the stage that the country would have the means to test a weapon within six months, diplomats told The Associated Press Friday.

The diplomats emphasized that there were no indications of plans for such a nuclear test, saying it was highly unlikely Iran would risk heightened confrontation with the West and chances of Israeli attack by embarking on such a course. Read more here – http://www.breitbart.com/article.php?id=D99GET3G0&show;_article=1

-Reports: Iran reactor to be switched on this year. Russian news agencies quote the country’s nuclear agency chief as saying a Russian-built nuclear power reactor in Iran is still set to be switched on this year. Read more here – http://www.breitbart.com/article.php?id=D99JL72G0&show;_article=1

-More bodies go unclaimed as families can’t afford funeral costs. Read more here – http://www.latimes.com/news/local/la-me-unclaimed21-2009jul21,0,2534079.story

-The rate of U.K. pub closures is accelerating, with 52 going out of business every week at a cost of 24,000 jobs over the past year, figures show. Almost 2,400 pubs and bars have vanished from villages and towns in the past 12 months, according to research for the British Beer & Pub Association (BBPA).

Local pubs serving small communities have been the worst hit, the association said. The number of closures represents the steepest rate of decline since records began in 1990 and has risen by a third compared with the same period last year, when 36 pubs were closing every week.

A preference for drinking more cheaply at home, rather than going out, is thought to have contributed to closures. A BBPA spokesman said: “The biggest impact is the recession. There are fewer people out and fewer people spending money in pubs and bars. Pubs are diversifying but, unfortunately, if you are a community pub you can’t transform yourself into a trendy town centre bar.” Read more here – http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6722488.ece

WWW.RARECOLOREDDIAMONDS.COM

-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

-Pink Argyle Diamonds Tour the World. The Argyle Diamond mine in Western Australia has selected 43 of its best pink diamonds, and is taking them on the road as part of its annual world-wide tender process. This year’s collection of gems, known as “Grand Passions”, would easily fit in the palm of your hand, but it’s worth millions of dollars.

Jo Archer, from Argyle Diamonds, says the stones are usually bought by jewellery connoisseurs, private collectors and celebrities. She says Argyle produces more than 90 percent of the world’s pink diamonds, yet pinks make up a very small percentage of production.

“It’s one-tenth of 1 percent of the mine’s production, so just a tiny sliver,” she says. “And for these tender stones, there’s a million carats of rough diamonds mined for every one carat of pink diamond that reaches tender status.” Diamonds.net-Read more here – http://www.abc.net.au/rural/news/content/200907/s2632976.htm

-Christie’s to sell Annenberg’s 32-carat diamond. A giant gem will hit the auction block in New York this autumn with the sale of the 32-carat emerald-cut Annenberg diamond, which is expected to fetch as much at $5 million, Christie’s said on Wednesday. The flawless ring-mounted diamond, owned by philanthropist Lee Annenberg, widow of publishing magnate Walter Annenberg, leads the auction house’s magnificent jewels sale on October 21.

“Gems of this size are extremely rare, and their presence on the market is always an important event in the world of diamonds,” said Rahul Kadakia, Christie’s head of jewellery. “This gem’s impeccable color, clarity, and polish as well as its prestigious provenance will attract jewellery collectors from all over the world.”

Annenberg, who died in March aged 91, served as chairman and president of the Annenberg Foundation after the death of her husband, a one-time U.S. ambassador to Britain who started the foundation to fund nonprofits, education and the arts. Annenberg also served a chief of protocol during the first term of President Ronald Reagan.

The gem will go on tour ahead of the sale with stops in Geneva, London, Hong Kong, Los Angeles and New York. In December the 35.6-carat Wittelsbach blue diamond smashed expectations and sold for $24.3 million, which experts said was consistent with rare and colossal diamonds fetching especially strong prices during times of economic woe. Read more here – http://www.reuters.com/article/lifestyleMolt/idUSTRE56L4PB20090722

BAILOUT MAY REACH $23.7 TRILLION-LONG TERM U.S. DEBT

-U.S. Rescue May Reach $23.7 Trillion, Barofsky Says. U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aY0tX8UysIaM

-Bailout risk: $23.7 trillion? More like $3 trillion. TARP’s overseer has struck a chord with his estimate that the government has committed $23.7 trillion to rescue the economy. Here’s what’s at risk. Read more here – http://money.cnn.com/2009/07/22/news/economy/bailout_watchdog_barofsky/index.htm

-TARP watchdog Neil Barofsky says the total size of the bailout has now hit $23.7 trillion, when all the guarantees are factored in. Of course, the government doesn’t just provide a bailout total, so different parties may come up with different numbers. But one thing’s clear: ever since the first bailout, the estimate has grown and grown and grown and grown and grown. Let’s hope today’s number is as big as it gets. Read more here – http://www.businessinsider.com/chart-of-the-day-the-bailout-cost-2009-7

-Fannie & Freddie: The most expensive bailout. Efforts to use the troubled mortgage finance firms to fix housing market problems are likely to push the taxpayer bill for Fannie & Freddie above $100 billion. Read more here – http://money.cnn.com/2009/07/22/news/companies/fannie_freddie_bailout/index.htm?postversion=2009072215

-The Long-Term U.S. Budget Outlook from the CBO-Congressional Budget Office. The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II.

As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020. Read more here – http://cboblog.cbo.gov/?p=328

U.K. DEBT HITS A RECORD

-UK debt hits a record of £799bn. Total outstanding government debt in the UK has risen to a record £799bn, or 56.6% of UK GDP the highest since records began in 1974. New borrowing in June was £13bn, almost twice as much as a year ago, the Office for National Statistics said, after the downturn shrank tax receipts.

The figures also reflect the cost of bank bail-outs and higher spending on social security benefits. One economist described the state of the public finances as “dire”. “The figures are modestly better than expected. It doesn’t take away from the fact that the state of public finances is dire and that a considerable degree of fiscal tightening will be required,” said Philip Shaw, chief economist at Investec.

“The figures are volatile on a month-on-month basis. The size of the shortfall and volatility mean there is little to celebrate.” Analysts had forecast borrowing of £15.5bn in June.

The UK is on track to meet Chancellor Alistair Darling’s forecast of £175bn of borrowing this financial year.

Public borrowing for May was revised down to £18.6bn from an initial estimate of £19.9bn. Business groups warned that, although it appears that public borrowing is in line with the chancellor’s forecast, the government must not sit back.

“It would be wrong to tighten policy while the recession continues, but maintaining Britain’s international credibility requires a robust plan for restoring our public finances over the medium-term,” said David Kern, chief economist at the British Chambers of Commerce.

“This must focus on curtailing public spending across the board, while avoiding damaging measures that would harm wealth-creating businesses.” Meanwhile, a National Audit Office (NAO) report said that tax receipts fell by 10% in the past year the biggest fall since 1923. Read more here – http://news.bbc.co.uk/2/hi/business/8160614.stm

-UK budget deficit hits record high in June. Total government spending in June hit £49bn, up from £44.2bn a year earlier. Read more here – http://www.guardian.co.uk/business/2009/jul/21/budget-deficit-hits-record-recession

FISCAL RUIN OF WESTERN WORLD BECKONS

-For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to war-time levels, look at what is happening to the Irish welfare state. Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state.

He has passed two emergency budgets to stop the deficit soaring to 15 percent of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap. A further 17,000 state jobs must go (equal to 1.25 million in the US), though unemployment is already 12 percent and heading for 16 percent next year.

Education must be cut 8 percent. Scores of rural schools must close, and 6,900 teachers must go. “The attacks outlined in this report would represent an education disaster and light a short fuse on a social time bomb,” said the Teachers Union of Ireland. Nobody is spared. Social welfare payments must be cut 5 percent, child benefit by 20 percent. The police, already smarting from a 7 percent pay cut, may have to buy their own uniforms. Hospital visits could cost L107 a day, etc, etc.

“Something has to give,” said Professor Colm McCarthy, the report’s author. “We’re borrowing E400 million a week at a penalty interest.” No doubt Ireland has been the victim of a savagely tight monetary policy given its specific needs. But the deeper truth is that Britain, Spain, France, Germany, Italy, the US, and Japan are in varying states of fiscal ruin, and those tipping into demographic decline (unlike young Ireland) have an underlying cancer that is even more deadly. The West cannot support its gold-plated state structures from an aging workforce and depleted tax base. Read more here – http://www.gata.org/node/7604

FOUR MORE U.S. BANKS GO DOWN

-Four more banks bite the dust. Two in California , one in Georgia and one in South Dakota these FDIC closures bring the total number of failed banks in 2009 to 57. Read more here – http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ab6guPdqNcq4 or http://money.cnn.com/2009/07/17/news/companies/bank_failures/?postversion=2009071718

FOUR BAD STOCK BEAR MARKETS

UPDATED INFLATION CHART 1872 TO PRESENT

REAL ESTATE-RENTAL-MORTGAGES-FORECLOSURES

-The commercial real estate time bomb. There’s a new main character moving to center stage in the great real estate meltdown. Underwater homeowners vying to refinance or score a loan modification have grabbed much of the headlines (and bailout attention) to date. But now commercial real estate is moving into the spotlight as the next potential body slam for the economy. Read more here – http://moneyfeatures.blogs.money.cnn.com/2009/07/20/the-commercial-real-estate-time-bomb/

-Commercial mortgage failure at 20-year high in U.S.: report. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56J1A120090720

-Bernanke Says Commercial Property May Pose Risk for Economy. Read more here – http://www.bloomberg.com/apps/news?pid=20601068&sid;=a2mAhkgbWDXc

-Manhattan Storefronts Hit Highest Vacancies Since ’01. Manhattan shopping strips from the Upper East Side to SoHo are flooded with empty storefronts. The borough’s second-quarter vacancy rate rose to 12.4 percent and now stands at the highest since 2001 as rising unemployment and the recession curb spending, according to data compiled by Faith Hope Consolo, chairman of the retail leasing and sales division at Manhattan- based Prudential Douglas Elliman Real Estate.

“The consumer just stopped shopping,” Consolo said. More than 15 percent of the 185 stores on Madison Avenue between 57th and 72nd streets are vacant or about to lose tenants, according to New York-based broker Cushman & Wakefield Inc. In SoHo, 11 percent of the 551 stores are listed as available for lease. About 9 percent of the 265 stores on the Upper West Side are without tenants or soon will be.

Rents may fall as much as 23 percent by the fourth quarter from a year earlier and may continue dropping through 2010 given the pace of unemployment and consumer demand, according to Sam Chandan, chief economist at research firm Real Estate Econometrics in New York. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aCUtsLdJ9k0M

-U.S. Home Prices Have Smallest Decline in 10 Months. U.S. home prices had the smallest annual drop in 10 months, signalling the free fall of property values is abating in the three-year housing slump at the center of a global recession.

Prices declined 5.6 percent in May from a year earlier and rose 0.9 from April, the Federal Housing Finance Agency in Washington said today. “We saw a rebound of home prices in some parts of the country in part because the share of distressed sales dipped,” said Thomas Lawler, a former Fannie Mae economist who’s an independent consultant in Leesburg, Virginia. “That’s not any solace to anyone losing his shirt.”

Five U.S. regions showed price increases in May from April, the FHFA said. Job losses and record foreclosures have deterred buyers and slashed U.S. home prices 33 percent since the July 2006 peak, according to the S&P;/Case-Shiller index. The highest unemployment since 1983 and the biggest foreclosure rate on record thwarted government efforts to revive real estate demand.

The area that includes California had the biggest one-month gain from April, at 2.7 percent. The South Atlantic region that includes Florida saw a 1.4 percent increase in May. Prices in New England fell 2 percent and in the region that includes New York and New Jersey dropped 0.1 percent. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=akYQTO67sF2A

-Home Resales Rise for Third Month as Housing Steadies. Sales of existing homes in the U.S. rose in June for a third consecutive month, signalling the four year slump that precipitated the financial crisis is ending. Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors said today in Washington. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aj5tMUyodk.I or http://www.bloomberg.com/apps/news?pid=20601087&sid;=atDcwF9fS0ws

-U.S. housing inventory data points to stabilization. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56G3NC20090720

-Hamptons Luxury Market Stalls With Four-Year Inventory Pileup. Luxury home sales in the Hamptons, New York’s oceanside retreat for Wall Street and Hollywood luminaries, stalled in the second quarter as the number of unsold properties swelled and owners cut prices an average of 20 percent.

Only 37 houses and condominiums priced at more than $2.36 million sold in the Hamptons and on Long Island’s North Fork, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. Inventory jumped 46 percent. At the current sales pace it would take four years to sell all 584 luxury homes on the market.

“You have concerns about future layoffs and lower compensation,” Miller Samuel President Jonathan Miller said. “Unemployment needs to top out and begin to decline before you see renewed confidence in the second-home market.” Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=aI4op.R9fF.0

-Trump Park Avenue Penthouse Duplex Falls from $51 M. to $31 M. Read more here – http://www.observer.com/2009/real-estate/trump-park-avenue-penthouse-duplex-falls-51-m-31-m

-U.K. Property Asking Prices Rebounded in July, Rightmove Says. British home sellers raised asking prices this month to meet increased demand from buyers, Rightmove Plc said. The average cost of a home rose 0.6 percent to 227,864 pounds ($372,000) after falling 0.4 percent in June, the operator of the U.K.’s biggest residential property Web site said today in a statement. Prices in London had the first annual gain of the year so far.

The housing market is showing signs of recovery from the worst economic contraction in a generation after officials rescued banks and started printing money. Ernst & Young LLC’s Item Club today raised its forecast for British gross domestic product in 2010 to show expansion. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5k9OgVx0ZWQ

-Spanish Rents Fall in Worst Housing Glut Since 1950s. Arancha Ibarra considers herself one of the lucky victims of Spain’s housing collapse. After struggling to find a buyer for her renovated two- bedroom apartment in Madrid for two years, Ibarra found a tenant for 750 euros ($1,066) a month, becoming one of the 1.5 million second-home owners thrust onto the country’s rental market.

The number of properties for rent in Spain climbed 55 percent in the past two years to 3.3 million, the highest since the Ministry of Housing started collecting the data in 2004. Rents in cities, including Madrid and Barcelona, are falling for the first time in seven years with declines of as much as 8 percent, according to Madrid-based property research firm Idealista.com.

“Those who need to sell but can’t are being forced to lease,” said Fernando Encinar, co-founder and head of research at Idealista.com, Spain’s largest real estate Web site with 308,000 listings for rent and purchase. “We haven’t seen this number of properties for rent since the 1950s.”

Spain built about 29 percent of new homes in the European Union from 2001 to 2007, even as it represented just 9 percent of the population. The resulting glut of 1.5 million unsold houses and apartments sparked the end of a decade-long real estate and construction boom that accounted for about 20 percent of the country’s gross domestic product in 2007. Read more here – http://www.bloomberg.com/apps/news?pid=20601109&sid;=aTcShxOgN1o8

-Foreclosures at record high in first half 2009 despite aid. U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated. Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.

The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year. “Despite everybody’s best efforts to date we’re not really making any headway against the problem,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months. One in every 84 households with loans got at least one foreclosure filing in the first half of this year. “I don’t think this suggests the economy is any worse than anyone expected but I certainly don’t think it shows by itself any signs of improvement,” Sharga said. Read more here – http://www.reuters.com/article/businessNews/idUSTRE56F0XK20090716?feedType=RSS&feedName;=businessNews&rpc;=23&sp;=true

-After the Foreclosure: Downsizing and Doubling Up. Moving in with roommates and family: It’s what happens to folks who lose their homes, and it ain’t pretty. Read more here – http://www.msnbc.msn.com/id/32009116/ns/business-businessweekcom/

The Goldbugg Report – July 28, 2009
Posted by Worldwide Precious Metals on Tuesday, July 28, 2009

The Goldbugg Report – July 21, 2009

July 21, 2009

WORLD FINANCIAL REPORT ON RADIO JULY 17 2009 SHOW

-10 compelling reasons why gold is going to do well this year.

-Ted Butler silver commentary.

-John Embry July commentary.

GOLD

-COMEX traders predict gold at $1,600 by December. Here are 10 compelling reasons why gold is going to do well this year. Read more here- http://www.commodityonline.com/news/COMEX-traders-predict-gold-at-$1600-by-December-19397-3-1.html

1) The Stimulus Effect: Including $1 trillion in cash infusions, the stimulus plan will pump $9.7 trillion into the economy, according to Bloomberg. As the Globe & Mail reports flatly, "Many believe that the monetary stimulus efforts will cause a spike in inflation," driving gold higher.

2) COMEX Traders Predict $1,600 Gold by December: If gold trades at or above $1,600 by December, some 100,000 call option contracts will be "in the money." Big-money players Goldman Sachs and JPMorgan are reportedly helping to drive the action, ahead of a huge purchase of gold futures contracts.

3) "Big Money" Inflows: In 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold, too, including Eton Park Capital, Green light Capital and Hayman Advisors.

4) China’s Doubling Down! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries and into gold, this will help fuel the next leg of the run-up.

5) Demand Building across the Board: Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540% another trigger for the coming gold boom.

6) The Paper Dollar’s 30% Drop: Since 2001, the U.S. Dollar Index has tanked 30% while gold has risen 300%. With all the downward pressure on the dollar, and inflation on the way, this trend is about to pick up steam.

7) Gold/Dow Ratio Signals $8,000 Gold: During major gold bull markets (and corresponding equity bears), gold and the Dow converge at a 1-to-1 ratio. During the last gold bull, the Dow sank to 850 and gold rose to $850. The Dow is now over 8,000. But even if it fell to 4,000, we could see $4,000 gold before this bull run is over!

U.S. Treasury Dept. Signals $5,468 Gold: Currently, the U.S. government holds about 286.9 million ounces of gold. It has printed about $1.569 trillion worth of paper dollars. If each dollar were backed by gold, that would put the price at $5,468.80 an ounce.

9) Riding the "Commodity Super Cycle": Jim Rogers expects the Commodity Super Cycle to drive commodity prices higher for another eight years including gold. And he’s stockpiling the yellow metal by the day. Every pullback, says Rogers, is another buying opportunity. Considering he’s been dead right on every major trend of the past 40 years, we wouldn’t bet against him.

10) Historic Model Predicts $6,214 Gold: During the last gold bull, the yellow metal ran from $35 an ounce to $850, a 24-fold increase. This bull started with gold at $255.95, meaning that if historic trends hold, the price target would be $6,214 an ounce.

-U.S. Mint again suspends gold coin production. Read more here- http://www.gata.org/node/7590

-MineWeb elaborates on U.S. Mint’s latest coin suspension. U.S. Mint gold, silver coin sales ‘temporarily suspended’ again. Sales and suspension of gold and silver coin or bullion coin sales by the U.S. Mint are becoming a regular part of doing business as overloaded refiners and mint facilities struggle to meet continuing high demand.

Unprecedented demand, a shortage of blanks, and restrictive policies and regulations continue to exacerbate what is almost becoming a chronic shortage of gold and silver coins authorized by the U.S. Mint. The U.S. Mint has again “temporarily” suspended sales of almost all of its gold uncirculated and proof coins, along with nearly all of silver uncirculated coins because of the limited availability of blanks.

U.S. Mint spokesman Michael White told Mineweb refiners are running 24-hours a day, seven days a week trying to meet demand for blanks. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86213&sn;=Detail

-Gold market update from Clive Maund. Read more here- http://news.goldseek.com/CliveMaund/1247503418.php

-John Embry July commentary. Read more here- http://www.sprott.com/Docs/InvestorsDigest/2009/07_24_2009.pdf

-Jay Taylor: “Gold is Where I Want to Be”. No, other than just that I think people need to be cautious right now, and not be swayed by the mainstream media to get back into the equity markets. Be very, very careful because Wall Street and their propaganda tools like the major media networks are helping them sell increasingly worthless paper instruments.

Wall Street can’t create gold or silver, which are real money. They can create fake money paper money and they like to sell you products made from that. It’s “buyer beware” and that is exactly what I try to do on my radio show. Make buyers beware of the horrendous downside to this market as well as ways to make a profit. But as I said, for the most part, gold is where I want to be. Read more here- http://news.goldseek.com/GoldSeek/1247256615.php

-Two more gold myths on interest and volatility. Two more gold myths as seen by Ronald Stoeferle, continuing our series on based on his analyses in Erste Bank’s Special Report on Gold.

Myth # 3: Gold does not pay interest, Myth # 4: The gold price is volatile and speculative, and gold is bad in a deflationary environment. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86041&sn;=Detail and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86086&sn;=Detail

-This is a rare interview on South African television yesterday featuring the gold uber-guru Jim Sinclair who is offering a $1 million bet that gold will reach $1,650 by January 14th 2011. Watch more here- http://www.youtube.com/watch?v=1Cgnn72_v6s

-Russian president muses favourably about gold as money. Russian President Dmitry Medvedev said on Friday he had been given an example coin of a possible global currency at the G8 summit in Italy, adding that all aspects of reserve currencies were under discussion.

“We are discussing both the use of other national currencies, including the ruble, as a reserve currency, as well as supranational currencies,” the Russian leader said at a news conference following the G8 summit. Medvedev showed reporters an example of a coin of a supranational currency, which he called a “united future world currency.”

“This is a symbol of our unity and our desire to settle such issues jointly,” Medvedev said, adding that the coin had been made in Belgium. He also expressed the hope that a day would come when something of the kind would be used for payment. Read more here- http://www.gata.org/node/7591 or http://www.themoscowtimes.com/article/1010/42/379464.htm

-Commodity exchanges can dump gold debts on ETFs. GATA board member Adrian Douglas discloses in the report below, titled “The Alchemists,” that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs).

This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold. Read more here- http://www.gata.org/node/7586

-Gene Arensberg: U.S. banks still dominate gold, silver shorts. Read more here- http://www.gata.org/node/7588

-Missing Canadian gold could have left mint in liquid form. Experts speculate on how $15M in bullion slipped past elaborate security. Read more here- http://www.ottawacitizen.com/business/Missing+gold+could+have+left+mint+liquid+form/1784600/story.html

SILVER

-Daily Bell interviews James Turk on gold and silver. Read more here- http://www.gata.org/node/7562

Daily Bell: Does gold remain undervalued?

Turk: Yes, which is quite amazing considering that gold has risen eight years in a row against the US dollar and appreciated during this period at an average annual rate of 16.3 percent. In fact, gold has risen by double-digit annual rates this decade against all the world’s major currencies. But 1 ounce of gold still buys approximately the same amount of crude oil it purchased when this decade began.

This performance is a testament to how badly the purchasing power of the dollar is being destroyed, which is quite ironic given that real estate in the United States is getting cheaper by the month. What is clear is that we are measuring this decline in real estate prices with a currency that is inflating. That real estate is falling in price while the purchasing power of the dollar is eroded by inflation simply shows how overvalued real estate had become at the height of that bubble.

Daily Bell: How about silver?

Turk: The gold/silver ratio is still way above historical norms. As bullish as I am about gold, I remain more bullish about silver. However, silver is more volatile than gold, so it may not be for everyone.

-Ted Butler silver commentary. Read more here- http://news.silverseek.com/TedButler/1247586939.php

-Clive Maund silver market update. Read more here- http://news.silverseek.com/CliveMaund/1247503191.php

-Despite some headwinds, ScotiaMocatta still bullish on gold and silver. Noting IMF gold sales are all but inevitable, ScotiaMocatta still remains bullish on gold over the medium to long term. Silver has been outperforming making it vulnerable short term, but again confidence expressed medium term. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86089&sn;=Detail

PLATINUM-PALLADIUM

-Fortis White Book Analysis of platinum and palladium fundamentals. Read more here- http://mineweb.net/mineweb/view/mineweb/en/page674?oid=86169&sn;=Detail

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-The Great Debt Mountain. Unless our economy goes through some major, structural changes, we’ll need consumers to spend again for GDP to grow. And while consumers might be feeling good after today’s rally, that doesn’t help the monster overhang, which as today’s chart shows remains near all-time highs. Read more here- http://www.businessinsider.com/chart-of-the-day-consumer-debt-2009-7

-Debt Still Swallowing Up Our Cash. Americans are finally feeling less stressed about their debt payments, but make no mistake, paying off debt will continue to be a major suck on finances for some time.

As this data from the Fed shows, household debt service ratios have come of their peak, but are still well above historical levels for the last three decades. Until this gets in line, don’t expect a rebound in spending. Read more here- http://www.businessinsider.com/chart-of-the-day-household-debt-service-ratio-2009-7

-”Where all think alike, no one thinks very much.” Walter Lippmann-Bio here- http://en.wikipedia.org/wiki/Walter_Lippmann

-”Government big enough to supply everything you need is big enough to take everything you have. The course of history shows that as a government grows, liberty decreases.

Gerald Ford the 38th President of the United States, Presidential address to a joint session of Congress August 12 1974-Bio here- http://en.wikipedia.org/wiki/Gerald_Ford

-Last, but by no means least, courage moral courage, the courage of one’s convictions, the courage to see things through. The world is in a constant conspiracy against the brave. It’s the age-old struggle the roar of the crowd on one side and the voice of your conscience on the other. General Douglas MacArthur-http://en.wikipedia.org/wiki/Douglas_MacArthur

-To the masses, the catchwords of Socialism sound enticing so they will continue to work for Socialism, helping thereby to bring about the inevitable decline of the civilization which the nations of the West have taken thousands of years to build up. Ludwig von Mises-Read more here- http://en.wikipedia.org/wiki/Ludwig_von_Mises

-Gold or silver? I’d rather buy silver today. I own both and I’m not selling either. Jim Rogers-Read more here- http://economictimes.indiatimes.com/Opinion/Interviews/Commodities-are-sizzling-says-Jim-Rogers/articleshow/4774115.cms

-Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt.’ Vice President Joe Biden told people attending an AARP town hall meeting that unless the Democrat-supported health care plan becomes law the nation will go bankrupt and that the only way to avoid that fate is for the government to spend more money.

"And folks look, AARP knows and the people working here today know, the president knows, and I know, that the status quo is simply not acceptable," Biden said at the event on Thursday in Alexandria, Va. "It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it. It can’t do it financially."

"We’re going to go bankrupt as a nation," Biden said. "Well, people when I say that look at me and say, ‘What are you talking about? You’re telling me we have to go spend money to keep from going bankrupt?’" Biden said. "The answer is yes, I’m telling you." Read more here- http://www.cnsnews.com/public/content/article.aspx?RsrcID=51162

-Greenlight Holds Bullion, Buys Reinsurance Stocks. Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter. "At a minimum this will provide some savings as the costs of storing gold are less than the fees" for the SPDR Gold Trust, the New York-based firm said yesterday in a letter to investors.

The firm’s Greenlight Capital LP fund gained 16.3 percent in the second quarter, bringing its return this year to 21.5 percent boosted by investments in Ford Motor Co. debt, according to the letter, a copy of which was obtained by Bloomberg News. The fund lost 23 percent last year. Hedge funds returned an average 9.4 percent this year through June after losing 19 percent in 2008, according to Hedge Fund Research Inc. in Chicago. Read more here- http://www.bloombergnews.com/apps/news?pid=20601213&sid;=arz6MqVbTVBs or http://www.gata.org/node/7593

-John Rubino: A sudden worldwide currency revaluation is imminent. In his new essay, “A Tremendous Secret,” financial writer John A. Rubino, co-author with GoldMoney’s James Turk of “The Coming Collapse of the Dollar,” foresees an imminent worldwide currency revaluation.

This revaluation, Rubino thinks, will correct the biggest financial imbalance of all, the ratio between the value of the world gold supply and the supply of fiat money. Such revaluations, as Rubino notes, are not done gradually but overnight, so that no one can trade against them and so there is no chaotic escape from the new currency system after it is imposed.

A clue in support of Rubino’s speculation may be found in the communique issued last week by the G8 conference in Italy, which said: “We will refrain from competitive devaluations of our currencies.” But of course the G8 pledge against “competitive devaluations” was not a pledge against coordinated and cooperative devaluations. Read more here- http://www.gata.org/node/7597

-"The money pumped into economies by governments around the world is likely to support various asset price bubbles across global markets in coming years," said Bill O’Neill, portfolio strategist at Merrill Lynch Global Wealth Management. "The fact is that gold is a good hedge against the legacy effects of governments throwing vast sums at the crisis issue," O’Neill added. Casey Daily Resource

-"The next wave of gold investment, which will take the price well above $1,000, may follow a rise in Fed purchases of long-term government debt securities. Before the end of the year, we will see that type of evolution." Philip Klapwijk, the executive chairman of GFMS Ltd

-The Commodity Futures Trading Commission looks eager to move quickly to implement trading limits on commodity and energy futures, leaving opponents little time to argue that the agency is going too far, too fast.

In response to gyrating oil and commodity prices, the CFTC announced this week it was planning to clamp down on big market players by implementing position limits on all commodity futures contracts of limited supply, focusing especially on energy.

The CFTC said it would hold hearings in the next few weeks to get broad public input before embarking on the reforms. Some analysts had suggested the process could be slow and it would be months before anything new was implemented.

But Bart Chilton, a CFTC commissioner, signalled otherwise. “We’re looking at a pretty fast timeline,” Chilton told Reuters in an interview. “We’re going to use our authority to the fullest extent possible. That doesn’t mean we’re going to be draconian or go too far,” he vowed. Read more here- http://www.reuters.com/article/ousiv/idUSN1052575320090710?pageNumber=1&virtualBrandChannel;=0

-Cash-strapped Spain has ordered its navy to look for huge gold reserves that were lost at sea in the 16th century. Gold bullion and silver treasure worth an estimated £85billion the size of the nation’s current budget shortfall lies on the sea bed off the coast of southern Spain.

The Inca and Aztec loot is believed to be in heavily laden vessels which hit the bottom of the sea in bad weather as they returned to Cadiz from South America. Naval mine sweepers are to begin radar and sonar surveys to try to locate the wrecks. Read more here- http://www.mirror.co.uk/news/top-stories/2009/07/13/spain-seeks-el-of-a-haul-115875-21515845/ or http://www.commodityonline.com/news/Spain-hunts-for-gold-treasure-in-sea-19531-3-1.html

-China’s Foreign-Exchange Reserves Surge, Exceeding $2 Trillion. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=anqPFHKCq40s

-China criticises dollar. Dai Bingguo, who is standing in for the Chinese president Hu Jintao at the G8 meetings, raised questions over the dominant role of the dollar as the world’s reserve currency. Read more here- http://www.telegraph.co.uk/news/worldnews/asia/china/5793308/China-criticises-dollar.html

-China Should Keep Buying U.S. Treasuries, PBOC Economist Says. China and other nations with large dollar reserves should hold negotiations with the U.S. government on how those funds can be injected into the world’s largest economy, and those talks should include the possibility of shifting bond holdings into other assets such as stocks and gold, Wang wrote. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=awz3NJatMDzk

-Darling Says Global Bank Rules Needed to Cope With Bank Crisis. U.K. Chancellor of the Exchequer Alistair Darling, following a meeting with U.S. Treasury Secretary Timothy Geithner, said the world needs a global rulebook for banks to prevent future crises. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aFWiOP33Hd6w

-Bank of Wyoming Seized; 53rd U.S. Failure This Year. Bank of Wyoming in Thermopolis was closed by regulators, the 53rd lender to fail this year, amid rising unemployment and home foreclosures in the deepest recession in a quarter century.

Bank of Wyoming, with $70 million of assets and $67 million of deposits, was closed by the state’s Department of Audit, Division of Banking and the Federal Deposit Insurance Corp. was named receiver, the FDIC said today in a statement. Central Bank & Trust in Lander, Wyoming, will assume the deposits and the failed bank’s only office. Read more here- http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=agpbmkGrsbu4

-Bunning Says FDIC Warned Lawmakers of Banks at Risk. Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers that 500 more banks are at risk of failure "unless something dramatic" happens, Senator Jim Bunning said.

Bunning, a Kentucky Republican, said at a Senate Banking Committee hearing today that he had "just" left a meeting with Bair in which she made the statement. An FDIC spokesman, Andrew Gray, disputed Bunning’s recollection of the meeting.

"In both public and private settings, the chairman and the FDIC is always careful to not make predictions on the number of upcoming bank failures," Gray said in an e-mail. "No estimate" was given during the meeting, which took place last week, Gray said. "We would regret any miscommunication, but she did not say that," Gray added. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8SeuFzxr6I8

-Investors Say ‘Tarnished’ Fed Shouldn’t Oversee Risk. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=ahejSLs7kIMM

-Eliot Spitzer, the former New York governor and attorney general, said U.S. banks made a "bloody fortune" while receiving taxpayer money without a proven benefit to the wider economy.

Politicians understand the "populist rage" with excesses in the financial industry and in this case the "public is right," Spitzer said in a Bloomberg Television interview today. "We have saved financial services, we have not created a single job. We are still bleeding jobs."

As New York attorney general, Spitzer was known as "the sheriff of Wall Street." He changed business practices and collected billions of dollars in settlements from financial corporations such as Merrill Lynch & Co., American International Group Inc. and Marsh & McLennan Cos. He later became governor, resigning in March 2008 after he was identified as a client of the Emperors Club VIP, a high-priced prostitution ring.

Spitzer said rules proposed by President Barack Obama’s administration are irrelevant because agencies failed to enforce existing regulations. "Regulatory agencies already had the power to do everything they needed to do," he said. "They just affirmatively chose not to do it."

"You don’t need new regs to do it, you just need the will to do what they were supposed to do," he said. Former Federal Reserve Chairman Alan Greenspan had "avowed a theory of hands off" and didn’t consider himself a regulator, Spitzer said.

"What we’re seeing now is a new regulatory spirit," he said. Spitzer said the lessons of the financial crisis will only be remembered over a short period of time. "Over and over we fall into the same trap," he said. "Ten years from now we will have forgotten." Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.H0jl05On0A

-Credit Swaps Investigated by U.S. Justice Department. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aTIJ1GZBX_m4

-Fed’s Hoenig says U.S. recovery to be very slow. Read more here- http://www.reuters.com/article/ousiv/idUSTRE56D6CK20090714

-Fed economist says U.S. recovery to be “painfully gradual”. Read more here- http://www.reuters.com/article/ousiv/idUSTRE56D3Y420090714

-Fed Saw Economy as ‘Vulnerable’ at June FOMC Meeting. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXtRjUz2MSXY

-The U.S. economy may pull out of a recession by the end of the year and a second stimulus package would help broaden the recovery, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

"The free fall of the economy has stopped," Roubini said at a Chilean investors’ conference in New York. "The economy is still contracting but slowly." To help shore up growth, a second spending package may be needed by late 2009 or early 2010 totaling between $200 billion and $250 billion, Roubini said.

"We should continue with fiscal stimulus and we might need a second one," Roubini said. While the worst of the crisis is over, there’s still a "meaningful amount of weakness" in labor markets, industrial production and housing, he said. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSQQBfqRSYco

-Tab hits $95.7 billion so far for bailout of General Motors, Chrysler and auto parts suppliers. Read more here- http://content.usatoday.com/communities/driveon/post/2009/07/68494276/1

-The Economy Is Even Worse Than You Think. The average length of unemployment is higher than it’s been since government began tracking the data in 1948. Read more here- http://online.wsj.com/article/SB124753066246235811.html

-Sears Starts Christmas Sales in July. Read more here- http://www.myfoxny.com/dpp/your_money/consumer/090710_Sears_Christmas_Sales

-Mexico Faces ‘Unsustainable Deficits,’ Analysts Say. Mexico’s fiscal accounts may be heading toward "unsustainable deficits" as a decline in oil production cuts government revenue, according to Morgan Stanley. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a05nw0vjJA3c

-UK can’t afford another fiscal rescue, warns IMF. Britain is the world’s only leading economy unable to budget for any kind of economic rescue package next year, the International Monetary Fund has warned. Read more here- http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5804507/UK-cant-afford-another-fiscal-rescue-warns-IMF.html

-Kim Jong Il’s Health Is Deteriorating, Reports Say. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOhfErNzjXLU

-Five North Korean officials have been barred by the United Nations Security Council from leaving their country and are to have their foreign assets frozen as punishment for working on nuclear weapons and missiles. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aaWL1nGtzNUQ

-Ahmadinejad: Iran will “bring down” Western foes. Newly re-elected President Mahmoud Ahmadinejad said on Thursday his next government “would bring down the global arrogance,” signalling a tougher approach by Tehran toward the West after last month’s disputed election.

Ahmadinejad, in his first provincial trip after the June 12 presidential vote, said Iran’s enemies had tried to interfere and foment aggression in the country, referring to mass opposition protests against the official election result.

The hardline president, who often rails against the West, said the Islamic Republic wanted “logic and negotiations” but that Western powers had insulted the Iranian nation and should apologize. Iranian leaders often refer to the United States and its allies as the “global arrogance.” Read more here- http://www.reuters.com/article/newsOne/idUSDAH65258120090716

-Israeli warships rehearse for Iran attack in Red Sea. Israeli warships have deployed to the Red Sea for what has been described as a rehearsal for a possible attack on Iran. Read more here- http://www.telegraph.co.uk/news/worldnews/middleeast/israel/5842963/Israeli-warships-rehearse-for-Iran-attack-in-Red-Sea.html

-U.K. Considers Abolishing Mandatory Retirement Age of 65. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a2NbFkFZCAQM

-Gulf Hurricane Chances Low for Next Two Weeks, Forecasters Say. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.fP0sJhMYj0

-WHO says new flu “unstoppable” calls for vaccine. Read more here- http://www.reuters.com/article/newsOne/idUSTRE56C60820090714

-New flu resembles feared 1918 virus: study. Read more here- http://www.reuters.com/article/newsOne/idUSTRE56C3K120090713

-Swine flu ‘will keep one in eight workers at home’. Businesses will be crippled within two months as swine flu forces one in eight workers to stay at home, according to official figures.

Prof Sir Liam Donaldson, the chief medical officer, will say that up to 12 per cent of the workforce will be sick by September, in addition to the nine per cent of workers predicted to contract the virus in August. Across the first wave of the pandemic this summer up to 30 per cent of population may catch swine flu, the figures suggest. Read more here- http://www.telegraph.co.uk/health/swine-flu/5838326/Swine-flu-will-keep-one-in-eight-workers-at-home.html

-11-bedroom Aspen home sells for $43 million. Read more here- http://www.denverpost.com/ci_12830008

-Violin Fund Seeks $100 Million for Stradivari Strings. Read more here- http://www.bloomberg.com/apps/news?pid=20601213&sid;=a1O.bRn0HuGs

WWW.RARECOLOREDDIAMONDS.COM

-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

-Rio Tinto 2Q Diamond Production -72%. Rio Tinto reported Wednesday that its diamond production fell 72 percent to 1.281 million carats in the second quarter of 2009. The company explained that the global economic downturn had severely impacted prices and sales volumes of diamonds. "The effect on the rough diamonds market has been exacerbated by the lowering of inventory levels in the diamond pipeline, resulting from reduced global liquidity," Rio Tinto explained in its quarterly operations review.

Production at the company’s fully-owned flagship Argyle mine decreased 86 percent to 408,000 carats, after Rio Tinto reduced production at the mine in March due to the decline in diamond demand. The company slowed the mine’s underground development project to critical activities and placed its diamond-processing facilities on a three-month extended maintenance shutdown. Rio Tinto’s 60 percent production share of the Diavik mine dropped 44 percent to 853,000 carats. The company also owns 78 percent of the Murowa mine in Zimbabwe, where its share of production sank 62 percent to 20,000 carats.

During the first half of 2009, Rio Tinto’s diamond production fell 14 percent to 6.787 million carats. Production at Argyle decreased 7 percent to 4.812 million carats, while the company’s share of Diavik’s output declined 26 percent to 1.924 million carats and its stake in production at Murowa dropped 51 percent to 51,000 carats. Read more here- http://www.diamonds.net/news/NewsItem.aspx?ArticleID=27096 or http://www.idexonline.com/portal_FullNews.asp?id=32631

-Diamond production dips by 62.4% for South Africa. Diamond production has decreased by 62.4 percent at South Africa, during May 2009, when compared to the same month last year. But in comparison to diamond production in April 2009, the May figures indicate only a 1 percent drop.

Diamond production showed an increase of 1.9 percent in the quarter ending May 31, when compared to the previous quarter. Production of gold also showed a decline of 10.5 percent in May 2009 as compared to the same month last year, while the entire mineral production was lower by 14.5 percent. Read more here- http://diamondworld.net/contentview.aspx?item=3989

OIL CRUNCH COMING

-Oil crunch likely after fall in oil, gas exploration. A sharp decline in oil and gas exploration because of the global credit crunch will lead to another spike in prices, probably within the next four years, a leading energy finance consultancy said on Tuesday.

Christopher Moyes, president of Dallas-based Moyes & Co. Inc, which manages acquisitions and investments for dozens of medium-sized oil and gas companies, said the spiralling cost of capital over the last year has slashed the number of exploration projects and hit the value of potential oilfields.

As the cost of financing all projects has escalated, oil companies are turning their backs on risky exploration and are instead under pressure to obtain hydrocarbon resources through the easier route of mergers and acquisitions. “It is bound to lead to a supply crunch,” Moyes told Reuters in an interview. “Sometime between 2013 and 2016 we will have another price crunch.”

“The last three price spikes have had a lead time of about 1,500 to 2,500 days. The bottom of the price trough was January. It is about 1,500 days until where we run into the supply crunch again, when demand rises and we can’t supply.” “The problem will be a demand issue out of China and India, putting pressure on the market, causing prices to go up and we won’t be able to turn the taps on fast enough.”

Oil prices peaked a year ago at over $147 per barrel for benchmark U.S. light crude oil futures but then collapsed to under $40 in December before recovering to over $70 in June and falling to just below $60 by (11 a.m. EDT) on Tuesday. The International Energy Agency, the Organization of the Petroleum Exporting Countries and other agencies have warned that an oil supply crunch is possible if exploration does not begin to pick up fast. Read more here- http://www.reuters.com/article/hotStocksNews/idUSTRE56D45G20090714

U.S. BUDGET GAP EXCEEDS 1 TRILLION FOR FISCAL YEAR

The U.S. budget deficit topped $1 trillion for the first nine months of the fiscal year and broke a monthly record for June as the recession subtracted from revenue and the government spent to rejuvenate the economy.

The shortfall for the fiscal year that began Oct. 1 totaled $1.1 trillion, the first time that the gap for the period surpassed $1 trillion, Treasury figures showed today in Washington. The excess of spending over revenue for June was $94.3 billion, the first deficit for that month since 1991, according to data compiled by Bloomberg.

Individual and corporate tax receipts are sliding even as the worst recession in five decades shows signs of easing because the jobless rate continues to rise reaching a 26-year high in June — and companies have yet to see a sustained increase in demand. The shortfall is also widening as the government ramps up spending from the $787 billion stimulus program President Barack Obama signed into law in February.

"This is a difficult pill to have to swallow," said Richard Yamarone, director of economic research at Argus Research Corp. in New York. "The economy and banking system need these funds to recover, yet it will ultimately hit Americans’ wallets hard. It’s a necessary evil." Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=aiaDbSX1Ziwg

-June budget gap $94.32 billion, record for June. The U.S. government rang up a $94.32 billion budget deficit in June, a record for the month, as the price tag for efforts to prop up the economy, banks and automakers mounted while revenues weakened.

The Treasury Department said on Monday that June marked the ninth straight month in which the government had run a deficit. In June 2008, the budget enjoyed a $33.55 billion surplus.

Through the first nine months of fiscal 2009, the government has racked up a $1.086 trillion deficit. That compares with a shortfall of only $285.85 billion in the comparable year-ago period, underscoring the sharp deterioration in the U.S. fiscal picture.

“The Federal deficit is now at a post-World War II high and is likely to continue to rise in the near term as deficits rise and the economy remains weak,” said John Silvia, chief economist for Wells Fargo Securities. “These deficits will influence the allocation of global savings for the foreseeable future. No doubt where this train is going,” Silvia said.

The record budget deficit for June was not an all time high. that was February when it was $194 billion, a department official said. The recession and related government rescue efforts have put the budget on track for its longest-ever stretch of consecutive monthly deficits. The current record is 11 straight months, which has been reached three times.

Some Wall Street economists see the deficit heading higher, some suggesting a $1.5 trillion deficit for fiscal 2009 as the ranks of the jobless grow and hiring remains stubbornly weak as the economy struggles to emerge from recession. Read more here- http://www.reuters.com/article/domesticNews/idUSTRE56C5BA20090714?feedType=RSS&feedName;=domesticNews&rpc;=22&sp;=true

MOBIUS-DERIVATIVES STIMULUS TO SPARK NEW CRISIS

-A new financial crisis will develop from the failure to effectively regulate derivatives and the extra global liquidity from stimulus spending, Templeton Asset Management Ltd.’s Mark Mobius said.

"Political pressure from investment banks and all the people that make money in derivatives" will prevent adequate regulation, said Mobius, who oversees $25 billion as executive chairman of Templeton in Singapore. "Definitely we’re going to have another crisis coming down," he said in a phone interview from Istanbul on July 13.

Derivatives contributed to almost $1.5 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg. Global share markets lost almost half their value last year, shedding $28.7 trillion as investors became risk averse amid a global recession.

The U.S. Justice Department is investigating the market for credit-default swaps, Markit Group Ltd., the data provider majority-owned by Wall Street’s largest banks, said July 13.

Mobius didn’t explain what he thought was needed for effective regulation of derivatives, which are contracts used to hedge against changes in stocks, bonds, currencies, commodities, interest rates and weather. The Bank for International Settlements estimates outstanding derivatives total $592 trillion, about 10 times global gross domestic product. Read more here- http://www.bloomberg.com/apps/news?pid=20601109&sid;=ajsCDAWaoANg

REAL ESTATE-MORTGAGES-FORECLOSURES

-U.S. home sellers cut the prices of their properties by a total of $27.1 billion as the recession and rising foreclosures curtailed demand, Trulia Inc. said. One quarter of sellers with homes on the market as of July 1 reduced their price by an average of 10 percent, the San Francisco-based real estate data provider said today. Properties listed for more than $1 million had the biggest cuts, with owners taking about 13 percent off the asking price.

Prices of existing U.S. homes dropped 17 percent in May from a year earlier, according to the most recent data from the Chicago-based National Association of Realtors. The decline helped boost purchases 2.4 percent to an annual rate of 4.77 million sales, NAR said.

"Sellers just have to discount their prices to reflect what’s going on," Pete Flint, chief executive officer of Trulia, said in an interview. "Price reductions will stabilize the market, but I think we’re still some way off." The average discount on homes priced for less than $1 million was 9 percent, Trulia said. In 2007 and 2008, "the lower end of the market was clearly cratering with subprime," Flint said. "Now you’re seeing the top end of the market with price reductions."

Among the 50 largest U.S. cities, Jacksonville, Florida, had the biggest percentage of discounts, according to Trulia. Sellers there slashed prices on 39 percent of homes for sale. Boston was second at 35 percent, followed by Minneapolis at 33 percent. Read more here- http://www.bloomberg.com/apps/news?pid=20601213&sid;=agq0NRuqLW38

-Rich Russians Returning to U.S. Property Lured by Lower Prices. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=adx4qqDiCti4

-Insight: US property market central to economy. Read more here- http://www.ft.com/cms/s/0/c5b86f86-6cad-11de-af56-00144feabdc0.html?nclick_check=1

-Hamptons Home Sales Plunge as Wall Street Cuts Jobs. Read more here- http://www.bloomberg.com/apps/news?pid=20601213&sid;=aXEt83qIc23w

-U.K. Housing Market Improves as London Index Rises. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=aAopr2RVKiSk

-U.S. mulling mortgage aid for unemployed. President Barack Obama is mulling new ways to delay foreclosure for jobless homeowners who are unable to keep up with monthly payments, an administration official said on Monday.

The official told Reuters it was reasonable for policymakers to consider options for loan forbearance allowing borrowers to delay, defer or skip payments that are more effective than those currently available in the private sector. Read more here- http://www.reuters.com/article/newsOne/idUSTRE56D04920090714

-Foreclosure Filings in U.S. Reach Record 1.5 Million. U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to RealtyTrac Inc.

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, the Irvine, California-based seller of default data said today in a statement. That’s a 15 percent increase from the year earlier. One in 84 U.S. households received a filing.

"People are losing their jobs, seeing their income go down and are underwater on their mortgage," Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles, said in an interview. "It’s a toxic combination."

Home prices in 20 major U.S. metropolitan areas dropped 18.1 percent in April from a year earlier, according to the S&P;/Case-Shiller index. The unemployment rate rose to 9.5 percent in June, the highest since 1983, bringing the total number of lost jobs to about 6.5 million since the recession started in December 2007, the Labor Department said.

Defaults by subprime borrowers with poor credit histories spurred the housing recession and spread to prime borrowers as home prices and sales declined. The Mortgage Bankers Association said May 28 that prime fixed-rate home loans to the most creditworthy borrowers accounted for 29 percent of new foreclosures in the first quarter, the biggest share of any type of loan. One in eight Americans is now late on a payment or already in foreclosure, the Washington-based mortgage group said. Read more here- http://www.bloomberg.com/apps/news?pid=20601213&sid;=aGKKaIPgvnDk or http://www.reuters.com/article/newsOne/idUSTRE56F0XK20090716

-Hotel foreclosures spread throughout California. Read more here- http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/12/BUIJ18LU5J.DTL&type;=printable

-Many underwater homeowners are deliberately walking away from mortgages. A study finds that 26% of the defaults across the country are calculated economic decisions to bail out of loans by borrowers who could afford to make the monthly payments. Read more here- http://www.latimes.com/classified/realestate/news/la-fi-harney12-2009jul12,0,3674775.story

HEALTHCARE COSTS SOAR FOR PETS

-Do you think that soaring healthcare costs are just due to the fact that people don’t pay out of pocket? Sorry, that can’t be it. As this chart from the American Enterprise Institute shows, veterinary services spending is soaring at a similar pace to healthcare for humans. And yes, most people pay for pet care out of pocket and no, there’s not much government intervention. How about them apples? Read more here- http://www.businessinsider.com/chart-of-the-day-healthcare-pets-vs-humans-2009-7

The Goldbugg Report – July 21, 2009
Posted by Worldwide Precious Metals on Tuesday, July 21, 2009

The Goldbugg Report – July 14, 2009

July 14, 2009

- A case for silver’s quiet strength.

- John Embry monthly commentary.

- Gold price poised for spectacular and prolonged rally – Peter Schiff

GOLD

- Preserve Your Wealth with Precious Metals from Nick Barisheff. In this extraordinary environment, preserving your personal wealth becomes priority one. Before you make another major financial decision, it is imperative to understand the big picture by recognizing and understanding three critical issues.

First, we are in a secular bear market for financial assets (stocks and bonds). Second, the consequences of the global bailouts will likely be highly inflationary. Third, we are at a pivotal point in the long-term investment cycle. Let’s examine each of these three keys in more detail. Read more here – http://www.321gold.com/editorials/barisheff/barisheff070309.html or http://news.goldseek.com/GoldSeek/1246582800.php

Preserve your portfolio’s purchasing power. A minimum 10-15 percent allocation is considered adequate in a bull market, but a much larger allocation is suggested for protection in a secular bear market. If you have not already done so, now is the time to rethink your investment strategy. Physical bullion adds an asset class that will keep its value, regardless of where the economic downturn takes us inflation, deflation or hyperinflation.

For the first time in history, the central banks have an unlimited ability to print as much money as they need to avoid a deflationary depression. Precious metals are the only currency that will survive intact, because while governments can print infinite amounts of money, they cannot increase the supply of hard assets with intrinsic value.

Investors, institutions and central banks will turn in droves to the historical safe haven of precious metals, as real wealth replaces wishful thinking. This secular bear market is expected to last for many years, eating away at investors’ hopes and dreams and portfolios along the way. Don’t let your portfolio be one of them. Now is the time to make an investment in your future, because the future is precious metals bullion.

- Trusting in gold Austria’s Erste Bank. Austria’s Erste Bank’s latest Special report on Gold still rates the yellow metal positively as an investment. A minimally edited version of the introduction to this report is published below. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85867&sn;=Detail

Full 53 page report here – http://mineweb.co.za/mineweb/action/media/downloadFile?media_fileid=243 or http://produkte.erstegroup.com/CorporateClients/en/ResearchCenter/Overview/Research_Detail/index.phtml?ID_ENTRY=752

Gold vs. other asset classes since June 2008

- Gold Myth No. 1: Gold is (too) expensive. The following note is abstracted from a Special Report on Gold published by Austria’s Erste Bank and written by gold expert Ronald Stoeferle. Other abstracts and analysis from this report will also be published in due course. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85854&sn;=Detail

- Gold Myth No. 2: Gold is of no interest to Euro investors. The second in a series of gold myths from Erste Bank’s Ronald Stoeferle in his latest Special Report on Gold. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85909&sn;=Detail

- John Embry monthly commentary. Once gold decisively tops $1,000, it’ll stay there. Read more here – http://www.sprott.com/Docs/InvestorsDigest/2009/June_2009.pdf and http://www.thebullandbear.com/articles/2009/_print-2009/p-0609-Embry.html

- Peter Grandich commentary. Once gold closes comfortably above $980 (and that should happened no later than after gold’s seasonally weakest period of June-August is past us) we can see four digit gold here to stay and a steady rise to $1,500 in the next 3-5 years. Read more here – http://news.goldseek.com/Grandich/1246943627.php

- Gold price poised for spectacular and prolonged rally Peter Schiff. Gold bullion and gold-related investments, especially gold mining stocks, will be the best bets in the protracted and severe inflationary environment likely to result from current global monetary policies. Read more here – http://www.321gold.com/editorials/davis/davis070809.html or http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85982&sn;=Detail

- Aden Sister gold commentary. Read more here – http://www.321gold.com/editorials/aden/aden070309.html or http://news.goldseek.com/AdenResearch/1246514940.php

- Ned W. Schmidt’s gold thoughts. Read more here – http://news.goldseek.com/NedSchmidt/1246943343.php

- Inflation-boosted gold price to reach new record high, GFMS tells China. After a possible short-term fallback below $900/oz, the gold price would reach a new record high in the second half of 2009 as the threat of inflation would drive a new wave of investment, consultancy GFMS said on Wednesday at the launch of its13th Chinese-language version of its annual Gold Survey in Beijing.

"The price may have pulled back a fair bit from the February highs but that was largely just the market’s reaction to jewellery demand crumbling and scrap booming. We believe that it’s far from game over for investors. The gold price in the coming months could easily re-attain the $1 000 mark and is likely to push up towards a fresh record high before the end of the year," Philip Klapwijk said. Read more here – http://www.miningweekly.com/article/inflation-boosted-gold-price-to-reach-new-record-high-gfms-tells-china-2009-07-08

- Catching The Gold Bug. Worried about a harrowing, inflation-ridden future, Scott Van Steyn has found the answer in a batch of glittering one-ounce gold coins. In fact, they make up a large chunk of the physician’s assets.

"There’s 2,000 years of history to show that gold is the best thing to own during bad inflation," says Dr. Van Steyn, a 45-year-old orthopedic surgeon in Columbus, Ohio. "People used to laugh at me for buying gold. They don’t anymore." Read more here – http://online.wsj.com/article/SB10001424052970203577304574275953355412882.html

SILVER

- A case for silver’s quiet strength. The price of sterling has historically followed the price of gold; right now it’s lagging. Gold gets all the glamour when it comes to precious metals, but it’s not the only thing you can hide under your mattress as a hedge against financial ruin. Silver is just as much money as gold. The French word for money is, after all, argent, or silver. Like gold, the metal is a store of money that protects against the frailties inherent in paper currency.

- Brad Zigler of hardassetsinvestor.com looks at why strengthening gold might actually make now a good time to buy silver. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85939&sn;=Detail

- Ted Butler and Israel Friedman silver commentary. If you think like me that silver is in short supply and sooner or later a shortage will come, you should get your silver before it goes up. All these things these big shorts have been doing to keep the price low makes the coming price rise more certain. When it comes, it will go so high the whole world will ask how this could happen. Read more here – http://news.silverseek.com/TedButler/1246988868.php

- Ted Butler online interview, listen here – http://www.kingworldnews.com/kingworldnews/Gold+_Broadcast/Entries/2009/7/2_Ted_Butler_files/Weekly%20Wrap%20Ted%20Butler%2007:02:2009.mp3

- I believe the situation is even more dire in silver than in gold because gold is not being consumed but rather is becoming scarce because it is being hoarded by more and more smart investors. Silver is becoming scarce because it is both being hoarded by smart investors and being consumed by industry and ending up in landfills never to be recovered.

The U.S. Geological Survey estimates that silver will become extinct by 2020 — just 11 years from now all silver in the earth’s crust will have been mined and consumed. Yet silver now is trading at only its cost of production. The world cannot live without silver. Paper derivatives can not be used to make cell phone batteries or RFID transmitters or electrical solder, etc.

Adrian Douglas-Read more here – http://www.gata.org/node/7559

- Deutsche Bank mildly bullish on gold into 2H09, silver to outperform. As Deutsche Bank forecast the Central Bank Gold Agreement soon will be extended another five years, bank strategists advised the influence of gold ETFs on gold prices is starting to wane. Given the risk of central bank gold activity to the gold price, Deutsche Bank anticipates “the ongoing out-performance of silver relative to gold.”

“Indeed we believe the production cuts that have occurred across the industrial metals complex may have important implications for silver,” the strategists asserted. “We find that of total silver production, more than 60% is mined as a by-product with other industrial metals such as zinc, lead and copper.

“We believe silver production could face similar challenges to the ones likely to occur across the industrial metals complex as a result of the significant decline in capex spending that has occurred over the past two years,” they said. Read more here – http://www.mineweb.net/mineweb/view/mineweb/en/page31?oid=85938&sn;=Detail

- Austrian silver euro coins being used to beat German taxes. Read more here – http://www.gata.org/node/7560

- Strong sales of silver and gold coins reported. Read more here – http://online.wsj.com/article/SB10001424052970203577304574274450380620612.html?mod=googlenews_wsj and https://fx1.oanda.com/mod_perl/news/article.pl?id=972941

- G-8 leaders to be given symbolic gold coins. Read more here – http://www.gata.org/node/7572

CHART OF THE WEEK-QUOTES-QUICK HITS

- Here’s an ugly stat courtesy of Whitney Tilson’s T2 Partners: Home vacancies are still at all-time highs. With yet more foreclosures coming, it’s no wonder they’re just tearing down houses in some places. Read more here – http://www.businessinsider.com/chart-of-the-day-vacancies-2009-7

- If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed. Mark Twain-Bio here – http://en.wikipedia.org/wiki/Mark_Twain

- I place the economy among the first and most important virtues, and public debt as the greatest of dangers to be feared we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude. Thomas Jefferson-Bio here – http://en.wikipedia.org/wiki/Thomas_Jefferson

- “If a man is offered a fact which goes against his instincts, he will scrutinize it closely, and unless the evidence is overwhelming, he will refuse to believe it. If, on the other hand, he is offered something which affords a reason for acting in accordance to his instincts, he will accept it even on the slightest evidence.” Bertrand Russell-Bio here – http://en.wikipedia.org/wiki/Bertrand_Russell

- I am often asked, “What advice do you have for the average investor?” My reply is, “Don’t be average.” Most of us know of the 80/20 rule. That rule is a good rule for averages. And in the world of money, the rule is 90/10. This means 90 percent of the people make 10 percent of the money and 10 percent of the people make 90 percent of the money.

This 90/10 rule holds true in almost anything financial. Take the game of golf, for example. Ten percent of the professional golfers make 90 percent of the money. Taking the ratio to the next level, the top 10 percent of professional golfers make 90 percent of the money. Just look at Tiger Woods. When you compare his winnings plus endorsements, he is in a league unto himself.

It matters little if the game is golf, tennis, or money. Ten percent of the people will always make 90 percent of the money. When the markets began crashing in 2007, the money did not disappear. Ninety percent of the money went to 10 percent of the investors. A financial crisis is a great time for professional investors and a horrible time for average ones. If you’re going to invest, don’t be average. It’s time to turn pro or take up tennis. Robert Kiyosaki-Read more here – http://finance.yahoo.com/expert/article/richricher/175190

- Silver is set to outperform gold, argued Citigroup in a note published Thursday, with the broker saying investment flows into gold are moderating while the outlook for silver is improving. The ratio for gold-to-silver prices should return to its historical norm between 55 and 60 from the current 71, it said. Read more here – http://www.marketwatch.com/story/story/print?guid=AE0D158D-A227-4D9D-9A3E-3DCF5F454F02

- South Korea to buy gold, expecting it to replace dollar. The Bank of Korea has not purchased gold for 11 years but is expected to go on a gold buying spree, as the world’s central banks have bought the commodity since the global economic erupted in September last year.

A Bank of Korea official said yesterday, “The bank has begun to set up a plan to manage foreign exchange reserves for next year. It has also closely watched central banks in other nations and trends in the global gold market. Given the changing global financial environment, the bank’s management plan is critical.”

According to experts, the comment implies that the bank plans to buy gold soon. Korea has the world’s sixth most foreign exchange reserves but ranks just 56th in gold holdings. China, which has the world’s largest foreign exchange reserves, has secretly bought 454 tons of gold over the past six years. This has intensified global competition to obtain more gold.

The amount of gold bought by China over the period is 32 times larger than the Bank of Korea’s gold reserves. The world’s central banks have rushed to buy gold, since they believe the metal will replace the greenback when the dollar’s status as the world’s leading currency weakens.

The bank has said nothing officially, simply saying, “We have made no decision on the purchase of gold and cannot say if we have considered it.” It will finalize by November its plan to manage foreign exchange reserves for 2010, but experts forecast that the bank will have no choice but to buy gold soon. Read more here – http://www.gata.org/node/7564

- Historic trends dictate we may well see another spike in the precious metal in the next 3-4 months. No investment ever goes straight up or straight down. During the last bull market in gold, the precious metal rose 2,329% from a low of $35 in 1970 to a high of $850 in 1980. However, during that time, there was a period of 18 months in which gold fell nearly 50%.

From mid-1971 to December 1974, gold rose 471%. It then fell 50%, from December ‘74 to August ‘76. After that, it began its next leg up, exploding 750% higher from August ‘76 to January 1980. Now, in its current bull market (2001 to March 2008), gold rose over 300% from $250 to a little over $1,000. And just like in the mid-70s, it began showing signs of weakness after its first big rally up to $1,014 in March ‘08. At one point, it even fell to $700, a 30% retraction. Granted, it wasn’t a full 50% retraction like the one that occurred from 1974-76. But we are experiencing a financial crisis. And gold is the most common catastrophe insurance.

If we were to go by the historic pattern of the gold market in the ‘70s, gold should experience upwards resistance for 19 months after its first peak today. Gold’s recent peak was $1,014 in March ‘08 (roughly 14 months before the writing of this report). If this bull market parallels the last one, then gold should renew its upward momentum in a very serious way starting in October 2009. And this next leg up should be a major one (the biggest gains came during the second rally in gold’s bull market in the ‘70s). Graham Summers-Read more here – http://www.kitco.com/ind/Summers/jul062009.html

- Yes. Printing more money, creating more money makes gold prices higher. It’s very simple. If you have an island and an economy on an island where four coconuts come down from the trees everyday, and there are four dollar bills on the island, the cost of coconuts is a dollar. Every day the people get up, they go to the marketplace, it’s four dollars and four coconuts, they exchange.

Now, you could have in an advanced island, where four fish are caught every day, and four coconuts are produced every day, and let’s say have eight dollars on the island and everybody likes coconuts and they like fish roughly the same, so the price of everything is a dollar, and that goes on for months and months and years on the island. Then someone comes to the island with a motorboat and a printing press and prints an extra $4.

Now, the motorboat comes to the dock and there is someone on the dock. Somebody gets that $4 first. They take that $4, that extra $4, and they go into the marketplace and let’s say, they buy all the coconuts. They give the guy, coconut seller, they give the guy $4, they get four coconuts. Now, you have $4 extra in the economy along with the $8 that’s already there.

So, now you’ve got $12 floating around on the island that day and when everyone else gets up to go to the marketplace, there are no coconuts, the guy who got the money first on the dock bought the coconuts but there is now $12 in circulation and there are only four fish left. The price of fish is going up to $3 and that is the horrifying thing about printing money.

The guy at the dock gets the money first and hurts the purchasing power of everyone else in the marketplace. In the modern economy, the people at the dock are the banks, the big corporations and very wealthy people. They get the benefit by borrowing or getting the motorboat money first or by the privilege from the government (who own the motorboat and the printing press on the boat) as leveraged bank credit or loans and they get the benefit of the old prices early. You cannot print wealth, you have to produce wealth and you can’t be wealthier as a nation by going into more and more debt. That’s it. Ken Gerbino-Read more here – http://finance.yahoo.com/news/Gold-Becomes-More-Valuable-twst-586185760.html?x=0&.v=1

- How do you keep any kind of perspective in this yo-yo market? The irrepressible Dan Norcini, writing on jsmineset.com, comments: "There is really not much to say about any of this – deflation is battling inflation and until one side gets a clear advantage and dethrones the thinking in the other camp, we are going to see no trends, no orderly markets, no sanity and nothing but idiotic volatility and casino-like markets.

"The markets have been completely taken over by the day trading, one minute bar chart geeks who wouldn’t know a pork belly from a brisket cut or a grain of wheat from a cocoa pod but who are enamoured with lots of squiggly lines and dream of coming back from their bathroom break and discovering that they have traded in and out of the same market 15 times during that period and made $100,000 on each turn.

"The rest of us normal people who actually have lives to lead and families to raise, etc. are better served keeping a longer term perspective and understanding that the Dollar’s days of supremacy are forever over and that the rise of the BRIC nations means that America is beginning to go the same path as the once mighty and proud British Empire. Its leaders too spent it into oblivion and destroyed its currency in the process." Indeed they have, and gold will one of the few things that ultimately benefits. Casey Daily Resource

- World Bank tells G8: 2009 remains dangerous year. The Group of Eight nations should not presume a global economic recovery is near, World Bank President Robert Zoellick said in a letter to G8 host Italian Prime Minister Silvio Berlusconi obtained by Reuters on Monday.

The letter, dated July 1 and copied to all G8 leaders, said interventions by central banks and governments appeared to have “broken the fall in the global economy” by stabilizing financial markets and boosting demand. “Yet 2009 remains a dangerous year. Recent gains could be reversed easily, and the pace of recovery in 2010 is far from certain,” Zoellick wrote. Read more here – http://www.reuters.com/article/ousiv/idUSL619527520090706

- Protectionism could cause extended harm: World Bank. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56519420090706

- Roubini Sees Six More Months of Recession, ‘Shallow’ Recovery. "This is a great recession that could have ended up in a near depression," Roubini, the New York University economist who predicted the credit crisis, said on Bloomberg Radio’s "Surveillance." "We’re not out of the woods."

Yale University Professor Robert Shiller, speaking during the same program in New York today, said the economic crisis continues despite the $12.8 trillion pledged by the U.S. government and Federal Reserve. President Barack Obama needs to propose another stimulus plan, Shiller added. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a6qhJ4aCIlD0

- Seven U.S. Banks Seized in Busiest Year for Closures Since 1992. Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992. Read more here – http://www.bloomberg.com/apps/news?pid=20601103&sid;=acr01Xb3Fkz0

- Economist: FDIC gearing up for bank closures. The Federal Deposit Insurance Corp. is gearing up to handle a large number of bank failures expected as a result of bad mortgages, both in residential and commercial real estate, an economist said Tuesday.

"They know they’re going to take down a large number of banks and they can’t do it until they’re staffed up," said Mark Dotzour, chief economist and director of research for the Real Estate Center at Texas A&M; University.

Dotzour expects federal regulators to establish an agency, similar to the Resolution Trust Corp. that disposed of assets belonging to insolvent S&Ls; in the late 1980s and early 1990s.

"Once they start to sell [foreclosed real estate], we’ll find out what the market really is," Dotzour told attendees at an economic summit hosted by a handful of real estate groups in Tampa, Fla. Read more here – http://www.bizjournals.com/washington/stories/2009/07/06/daily39.html

- Bank of America Corp., the biggest U.S. lender, faces a 10 percent jump in uncollectible loans to $7.6 billion when it reports second-quarter earnings, Credit Suisse said in a report. Bad debts included $1.9 billion tied to home equity, and about 10.4 percent of credit card loans will be written off, analyst Moshe Orenbuch wrote in the report dated today. The bank, based in Charlotte, North Carolina, charged off $6.9 billion in the first quarter, he said. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a9gldUvl3Ucw

- A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap. Read more here – http://online.wsj.com/article/SB124692354575702881.html

- BOE Keeps Asset-Purchase Plan at 125 Billion Pounds. The Bank of England stuck to its plan to buy bonds with 125 billion pounds ($202 billion) of newly printed money as officials assess whether the worst of Britain’s recession is over. The nine-member Monetary Policy Committee, led by Governor Mervyn King, kept the interest rate at 0.5 percent and refrained from expanding its asset-purchase plan. Read more here – http://www.bloomberg.com/apps/news?pid=20601068&sid;=a.H3mBwHioCE

- Global 500: 20 money losers. In a dismal year, these 20 companies saw the biggest losses. Badly timed acquisitions, exposure to subprime mortgages, and rising oil prices are a few of the culprits. Read more here – http://money.cnn.com/galleries/2009/fortune/0907/gallery.G500_money_losers_fortune.fortune/index.html

- Brand name companies go bankrupt. As consumers cut back, businesses are scrambling. 12 brands you know from an NHL hockey team to Obama’s suit maker that are hitting the skids. Read more here – http://money.cnn.com/galleries/2009/news/0906/gallery.companies_going_bankrupt/index.html

- Gerald Celente on Fox News: Obamageddon is coming! Watch video here – http://www.youtube.com/watch?v=_18t2_XvZRA&eurl;=http%3A%2F%2Fgoldismoney.info%2Fforums%2Fshowthread.php%3Ft%3D388716&feature;=player_embedded

- U.S. consumers fall behind on loans at record pace. Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56638720090707

- Biden: We ‘Misread the Economy.’ Read more and watch video here – http://blogs.abcnews.com/george/2009/07/biden-we-misread-the-economy-.html

- Kuwait wants oil price above $60. Read more here – http://www.reuters.com/article/ousiv/idUSTRE5640JW20090705

- Goldman May Lose Millions From Ex-Worker’s Code Theft. Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=axYw_ykTBokE

- Goldman Sachs Loses Grip on Its Doomsday Machine: Jonathan Weil. Read more here – http://www.bloomberg.com/apps/news?pid=20601039&sid;=aFeyqdzYcizc

- GATA urges SEC, CFTC to probe Goldman trading program. Read more here – http://www.gata.org/node/7569

- ‘Commodities of finite supply’ might get position limits. U.S. regulators say they may clamp down on oil and gas price speculators by limiting the holdings of energy futures traders, including index and exchange-traded funds.

The Commodity Futures Trading Commission will hold hearings this month and next to explore the need for government-imposed restrictions on speculative trading in oil, gas and other energy markets, Chairman Gary Gensler said today in a statement. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aIEgmYChpWg8 or http://www.gata.org/node/7567

- U.S. warns of multiple al-Qaida plots. Last week, German authorities discovered that groups of terrorists may have been dispatched from training bases in Pakistan to launch crippling attacks. Read more here – http://www.wtop.com/?nid=778&sid;=1711695

- U.S. military chief says clock ticking on Iran nuke. The top U.S. military officer warned on Tuesday that time is running out for dialogue with Tehran to avoid either a nuclear-armed Iran or a possible military strike against the Islamic Republic.

Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, said it is critical for diplomatic efforts to reach a solution before Iran develops a nuclear weapon or faces an Israeli or U.S. strike to turn back its nuclear program.

“That window is a very narrow window,” Mullen told an audience at the Center for Strategic and International Studies, a Washington think tank. “There’s a great deal that certainly depends on the dialogue and the engagement,” he said. “I’m hopeful that that dialogue is productive. I worry about it a great deal if it’s not.” Mullen noted that some forecasters believe Iran could be as little as a year away from developing a nuclear bomb, adding: “The clock has continued to tick.” Read more here – http://in.reuters.com/article/worldNews/idINIndia-40879020090707

- Biden Says Israel Has ‘Sovereign Right’ to Hit Iran. Vice President Joe Biden asserted Israel’s "sovereign right" to attack Iran’s nuclear facilities and reiterated a U.S. offer to meet with the Tehran government over its suspected weapons program.

Israel "can determine for itself as a sovereign nation what is in its best interest," Biden said in an interview with the ABC News program "This Week," that was taped July 4 and aired yesterday. A U.S. offer to meet with Iran about its nuclear program remains "on the table," Biden said. Israeli Prime Minister Benjamin Netanyahu said May 18 after a White House meeting with President Barack Obama that a nuclear-armed Iran is "the worst danger we face." Read more here – http://www.bloomberg.com/apps/news?pid=20601103&sid;=azw2feO2poi4

- Joe Biden speech sparks fierce response from Ayatollah Ali Khamenei. One day after the American Vice-President said that the US would not stop Israel bombing Iran’s nuclear plants, Ayatollah Khamenei launched a fierce attack on "meddling" Western leaders, designed to rally his fractured people. Read more here – http://www.timesonline.co.uk/tol/news/world/middle_east/article6653069.ece

- A fresh wave of cyber attacks that slowed U.S. and South Korean websites this week hit more targets on Thursday, a Web security firm said, while the South’s spy agency has said the hacking may be linked to North Korea.

The impact of the attacks, aimed so far at dozens of sites including the White House and the South’s presidential office, was seen as negligible, experts said, but served as a reminder that Pyongyang has been planning for cyber warfare. “The anticipated attack did take place, but considerable countermeasures were taken and it did act as a defense to some degree,” an official at the online security firm Ahnlab said. Read more here – http://www.reuters.com/article/newsOne/idUSTRE56709E20090709

- Wary of naked force, Israelis eye cyberwar on Iran. Read more here – http://www.alertnet.org/thenews/newsdesk/LV83872.htm

- U.S. Food-Stamp Recipients Reached Record 33.8 Million in April. Read more here – http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDhdHJrK42P0

- El Nino conditions are forming in the Pacific Ocean, which may limit the number of hurricanes that form in the Atlantic this year, the National Oceanic and Atmospheric Administration reported today.

El Nino is a warming of the eastern Pacific that occurs every two to five years, on average, and lasts about 12 months, the agency said in a statement. Sea surface temperatures in the area were about 1 degree Celsius above average in June, according to the National Weather Service’s Climate Prediction Center in Camp Springs, Maryland. Read more here – http://www.bloomberg.com/apps/news?pid=20601110&sid;=aFU7peSD1U2o

- Parts of Britain “near an H1N1 epidemic”; 14 dead. Read more here – http://www.reuters.com/article/topNews/idUSTRE5685ER20090709?feedType=RSS&feedName;=topNews&rpc;=22&sp;=true

- Buffett lunch auction won by Canadian firm Salida. The hedge fund manager that won Warren Buffett’s annual charity auction said the $1.68 million price for a steak lunch with the billionaire is "an investment in our future" amid the global recession. Read more here – http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=abCmeZER9Ttg and http://www.reuters.com/article/ousiv/idUSTRE5675PN20090708

WWW.RARECOLOREDDIAMONDS.COM

- 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

- “Today, if you had to go find a 5-carat vivid blue or a 5-carat vivid pink, you couldn’t buy it for less than $1 million per carat.” Nationaljewelernetwork.com Rahul Kadakia, head of jewellery at Christie’s, New York May 13,2009

- “I believe in the 3G’s-guns, gold and gems. You can never have enough.” An Anonymous Client June 5, 2009

- “Diamonds, jewels and cars have been outperforming other areas of the auction market as art collectors hesitate about purchases as prices decline in the economic slowdown.”

Bloomberg May 12, 2009

- Diamonds are a girl’s best friend, but they are also more wallet friendly than ever, costing 11 percent less on average. Henry Barguirdjian, president of Graff Diamonds, says while high end jewels like a rare 16.5 karat yellow diamond that costs 5 million dollars haven’t dropped in price, investing in the finest jewels can be better than putting your money in stocks.

“In the past 30 years the price of diamonds virtually never went down. At worst it stayed flat or went up. In the past five years it went up over 300 percent because of the global economy and the build up of new fortunes around the world,” says Barguirdjian. Read more here – http://www.wbir.com/news/national/story.aspx?storyid=92414&catid;=16

- Antonio Bianco, who has died aged 57, was a master diamond cutter, and created spectacular precious stones for some of the world’s wealthiest collectors. Royalty and Hollywood celebrities were among Bianco’s customers. He operated in cloistral seclusion from a windowless workshop in the diamond district of New York, cutting some of the biggest, rarest and most valuable stones of the age.

One of the most valuable was the “Flame” diamond, a flawless 100 carat pear-shaped gem that Bianco cut from a 169 carat rough stone mined in Angola. “The elegance and sheer beauty of the stone,” noted one expert, “surpasses all of the known historical pearshapes.” Read more here – http://www.telegraph.co.uk/news/obituaries/5701306/Antonio-Bianco.html

- The entire gem world is reacting to rumours of imminent recutting of the famous Wittelsbach diamond by its new owner Laurence Graf as if this gem’s survival in its current form were as important as the survival of the spotted owl or snow leopard. Leave this historic treasure alone, urged the writers of an article on this diamond in the Winter 2008 issue of Gems & Gemology. And we can certainly understand their pleas for a hands-off policy to the stone’s future. Read more here – http://www.ncdia.com/news-events/index.cfm?sh=news&type;=2&id;=501&groupby;=&PageNum;_results=1

STOCK BEAR MARKET-1929 ALL OVER AGAIN

- Chart-master Doug Short observes that the behaviour of the market since August 2008 a violent 50% plunge followed by a major recovery almost perfectly tracks the market’s behaviour in the year after the peak in 1929. Of course, our current bear market started in 2007, not August 2008, so this pattern comes in the middle of our crash, not the start. But the similarity is still startling.

Here’s hoping the current bear market doesn’t continue right on down to the -89% of the 1929 crash. Because from the top of our bear market, way back in 2007, that would mean a fall of more than 95%. Read more here – http://www.businessinsider.com/henry-blodget-bear-market-cliff-diving-1929-all-over-again-2009-7

BUFFETT-U.S. SHOULD PLAN SECOND STIMULUS

- Legendary investor Warren Buffett said in an interview aired on Thursday unemployment could hit 11 percent and a second stimulus package might be needed as the economy struggles to recover from recession. Buffett, the billionaire founder of Berkshire Hathaway said Americans suffered “a shock to the system” from the economic difficulties in the final quarter of last year but had started to rebound.

“We’re not in a freefall, but we’re not in a recovery either,” he told ABC’s “Good Morning America.” “We were in a freefall really in the last quarter of last year, starting in the financial markets and spreading to the economy, and we had this huge change in behavior.”

Buffett, a supporter of President Barack Obama during last year’s election campaign, said a second economic stimulus package might be needed. The Obama administration says it does not see a need for a second stimulus yet. “I think a second one may well be called for. It is not a panacea. A stimulus is the right thing. You hope it doesn’t get watered down,” he said.

He likened the first $787 billion stimulus package passed by Congress to “half a tablet of Viagra and then having also a bunch of candy mixed in it doesn’t have really quite the wallop.”

Buffett said unemployment had “a ways to go” and he would not be surprised to see it hit 11 percent before it recovers.

“I’m not predicting it but no that would not surprise me,” he said of the 11 percent figure. “We’re going to come out of this better than ever, the best days of America lie ahead but not next week or next month,” he said. Read more here – http://www.reuters.com/article/newsOne/idUSN0944100220090709 watch video here – http://abcnews.go.com/Business/story?id=8039651&page;=1

- U.S. should plan 2nd fiscal stimulus: economic adviser. The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy after the $787 billion rescue package launched in February, an adviser to President Barack Obama said.

“We should be planning on a contingency basis for a second round of stimulus,” Laura D’Andrea Tyson, a member of the panel advising President Barack Obama on tackling the economic crisis. said on Tuesday.

Addressing a seminar in Singapore, Tyson said she felt the first round of stimulus aimed to prop up the economy had been slightly smaller than she would have liked and that a possible second round should be directed at infrastructure investment. “The stimulus is performing close to expectations but not in timing,” Tyson said, referring to the slow pace at which the first round of stimulus had been spent on the economy. Read more here – http://www.reuters.com/article/newsOne/idUSTRE56611D20090707

U.S. FACING DEBT EXPLOSION

- US lurching towards ‘debt explosion’ with long-term interest rates on course to double. The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank.

In a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current 3.5pc.

The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a "debt explosion". Mr. Laubach’s study has implications for the UK, too, as public debt is soaring. A US crisis would have implications for the rest of the world, in any case.

Using historical examples for his paper, New Evidence on the Interest Rate Effects of Budget Deficits and Debt, Mr. Laubach came to the conclusion that "a percentage point increase in the projected deficit-to-GDP ratio raises the 10-year bond rate expected to prevail five years into the future by 20 to 40 basis points, a typical estimate is about 25 basis points".

The US deficit has blown out from 3pc to 13.5pc in the past year but long-term rates are largely unchanged. Assuming Mr. Laubach’s "typical estimate", long-term rates have to climb 2.5 percentage points.

He added: "Similarly, a percentage point increase in the projected debt-to-GDP ratio raises future interest rates by about 4 to 5 basis points." Economists are predicting a wide range of ratios but Mr. Congdon said it was "not unreasonable" to assume debt doubling to 140pc. At that level, Mr. Laubach’s calculations would see long-term rates rise by 3.5 percentage points.

- Mountain of debt, rising debt may be next crisis. The Founding Fathers left one legacy not celebrated on Independence Day but which affects us all. It’s the national debt. The country first got into debt to help pay for the Revolutionary War. Growing ever since, the debt stands today at a staggering $11.4 trillion equivalent to about $37,000 for each and every American. And it’s expanding by over $1 trillion a year.

The mountain of debt easily could become the next full-fledged economic crisis without firm action from Washington, economists of all stripes warn. “Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Federal Reserve Chairman Ben Bernanke recently told Congress.

Higher taxes, or reduced federal benefits and services – or a combination of both – may be the inevitable consequences. The debt is complicating efforts by President Barack Obama and Congress to cope with the worst recession in decades as stimulus and bailout spending combine with lower tax revenues to widen the gap.

Interest payments on the debt alone cost $452 billion last year – the largest federal spending category after Medicare-Medicaid, Social Security and defense. It’s quickly crowding out all other government spending. And the Treasury is finding it harder to find new lenders.

The United States went into the red the first time in 1790 when it assumed $75 million in the war debts of the Continental Congress. Alexander Hamilton, the first treasury secretary, said, “A national debt, if not excessive, will be to us a national blessing.” Some blessing. Since then, the nation has only been free of debt once, in 1834-1835. Read more here – http://apnews.myway.com/article/20090704/D997DOMG0.html

- Bailouts for Everyone, But Who’s Going to Rescue Uncle Sam? Read more here – http://finance.yahoo.com/tech-ticker/article/273773/Bailouts-for-Everyone-But-Who%27s-Going-to-Rescue-Uncle-Sam?tickers=^DJI,^GSPC,TBT,TLT,SPY,FXI,UDN&sec;=topStories&pos;=8&asset;=&ccode;

- America’s long-awaited fiscal train wreck is now underway. US public debt was 41% of GDP at the end of fiscal year 2008, a little above the 40-year average of 36%. The Congressional Budget Office (CBO) projects that in the next few years, deficits will be extraordinarily high by historical standards almost 12% of GDP in fiscal year 2009 and almost 8% in fiscal year 2010.

As a result, debt will grow to 60% of GDP by the end of fiscal year 2010. After peaking at 113% in 1945, federal debt held by the public declined as a percentage of GDP to its lowest level in the post World War II era, 24% in 1974.

Similarly, when federal debt increased in the 1980s, its rise was followed by declining deficits from 1993 to 1997 and surpluses from 1998 through 2001. The systematic widening of budget shortfalls projected under CBO’s long-term scenarios has never been observed in US history. Read more here – http://www.finfacts.ie/irishfinancenews/article_1017099.shtml

U.S. DOLLAR-YUAN

- Jim Rogers Sells Dollars, Plans to Short Treasuries. The dollar and U.S. Treasuries are both likely to slide as soaring government debt in the world’s biggest economy undermines confidence in its assets, according to Jim Rogers, chairman of Rogers Holdings.

"The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency," he said in a telephone interview today from Singapore. "The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me."

Rogers, the author of books including "Investment Biker" and "Adventure Capitalist", said he holds fewer dollars than a year ago and plans to "short U.S. government bonds someday." A short bet involves selling a security you don’t own with a view to buying it back after the price has fallen. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aV5j5C_r6VdQ

- India Joins Russia, China in Questioning U.S. Dollar Dominance. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aR7yfqUwTb4M

- China officials call for displacing dollar, in time. Read more here – http://www.reuters.com/article/ousiv/idUSTRE5650WO20090706?virtualBrandChannel=11569

- Yuan starts on long slog to reserve currency status. Read more here – http://www.reuters.com/article/wtUSInvestingNews/idUSTRE5650W720090706

- Yuan Deposes Dollar on China Border in Sign of Future. Read more here – http://www.bloomberg.com/apps/news?pid=20601109&sid;=aqA9QhRSNeqM

UNEMPLOYMENT NUMBERS

- David Tice says Unemployment Rate May Reach 15%. Watch video here – http://www.youtube.com/watch?v=91yHqMc41Xc&eurl;=http%3A%2F%2Fgoldismoney.info%2Fforums%2Fshowthread.php%3Ft%3D389065&feature;=player_embedded

- True unemployment rate already at 20%. Read more here – http://blogs.moneycentral.msn.com/topstocks/archive/2009/07/06/true-unemployment-rate-already-at-20.aspx

- Today, the Labor Department reported that nonfarm payrolls (jobs) decreased by 467,000 in June. The stock market declined sharply on the news. Today’s chart puts that decline into perspective by comparing job losses during the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1954-2006 (dashed blue line).

As today’s chart illustrates, the current job market has suffered losses that are nearly three times as much as the average. In fact, if this were an average recession/job loss cycle, the number of jobs would have begun to increase three months ago. Read more here – http://www.chartoftheday.com/20090703.htm?T

- What’s the best way to express just how bad the job market is? You could look at the soaring unemployment rate, or perhaps the ever-shortening work week. How about this: Total nonfarm payrolls, notes economist James Hamilton, are now back to where they were in mid 2000, and in a few months they’ll certainly be back to pre-2000 levels. 21st century job creation: gone. Read more here – http://www.businessinsider.com/chart-of-the-day-2009-7

- Last week it was revealed that the average work week of non-farm workers had dropped to an all-time low of 33 hours. It’s a worrying sign that even with all the layoffs, employers aren’t making their existing employees work more. So what happened to the 40-hour work week? Turns out, that’s a long, distant memory. Read more here – http://www.businessinsider.com/chart-of-the-day-avg-work-week-decreases-2009-7

- Today’s chart simply represents the gap between male and female unemployment. As you can see, we’re in uncharted territory. Or, at least, newly charted territory. The zero line in the center of the graph means that men and women are equally unemployed. When the line dips below zero, as it did for 20 years between 1958 and 1978, it means that the female unemployment rate is higher than the male rate. When it climbs above zero, the male unemployment rate is relatively ascendant. Read more here – http://www.businessinsider.com/chart-of-the-day-unemployment-gender-gap-2009-7

REAL ESTATE-MORTGAGE-FORECLOSURE

- U.S. Home Prices to Fall Through 2011’s First Quarter, PMI Says. Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said.

Thirty of the 50 biggest metropolitan areas have at least a 75 percent chance of lower prices through March 31, 2011, Walnut Creek, California-based PMI said in a report today. The decline is likely to spread to "all regions of the nation" from California, Florida, Nevada and Arizona, the states most affected by the housing slump, PMI said.

"The housing market has been hit by a demand shock of high unemployment and a supply shock of distressed foreclosure sales," LaVaughn Henry, senior economist at PMI, the fourth- largest U.S. mortgage insurer, said in an interview.

Unemployment rose to 9.5 percent in June, bringing the total number of jobs lost to 6.5 million since December 2007, the Labor Department said July 2. Foreclosure filings may hit a record 1.8 million in the first half of the year as more jobless homeowners default on their loans, real estate data service RealtyTrac Inc. said last month.

Home prices in 20 major U.S. metropolitan areas dropped 18.1 percent in April from a year earlier, following an 18.7 decrease in March, according to the S&P;/Case-Shiller index. Prices are forecast to fall 41.7 percent from their peak, Deutsche Bank AG analysts led by Karen Weaver wrote in a June 15 report. Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=aWJ1aTFKp35E

- State of the Real Estate Market July 2009: Plenty More Downside. Read more here – http://www.businessinsider.com/henry-blodget-state-of-the-real-estate-market-july-6-2010-plenty-more-downside-2009-7 PDF file here – http://www.businessinsider.com/henry-blodget-t2-partners-presentation-on-the-state-of-the-housing-market-july-1-2009-2009-7

- U.S. office market continues to spiral down: report. The U.S. office market vacancy rate reached 15.9 percent in the second quarter, the highest level in four years, and rent fell by the largest amount in more than seven years as demand remained weak, according to a leading real estate research firm.

“It’s bad,” Reis Inc director of research Victor Calanog said. “It’s decaying and getting worse. Given the depth and magnitude of the recession, you can argue that we are facing a storm of epic proportions and we’re only at the beginning. Read more here – http://www.reuters.com/article/ousiv/idUSTRE5660MQ20090707

- Commercial Real Estate Is a ‘Time Bomb,’ Maloney Says. The $3.5 trillion commercial real estate market is a ticking "time bomb" that may lead to a second wave of losses at large U.S. banks, congressional Joint Economic Committee Chairwoman Carolyn Maloney said.

About $700 billion in commercial mortgages will need to be refinanced before the end of 2010 and "doing nothing is not an option," Maloney, a New York Democrat, said at a committee hearing today. This "looming crisis" may lead to significant losses for banks, force shopping center and hotel owners into bankruptcy, and impede economic recovery, she said.

The response by banks to this "growing threat has been slow and inadequate," said James Helsel, a partner at RSR Realtors in Harrisburg, Pennsylvania, and treasurer for the National Association of Realtors. "The lack of liquidity and banks’ reluctance to extend lending are also becoming apparent in the increasing level of delinquent properties."

There were 5,315 commercial properties in default, foreclosure or bankruptcy at the end of June, more than twice the number at the end of last year, with hotels and retail among the most "problematic,’ Real Capital Analytics Inc. said in a report yesterday. Losses on commercial mortgage-backed securities, or CMBS, will total 9 percent to 12 percent of the market, or as much as $90 billion, said Richard Parkus, a research analyst for Deutsche Bank Securities in New York. Read more here – http://www.bloomberg.com/apps/news?pid=20601110&sid;=aAXgbJTzHp4M

- Apartment Vacancies in U.S. Reach 22-Year High, Reis Reports. U.S. apartment vacancies rose to their highest in 22 years in the second quarter as job losses cut tenant demand and more units came to market. Vacancies climbed to 7.5 percent from 6.1 percent a year earlier, New York-based real estate research firm Reis Inc. said today. The last time landlords had so much empty space was in 1987, when vacancies reached 7.6 percent as the Standard & Poor’s 500 Index plummeted 23 percent in the last three months of that year.

"Vacancies continued to rise despite what has traditionally been a strong leasing period for apartment properties," said Victor Calanog, director of research at Reis. Job losses and falling wages are shrinking the pool of potential renters, defying forecasts that prospective homebuyers would rent rather that purchase as house prices decline. The U.S. unemployment rate rose to a 26-year high in June and U.S. payrolls dropped more than forecast in June, the government said last week.

Equity Residential, founded by billionaire Sam Zell and now the biggest U.S. apartment landlord by market capitalization, said in April that job losses made the company "cautious" and it was offering rent reductions to lure tenants. Asking rents for apartments fell 0.6 percent in the second quarter from the first, Reis said. That matched the rate of change in the first quarter, the biggest drop since Reis began reporting such data in 1999. Asking rents dropped 0.7 percent from a year earlier to an average $1,040 a month. Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=a5YNzreTGxLw

- Manhattan Rents Decline as Unemployment Cuts. Manhattan apartment rents fell as much as 18 percent in the second quarter from a year earlier as rising unemployment curbed demand. The median price dropped 3.1 percent to $3,100 a month, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today.

Studio prices fell 18 percent to $2,000; one-bedrooms declined 13 percent to $2,795; two-bedrooms were down 5.1 percent to $4,550 and three-bedrooms dropped 4 percent to $7,673. A separate report from broker Citi-Habitats Inc. showed average rents fell 8 percent for studio and one bedrooms and 11 percent for two- and three-bedrooms. Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=aKVGgC.tx5So

- Delinquencies on U.S. Home-Equity Loans Reach Record. Late payments on home-equity loans rose to a record in the first quarter as 18 straight months of job losses and a slumping economy left more borrowers unable to pay their debts, the American Bankers Association reported.

Delinquencies on home-equity loans climbed to 3.52 percent of all accounts from 3.03 percent in the fourth quarter, and late payments on home-equity lines of credit climbed to a record 1.89 percent, the group reported today. An index of eight types of loans rose for a fourth straight quarter, to 3.23 percent from 3.22 percent in October through December, the group said.

"The number one driver of delinquencies is job losses, which we’ve seen build and build," James Chessen, the group’s chief economist, said in a telephone interview. "Delinquencies won’t come down without a dramatic improvement in the economy and businesses will have to start hiring again."

The U.S. economy lost an average 691,000 jobs a month in the quarter, and more than 6.5 million positions have been shed since the recession began in December 2007. The economy this year will shrink the most since 1946, according to a Bloomberg survey of 61 economists last month. President Barack Obama predicted last month unemployment will reach 10 percent this year. The rate was at a 26-year high of 9.5 percent in June.

Delinquent bank-card accounts jumped to a record 6.60 percent of outstanding card debt in the first quarter from 5.52 percent in the previous period, a signal unemployed borrowers are relying on cards as falling prices erode the equity in their homes. More borrowers are using cards to meet daily expenses after losing their jobs, the ABA said. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=axMDObJEk6eA

- U.S. mortgage fraud ‘rampant’ and growing-FBI. U.S. mortgage fraud reports jumped 36 percent last year as desperate homeowners and industry professionals tried to maintain their standard of living from the boom years, the FBI said on Tuesday. Read more here – http://www.reuters.com/article/bondsNews/idUSN0751853920090707

- So Many Foreclosures, So Little Logic. Last week, the stock market tumbled on news that housing foreclosures and delinquencies rose again in the first quarter. The Office of the Comptroller of the Currency said that among the 34 million loans it tracks, foreclosures in progress rose 22 percent, to 844,389. That figure was 73 percent higher than in the same period last year. Read more here – http://www.nytimes.com/2009/07/05/business/05gret.html?pagewanted=print

The Goldbugg Report – July 14, 2009
Posted by Worldwide Precious Metals on Tuesday, July 14, 2009

The Goldbugg Report – July 7, 2009

July 7, 2009

WORLD FINANCIAL REPORT ON RADIO JULY 3 2009 SHOW

-Last chance saloon for gold investors to jump in? The currently stuttering gold price as the northern hemisphere enters the summer season, traditionally a weak time for the gold price, could, some experts believe be the last opportunity to buy gold before an autumnal surge. Read more here-

GOLD

-John Embry explains why the “green shoots” will be short lived and gives some common sense advice on how to navigate these turbulent financial waters. Read more here-
http://www.thedailybell.com/bellPage.asp?nid=431&fl;=0

Daily Bell: How will the financial crisis end?

John Embry: We are currently facing a huge deflationary problem due to the excess debt but with absolutely no restraint on money creation in a pure fiat currency system, I firmly believe the ultimate outcome will be hyperinflation, which is a true human tragedy.

Daily Bell: Will the dollar still be the reserve currency?

John Embry: Not a chance. The U.S. dollar is doomed. The Chinese, America’s largest creditor, are already making their discontent known and are doing unilateral deals with other countries, that effectively eliminate the dollar. When a country that has the responsibility of managing the world’s reserve currency has a federal budget deficit that amounts to 13% of GDP (this year’s projection which may be underestimated) the end is near.

Daily Bell: Would you like to see a return to a gold standard of some sort?

John Embry: I expect when the full catastrophe of the pure fiat currency system is realized, gold will have to be reintroduced into the monetary system to restore confidence.

Daily Bell: Where do you see gold headed pricewise?

John Embry: The extent of the debasement of all the world’s currencies will be the ultimate determinant of how high gold can go. In reality, gold is a constant and it is the value of paper money that declines. In this instance, the world’s reserve currency is doomed and I don’t see another currency that appeals to me. Thus, I expect gold priced in U.S. dollars to trade at many multiples of the current price before this saga comes to an end.

Daily Bell: How about silver?

John Embry: As much as I love gold, I actually think silver will outperform it pricewise, at least in the next few years. Known as the “poor man’s gold”, I think it will reassert itself as money and with continuing robust demand from industrial and medical uses, I suspect it will be in very short supply. Unlike gold, most silver is consumed so shortages could develop very rapidly.

Daily Bell: What would be an ideal portfolio in the current environment?

John Embry: I would always have bullion at the core of a portfolio, to the extent of perhaps 20-25%. However, I would not use ETF’s in general because I’m not sure the gold is all there.

-Gold price will move higher so keep the faith – Sprott Asset Management. Charles Oliver and Jamie Horvat, both senior portfolio managers at Sprott Asset Management, explain how gold will react in the New Financial (dis)Order. Both foresee $2,000 gold in the next three years and, ultimately, “significant” hyperinflation on a global scale over the next decade. Interview with The Gold Report. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page56?oid=85595&sn;=Detail or http://www.theaureport.com/pub/na/2751

-John Embry, reasons to own gold. Read more here- http://www.sprott.com/docs/Reports/reasons_to_own_gold.pdf

-Eric Sprott May/June commentary. Read more here- http://www.sprott.com/Docs/MarketsataGlance/June_2009.pdf

-Gold price will rise in real terms Roulston. Newsletter writer and analyst Lawrence Roulston provides his thoughts on the outlook for the economy and what factors impact gold and other metal markets. “As the Western world gets back on track,” says Roulston, “commodity prices will continue higher.” Interview with The Gold Report. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85733&sn;=Detail

-Bulliondesk.com bullion weekly report. Read more here-
http://www.thebulliondesk.com/content/reports/tbd/temp/e-mailrequestversion.pdf

-Chinese Government Wants To Purchase Another $80 Billion Of Gold! Read more here-
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId;=6926

-Gold Could Shoot Through $1,000 if China Shifts Away From U.S. Treasury’s. Read more here-
http://www.foxbusiness.com/story/markets/commodities/gold-shoot–china-shifts-away-treasurys/

-Next Stop for Gold Is $2,100 Not $1,300. Read more here- http://news.goldseek.com/GoldSeek/1246542892.php

-Investor demand to continue to fuel higher gold price-Scotia Capital. Scotia Capital is calling for “much higher gold and silver prices in the second half of the year and in 2010.”

http://www.mineweb.net/mineweb/view/mineweb/en/page31?oid=85791&sn;=Detail

-Richard Russell: Competitive devaluations to spur on gold. Read more here-
http://www.investmentpostcards.com/2009/06/27/richard-russell-competitive-devaluations-to-spur-on-gold/

-Audit fails to find Royal Canadian Mint’s missing gold. The Royal Canadian Mint, which produces coins for several nations, may have been the victim of a 15.3-million-dollar (13.2-million US) gold heist, an audit concluded Monday. The mint had called in external auditors last month to investigate a discrepancy between the mint’s 2008 financial accounting of its precious metal holdings and its actual stockpile.

Auditors at Deloitte and Touche concluded in report that approximately 17,500 troy ounces of gold, or about 0.32 percent of the mint’s fiscal 2008 throughput, is indeed missing. The unaccounted for difference in gold “does not appear to relate to an accounting error” in the reconciliation process, physical stock count or recordkeeping of transactions during the year, they said. This leaves few unexplored options to explain the missing gold. Read more here-
http://www.gata.org/node/7539 or
http://www.bloomberg.com/apps/news?pid=20601082&sid;=aKwwOGSy.k1g

-Where’s The Gold? Read more here-
http://www.huffingtonpost.com/nathan-lewis/wheres-the-gold_b_216896.html

-Video of GATA’s presentation to the Vancouver Resource Investment Conference on Sunday, June 7 moderated by Peter Grandich, market analyst for Agoracom.com, and featuring Al Korelin of the Korelin Economics Report, financial newsletter writer Jay Taylor, GATA Chairman Bill Murphy, GATA board member Ed Steer, and your secretary/treasurer has been posted in three parts at YouTube. Watch video here-
http://www.gata.org/node/7544

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,500 the silver price would be $31.25

Gold to silver ratio at 70 to 1 with gold at $2,500 the silver price would be $35.71

Gold to silver ratio at 60 to 1 with gold at $2,500 the silver price would be $41.67

Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00

Gold to silver ratio at 15 to 1 with gold at $2,500 the silver price would be $166.67

-Rising Industrial usage & rebound in investment puts silver in demand. Read more here- http://economictimes.indiatimes.com/Features/Investors-Guide/Rising-Industrial-usage–rebound-in-investment-puts-silver-in-demand/articleshow/4714142.cms

-Ted Butler silver commentary. Read more here- http://news.silverseek.com/TedButler/1246302473.php

-Q2 silver news from the silver institute. Read more here- http://www.silverinstitute.org/images/pdfs/2q09.pdf

-Gene Arensberg: Indicators supportive of gold, silver. Read more here- http://www.gata.org/node/7542

-David Morgan silver commentary. Read more here-
http://news.silverseek.com/SilverInvestor/1245993732.php

-Investment demand for PGMs is expected to remain healthy. CPM predicts the price of the three major platinum group metals is expected to remain as dynamic this year as they have been for the past 18 months. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=85731&sn;=Detail

-Sen. Crapo proposes equal tax treatment for precious metals. Read more here-
http://www.gata.org/node/7549

CHART OF THE WEEK-QUOTES-QUICK HITS

-Think the housing market is bad in New York City? It is! But it could be a lot worse. Going back to 2006, we still haven’t matched the decline for the rest of the country, according to the Case Shiller 20 City Composite. And pray we don’t end up like Las Vegas. Read more here-
http://www.businessinsider.com/chart-of-the-day-case-shiller-home-price-indices-2009-6

- Rob McInerney and Lucas Bugg of Worldwide Precious Metals back on Metals News: http://www.metalsnews.com/picturegalleries/PicturePopUp.aspx?ID=62342

-At my age (68), the only new venture I’m planning is making sure I wake up every morning. John Embry

-If the bureaucracy is not checked it will tend to build in the name of peace, a defense against every conceivable contingency; so much ’security’ that ‘the secured’ are without resources, helpless and hopeless. Leonard E. Read-Bio here-
http://en.wikipedia.org/wiki/Leonard_Read

-The free market punishes irresponsibility. Government rewards it. Harry Browne-Bio here- http://en.wikipedia.org/wiki/Harry_Browne

-The world’s most powerful investment bank Goldman Sachs is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. Matt Taibbi, Rolling Stone magazine, June 2009

-Goldman Sachs has engineered every major market manipulation since the Great Depression. Read more here-
http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

-’Pretty Boy’ Paulson and the Goldman Gang. Commentary: ‘Public Enemies’ run, not rob, our banks today. Read more here-
http://www.marketwatch.com/story/story/print?guid=982D6862-82E4-45C5-91A2-86B6C0F7604A

-Harry Markowitz, 81, who won the Nobel Prize for economics in 1990 for his work on portfolio theory, says that last year’s collapse reinforces his view that even the most unlikely outcomes are possible in any year.

“The thundering herd is still with us,” said Markowitz, a professor of finance at the Rady School of Management at the University of California, San Diego. “Nature draws into a bushel basket full of returns and finds a next return every year, and I believe there’s another 1929 somewhere in that bushel basket. 2008 was not a refutation, it was a confirmation.” Read more here- http://www.bloomberg.com/apps/news?pid=20601213&sid;=aSSzKSJaiuGM

-”By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” J.M. Keynes-Bio here-
http://en.wikipedia.org/wiki/John_Maynard_Keynes

-Silver at less than $14/oz today remains well below its average price in 1980 of some $20/oz and less than a third of its nominal high price in 1980 of over $50/oz (some $130/oz when adjusted for the significant inflation of the last 29 years). Mark O’Byrne

-Volatility should still be expected to continue. We continue to believe that gold and silver are poised for a dramatic move to the upside. The US congress is losing focus on reviving the economy as it tries to lay blame for the decisions that were made in the heat of the financial meltdown. China’s increasing rhetoric about creating a new world currency is gaining ground with more and more countries and the threat of inflation is now looming on the horizon.

We feel that current prices are still very attractive for long term appreciation and those who make acquisitions at these levels and maintain their ability to stay for the long term by not over-extending themselves should achieve their goal of long term profitability and capital preservation through the ownership of precious metals. Trading Department Precious Metals International

-James Moore, of TheBullionDesk.com, wrote that “given the scale of longs already in place and the slow pace of physical demand, gold is still vulnerable to profit taking short-term and may look to consolidate in the $910 to $950 area before pushing towards $1000 again” Casey Daily Resource

-A Commerzbank analysts wrote this week, “It is likely that China will buy further gold over the coming months and years, as, in contrast to other countries, gold still accounts for only a small proportion of China’s entire foreign exchange reserves.”

Many in that country agree. China should buy gold rather than U.S. debt because the Fed’s policies make dollar depreciation inevitable, Li Lianzhong, a senior Communist Party official, told a conference in Beijing last week. Casey Daily Resource

-Ron Paul Wins Support to Audit Fed Reserve. Rep. Ron Paul so far has won 245 co-sponsors to a bill that would require a full-fledged audit of the Federal Reserve by the end of 2010. Read more here-
http://www.foxnews.com/politics/2009/06/24/mr-popular-rep-paul-wins-supporters-fed-sunshine/

-Lawmakers attack Fed for being too secretive. Read more here- http://www.gata.org/node/7534

-China will drive commodities super-cycle: Scotiabank. Read more here- http://www.financialpost.com/story.html?id=1744259

-China’s central bank repeats call for new world currency. Read more here- http://www.gata.org/node/7533

-China, Brazil would exit dollar in bilateral trade. China and Brazil are working on a currency arrangement to allow exporters and importers to settle deals in their local currencies, bypassing the U.S. dollar, the countries’ central banks said on Sunday. Read more here- http://www.gata.org/node/7537

-For five minutes Monday morning CNBC market analysts discussed how obvious U.S. government manipulation of the financial markets has become. If manipulation is obvious to CNBC analysts now, soon even some mainstream gold market analysts may have trouble denying it. You can watch the CNBC segment here- http://www.cnbc.com/id/15840232?video=1167028705&play;=1 or
http://www.gata.org/node/7546

-North Korea fired four short-range missiles off its eastern coast today in defiance of United Nations sanctions imposed after a nuclear test, South Korea’s military and a U.S. official said.

The communist state launched the devices from South Hamgyong province at 5:20 p.m., 6 p.m., 7:50 p.m. and 9:20 p.m. local time, said an official at South Korea’s Joint Chiefs of Staff who declined to be identified for security reasons. The action probably was part of a military drill, according to the same official.

North Korea has used such launches in the past to counter international condemnation of its nuclear program. The regime fired six short-range missiles in May, following its detonation of a nuclear bomb. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=a3s0DujPPI9M

-North Korea Exports $800 Million of Arms Illegally, Chosun Says. North Korea has exported $800 million worth of weapons illegally since 2000 to countries including Iran, Syria and Myanmar, the Chosun Ilbo newspaper reported, citing an unidentified South Korean government official.

Kim Jong Il’s regime sold arms including missiles, field guns, rockets and submarines through illegal channels to avoid a U.S.-led program to intercept international shipments of weapons of mass destruction, the South Korean newspaper said.

North Korea used overland routes through China and Russia to avoid detection under the Proliferation Security Initiative, or PSI, according to the report. The U.S. is reviewing ways to prevent North Korea’s illegal weapons exports after the United Nations Security Council adopted sanctions against the communist country following its May 25 nuclear test, Chosun said.

-Judge orders Allen Stanford jailed until trial. Read more here- http://www.reuters.com/article/ousiv/idUSTRE55T6TY20090630

-Bernard Madoff Sentenced to 150 Years for Epic Swindle. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aPDMGOxP0uJQ and
http://www.bloomberg.com/apps/news?pid=20601082&sid;=apzmc9N7mJkA

-Poll finds Alan Greenspan to blame for credit crisis. Read more here- http://www.reuters.com/article/ousiv/idUSTRE55T1V920090630

-Millionaires’ springtime optimism wilts: survey. Millionaire investors lost their springtime cheer and turned pessimistic in June as worries over the economy and political climate soured the mood, according to an index released on Wednesday.

High rollers became slightly bearish last month, according to the index that measures investment sentiment of the wealthy. The plunge of 18 points to -20 on the Spectrem Millionaire Investor Index in June was a record drop for the index, which was created in 2004. Read more here-
http://www.reuters.com/article/hotStocksNews/idUSTRE5605N720090701

-Warren Buffett lunch sells for $1.68 million on eBay. Read more here-
http://www.reuters.com/article/ousiv/idUSTRE55Q0C920090627

-Meet Buffett’s $2.1 million lunch partner. Hong Kong hedge fund manager Zhao Danyang says the Omaha sage is “so famous, but he’s just like your friend.” Read more here-
http://money.cnn.com/2009/06/26/magazines/fortune/lunch_buffett_danyang.fortune/index.htm

-Warren Buffett donates $1.5 billion Berkshire shares. Read more here- http://www.reuters.com/article/ousiv/idUSTRE56162S20090702

-Woods Tops SI.com’s Highest-Paid Athletes With $100 Million. Tiger Woods remains the top-earning U.S. athlete, making almost $100 million in prize money and endorsements during the past year even though knee surgery kept him off the golf course for eight months, according to Sports Illustrated.

Woods, 33, had $7.7 million in winnings and $92 million in endorsement income to top SI.com’s “Fortunate 50” list for the sixth time in the six years it’s been published by the magazine.

The global economic decline caused average earnings of those on the list to decline for the first time, down $1.5 million per athlete to $23.6 million. Woods, whose off-course earnings declined from $105 million a year ago, ended a marketing accord in November with General Motors Corp. after endorsing GM products including Buick for the past nine years. Read more here- http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8owlojq4jnA

WWW.RARECOLOREDDIAMONDS.COM

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

-Fancy colored diamonds, have appreciated 10-to-15 percent annually since their prices started being tracked in the 1970’s, with reds, purples, pinks and blues commanding even higher premiums. Diamonds.net

-After three months of not processing a single diamond, Australia’s largest diamond mine is now back in production. The Argyle mine is in Western Australia’s far north. Read more here-
http://www.israelidiamond.co.il/english/News.aspx?boneId=918&objid;=5286

-The ultimate jewel of all jewels, from the NYTimes, Monday, December 5, 2005.

Connoisseurship rules. In the rarefied world of fine jewelry, the all-absorbing quest for individuality, that rampant lust for the ultimate, one-of-a-kind exclusivity, is driving discerning buyers toward the rarest and most ravishing of nature’s miracles: colored diamonds.

Regarded until five to 10 years ago as a scientific curiosity, the colored diamond, with its fire and light, its soft, powdery palette of cherry blossom pinks, baby blue, mist gray, gooseberry green, cognac, ochre and so many more, has become the poetic focal point of high jewelry collections around the world. In today’s escalating climate of “super luxe,” the princely colored diamond, beyond precious, beyond fashion, is the ultimate possession.

Melvyn Kirtley, Tiffany’s head gemologist, has been assembling a “critical mass” of colored diamonds for Tiffany over the past few years, building, he says, on the company’s historic ownership of the 128.54 carat canary yellow Tiffany diamond, mined in South Africa in 1877.He explains the enduring appeal: “Colored diamonds are so immensely rare, so remarkable, and although people are more aware of them today, they are still a bit of a secret, something intensely personal. You have to discover them, and, when you do, they open up another world.”

It is this element of personal, secret and understated luxury that makes the colored diamond the perfect gem of the moment. Usually small and subtle, colored diamonds possess a sophisticated, low-key glamour that only the wearer, or another elite connoisseur, can understand. Read more here-
http://www.nytimes.com/2005/12/04/style/04iht-rgem.html

-Always precious, diamonds gain as investment. Diamonds, like art, are a commodity that is gaining attention as an alternative investment. Increases in the price of the rarest colorless and colored diamonds are attracting wealthy investors and structured funds as stock markets and real estate values decline. Read more here- http://www.boston.com/business/articles/2008/07/16/always_precious_diamonds_gain_as_investment/

-Investing in Diamonds: The Terms of Engagement. Diamond investments may turn up profits “in the rough.” Diamond values are not directly linked to stock and bond markets. Diamond prices have increased an average of 15 percent each year since 1949, according to statistics published by diamond manufacturer Ajediam on their company website. “Diamonds do hold their value well,” Chuck Jaffe wrote in his syndicated column last December. “So long as the stone is real, it’s not going to zero like a company headed for bankruptcy.” Read more here-
http://www.nuwireinvestor.com/articles/investing-in-diamonds-the-terms-of-engagement-51499.aspx

JAMES TURK-FIRST HALF OF 2009

-The first half of 2009 is now behind us, so it is time to look at the scorecards. The tables below present the percentage change in gold and silver for the first six months of 2009. For comparison purposes I also include the annual rates of appreciation achieved by gold and silver so far this decade against nine of the world’s major currencies.

Gold % Annual Change
	USD	AUD	CAD	CNY	EUR	INR	JPY	CHF	GBP
2001	2.5%	11.3%	8.8%	2.5%	8.1%	5.8%	17.4%	5.0%	5.4%
2002	24.7%	13.5%	23.7%	24.8%	5.9%	24.0%	13.0%	3.9%	12.7%
2003	19.6%	-10.5%	-2.2%	19.5%	-0.5%	13.5%	7.9%	7.0%	7.9%
2004	5.2%	1.4%	-2.0%	5.2%	-2.1%	0.0%	0.9%	-3.0%	-2.0%
2005	18.2%	25.6%	14.5%	15.2%	35.1%	22.8%	35.7%	36.2%	31.8%
2006	22.8%	14.4%	22.8%	18.8%	10.2%	20.5%	24.0%	13.9%	7.8%
2007	31.4%	18.6%	10.4%	23.0%	17.9%	17.5%	24.7%	21.5%	29.2%
2008	5.8%	32.5%	32.4%	-1.1%	11.9%	30.4%	-14.9%	0.2%	44.3%
Average	16.3%	13.3%	13.6%	13.5%	10.8%	16.8%	13.6%	10.6%	17.1%
(6 mos.) 30 June 2009	4.9%	-9.1%	-0.3%	5.0%	4.1%	3.1%	11.3%	6.8%	-6.8%

Silver % Annual Change
	USD	AUD	CAD	CNY	EUR	INR	JPY	CHF	GBP
2001	-0.1%	8.5%	6.1%	-0.1%	5.3%	3.1%	14.4%	2.3%	2.7%
2002	4.8%	-4.6%	4.0%	4.9%	-11.0%	4.3%	-5.0%	-12.6%	-5.3%
2003	24.0%	-7.3%	1.4%	23.9%	3.2%	17.7%	11.9%	11.0%	11.9%
2004	14.3%	10.2%	6.5%	14.3%	6.4%	8.6%	9.6%	5.4%	6.5%
2005	29.6%	37.7%	25.5%	26.3%	48.1%	34.6%	48.8%	49.3%	44.4%
2006	45.3%	35.3%	45.3%	40.5%	30.4%	42.6%	46.7%	34.8%	27.5%
2007	15.4%	4.1%	-3.1%	8.0%	3.5%	3.2%	9.5%	6.7%	13.5%
2008	-23.8%	-4.7%	-4.7%	-28.9%	-19.5%	-6.2%	-38.8%	-27.9%	3.8%
Average	13.7%	9.9%	10.1%	11.1%	8.3%	13.5%	12.1%	8.6%	13.1%
(6 mos.) 30 June 2009	20.4%	4.4%	14.5%	20.6%	19.5%	18.4%	27.8%	22.6%	7.0%

Here are my observations about gold and silver’s performance so far in 2009.

Silver is clearly outperforming gold. It has risen against all nine currencies, ranging from a low of 4.4% in terms of the Australian dollar to a high of 27.8% against the Japanese yen. Silver’s average appreciation against the nine currencies is 17.2%.
Silver is also doing better this year than its annual averages from 2001-2008 for every currency except the Australian dollar and British pound. Both of these currencies sold off especially hard after the Lehman Brothers collapse last year. So it is understandable that both of these currencies have bounced back strongly, particularly given this year’s resurgence in commodity prices (the CRB Continuing Commodity Index is up 9.8% this year). Consequently, silver’s gains over the past six months were the smallest against these two currencies because of their relative strength.
Gold declined in the first six months of this year against three currencies. These are the two strong currencies – the Australian dollar and British pound – and, gold is also down slightly against the Canadian dollar, another currency hit hard after the Lehman collapse.
Against all nine currencies, gold eked out a 1.9% average rate of appreciation during the first half of the year.
Gold is up 4.9% against the US dollar so far this year. It will be interesting to see gold’s result at the end of the year, and whether it manages to climb against the US dollar for its ninth year in a row.

It is clear from the above tables that gold has been contained during the first half of this year. In contrast, silver is doing exceedingly well. Only time will tell what the second half of the year will bring, but the ongoing debasement of the dollar and other fiat currencies still favors the ongoing accumulation of gold and silver. By doing so, the above tables make clear that you are saving sound money, namely, money that preserves your purchasing power. Read more here-
http://goldmoney.com/commentary-the-first-half-of-2009.html

BLACK SWAN-WE ARE IN THE MIDDLE OF A CRASH

-The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of “The Black Swan,” told CNBC Thursday. “You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that’s breaking,” Taleb said on “Squawk Box.”

Anything that’s fragile like the financial system will eventually crash, he said. “We’re in the middle of a crash,” Taleb said. “So if I’m going to forecast something, it is that it’s going to get worse, not better.” The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said. “What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion,” Taleb said.

“The monkey on our back is debt,” he added. As an example, Taleb said banks should not be sending demands for larger and larger sums from homeowner in arrears on their mortgage. Instead the bank should offer to lower the monthly payments in return for part-ownership of the property. “People would be able to start from scratch on a healthy basis. You don’t want to wait for foreclosure,” he said. Watch video here-

http://www.cnbc.com/id/31706523

BILL GROSS-ECONOMY TO STAY WEAK FOR A NUMBER OF YEARS

-The slide in employment is representative of what the U.S. economy faces for years to come, Pimco co-chief investment officer Bill Gross told CNBC. A slow-growth scenario continues to play out as consumers who are losing their jobs or are in fear of facing unemployment cut spending and inhibit economic growth, said Gross, who helps manage the world’s largest bond fund at Pacific Investment Management.

He spoke after a government report showed the economy lost 467,000 jobs in June and the unemployment rate moved to 9.5 percent. “Much like we saw with the Depression, attitudes change, and so consumers and investors will now become conservative savers as opposed to spenders,” Gross said in a live interview. “Spending as driven by asset appreciation in terms of houses that game stops, that game has stopped and we must now move in another direction.”

Keeping with his recent forecasts, Gross said real gross domestic product likely will grow at just 1 to 2 percent annually for the next generation or so. In that type of situation, government will have no choice but to keep up its deficit spending programs to keep the economy moving.

“The question becomes, can we maintain that level of spending?” Gross said. “I think it’s necessary over the next year or two simply because the consumer provides a void in terms of the economic hand and so, yes, the government must continue to spend, must continue to provide new forms of stimulus whether it’s in the form of low interest rates and monetary policy or fiscal policy going forward.”

Yet the government also will have to confront the reality of a weakening currency and the problems that will lead to in terms of global investors willing to put money into the U.S. It all adds up to a difficult future, he said. “The talk of three or four months ago in terms of Depression I think is out,” Gross said. “But we are looking at stagflation or some type of stagnation in terms of 1 to 2 percent growth for a number of years.” Watch video here-
http://www.cnbc.com/id/31707377

-The U.S. economy will grow for a few quarters and then contract again, said Martin Feldstein, a professor of economics at Harvard University. “I think we’re going to see a temporary substantial improvement,” Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Radio. “I emphasize the words temporary and substantial.”

After the economy shrank at a 5.5 percent annual pace in the first quarter of the year, the change in gross domestic product will be “closer to zero” or “even a small plus” for the April-to-June period, Feldstein said. “We’ll get a bounce for a few quarters and then it will fade out,” Feldstein said. “We’re now going through the getting-better phase for a while.” Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=agnFzEH.Xsx4

WORLD BANKING SYSTEM

-Banking system like South Sea bubble, says senior Bank of England official. ‘Banking became the goose laying the golden eggs. There is no period in recent UK financial history which bears comparison,’ says executive director for financial stability, Andy Haldane.

A senior Bank of England official today compared the banking system over the last 20 years to the South Sea bubble of the early 18th century and said bankers had merely “resorted to the roulette wheel” to keep up with each other.

The Bank’s executive director for financial stability, Andy Haldane, said in a speech in Chicago that having been stable over much of the 20th century, returns in the banking system relative to the wider stockmarket shot up after 1986 until 2006.

“Banking became the goose laying the golden eggs. There is no period in recent UK financial history which bears comparison,” he said. He said bankers and policymakers became seduced by the excess returns available: “Banks appeared to have discovered a money machine, albeit one whose workings were sometimes impossible to understand.

“One of the South Sea stocks was memorably ‘a company for carrying out an undertaking of great advantage, but nobody to know what it is’. Banking became the 21st-century equivalent.” He said banking returns over the period were magnified by leverage as banks borrowed excessively, he said. Read more here-
http://www.guardian.co.uk/business/2009/jul/01/bank-england-south-sea-bubble

Returns on banking shares relative to the wider market

-British banks highly vulnerable to future shocks, Bank of England warns. Britain’s banks remain over-indebted, highly vulnerable and harbour growing funding gaps which leave them susceptible to future shocks, the Bank of England has said. Read more here-
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5639474/British-banks-highly-vulnerable-to-future-shocks-Bank-of-England-warns.html

-China’s banks are an accident waiting to happen to every one of us. Fitch Ratings has been warning for some time that China’s lenders are wading into dangerous water. Read more here-
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5675198/Chinas-banks-are-an-accident-waiting-to-happen-to-every-one-of-us.html

-Bank failure list tops 45. The FDIC says banks in Georgia, Minnesota and California were shuttered by state regulators. Read more here-
http://money.cnn.com/2009/06/26/news/companies/bank_failure/index.htm?postversion=2009062622 or http://www.bankinfosecurity.com/articles.php?art_id=1583 or
http://www.fdic.gov/bank/individual/failed/banklist.html

-Seven banks fail, pushing 2009 tally to 52. Regulators close six Illinois banks and one Texas bank setting the FDIC back a total of $314.3 million. Read more here-
http://money.cnn.com/2009/07/02/news/companies/bank_failure/index.htm?postversion=2009070219

-Private-equity firms said the Federal Deposit Insurance Corp.’s proposed rules for buyout groups that take over failed banks will dampen interest in such deals. “The FDIC’s proposed guidance would deter future private investments in banks that need fresh capital,” Douglas Lowenstein, president of the industry group the Private Equity Council, said in a statement today.

The FDIC is courting private-equity companies that have about $400 billion to invest while trying to placate lawmakers such as U.S. Senator Jack Reed who have expressed fear that buyout firms may be lax stewards of the banking industry. Private-equity firms pumped more than $1 billion into U.S. banks, 47 of which have been closed by the FDIC this year. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=anKbhVnbdOA0

-U.K. Bank Job Cuts Surpass 55,000; More Are Forecast. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=ai44ri_p.hB0

-AIG Discloses New Risk on Derivatives Sold to Banks. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aFdfSkR0t0Jo

-Recovery threatened by toxic assets still hidden in key banks. Read more here-

http://www.guardian.co.uk/business/2009/jun/29/taxpayers-large-losses-toxic-assets

INFLATION-INTEREST RATES

-Alan Greenspan, Inflation the real threat to sustained recovery. Read more here- http://www.ft.com/cms/s/0/e1fbc4e6-6194-11de-9e03-00144feabdc0.html

-Hyperinflation Nation Part 1/3. Watch video here- http://www.youtube.com/watch?v=SzmYI_4XCbM&eurl;=http%3A%2F%2Fgoldismoney.info%2Fforums%2Fshowthread.php%3Ft%3D386839&feature;=player_embedded

Hyperinflation Nation Part 2/3. Watch video here- http://www.youtube.com/watch?v=d4OaUUHdtMA&feature;=related

Hyperinflation Nation Part 3/3. Watch video here- http://www.youtube.com/watch?v=ZL2pOt28W10&feature;=related

-BIS Sees Risk Central Banks Will Raise Interest Rates Too Late. The Bank for International Settlements said there’s a risk central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation.

History shows that policy makers “have a tendency to be late, tightening financial conditions slowly for fear of doing it prematurely or too severely,” the BIS, which oversees central banks, said in its annual report published today in Basel, Switzerland. “Because their current expansionary actions were prompted by a nearly catastrophic crisis, central bankers’ fears of reversing too quickly are likely to be particularly intense, increasing the risk that they will tighten too late.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=aOnSy9jXFKaY

-Fed’s Yellen: rates could be near zero for years. Read more here- http://www.reuters.com/article/ousiv/idUSTRE56009K20090701

-Pimco’s El-Erian Says Federal Reserve Unlikely to Raise Rates. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNUlQ0AV7r3w

-Trichet Signals ECB Rates Unchanged for Next Months. Jean-Claude Trichet signaled the European Central Bank will keep interest rates at a record low for the coming months as officials deploy new tools to fight the worst recession since World War II.

“The current rates are appropriate,” Trichet said at a press conference in Luxembourg after the ECB left its benchmark rate at a record low of 1 percent. At the same time, he refused to rule out the option of further cuts, saying “we did not decide today that this was the lowest level we would attain under any circumstances.”

The ECB has reduced its main rate by 325 basis points since October to stem the economic slump. The Frankfurt-based central bank also flooded the banking system with hundreds of billions of euros last week and will start buying 60 billion euros ($84 billion) of covered bonds on July 6 to free credit and encourage lending. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOTyHwRqTilw

-Soros predicts “stop-go” economy and higher rates. Read more here- http://www.reuters.com/article/ousiv/idUSTRE55T4WM20090630

U.S. DEBT-DEFICIT

-Cost of rescues: $835 billion this year. Congressional Budget Office estimates 2009 outlays to stem economic and financial crises. But the bigger problem for the budget looms elsewhere. Read more here- http://money.cnn.com/2009/06/26/news/economy/cbo_federal_budget_outlook/index.htm

-Rising national debt raises prospects of eventual inflation. Read more here- http://www.usatoday.com/money/economy/inflation/2009-06-28-national-debt-inflation_N.htm?loc=interstitialskip&POE;=click-refer

-U.S.’s debtor status worsens dramatically. In the midst of the longest, and probably deepest, postwar recession last year, the U.S. investment position with the rest of the world sharply deteriorated.

At the end of 2008, America’s net international investment position was minus $3.47 trillion, the Commerce Department reported Friday. That represents the difference between the value of U.S. assets owned by foreigners ($23.36 trillion) and the value of foreign assets owned by Americans ($19.89 trillion).

At the end of 2007, the U.S. net international investment position was minus $2.14 trillion. Thus, America’s net indebtedness with the rest of the world increased by $1.33 trillion, or 62 percent, during 2008. It was by far the biggest annual increase in data that go back to 1976.

Foreigners now hold nearly 50 percent of the federal government’s publicly held debt. If foreign investors significantly reduce their purchase of future U.S. Treasury debt securities, without even dumping their current holdings, U.S. interest rates could soar and the dollar could collapse, analysts fear. At minus $3.47 trillion, America’s net debtor status with foreigners represents nearly 25 percent of U.S. gross domestic product, the highest level in history.

“Three decades of massive trade deficits have converted the United States from the world’s banker able to ‘pay any price and bear any burden in the cause of freedom’ to the world’s largest debtor, utterly dependent on China and other foreign interests,” said Charles McMillion, chief economist of Washington-based MBG Information Services.

Essentially, America’s net international investment position is driven by what the United States borrows from the rest of the world to finance its ongoing trade deficit, said Brad Setser, a fellow for geoeconomics at the Council on Foreign Relations. Read more here- http://www.washingtontimes.com/news/2009/jun/27/uss-debtor-status-worsens-dramatically/print/

JOB NUMBERS-CONSUMER CONFIDENCE

-No surprise: consumer discretionary companies are highly dependent on consumers having jobs and income. As such, consumer discretionary stocks, as measured by the XLY ETF, fell while new unemployment insurance claims spiked. And, as new unemployment claims have come back to earth, the XLY has jumped. Eventually, for consumer discretionary companies to thrive we’ll actual need to see real gains from consumers gains in jobs and income, neither of which we’re seeing now. Read more here-

http://www.businessinsider.com/chart-of-the-day-unemployment-insurance-claims-vs-consumer-discretionary-spdr-2009-6

-Payrolls Fall More Than Forecast, Unemployment Rises. Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.

The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=ahfK709b4uds

-U.S. Initial Jobless Claims Fell to 614,000 Last Week. The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, indicating firings remain elevated.

Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before, the Labor Department said today in Washington. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSAv5b8Tqqzs

-Confidence among U.S. consumers slipped unexpectedly in June, reflecting a weak labour market and rising energy costs. The Conference Board’s sentiment index decreased to 49.3 from a revised 54.8 in May, the New York-based research group said today. The figure was still above a record low of 25.3 reached in February. Another report showed home prices fell at a slower pace in April than in the previous month. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=aL2GQmLUajv4

U.S. PERSONAL INCOME

-Americans are saving and paying off credit card debt at levels not seen in years, but where’s that money coming from? Increasingly, it’s not coming from work. As today’s chart (via David Rosenberg) demonstrates, a staggering proportion of American personal income now comes straight from government transfer payments welfare, unemployment, etc. And thus the process of household debt becoming government debt takes place. Read more here-

http://www.businessinsider.com/chart-of-the-day-govt-transfers-as-a-percent-of-personal-income-2009-6

-U.S. Savings Rate at Highest Point in 15 Years. Read more here-
http://www.nytimes.com/2009/06/27/business/economy/27econ.html

U.K. FINANCIAL CRISIS

-Britain facing biggest deficit in Western world, warns OECD. Hopes that the biggest post-war economic slump will soon end have been dashed after the rich world’s leading economic institution slashed its forecasts for economic growth and warned that Britain next year faces the worst deficit in the industrialised world. Read more here-
http://www.telegraph.co.uk/finance/financetopics/recession/5626858/Britain-facing-biggest-deficit-in-Western-world-warns-OECD.html

-The U.K. economy shrank more than previously estimated in the first quarter in the biggest contraction since 1958 as the recession choked industries from construction to services. Gross domestic product fell 2.4 percent from the final three months of 2008, compared with the prior measurement of a 1.9 percent drop, the Office for National Statistics said in London. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aHLN.DQP4SbQ

-Sterling Crisis Looms as U.K. Unravelling Points to Budget Cuts. The state of the U.K. economy fills British financial historian Niall Ferguson with foreboding. “The probability of a real sterling crisis is around one in three, and the probability of major tax hikes and cuts in public spending is roughly one in one,” the Harvard University professor says.

Ferguson’s concern stems from the deterioration in the U.K.’s public finances, which prompted Standard & Poor’s to warn on May 21 that the country could lose its AAA debt rating. The firm estimated the cost of propping up Britain’s banks at 100 billion pounds ($166 billion) to 145 billion pounds and said government debts could double to almost 100 percent of gross domestic product by 2013. Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=aptnrMueIerQ

CHART OF THE DAY

-Many investors continue to look to the early 1930s for some insight into the current economic/stock market environment. While there are significant differences (global economy, credit default swaps, TARP, FDIC, etc.) between the current environment and that what occurred in the early 1930s, there are also many similarities (bank failures, bankruptcies, severe market declines, etc.).

For some perspective on the current stock market rally that began on March 9th, today’s chart illustrates duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots). For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%.

As today’s chart illustrates, the current Dow rally (hollow blue dot labeled you are here) is above average in both duration and magnitude relative to the average 1929-1932 bear market rally (hollow red dot). Compared to the current rally, only one 1929-1932 bear market rally was greater in both magnitude and duration and that was the first 1929-1932 bear market rally that began in November 1929. Read more here-
http://www.chartoftheday.com/20090626.htm?T

REAL ESTATE-MORTGAGE-FORECLOSURE

-U.S. housing misery poised to enter new phase. Signs that home prices may have bottomed have stirred hope on Wall Street that the economy is on the mend, yet tight credit and a new foreclosure wave cast doubt on any looming housing revival. Read more here-
http://www.reuters.com/article/wtUSInvestingNews/idUSTRE55P51I20090626

-Housing in Peril as Obama Fails to Get Financing Breakthrough. Driving through Riverside, California, Bruce Norris pointed to a half-dozen empty houses with “For Sale” signs stuck in untended lawns that he said investors might buy if banks would just extend some credit.

“People today look at us as the enemy,” said Norris, 57, head of Riverside-based Norris Group, which purchases and renovates homes to rent or sell. “That’s a big problem for housing because if we can’t get the financing we need, a lot of these properties are going to sit vacant.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=aiZMzULhjTIo

-Home prices in 20 major U.S. metropolitan areas fell in April at a slower pace than forecast, a sign the plunge in real-estate values is abating. The S&P;/Case-Shiller home-price index decreased 18.1 percent from a year earlier following an 18.7 percent drop in March. The measure declined 19 percent in January, the most since the data began in 2001.

Price declines are likely to keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Still, the highest jobless rate in 25 years is contributing to record foreclosures, which are likely to keep depressing values for months to come even as home sales steady.

“It is looking a little bit better,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “The largest declines are probably past. When prices stop falling the erosion in household wealth will come to an end.”

Eight of the 20 cities showed an increase in prices from March, the most in almost a year, led by a 1.7 percent gain in Dallas. The 20-city measure was down 0.6 percent in April from the prior month, the best performance since June 2008.

Yale University economist Robert Shiller, who co-founded the index, said in an interview with Bloomberg Radio that he sees a “striking improvement” in the rate of decline in the U.S. housing market. He also noted that one measure of investors’ outlook for house prices indicate “the declines are over.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=aufFvZoxcQ6g

-Pending Sales of Existing Homes in U.S. Increased 0.1% in May. The number of Americans signing contracts to buy previously owned homes rose for a fourth consecutive month in May, a sign the four-year slump in housing sales may be bottoming out.

The 0.1 percent gain in the index of signed purchase agreements, or pending home resales, followed a 7.1 percent rise the prior month that was bigger than previously estimated, the National Association of Realtors said today in Washington. The May reading was up 4.6 percent from the same month a year earlier. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=azoz62A6P434

-Manhattan Apartment Prices Drop as Lehman Hits Home. Manhattan apartment prices dropped for the first time since 2002 in the second quarter as the collapse of Lehman Brothers Holdings Inc. and Bear Stearns Cos. caught up to property owners in the nation’s most expensive urban market.

The median price fell 18.5 percent from a year earlier to $835,700, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The number of sales plunged by half, the most since Miller Samuel began keeping data in 1989. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aKJTtME9cUhY

-Hotel Loan Defaults Double as Recession Cuts Travel. As many as one in five U.S. hotel loans may default through 2010 as the recession means companies are spending less on travel and perks, according to University of California economist Kenneth Rosen.

The value of hotel properties in default or foreclosure almost doubled to $17.3 billion in the second quarter through June 24 from $9 billion at the end of the first quarter, data compiled by Real Capital Analytics Inc. show. The New York-based research firm, which began tracking distressed commercial property in November, expects hotel defaults to increase by as much as $2 billion this quarter, said analyst Jessica Ruderman.

“Hotels without question will have the highest foreclosure rate of any commercial real estate sector,” said Rosen, who runs a real estate hedge fund with $310 million in assets and is chairman of the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley.

Hotel owners are defaulting as room rates and property values tumble and the securitized mortgage market that fueled an 88 percent gain in U.S. commercial prices from 2001 to late 2008 is dormant. Luxury hotel revenue fell 28 percent in April from a year earlier and has dropped for 12 straight months, according to Smith Travel Research Inc. in Hendersonville, Tennessee. The 29 percent decline in March was the biggest since October 2001.

A third of the $8.6 billion in securities backed by hotel loans due in 2010 are at risk of defaulting, data compiled by credit-rating firm Realpoint LLC in Horsham, Pennsylvania, show. Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=acgd9We.1TEY

-175 California Hotels In Default; Sheraton Keahou Bay Resort in Hawaii Defaults; More Defaults Coming. Read more here-
http://globaleconomicanalysis.blogspot.com/2009/06/175-california-hotels-in-default.html

-Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure. Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report.

First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said. “I’m very concerned about the rise in delinquent mortgages and foreclosure actions,” Comptroller of the Currency John Dugan said in a statement released with the quarterly report. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=amq8v.M.ak60

-Japan on verge of sub-prime mortgage crisis as summer bonuses plunge. Read more here-
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6578368.ece

-Freddie Mac receives additional $6.1B from gov’t. Battered mortgage giant Freddie Mac received $6.1 billion in new funds from the Treasury Department to help offset its mounting liabilities, according to a regulatory filing submitted Wednesday.

The Federal Housing Finance Agency, which has been operating Freddie Mac since last fall, requested the funds for Freddie Mac after the mortgage firm’s liabilities exceeded its assets by more than $6 billion, according to the filing with the Securities and Exchange Commission.

After drawing the funds, Freddie Mac has now received $51.7 billion from the Treasury Department and still has access to an additional $149.3 billion to help it finance operations. Read more here-
http://news.yahoo.com/s/ap/20090701/ap_on_bi_ge/us_freddie_mac_treasury_5

-Some folks out there still seem to think the housing market is bottoming or even turning around. It’s not. Freddie Mac is out with its latest housing market update, with a wealth of data on the housing market from its perch. One graph that stuck out for us: total delinquencies near 2.5% are way beyond the GSE’s historical norms.

When the numbers for things like delinquencies or foreclosures start to flatten or turn around, we can start talking about a turnaround. Granted, like the Case-Shiller series, some will say this particular chart is 3-months old, though nothing we’ve heard since the end of March suggests things are much different. Read more here-
http://www.businessinsider.com/chart-of-the-day-single-family-delinquencies-2009-6

The Goldbugg Report – July 7, 2009
Posted by Worldwide Precious Metals on Tuesday, July 7, 2009

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