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The Goldbugg Report – October 27, 2009
October 27, 2009
-The next target for gold is 1130, with a midterm target of 1300. The next target for silver is 19 with a midterm target of 26. Jim Willie CB
- Boiling Point, Warren Bevan
-Silver rose to a recent nominal high $20.88/oz in March 2008. After an 18 month period of correction and consolidation, silver looks set to challenge that high in the coming weeks…
GOLD
-Boiling Point, Warren Bevan http://news.goldseek.com/GoldSeek/1256485332.php
-Gold’s rally to a record means prices are still 53 percent below the 1980 inflation-adjusted peak. While gold rose 19 percent this year to $1,072 an ounce on Oct. 14, consumer prices almost tripled in the past three decades, eroding the metal’s value. Bullion hasn’t kept pace with the cost of bread, fuel or medical care. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.
Record government debt and interest rates close to zero percent are pushing gold higher for a ninth straight year, and options show investors expect the rally to continue. When prices reached all-time highs, the contract with the most open interest was the December call to buy the metal at $1,200. The contract to purchase at $1,500 an ounce was the third biggest.
“Gold is not at any peak,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages $58.5 billion in mutual funds and brokerage accounts. “The world’s money supply has increased and gold hasn’t kept pace,” he said. “We’re now in a period where gold is catching up.”
The U.S. Dollar Index, which measures the currency against those of six major trading partners, fell on Oct. 15 to the lowest level in 14 months, and has dropped about 7 percent this year. President Barack Obama has increased the nation’s marketable debt 22 percent to $7.01 trillion to revive growth.
Gold would need to rise more than sixfold to top the 1980 record, using a more accurate inflation-adjustment, said John Williams, an economist and the editor of Berkeley, California- based Shadowstats.com. He said the government has understated the cost of living over the past two decades with adjustments in the way it measures the basket of goods and services monitored by the U.S. consumer price index, or CPI. “If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,” Williams said.
At Jersey, Channel Islands-based GoldMoney.com, which held $759 million of gold and silver for investors as of Sept. 30, founder James Turk said bullion can climb eightfold based on the historical relationship between the metal and the Dow Jones Industrial Average. The Dow is up 10-fold since January 1980.
Gold and the Dow, which has gained 14 percent this year to 9,995.91, were at about the same level during the Great Depression and the early 1980s, he said. On Jan. 21, 1980, as gold futures surged to $873, the Dow slipped to 946.25.
“The dollar is constantly being debased and inflated,” Turk said. “By 2013, gold is going to be at $8,000 and the Dow will be at 8,000.” Philip Gotthelf, the president of Equidex Brokerage Group Inc. in Closter, New Jersey, says he expects gold to trade at $1,250 by year-end. “Gold has been pushing higher because it’s no longer just a hedge against commodity inflation, it’s also a hedge against a change in world-monetary standards.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a3w9OGzFRe3Y
-Gold above $1,000 isn’t close to ‘uncharted territory.’ Read more here-http://www.gata.org/node/7920
-Gold Heading to $3000 Unless America Hits the “Reset” Button, Tice Says. Among the cavalcade of gold bulls to recently grace Tech Ticker’s stage, David Tice is something of a centrist. Gold will hit at least $3000 per ounce before the current rally ends says Tice, Federated’s chief portfolio strategist for bear markets. The forecast falls roughly in between Peter Schiff’s $5000 per ounce call and Jimmy Rogers’ forecast of $2000.
Tice is wary about the potential for a short-term reversal in the dollar down-gold up trend. “We certainly could have a pullback,” he says. “However, we believe this rally in gold is going to on for a long time.” As with Schiff, Rogers and pretty much everyone else these days, Tice is concerned about the “debasing” of the U.S. dollar and our reliance on foreigners to fund the deficit.
Unlike others of the Austrian School of economics, however, he does believe the government was right to spend money last year because “we were going through a meltdown.” But Tice is frustrated that policymakers appear to be trying to prop up a “dysfunctional system” rather than using the crisis as an opportunity to “reset” the U.S. economy.
“We need to get away from a consumption-based economy,” Tice says. “Yes, it’s going to be tough [and] accompanied by very bad economic statistics and a lot of unemployment. Yes it’s going to be painful [but] we cannot simply continue to have foreigners or the Fed buy our Treasuries, agencies and mortgage-backed securities, etc. We have no real choice.”
But with policymakers and politicians seemingly unwilling to make the hard choices, Tice is sticking with dollar alternatives like gold, gold miners (he declined to specify) and foreign currencies, including the euro, Swiss franc, Norwegian krona and Canadian dollar. Read more here-http://finance.yahoo.com/tech-ticker/article/353661/Gold-Heading-to-3000-Unless-America-Hits-the-Reset-Button-Tice-Says
-Greenlight’s Einhorn holds gold, says US policies poor. David Einhorn, the hedge fund manager who had warned on Lehman Brothers’ precarious finances, on Monday said he is buying gold and betting that interest rates will rise as he lambasted the U.S. government’s financial chiefs for short-sighted policy decisions.
The exploding size of the national deficit, which reflects government policies that have simply rewarded bad behavior with massive bailouts, will make gold and gold stocks as well as call options on higher rates good investments, said Einhorn.
Einhorn, the president of Greenlight Capital, with more than $5 billion in assets under management, advocated buying both physical gold and gold stocks “if monetary and fiscal policies go awry.” He noted, “Gold does well when monetary and fiscal policies are poor and does poorly when they are sensible.” Read more here-
http://www.reuters.com/article/marketsNews/idAFN1928788520091019?rpc=44 or http://www.marketwatch.com/story/story/print?guid=23465BA4-9D9F-4AA0-AD7E-88E2D5FBC7E6
-Gold will rise to $1,200 an ounce by yearend as the dollar extends a slump, increasing demand for the metal as a store of value, according to researcher CPM Group. Read more here-
http://www.bloomberg.com/apps/news?pid=20601012&sid;=aAzQFxbQ0DzI
-Gold at $1250+ within 6 months hold on to it! The Gold Report interviews Eric Hommelberg, well known gold commentator and publisher of Gold Drivers Report who is looking for a bull run in gold to last at least until the middle of the next decade. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91077&sn;=Detail or http://www.gata.org/node/7919
-ScotiaMocatta, the precious metals division of the Bank of Nova Scotia, said on Thursday gold prices could rise as high as $1,400 an ounce in 2010 as investors turn to the metal as a store of wealth. Read more here-http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLM65364920091022?rpc=401&=undefined&sp;=true
-Central Bank of the Russian Federation updated their website with their September numbers. They show that their gold reserves rose another 400,000 ounces during the month that was. Their total gold reserves [at least what they're reporting] shows that they hold 19.0 million ‘fine troy ounces.’ So far this year, they’ve purchased a whopping 2.3 million ounces for their reserves. Richard Nachbar-Ed Steer
-Trading gold and silver buy low and sell high. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton101609.html
-Weakening dollar and global recovery have increased demand for gold. The World Gold Council’s latest Gold Investment Digest, which covers activity to the end of Q3, noted gold demand rising on continuing dollar weakness and signs of a stronger global economy. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91159&sn;=Detail
-India festival saw unexpected jump in gold sales-trade. Read more here-http://in.reuters.com/article/domesticNews/idINBOM53082520091021?sp=true
-In India even the Post Office sells gold coins. As a cheaper option for holding gold jewellery as an investment, Indian consumers are being sold small gold coins and bars through major marketing campaigns by the banks and even by India Post. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=91018&sn;=Detail
-Where are the giant gold discoveries going, going, gone? Giant gold discoveries are needed to help replace declining older resources, but they are few and far between. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91043&sn;=Detail
-Patrick A. Heller: Gold is king of New Orleans conference. Read more here-http://www.gata.org/node/7910
-Peter Brimelow: Gold bears gathering but bulls defiant. Read more here-http://www.gata.org/node/7916
-Greenwich Jewelry Turns to Cash as Gold Reaches $1,000 an Ounce. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aP0_Ze7PbVo8
-Lawrence Williams: Is your gold really there? Continuing doubts are being expressed that all the gold claimed to be held by Central Banks and others may not be there, or title is being held by several parties as the statistics just don’t appear to add up. Read more here-http://www.gata.org/node/7915
-Adrian Douglas: How much imaginary gold has been sold part 1? Read more here-http://www.gata.org/node/7908
-Adrian Douglas: How much imaginary gold has been sold part 2? Read more here-http://www.gata.org/node/7911
-Is gold market an accident waiting to happen or a crime scene? Read more here-http://www.gata.org/node/7906
-GATA’s Ed Steer interviewed by King World News. Listen here-http://www.gata.org/node/7907
-Canada’s BNN interviews Trace Mayer on gold suppression. Read more here-http://www.gata.org/node/7913 or http://news.goldseek.com/GoldSeek/1255880648.php
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,800 the silver price would be $22.50
Gold to silver ratio at 70 to 1 with gold at $1,800 the silver price would be $25.71
Gold to silver ratio at 60 to 1 with gold at $1,800 the silver price would be $30.00
Gold to silver ratio at 50 to 1 with gold at $1,800 the silver price would be $36.00
Gold to silver ratio at 40 to 1 with gold at $1,800 the silver price would be $45.00
Gold to silver ratio at 30 to 1 with gold at $1,800 the silver price would be $60.00
Gold to silver ratio at 20 to 1 with gold at $1,800 the silver price would be $90.00
Gold to silver ratio at 15 to 1 with gold at $1,800 the silver price would be $120.00
-Silver rose to a recent nominal high $20.88/oz in March 2008. After an 18 month period of correction and consolidation, silver looks set to challenge that high in the coming weeks. We continue to be bullish on gold and particularly silver and believe that silver will likely surpass its non inflation adjusted high of $48.70 per ounce and its inflation adjusted high of some $130 per ounce in the coming years and probably sooner than even more bullish analysts expect. Goldcore.com
-Silver, ‘Bullion’s Bridesmaid,’ May Outpace Gold: Chart of Day. Silver may outpace gold through mid- 2010 as a recovering global economy increases industrial demand, said Citigroup Inc. The CHART OF THE DAY shows the ratio of gold to silver. An ounce of gold bought 59.4 ounces of silver on Oct. 14 when gold for immediate delivery jumped to a record $1,070.80 as investors sought an alternative to the weakening dollar and a hedge against inflation. That compares with 48.5 ounces when gold first exceeded $1,000 on March 13 last year and 43.6 on April 19, 2006, the lowest level in the past 10 years.
“Silver is set to benefit from stronger gold, but also the improving outlook for global industrial production,” said David Thurtell, a London-based analyst at Citigroup, in an interview. “I think the gold-to-silver ratio can get to the low 50s.”
When gold reached $1,000 for the first time, silver traded above $20 an ounce, compared with $17.82 now. Silver has already climbed 56 percent this year, more than double the 21 percent advance in gold. Gold is on course for its ninth straight annual gain while the U.S. Dollar Index, a gauge against six major currencies, has fallen 7.4 percent this year.
“The dollar’s decline has been pushing gold to a series of record highs,” Harjas Wadhwa, vice president for New Delhi- based AUM Capital Market Private Ltd., said. “If gold moves higher from here, you’d expect silver to outperform,” he said. “It has a lot of catching up to do” since “bullion’s bridesmaid” was more than $20 an ounce when gold first surpassed $1,000, he said in a report.
Industrial applications such as electrical switches and batteries accounted for 50.3 percent of silver demand in 2008, compared with 40 percent five years earlier and 51 percent in 2007, according to The Silver Institute. Use in jewelry comprised 18 percent, followed by photography with 12 percent. “Net investment” about doubled from 2007, to 5.7 percent of demand, according to the Washington D.C.-based institute. The world economy will expand 3.1 percent next year after shrinking 1.1 percent in 2009, the International Monetary Fund forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a8lUSwDoyfPs
-Record gold prices could turn Indian buyers onto silver. Current indicators suggest demand for gold in India is of late being driven by investment sentiment, where price is a factor. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=91133&sn;=Detail
-The next target for gold is 1130, with a midterm target of 1300. The next target for silver is 19 with a midterm target of 26. Jim Willie CB-Read more here-
http://www.321gold.com/editorials/willie/willie101609.html
-Ted Butler on King World News: Morgan holds 40% of Comex silver shorts. Listen here-http://www.gata.org/node/7909
-Gene Arensberg: Two U.S. banks still hold over half silver shorts. Read more here-http://www.gata.org/node/7904
-So where’s Yamashita’s silver? Read more here-http://www.gata.org/node/7914
-Fit for a king: Why edible gold and silver is the new glamorous culinary craze. Read more here-http://www.dailymail.co.uk/femail/food/article-1221444/Fit-king-Why-edible-gold-silver-new-glamorous-culinary-craze.html#ixzz0UV7vIVtT
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: The Next Leg Down In Housing. Housing bears have been warning for months that despite a seemingly good summer, the pain would resume come the fall. This may be the first sign of that. The NAHB’s builder confidence level slipped in October to a reading of 18, less than the expected 20. Specifically, it seems builders are seeing the effect of the end of the $8,000 homebuyer tax credit, which is why the organization is pushing for it to be extended.
“It comes as no surprise that after trending upward from an historic low in January, the HMI’s positive momentum now appears to have stalled,” said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla.
“Our economists have repeatedly warned that the approaching expiration of the $8,000 home buyer tax credit on Nov. 30, combined with the massive hurdles that builders face in obtaining construction financing and appropriate appraisals on new homes, could derail the fragile recovery in housing just as it is starting to take shape.
“Congressional action to expand the tax credit and extend it for one year would provide a critically needed boost to the employment market and economy, generating nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues. That’s an opportunity we can’t afford to pass up at this difficult time.” Read more here-
http://www.businessinsider.com/chart-of-the-day-housing-market-index-2009-10
-China is a sleeping dragon. Let it sleep. If it wakes, it will shake the world. Napoléon Bonaparte-Read more here-http://www.321gold.com/editorials/schoon/schoon102009.html
-What 10 years ago was a cheap stock-fraud scheme for second-rate grifters in Brooklyn has become a major profit center for Wall Street. Our burglar class now rules the national economy. And no one is trying to stop them. Matt Taibbi, rollingstone.com October 15, 2009-Wall Street’s Naked Swindle A scheme to flood the market with counterfeit stocks helped kill Bear Stearns and Lehman Brothers and the feds have yet to bust the culprits. Read more here-http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/1
-”The days of reckoning will come” for all the fiscal and money stimulus; specifically, higher long-term inflation, higher interest rates and lower growth, said the chairman of Group of Thirty and former Bank of Israel governor. “You must articulate today how the book will be closed” on all the extraordinary government support. Dr. Jacob Frenkel-Read more here-
-Well, as we have said in the past, the stock market is expensive. According to Ned Davis, the median P/E ratio is 20x versus the average of 17x dating back nearly 40 years. Another nifty way to look at the situation (see page B2 of last Thursday’s NYT) is to go back to 1995 after the Fed had engineered the era of multi-year price stability and when Alan Greenspan hinted at the FOMC meetings that the stock market seemed to be fairly valued.
At that time, the Dow was trading around the 4,000 mark. If you were to inflate that figure by the increase in GDP since that time and tack on a little more to account for margin expansion, the Dow would be trading around 8,000. As the NYT concluded, “against that hypothetical level, the Dow appears to be in bubble mode.” David Rosenberg-Gluskin/Sheff
-We highly, very highly recommend that you take the time to read the only article on the weekend worth reading, which was “The View From Inside a Depression” on page B1 of the Saturday NYT. Have a read of the excerpts from Benjamin Roth’s diary of the roller coaster ride that came to define the economy and the financial markets during the 1930s.
How it was all over by 1930 but it wasn’t. How everyone was giddy from all the government stimulus in 1935 and 1936 and the sudden and dramatic reversal in 1937 and 1938. It resonates, especially at a time when all the mainstream economists focus so intently over the latest tick in the regional manufacturing indices or jobless claims or inventory-sales ratios.
You have to go beyond the confines of Wall Street to see what is really going on beyond the trees this was not a recession brought on by excessive inventories, or by inflationary pressures for that matter. David Rosenberg-Gluskin/Sheff
-At a series of client meetings this week, we stressed that there were fewer and fewer securities left in the market that were priced inexpensively. Ain’t that the truth. We re-ran our regressions with the latest tightening in spreads and breakout in equity valuation and found that U.S. investment grade credit is now priced for 2.5% GDP growth in the coming year (was 2.0% two-months ago) and the S&P; 500 is now de facto pricing in 4.8%, which, by the way, is now basis points shy of what it was discounting in the summer/fall of 2007.
And, backing out the fair-value P/E from the corporate bond market, and yields have been backing up sizably in recent weeks, we can see that the S&P; 500 is now pricing in $85 of operating earnings, which we think will be, at best, a 2013 story.
Commodities are priced for 2.7% ‘global’ growth and are at least one ‘asset class’ that is priced for a muted recovery; though I would still classify corporate bonds as being within the zone of fair-value but at the expensive end of that zone currently. As an aside, the consensus is looking for +2.4% real GDP growth in the U.S.A. for next year, and +3.1% for global growth.
David Rosenberg-Gluskin/Sheff
-Yesterday I spent some serious time with my stock broker of 25+ years. I asked him what he saw from where he sat. He said that a lot of his clients our age [that's 60+] have lost a bundle in the stock market and can’t retire on what’s left because interest rates are so low that the yearly income from any fixed-rate investment is many orders of magnitude less than what they’re making now.
I would say that applies to an unusually large portion of the leading edge of the ‘baby boomers’ of which I’m one. He went on to say that the entire global economic, financial and monetary system has been “Photoshopped” just to keep up the appearance that everything is fine. I guess that’s his way of saying that everything is rigged and you can’t believe anything you see anymore. He would be right about that. Ed Steer
-Billionaire hedge fund founder Raj Rajaratnam and executives from some of the most prestigious U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever.
Investigators said they used court-approved telephone wire taps for the first time in a Wall Street insider trading case, sending shivers through the hedge fund industry which has traditionally picked up and shared trading tips to make big profits.
At the center of the case are Rajaratnam, his Galleon hedge fund and two executives from hedge fund New Castle, which was a unit of Bear Stearns Asset Management before Bears Stearns Cos collapsed in 2008, but is still in operation. Read more here-http://www.reuters.com/article/topNews/idUSTRE59F35L20091016
-Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.
The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.
As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.
These people are incredibly smart, they’re incredibly talented and they bring knowledge, said Bill Brown, a visiting professor at Duke University School of Law and former managing director at Morgan Stanley. The risk is they will further exacerbate the problem of our regulators identifying with Wall Street.
While it isn’t unusual for Treasury officials to come from the financial industry, President Barack Obama has been critical of Wall Street, blaming its high-risk, high-pay culture for helping cause the financial-market meltdown. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1255883260.php or http://news.goldseek.com/InternationalForecaster/1256145063.php
-Higher jobless rates could be new normal. Read more here-http://news.yahoo.com/s/ap/20091019/ap_on_bi_ge/us_vanishing_jobs
-More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover. Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said today in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDqJg3YhYapo
-Dollar May Drop 20% More on Deficit, Harvard’s Ferguson Says. The dollar will extend its drop versus the euro over the next two to five years, falling as much as 20 percent to an all-time low under a widening U.S. budget deficit, Harvard University’s Professor Niall Ferguson said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZYblKZy9jTs
-Niall Ferguson: The Dollar Is Finished And The Chinese Are Dumping It. Read more here-http://www.businessinsider.com/niall-ferguson-the-dollar-is-finished-and-the-chinese-are-dumping-it-2009-10
-The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aCNsiX9n0upg
-A “disorderly decline” of the dollar, leading to the end of its reserve-currency status, cannot be ruled out, Pacific Investment Management Co. said. An orderly dollar decline is the “most likely scenario,” Richard Clarida, a Newport-Beach, California-based global strategic adviser at Pimco, wrote in a note to clients today. “A disorderly decline, while unlikely, cannot be ruled out.” Read more here-http://www.bloomberg.com/apps/news?pid=20601083&sid;=a83XY0Ek_Bvo
-Dollar decline draws international protest. Read more here-http://www.gata.org/node/7922
-Dollar’s Decline Makes Oil ‘Too Cheap’ at $80: Chart of the Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a7RLuC_XEZ4Q
-Canada Keeps Key Rate 0.25%, Warns About Currency. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aR0jNyWarwDA or http://www.bloomberg.com/apps/news?pid=20601082&sid;=aa3_B6RrYlxs or http://www.bloomberg.com/apps/news?pid=20601082&sid;=a25Qyxd3D4SA
-German ‘Wise Men’ fear credit crunch in 2010. Germany’s leading institutes have warned that the pace of economic recovery is “unsustainable” and that the country’s banks may face a fresh crisis over the next year as bad debts surface in earnest. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6339144/German-Wise-Men-fear-credit-crunch-in-2010.html
-Hedge manager Sprott sees trouble when easing ends. When so-called quantitative easing by central banks ends, the world economy may slip back into trouble, Canadian hedge fund manager Eric Sprott warned on Tuesday.
Toronto-based Sprott called Citigroup, Fannie Mae, Freddie Mac, and General Motors “dead men walking” in late 2007. On Tuesday, he said the U.S. government is the new dead man walking, partly because it may struggle to keep borrowing enough money if the Federal Reserve stops buying Treasury bonds. Read more here-
http://www.marketwatch.com/story/story/print?guid=885E4B89-D5C2-4AF4-BD3E-B4F018847F39
-Conservatory Lot Sells at Tax Deed Sale for $15,185. Lots in this Ginn community sold originally for $329.9 thousand to $529.9 thousand. Read more here-
http://www.gotoby.com/news.php?id=831#null
-Swine Flu Deaths Take 90% of Toll Among Young People. Almost 90 percent of 292 deaths related to swine flu in the U.S. since Sept. 1 were in people younger than age 65, contrary to the pattern for seasonal flu, the U.S. Centers for Disease Control and Prevention reported. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6hqMT775kY8
-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
-“Very Strong Price Appreciation” at Rio Tinto’s Pink Diamond Tender. Rio Tinto has celebrated the 25th anniversary of its iconic Argyle Pink Diamonds Tender with an exceptional result that belies the global financial crisis of the past 12 months. Titled Grand Passions, this year’s tender collection comprised 43 of the rarest and the best pink diamonds from Rio Tinto’s Argyle Diamond Mine in Western Australia, including four heart shaped gems. According to Jean-Marc Lieberherr, General Manager for the sales and marketing for all diamonds from Rio Tinto’s mines,
“This year’s collection was keenly contested by investors, collectors and diamond experts from around the world. All diamonds were sold and we were delighted to see strong representation from the growing markets of India and China, as well as the more established markets for rare coloured diamonds.” Whilst Rio Tinto does not release the prices of the pink diamonds sold at its tender, Josephine Archer, Business Manager for Argyle Pink Diamonds, commented that,
“The 2009 Pink Tender results have demonstrated a significant global reach with very strong price appreciation, on the back of a growing awareness of the rarity, exclusivity and uniqueness of the Argyle Pink Diamond brand.”
Referred to as the world’s most exclusive diamond sale, the Argyle Pink Diamonds Tender was showcased around the world from June to September with private viewings in Perth, London, Hong Kong, Sydney, and for the first time ever, Mumbai. All 43 diamonds were cut and polished in Perth, Western Australia by Rio Tinto’s master craftsmen, acknowledged globally for their expertise, precision and artistic flare. This year’s collection included a 2.61carat intense pink heart shaped diamond named Argyle Amour, a 1.25 carat purplish pink round diamond, Argyle Shalimar, and Argyle Scarlett, a 1.10 carat red oval diamond.
According to Josephine Archer, “The diamonds sold at this year’s Tender will go to a range of individual diamantaires, jewellery manufacturers and luxury retailers across all major markets. The ultimate consumers for these diamonds are likely to be investors, collectors, celebrities and high net worth individuals. “
Rio Tinto’s Argyle Diamond Mine (100% owned by Rio Tinto), in Australia, is the world’s only consistent supplier of rare pink diamonds and provides a large proportion of the world’s coloured diamonds. The Argyle Diamond mine produces more than 90 per cent of the world’s pink diamonds, which are sold in a broad range of colours and sizes to an international customer base. The best stones are reserved for the annual Argyle Pink Diamonds Tender. Read more here-http://www.diamondne.ws/2009/10/22/very-strong-price-appreciation-at-rio-tintos-pink-diamond-tender/ or http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28364 or http://www.idexonline.com/portal_FullNews.asp?id=33111
-Astounding Results for Christie’s New York Jewelry Sale. Besides the Annenberg Diamond, four other lots topped the $1 million mark. An Asian private scooped up a 16.33-carat, E internally flawless, round diamond for $1,583,300, or $97,000 per carat. A pair of ear pendants with a 7.18-carat, pear-shaped fancy blue and an 8.04-carat, pear-shaped fancy light pink sold to an Asian private for $1,426,500.
Also finding its way to an Asian private was a pair of earrings showcasing D internally flawless, pear-shaped diamonds weighing 7.51 and 8.18 carats, which sold for $1,202,500. The final lot that soared over the coveted million mark was a Belle Epoque Cartier diamond and rock crystal bow brooch, which sold for $1,082,500. Read more here-
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28371
-A square, 32.01-carat emerald-cut diamond that billionaire philanthropist Leonore Annenberg bought for her 90th birthday sold for $7.7 million at auction on Wednesday. About the size of a walnut, the flawless, colorless diamond sits on a ring designed by Manhattan jeweler David Webb. It is flanked by two pear-shaped diamonds, one of them 1.61 carats and the other 1.51 carats.
The ring was offered for sale by Annenberg’s estate. Christie’s auction house did not identify the buyer, who bid by phone. Annenberg died in March at the age of 91. She served as U.S. chief of protocol during President Ronald Reagan’s first term a position that carried the rank of ambassador. Her husband, Walter Annenberg, a billionaire publisher and ambassador to Britain under President Richard Nixon, died in 2002.
The big diamond “combines the best of the four C’s: top color, perfect clarity, ideal cut and excellent weight,” said Francois Curiel, international head of Christie’s jewels. With the “impeccable provenance of the Annenberg name, you have one of the finest gems to appear on the market for many years,” he said.
Annenberg purchased the ring for herself to mark her 90th birthday, Christie’s said. It was delivered by armed guards to her Rancho Mirage, Calif., home from the Beverly Hills jeweler’s store, it said. She was thrilled whenever someone came by to admire it, the auction house said. The ring’s pre-sale estimate was $3 million to $5 million. The previous auction record for a 30-carat square cut flawless, colorless diamond was $3.1 million, set at Christie’s in Geneva in May.
The record for any diamond or jewel at auction is $24.3 million for the 17th century cushion-shaped grayish-blue 35.56 carat Wittelsbach Diamond. It was sold at Christie’s in December 2008, topping the previous record of $16.5 million for a 100-carat diamond sold in 1995 in Geneva.
In May, a rare 7.03-carat blue diamond sold at Sotheby’s for $9.5 million the highest price ever for a gem of its kind. Walter and Leonore Annenberg donated $4.2 billion to cultural, educational and medical institutions through the Annenberg Foundation. In 2002, their collection of French Impressionist art was donated to the Metropolitan Museum of Art in New York, where Leonore Annenberg was a member of the acquisitions committee.
She was also a trustee of the Philadelphia Museum of Art and served on the Trustee’s Council of The National Gallery of Art in Washington, D.C. Her husband established the Annenberg School of Communications at the University of Pennsylvania and at the University of Southern California. Read more here-http://www.google.com/hostednews/ap/article/ALeqM5iuyNryIsSSn7zRZ6oM0uzAwUYYigD9BFM0000 or http://www.nbcnewyork.com/news/local-beat/Emerald-Cut-Diamond-Sells-for-76M-65208887.html
HYPERINFLATION
-Evidence continues to emerge that the US dollar is headed for hyperinflation. For example, consider why US stock markets are rising. The Dow Jones Industrials, S&P; 500 and other indices are not rising because the economy has started growing. That won’t happen until employment stops falling, and there are no signs that employment will turn around anytime soon.
Nor are the stock markets rising because the financial crisis of the past two years has ended. Banks failures are happening almost weekly in the US, with nearly 100 failures so far this year. A large Dutch bank collapsed last weekend, indicating that there are insolvent banks outside the US as well.
It is important to note that one of the early warning signs of hyperinflation is a rising stock market. The stock market rises because too much money is being created. That condition is now being repeated in the US, as explained by the following chart (I’m not sure who the source of this chart is, so I do not identify who to credit).
The above chart illustrates the close correlation between the price of the S&P; 500 and the Federal Reserve’s program of “quantitative easing”, which is a euphemism for creating dollars out of thin air. Note from the above chart how the stock market stopped falling in March almost to the exact day that quantitative easing began. Then follow the rise in the S&P; 500 along with the quantity of US government paper purchased by the Federal Reserve.
At its last meeting of the FOMC, the Federal Reserve indicated that its quantitative easing program would continue to March 31, 2010. The substance would change slightly because after October 31 it will be buying agency paper rather than Treasuries. But that change doesn’t matter.
The Fed is still creating money out of thin air, and it can be argued that this new program is even worse. Because agencies are not direct obligations of the federal government, agencies by definition are of lesser quality than Treasuries. So with this revised quantitative easing program, the Fed is also lowering the quality of the assets on its balance sheet.
Quantitative easing is a pernicious and harmful policy. The US government and the Federal Reserve are pursuing policies that are sending the US dollar in the wrong direction. The US dollar remains on the road to the fiat currency graveyard. Read more here-http://www.fgmr.com/hyperinflation-watch-october-21-2009.html
-Has the US Reached The Hyperinflation Tipping Point? Economist Peter Bernholz is an expert on the subject of national hyperinflations. He has studied all the major cases of hyperinflation since 1980. His conclusion: The tipping point occurs when a government’s deficit exceeds 40% of its expenditures. Guess what? The U.S. will hit the 40% mark in 2009.
There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money.
In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceed 40% of its expenditures. Read more here-http://www.bearishnews.com/post/2420
U.S. 2009 DEFICIT SURGES TO $1.42 TRILLION
-What is $1.42 trillion? It’s more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada’s, and more than $4,700 for every man, woman and child in the United States.
It’s the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year. And, some economists warn, unless the government makes hard decisions to cut spending or raise taxes, it could be the seeds of another economic crisis.
Treasury figures released Friday showed that the government spent $46.6 billion more in September than it took in, a month that normally records a surplus. That boosted the shortfall for the full fiscal year ending Sept. 30 to $1.42 trillion. The previous year’s deficit was $459 billion. As a percentage of U.S. economic output, it’s the biggest deficit since World War II.
“The rudderless U.S. fiscal policy is the biggest long-term risk to the U.S. economy,” says Kenneth Rogoff, a Harvard professor and former chief economist for the International Monetary Fund. “As we accumulate more and more debt, we leave ourselves very vulnerable.”
Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this fiscal year. Read more here-http://apnews.myway.com/article/20091017/D9BCHP5O0.html or http://www.reuters.com/article/ousiv/idUSTRE59F4K820091017
99TH U.S. BANK SHUTDOWN
-Regulators shut down San Joaquin Bank in California on Friday, marking the 99th failure this year of a federally insured bank. The Federal Deposit Insurance Corp. was appointed receiver of San Joaquin Bank, based in Bakersfield, Calif. It had $775 million in assets and $631 million in deposits as of Sept. 29.
The FDIC said the bank’s deposits will be assumed by Citizens Business Bank, based in Ontario, Calif. Its five branches will reopen Monday as branches of Citizens Business Bank.
San Joaquin Bank’s failure is expected to cost the FDIC’s insurance fund $103 million.
Depositors’ money is not in danger. The FDIC is backed by the government, and deposits are guaranteed up to $250,000 per account. But the deposit insurance fund has fallen into the red. The FDIC board recently proposed to have U.S. banks prepay about $45 billion of their insurance premiums three years’ worth.
That plan isn’t a long-term remedy for the depleted fund. But it would spare ailing banks the immediate cost of an alternative idea: paying an emergency fee for the second time this year. And the FDIC still has billions in loss reserves apart from the insurance fund.
The 99 bank failures this year compare with 25 last year and three in 2007. It’s the highest number in a year since 1992 during the savings-and-loan crisis, when 120 institutions collapsed. Closures peaked during that crisis in 1989, when 534 banks were shuttered.
The most severe financial crisis since the 1930s has hit banks large and small. With unemployment rising, consumer spending slack and businesses shuttered, experts say up to 400 more banks could fail in the next couple of years.
The 99 failures may not fully reflect the depth of banks’ travails. Many more banks – perhaps hundreds – are so weak they could have been shut down already, experts say. Many vulnerable banks are in limbo. Regulators have threatened to close them unless they shore up their balance sheets, but the recession has made it difficult to raise capital or sell assets.
The number of banks on the FDIC’s confidential “problem list” jumped to 416 at the end of June from 305 in the first quarter. That’s the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans. Read more here-http://apnews.myway.com/article/20091017/D9BCKOP81.html
-FDIC bank fund in the red until 2012. Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief. Read more here-http://money.cnn.com/2009/10/14/news/companies/fdic_deposit_fund/?postversion=2009101415
PAUL FARRELL-20 REASONS AMERICAN HAS LOST ITS SOUL AND COLLAPSE IS INEVITABLE
-Jack Bogle published “The Battle for the Soul of Capitalism” four years ago. The battle’s over. The sequel should be titled: “Capitalism Died a Lost Soul.” Worse, we’ve lost “America’s Soul.” And, worldwide, the consequences will be catastrophic.
That’s why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: “The future will be a total disaster, with a collapse of our capitalistic system as we know it today.”
No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Street’s too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great “American Economic Empire” for 233 years will collapse, a total disaster, a destiny we created.
OK, deny it. But I’ll bet you have a nagging feeling that maybe he’s right, that the end may be near. I have for a long time: I wrote a column back in 1997: “Battling for the Soul of Wall Street.” My interest in “The Soul” what Jung called the “collective unconscious” dates back to my Ph.D. dissertation, “Modern Man in Search of His Soul,” a title borrowed from Jung’s 1933 book, “Modern Man in Search of a Soul.” This battle has been on my mind since my days at Morgan Stanley 30 years ago, witnessing the decline.
Has capitalism lost its soul? Guys like Bogle and Faber sense it. Read more about the soul in physicist Gary Zukav’s “The Seat of the Soul,” Thomas Moore’s “Care of the Soul” and sacred texts.
But for Wall Street and American capitalism, use your gut. You know something’s very wrong: A year ago, too-greedy-to-fail banks were insolvent, in a near-death experience. Now, magically, they’re back to business as usual, arrogant, pocketing outrageous bonuses while Main Street sacrifices, and unemployment and foreclosures continue rising as tight credit, inflation and skyrocketing federal debt are killing taxpayers.
Yes, Wall Street has lost its moral compass. It created the mess, but now, like vultures, Wall Streeters are capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation. Here are the Top 20 reasons American capitalism has lost its soul. Read more here-http://www.marketwatch.com/story/story/print?guid=47729BA0-933E-4299-92CC-EB41EEE671D2
REAL ESTATE-MORTGAGES-FORECLOSURES
-Buyers Sue Trump as Miami’s Condo Prices Plummet. Robert Cooper says he has found a way to make money in South Florida’s real estate bust. Cooper, an attorney in Aventura, Florida, sues for refunds on deposits in the nation’s largest condominium market. In the last two years, he filed lawsuits for about 1,500 buyers against companies and individuals including the Related Group of Florida, Dezer Development LLC, Corus Bankshares Inc., Donald Trump.
More suits seeking refunds under a federal law regulating condo sales have been filed in South Florida than in the rest of the country combined, according to a search of federal court records. Fueling the litigation is a price crash that makes buyers unwilling to pour more money into bad investments even if they can get financing. Condos on which they made deposits of up to $1,000 a square foot in 2006 are now selling for $125 to $350 a foot, said Jack McCabe, a real estate consultant in Deerfield Beach, Florida.
“If you’re thinking you can come here and buy and sell condos for a profit in less than five years, you’re sadly mistaken,” said McCabe, whose clients have included Credit Suisse Group AG and Pulte Homes Inc., the largest U.S. homebuilder. “You need a seven- to 10-year range.” Prices could fall to $100 a foot, less than half the cost of construction, and a value not seen in 20 years, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a7s0rpuaOw50
-Deutsche Bank Offers Settlement to Cosmopolitan Condo Buyers. Deutsche Bank AG, owner of the $3.9 billion Cosmopolitan Resort & Casino in Las Vegas, is offering to partially refund deposits to some condominium buyers in the delayed project.
A Deutsche Bank unit that took over the Cosmopolitan in a foreclosure is offering buyers of West Tower units 74 percent of their deposit principal to walk away, according to a copy of the proposal provided by Sigal Chattah, a lawyer for some purchasers. The tower has 1,353 condo units, the documents show.
Germany’s biggest bank wrote down the value of Cosmopolitan by 500 million euros ($747 million) this year, and continues spending to complete the resort during the worst gambling and real estate slump in Las Vegas history. Neighboring CityCenter, a joint venture of MGM Mirage and Dubai World, offered existing condo buyers a 30 percent price cut this month to close sales.
Lawsuits filed by Cosmopolitan buyers and agents in district court in Clark County, Nevada, claim construction delays and plunging property values have made it impossible to finance the purchases. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a9gI8dAj1ue0
-The stretch from 1997 to 2007 was the helium-rich years of a multi-decade-long credit bubble, when buying and selling dot-com stocks was replaced with suburban houses as the path to riches. However, IRS data show that during these years, as Americans pocketed $5,312 billion in capital gains, they simultaneously shelled out $5,252 billion in mortgage interest and real estate taxes a difference so small as to be a rounding error.
Over the same period, homeowner costs rose 122% for mortgage interest and 112% for property tax, while personal income increased by a paltry 63%. The cost of home-sweet-home ownership was eating Mr. & Mrs. Suburbia alive. This 10,000-foot view is just a snapshot of the big-picture trend. There were obviously home flippers and stock market players that profited handsomely during the market’s boom.
And we haven’t factored in the balance between taxes saved from interest/taxes written off and taxes owed from capital gains. But as a whole, did the nation grow any wealthier as a result of Americans being obsessed with selling their houses to each other? At best it looks like a zero-sum, tax code-induced illusion. Read more here-http://caseyresearch.com/displayCcs.php?e=true
-Countrywide Mortgages Lead California in Defaults. Default notices on California home mortgages rose almost 19 percent in the third quarter from a year earlier as job losses and falling property prices deepened the state’s housing recession, MDA DataQuick said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a4KiQ2.ooKW8
-Hotel Foreclosure Watch: Miami’s Swank Shore Club Goes Delinquent. Read more here-http://blogs.wsj.com/developments/2009/10/20/hotel-foreclosure-watch-miamis-swank-shore-club-goes-delinquent/
-Chart of the day: In Parts Of America, There’s Literally No Foreclosure Crisis. While the U.S. foreclosure rate hit an all-time high in Q3 according to RealtyTrac, some states are doing relatively fine, while others are simply a blood bath.
For example, in Nevada one out of 23 households had a foreclosure filing in the third quarter alone. Meanwhile, in picturesque Vermont foreclosures weren’t that bad; the rate was only one in 5,023. Here are the five best and worst states, by foreclosures per household. Overall, the national rate was one in 136. Note that higher is better and Nevada is ugly. Read more here-http://www.businessinsider.com/chart-of-the-day-foreclosure-rate-ten-best–worst-states-2009-10
Gold Blast-Off Starts Friday
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© 2011, Worldwide Precious Metals.
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The Goldbugg Report – October 27, 2009
Posted by Worldwide Precious Metals on Tuesday, October 27, 2009
The Goldbugg Report – October 20, 2009
October 20, 2009
-Gold will hit $2,000 an ounce within decade, says Jim Rogers
- BMO Global Commodities Analyst Bart Melek sees gold going to $1,300.
-Silver is currently trading at $17.50/oz and looks very bullish technically and fundamentally.
GOLD
-Gold may climb to $1,879 an ounce by 2013 as investors buy the metal to protect against accelerating inflation, according to Edison Investment Research. As the U.S. kept interest rates near zero and government debt surged on spending aimed at ending the worst economic slump since the 1930s. Edison said in April that gold would reach $1,567 in the “foreseeable future” as investors buy the precious metal as an inflation hedge.
“We reiterate our belief that gold is in the second phase of its bull run and that it has the potential to spike higher in the near term,” Edison analyst Charles Gibson said in a report. “With the world still facing deflationary forces in the near term, gold’s peak is likely to be delayed to 2013, but that its peak will be correspondingly higher at $1,879 an ounce.”
The Fed has kept its target rate for overnight loans among banks between zero and 0.25 percent since December to help stimulate the economy. President Barack Obama increased the nation’s marketable debt to an unprecedented $7.1 trillion as the government borrows to revive growth.
Goldman Sachs Group Inc. predicts the U.S. will sell about $2.9 trillion of debt in the two years ending next September. “We assume the continuation of an environment of very low and/or negative real U.S. interest rates and a relatively well-supported oil price,” Gibson said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ay7mn07f84Bs
-Gold will hit $2,000 an ounce within decade, says Jim Rogers. “I like gold,” he said in the interview, pulling a Chinese Panda gold coin from his pocket. While bullish on gold, Rogers said silver and palladium will perform even better.
“There are better opportunities in silver and palladium,” he said. “Silver is still 70% below its all-time high,” while palladium, standing at around $310 an ounce, is also much lower than its high above $1,000 an ounce hit in early 2001. Rogers said he owns all four major precious metals: gold, silver, platinum, and palladium. Read more here-
http://www.marketwatch.com/story/story/print?guid=47F09412-904E-4823-8DCA-4840BF4A1363
-Goldcorp CEO ‘won’t argue’ with $1 200-$1 500/oz gold in next few years. In one of the first interviews he gave after replacing Kevin McArthur as CEO of Canadian gold-miner Goldcorp, in January, Chuck Jeannes went on record with a prediction that bullion prices would beat the all-time record before the year was out. Read more here-http://www.miningweekly.com/article/goldcorp-ceo-wont-argue-with-1-200—1-500oz-gold-in-next-few-years-2009-10-10
-Lihir Gold’s Hood Says Metal Price May Rise to $1,500 an Ounce. Lihir Gold Ltd., the second-largest gold mining company on the Australian stock exchange, said prices for the metal may reach $1,500 an ounce buoyed by demand from China and central banks.
“There’s been talk this week of $1,500 and I see that as perfectly achievable,” Chief Executive Officer Arthur Hood told Australian Broadcasting Corp. television today. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=azAAypHuGsg0
- BMO Global Commodities Analyst Bart Melek sees gold going to $1,300. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=90632&sn;=Detail
-Citigroup says gold could rise above $2,000 next year. According to an internal client note the US bank stated that gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity.
Barclays Capital predicted that the gold price could rise as high as $1,500/oz. The bank is targeting $1,050/oz initially, followed by $1,120/oz. It advises holding long positions in the precious metal. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90588&sn;=Detail
-About gold, the Adens note that “gold’s peak in 1980 at $850 is the equivalent of about $2,300 in current dollars. Gold has not even approached that level yet and the situation is far more serious now than it was then.”
“The focus now is on the next phase of the current rise. If we continue to use proportions, the bull market’s second rise from 1976 to 1980 gained 750%. Using the same growth and applying it to the current bull market, we could see gold eventually reach $4100 during the next run-up.
And if you take the entire bull market gain in the 1970s at 2300% and extrapolate, then $5800 would be the equivalent upside target.” Long-term, the Adens expect an inflationary collapse. Aden Sister-Read more here-http://www.marketwatch.com/story/story/print?guid=C9D3BD6A-5539-4824-9D64-32BCEBF54820
-Harrods Selling Gold Bars, Coins to Customers for First Time. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6328823/Harrods-to-sell-gold-bullion-for-first-time.html or http://www.bloomberg.com/apps/news?pid=20601110&sid;=axbgzvi.cQtw
-The tug-of-war I described in my last commentary has ended. Gold has won another battle in its decade-long bull market by finally breaking through resistance at $1010-$1012, as we can see on the following chart.
Gold’s short-term and long-term uptrends have now been re-confirmed. The $1010-$1012 area should now act as support, but I doubt if we will see those levels. I don’t expect much of a pull-back here. Two things are happening. First, there is a lot of money parked on the sidelines looking to participate in gold’s break-out as well as to find a safe home. Consequently, I expect any pull-backs to be well bid.
Second, and more importantly, there is presently a scramble for physical metal. I made this point on October 9th in an interview on CNBC Europe. In my CNBC interview I mention Greenlight Capital, which is a large hedge fund that switched in this year’s second quarter out of GLD, the gold ETF, into physical metal. I believe this switch marks a tipping point from which we will see gold climb much higher.
People are increasingly seeking physical gold, rather than paper gold, which is a bullish development. Note that GLD has less gold now than it did in June (1109 tonnes today vs. circa 1132 tonnes in June). The gold price since June has nevertheless risen by more than $100, proving that gold does not have to flow into GLD for the gold price to rise.
My point is that given the large short position that presently exists in gold, the gold price can rise even if GLD contracts in size. Assuming the gold reportedly backing GLD really exists and isn’t double counted or encumbered in any way, in a contracting GLD the short-sellers will increasingly be forced to cover so that their short position does not become too large a percentage of GLD’s total assets.
The implications for the gold market from the trading action this past week are very bullish. Breaking above $1000 is a major event. It is a worldwide wake-up call that the global monetary problems arising from mismanaged fiat currencies are worsening. In my view, a 3-digit gold price is history, just like a 3-digit price was never seen again when the Dow Jones Industrial Average finally hurdled 1000 in 1983. James Turk-Read more here-http://www.fgmr.com/gold-october-9-2009.html
-On CNBC Europe, Turk cites flight to gold in hand. Read and watch more here-http://www.gata.org/node/7885
-China’s gold investors undeterred by high prices. Read more here-http://www.gata.org/node/7880
-Adrian Douglas: The explosive dynamics of the gold and silver markets. Read more here-http://www.gata.org/node/7887
-GATA’s Adrian Douglas interviewed by King World News. Read more here-http://www.gata.org/node/7884
-Adam Hamilton: Commitment of traders reports don’t fully tell the tale. Read more here-http://www.zealllc.com/2009/goldcot3.htm
-U.S. Mint didn’t try as hard to keep up with gold, silver coin demand. Read more here-http://www.gata.org/node/7883
-Fox Business interviews Jay Taylor to explain gold’s rise. Read more here-http://www.gata.org/node/7881
-Gold: it’s all about currency crisis protection. If what you are looking for is insurance against economic Armageddon then gold could be the place to start. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90468&sn;=Detail
-Gold-Silver: The First Global Bull Market. Read more here-http://www.321gold.com/editorials/acamarjournal/acamarjournal100909.html
-Ned W. Schmidt’s Gold Thoughts. Read more here-http://news.goldseek.com/NedSchmidt/1255413780.php or http://www.gata.org/node/7898
-In a bull rally gold needs to rise in all currencies not just in dollar terms Walker. GFMS says that while prices may rise in the short-term longer-term prices could be hurt by weak physical demand. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90657&sn;=Detail
-GATA consultant Rob Kirby of Kirby Analytics in Toronto alleges some funny stuff with the inventory of exchange-traded gold fund GLD amid a panic in London and other bullion-vaulting centers to come up with the real metal said to back the burgeoning paper claims to gold. Read more here-http://www.gata.org/node/7902
-Gold ETF overhang a worry in a double dip scenario. While in theory gold is perhaps still the best wealth protector if there is a second leg to the depression/recession, the big ETF overhang could create a problem if institutions are again forced to divest themselves of any saleable assets to preserve liquidity. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90571&sn;=Detail
-A small gold mine will never make you big money Rule. When investing in junior gold miners it is worth looking for those with a large production potential and long life projects. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90590&sn;=Detail
-Market analyst Hutchinson acknowledges gold suppression. Read more here-http://www.gata.org/node/7899
-’Gold, peace, and prosperity,’ Ron Paul tells New Orleans conference. Read more here-http://www.gata.org/node/7895
-GATA’s Chris Powell: Remarks to the 2009 New Orleans Investment Conference. Read more here-http://www.gata.org/node/7894
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,700 the silver price would be $21.25
Gold to silver ratio at 70 to 1 with gold at $1,700 the silver price would be $24.29
Gold to silver ratio at 60 to 1 with gold at $1,700 the silver price would be $28.33
Gold to silver ratio at 50 to 1 with gold at $1,700 the silver price would be $34.00
Gold to silver ratio at 40 to 1 with gold at $1,700 the silver price would be $42.50
Gold to silver ratio at 30 to 1 with gold at $1,700 the silver price would be $56.67
Gold to silver ratio at 20 to 1 with gold at $1,700 the silver price would be $85.00
Gold to silver ratio at 15 to 1 with gold at $1,700 the silver price would be $113.33
-Silver is currently trading at $17.50/oz and looks very bullish technically and fundamentally. Silver in euro terms looks on the verge of a very significant breakout. Silver remains less than half of its nominal high in dollars in 1980 and remains undervalued on an historical basis. Traders and astute investors will notice the anomaly and this will see many wisely allocate funds to silver. Goldcore.com
-Investors may take shine to silver after gold high. Read more here-http://in.reuters.com/article/businessNews/idINIndia-42977120091007
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/SilverSeek/1255368577.php
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7890
-Silver is the best hedge against Inflation: Robert Kiyosaki. Watch video here-http://www.youtube.com/watch?v=s7fb8jWImGM&feature;=player_embedded
-Reporting from New Orleans, Thom Calandra writes about gold going to $4,000 and silver $500. Read more here-http://www.gata.org/node/7897
-Indian bank to start selling silver bars. HDFC, a large gold seller is looking to sell into the silver retail market because it says investment demand is growing faster than jewellery. Read more here-http://mineweb.net/mineweb/view/mineweb/en/page32?oid=90344&sn;=Detail
-Mexico’s Hugo Salinas Price interviewed by King World News. Read more here-http://www.gata.org/node/7888
-Silver institute Q3 report. Read report here-http://www.silverinstitute.org/images/pdfs/3q09.pdf
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: The Government Debt Explosion. The growth of government debt has “decoupled” from the rest of the economy. While households, businesses and the financial sector reduce leverage, public sector debt growth has simply exploded.
As you can see from the chart, every non-governmental sector of the economy is now in debt reduction mode while governmental debt is growing a breakneck speeds. Read more here-http://www.businessinsider.com/chart-of-the-day-debt-growth-by-sector-2009-10
-Investors are celebrating an incipient “recovery,” but the interventions that were responsible for it are sowing the seeds of a more violent contraction down the road. The problem, quite simply, is debt. We’ve accumulated record amounts, yet many economists tell us we need more.
Leading the charge is Paul Krugman. He exhorts us to borrow our way back to prosperity, but he doesn’t acknowledge that his brand of Keynesian economics ignores the consequences of debt. If you look at a chart of America’s total debt burden, he’s leading us over a cliff. Rolfe Winkler-Read more here-http://blogs.reuters.com/rolfe-winkler/2009/09/30/krugman-and-the-pied-pipers-of-debt/
-The dollar is a scrap of paper, or an electronic impulse, the value of which is anchored by the analytical acuity of the monetary bureaucracy that failed to predict the greatest financial crackup since the 1930s. James Grant, WSJ, 20 September 2009
-On a real basis (not nominal) the Dow at 10,000 ten years ago is equivalent to 7,537 today! In other words, not only have we had a lost decade for all those who focus on the absolute flatness of the DJIA, but it is also a decade where the US Consumer has lost 25% of purchasing power from the perspective of stocks! Zerohedge.com
-Russia ready to drop dollar in energy trade with China, Putin says. Russia is ready to consider using the Russian and Chinese national currencies instead of the dollar in bilateral oil and gas dealings, Prime Minister Vladimir Putin said on Wednesday. The premier, currently on a visit to Beijing, said a final decision on the issue can be made only after a thorough, expert analysis.
“Yesterday energy companies, in particular Gazprom, raised the question of using the national currency. We are ready to examine the possibility of selling energy resources for rubles, but our Chinese partners need rubles for that. We are also ready to sell for yuans,” Putin said. He stressed that “there should be a balance here.”
Britain’s Independent newspaper reported last Tuesday that Russian officials had held “secret meetings” with Arab states, China and France on ending the use of the U.S. dollar in international oil trade.
The countries are reportedly seeking to switch from the dollar to a basket of currencies including the euro, Japanese yen, Chinese yuan, gold, and a new unified currency of leading Arab oil producing countries. The Independent said the meetings have been confirmed by Chinese and Arab banking sources. Read more here-http://www.gata.org/node/7900
-Gold will surpass its inflation-adjusted all-time high of more than $2,300 an ounce, Rogers said. He said that the timing will depend on many factors, including global politics. Some investors buy gold as a hedge against political instability and to preserve assets.
Commodity supplies will lag behind demand during the next 10 to 20 years, further fueling a rally in raw materials, according to investor Jim Rogers. “I don’t see any adequate-supply situation in any commodity market over the next decade or two,” Rogers, the chairman of Singapore-based Rogers Holdings, said today in an interview in New York. “The commodities boom is not over and the bull market has several years to go.”
“Oil could reach between $150 and $200 a barrel,” because known reserves of crude are declining, Rogers said. He said international relations, particularly between the U.S. and Iran, will help guide prices. “Natural gas is very cheap,” he said in the interview between sessions at an ETF Securities Ltd. investor conference.
As a long-term investor, “I am horribly pessimistic about the dollar,” Rogers said. “I am not selling it yet. I think there may be a rally. I don’t think it will be sustainable if there is one.” Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aMYHzYh0dzCY
-The Dow closed above the 10,000 market for the first time in a year October 3, 2008 was the last time the Dow was at 10,000. The media are certainly going to town on this news but it is, in fact, old news; it’s “only” the 26th time the Dow has managed to cross this milestone. David Rosenberg-Gluskin/Sheff
-A “V” shaped recovery? In this particular case, “V” stands for Valuation because every basis point of this 60% rally in the U.S. equity market from the lows has been due to an unprecedented expansion in P/E ratios. In fact, by some measures, the S&P; 500 is already trading at valuation levels that would ordinarily be consistent with an economic expansion that is five-years old as opposed to a recovery that, at best, is in its infancy stages.
There has been plenty of debate over whether equities are overvalued or not, and certainly we would assume that many investors know where we stand on the topic. Let’s look at the facts now that the September data are in.
On an operating (“scrubbed”) basis, the trailing P/E multiple on the S&P; 500 has expanded a massive 10 points from the March lows, to stand at 27.6x. Historically, when the economy is taking the turn away from contraction towards expansion, which indeed was the case in Q3, the trailing P/E multiple is 15x or half what it is today (and that 15x is also calculated off depressed earnings level of prior recessions we have more on the historical comparisons below).
While we will not belabour the point, when all the write-downs are included, the trailing P/E on “reported” earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble.
It is interesting to hear market bulls talk about how distorted it is to be using trailing multiples that include ‘recession earnings’ (even though using ‘forward’ earnings means relying on consensus forecasts on the future and these are rarely, if ever, correct).
It is also interesting that the last time the multiple was this high was back in March 2002, again after a huge countertrend rally that deployed ‘recession earnings’ from the 2001 downturn. If memory serves us correctly, this was right around the time that the bear market rally started to roll over and in fact, six months later, the S&P; 500 was hitting new lows and 34% lower than it was when the multiple had expanded to today’s level! David Rosenberg-Gluskin/Sheff
-U.S. consumers are increasingly late paying off loans on their primary home, as the highest unemployment in a quarter of a century pushes up delinquency rates on home loans and most other types of loans, according to a monthly report by the Equifax credit bureau.
“Every major consumer product line, in terms of delinquency, is up again, except for (credit) cards,” said Dann Adams, president of U.S. Information Systems. Read more here-
http://www.reuters.com/article/ousivMolt/idUSTRE59D4T520091014
-Prudent Bear David Tice Battles Bull Run, Says Market Will Make New Lows. Tice thinks the market will retest the lows, he thinks the next crash will make the one we just lived through look minor. “We don’t think this market will bottom until we get to book value,” which is about “3100 on the Dow,” he says (with a straight face.)
Why does he remain so negative on stocks? As you can see in this accompanying clip, Tice believes many of the problems that caused last year’s crisis still exist. His largest short position right now is in S&P; 500 futures, reflecting that view.
So what about all the economists that say the worst is behind us? Tice says its best to ignore them: “Can you count on these same economists who didn’t see any of this coming tell you we’re going to come out of it?” Read and watch more here-http://finance.yahoo.com/tech-ticker/article/353831/Prudent-Bear-David-Tice-Battles-Bull-Run-Says-Market-Will-Make-New-Lows;_ylt=Aop4UsYoAJEj7KEvPFI2fl5l7ot4;_ylu=X3oDMTE3MjA4NmIxBHBvcwMxMARzZWMDcmVjZW50UG9zdHMEc2xrA3BydWRlbnRiZWFyZA–?tickers=BEARX,^GS
-City watchdogs were monitoring cash withdrawals from Royal Bank of Scotland every hour during the height of the banking crisis, the Guardian can reveal. The Financial Services Authority demanded 60-minute updates on cash flooding out of the bank’s branches and hole-in-the-wall machines in the days before Britain’s historic bank bailout, which took place a year ago.
The regulators stepped up their surveillance after realising that confidence was draining from the banking system following the collapse of Lehman Brothers a month earlier, and that customers were concerned about the safety of their deposits. Read more here-http://www.guardian.co.uk/business/2009/oct/11/banking-crisis-one-year-on
-U.K. Considers Privatizations to Cut Its Debt. Read more here-http://online.wsj.com/article/SB125533924279879927.html or
http://www.breitbart.com/article.php?id=CNG.e6817121a4ab03ad4f5ec50ab56dc235.181&show;_article=1
-Homeland Security Secretary Janet Napolitano said law-enforcement authorities are tracking terrorists with al-Qaeda leanings in the U.S. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=al87YRCSOi3A
-Iran to “blow up heart” of Israel if attacked: official. Read more here-http://news.yahoo.com/s/nm/20091009/ts_nm/us_iran_israel_usa
-Bleak U.S. job market boosts military recruitment. Read more here-http://www.reuters.com/article/topNews/idUSTRE59C5O320091013
-New flu still raises questions among experts. Read more here-http://www.reuters.com/article/newsOne/idUSN1529221620091015
-2012 isn’t the end of the world, Mayans insist. Read more here-http://apnews.myway.com/article/20091011/D9B8P09O0.html
-Modern man a wimp says anthropologist. Read more here-http://www.reuters.com/article/newsOne/idUSTRE59D0BR20091014
-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
-Blue Diamond Fetches Asian Record of $5.7 Million at Sotheby’s. An 8.74-carat blue diamond, the size of a hazelnut, fetched HK$43.8 million ($5.7 million) in Hong Kong, the most expensive of its type sold at auction in Asia.
The emerald-cut, so-called fancy intense blue gem, went to an anonymous phone buyer after a two-minute tug-of-war with at least four rivals that escalated at a rate of HK$1 million a bid. The diamond has the third-highest grade of VVS1, which means it is very slightly flawed, according to host Sotheby’s.
A carat is one-fifth of a gram. New York-based Sotheby’s says it holds the per-carat world auction record for any gemstone with its May sale of a 7.03-carat cushion-shaped fancy vivid-blue diamond in Geneva for 10.5 million Swiss francs ($9.5 million); it was sold to Hong Kong property tycoon Joseph Lau.
“Only about a handful of such diamonds exist in the world,” said Fyzee Thambi, a Hong Kong-based gem dealer, in an interview at the venue yesterday. “That price is a bargain. In better economic times, people would have paid much more for it.” Diamonds are prized for being portable stores of value. Read more here-
http://www.bloomberg.com/apps/news?pid=20601088&sid;=aRQFbHxkoXpc or http://www.idexonline.com/portal_FullNews.asp?id=33045
-Market for Luxury Goods Shifts Further to the East. In December, Christie’s will auction off “the Vivid Pink,” a bubble-gum-colored five-carat diamond with an estimated value between $5 million and $7 million. But instead of scheduling the sale in New York or Geneva, the venue chosen was Hong Kong.
Emerging Asia’s role in the market for super high-end luxury goods is mushrooming, reflecting an underlying shift in consumer spending power that has been creeping along for years, but got added impetus from the global economic crisis.
Christie’s and its rival Sotheby’s say that within the past few years, Hong Kong has emerged as a top location for sales of expensive jewelry, gems and fine wines. Asians have also become major buyers of ultra-luxury goods at the auction houses’ sales in cities like London, New York and Geneva.
Christie’s sold its clear 101-carat Shizuka diamond in Hong Kong for $6.2 million in May 2008. That sale and the one coming Dec. 1 of its big pink diamond “are both great examples showing how important this market has become at the very top end,” said Vickie Sek, head of jewelry at Christie’s Asia.
“Both stones would have been offered in New York or Geneva just a few short years ago,” she said. In another telling example, Rolls-Royce, which did not even have dealerships in Asia until 2003, immediately got 20 orders for its new $250,000 Ghost when it presented the car in Hong Kong last month, despite taxes that effectively double that price.
More broadly, household spending in Asia’s developing nations is expected to increase as continued growth, rising populations and improving health and retirement provisions reduce the need for families to save for a rainy day. Read more here-http://www.nytimes.com/2009/10/13/business/global/13luxury.html
-Rio Tinto’s third quarter diamond production fell 54 percent to 2.787 million carats, the mining group reported in its production summary for the period. Third quarter production at Argyle dropped 51 percent, compared with 2008, to 2.274 million carats. Argyle’s year-to-date production fell 28 percent to 7.086 million carats. Read more here-
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28287 or http://www.idexonline.com/portal_FullNews.asp?id=33080
-Rio Tinto Raises Diamond Prices 15% as Demand Begins to Recover. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid;=aScBiIMfjiGw
-Diamonds aren’t forever, the pipes are running dry. According to Rio and BHP Billiton analysis, most existing mine resources for rough stones will be gone within 15 years. This is because new diamond discoveries are becoming increasingly rare. According to Rio, annual discoveries of kimberlite ”pipes” kimberlite is a host rock for diamonds have fallen (on a five-year moving average basis) to little more than 100.
And history shows that only one in 10 kimberlite pipes contain diamonds and only one in 100 of those are economic to mine. The lack of new discoveries since the mid-1980s means the world’s mine reserves of rough diamonds have fallen from 80 years’ supply to the 15 years that Rio now forecasts. Read more here-
http://www.smh.com.au/business/diamonds-arent-forever-the-pipes-are-running-dry-20090923-g2sp.html
-Diamonds sparkle at NYC’s natural history museum. Read more here-http://www.nationaljewelernetwork.com/njn/content_display/diamonds/supply/e3ica001feccbe3877bc904186bc282c0a5
THE WORLD FINANCIAL CRISIS IS NOT OVER
-The US economist widely credited with having predicted the financial crisis has warned we are already “planting the seeds of the next crisis.” Nouriel Roubini told the BBC that he is concerned about the growing gap between the “bubbly and frothy” stock markets and the real economy.
Over the last six months, the Dow Jones Industrial Average has risen about 45%. But Mr. Roubini says he sees an economy where consumers are “shopped out” and “debt burdened”.
Based on the run up in share prices in recent months, investors appear to be betting that good times are around the corner. A view not shared by Mr Roubini. “The crisis is not yet over,” the New York University professor said.
“I see an economy where the consumers are shopped out, debt burdened, they have to cut back consumption and save more. “The financial system is damaged and for the corporate sector I don’t see a lot of capital spending because there is a glut of capacity.” Mr. Roubini believes US house prices have further to fall, straining America’s fragile recovery. Read more here- http://news.bbc.co.uk/2/hi/business/8298182.stm
U.S. DOLLAR
-Dollar Reaches Breaking Point at Banks Shifting Record Reserves. Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=aS2s2mhDVBSM
-President Barack Obama’s effort to lead the world economic recovery by spending the U.S. out of its recession is undermining the dollar, triggering record commodities rallies as investors scour the globe for hard assets.
As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zero interest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s drop followed its best two quarters in 16 years.
“The dollar had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?” said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated with the tiny returns on safe assets.”
Investors are sating their renewed risk appetites with developing nations’ stocks, currencies and the commodities some of them produce. Gold is up 19 percent this year, touching an all-time high $1,062.70 an ounce on Oct. 8. Copper has rallied 103 percent with the biggest three-quarter rise in at least 21 years. Crude oil, up 64 percent, just finished its steepest eight-month climb since 1999. Aluminium has gained 24 percent, propelled by its best two quarters in a dozen years or more. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a7mHS_OElufk
-Dollar facing ‘power-shift’: analysts. The dollar’s position as the world’s leading reserve currency faces increased pressure as the financial crisis allows emerging economies greater influence on the world stage, analysts said.
A report last week in The Independent claiming that China, Russia and Gulf States are among nations prepared to ditch the dollar for oil trades has heightened the uncertainty surrounding the US currency’s future. Read more here-http://www.breitbart.com/article.php?id=CNG.ee8e6856c300b312ea0f64a4522381ca.481&show;_article=1
-Dollar faces long journey downward. Read more here-http://blogs.reuters.com/great-debate/2009/10/13/dollar-faces-long-journey-downward/
-’Benign currency neglect’ could spell real danger for US economy. What’s happening to the dollar? That’s the question dominating the world’s financial markets. Last week the US currency fell, on a trade-weighted basis, to a fresh 14-month low. The dollar’s decline is now gaining momentum. Read more here-http://www.telegraph.co.uk/finance/comment/liamhalligan/6292787/Benign-currency-neglect-could-spell-real-danger-for-US-economy.html
-The Message of Dollar Disdain. With U.S. debt set to exceed 100% of GDP in 2011, it’s no wonder people are looking for alternative ways to preserve wealth. Read more here-
http://online.wsj.com/article/SB10001424052748704107204574470961505506386.html?mod=rss_opinion_main
-Your dollars are just Monopoly money. Since Nixon severed gold from the greenback in 1971, the dollar’s comparative value has fallen 97%. Money printing today will only hasten the currency’s destruction. Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/your-dollars-are-just-monopoly-money.aspx?page=all
-The Dollar in Your Wallet Is Only Worth 18¢. Read more here-http://news.goldseek.com/GoldSeek/1255626453.php
U.S. CONSUMER-BUSINESS IS NOT BORROWING TO SPEND
-Constrained lenders and wary borrowers explain falling levels of credit in America. Read more here-http://www.economist.com/daily/news/displaystory.cfm?story_id=14636886&fsrc;=nwl
-Data published on Oct. 7 confirms what we all know, that the U.S. consumer is not borrowing to spend. In a world where credit has become so important to consumer spending, and where consumer spending drives 70% of GDP, the indicator confirms that the economy is still in slow-growth territory.
-While overall consumer credit continues slowing and is now declining at a rate of close to 5%, the subset of revolving credit, namely credit cards, is slowing even more by 7.8%. And consumer credit isn’t all that’s on the decline: commercial and industrial loans are off 12%.
Borrowing tends to be a lagging indicator, as the aftermath of a recession still lingers in the minds of consumers, and is reflected in more cautious banking practices. As the charts clearly show, the whole private sector is still in record-low borrowing mode.
The government, on the other hand, is doing the opposite borrowing like crazy in an attempt to counteract the Great Deleveraging. If we didn’t have the government directly supporting specific markets, the trends in private-sector borrowing would likely be even worse. And, with them now falling at a record pace, they are already about as bad as it gets confirming how serious the current recession is. Bud Conrad-Casey Research
BIG OR SMALL FDIC HAS PROBLEMS
-Failures of Small Banks Grow, Straining F.D.I.C. Read more here-http://www.nytimes.com/2009/10/11/business/economy/11banks.html
-The FDIC acts as guarantor to 8,195 financial institutions holding over $4.8 trillion worth of deposits. However, the majority of those deposits are concentrated in just 116 banks – the same banks that are sitting on the lion’s share of the toxic assets currently plaguing the economy.
After 123 bank failures in the last 22 months, the FDIC piggy bank is running on empty with less than $1 backing for every $500 insured. Of those failures, only six were banks holding assets of $10 billion or more, and 20 had assets between $1 billion and $10 billion. Most failures to date have occurred in the smaller local and regional banks with assets less than $1 billion.
As the glut of bad credit continues unwinding, additional bank failures seem a near certainty. It’s the size and scope of potential bank insolvencies that is a major cause for concern as one-third of the largest banks were unprofitable in the second quarter of 2009, and it’s not likely that the FDIC will be able to foot the bill if the trend continues.
Tinkering with mark-to-market accounting rules can only buy time for the struggling banks as the cash inflows disintegrate, it eventually comes time to shut the doors. We can only expect more “Too Big to Fail” taxpayer bailouts. Casey Research
THE NEXT BIG BAILOUT FHA
-The Next Big Bailout? FHA Facing “Cataclysmic” Default Rates. Given the choice between “complete collapse” and increased government involvement in the housing market, Whitney Tilson, manager of T2 Partners, is glad policymakers opted for the latter in 2008.
But there is going to be a heavy price to pay for the U.S. government becoming the nation’s mortgage broker, says Tilson, co-author of More Mortgage Meltdown. Specifically, Tilson is worried about the potential need for a bailout of the Federal Housing Administration (FHA), which has guaranteed about 25% of all new U.S. mortgages written in 2009, up from just 2% in 2005.
Created in 1934 to help low-income and first-time homeowners, the FHA has historically played a minor role in the U.S. housing market. But the agency has become the government’s vehicle of choice for mortgage financing in the past year.
Again, Tilson supports the concept of the government stepping into the breach caused by the near total cessation of private mortgage lending, as well as the curtailed financial activity of Fannie Mae and Freddie Mac, which became wards of the state in September 2008. But “there’s a price to pay,” he says, noting the FHA is facing “cataclysmic default rates” on loans written in 2006, 2007 and early 2008, as detailed by The NY Times.
“Effectively we the taxpayers are now guaranteeing mortgages written by over 10,000 FHA-approved lenders,” Tilson says. “The FHA’s portfolio is exploding [and] the taxpayer is now on the hook for 100% of the losses.”
How big of a hook? The FHA’s mortgage portfolio is now approaching $1 trillion. You can’t assume all those mortgages will default but you can assume the FHA’s exposure will only grow in the months ahead as politicians continue to look for ways to support the housing market (especially in an election year.) In other words, FHA is looking very much like the “new Fannie Mae.” Read and watch more here-http://finance.yahoo.com/techticker/article/352663/The-Next-Big-Bailout-FHA-Facing
U.S. JOB LOSSES MAY BE EVEN LARGER THAN ESTIMATED
-U.S. Job Losses May Be Even Larger, Model Breaks Down. The U.S. economic slump earlier this year was so severe it short-circuited the government’s model for calculating payrolls, raising the risk that today’s jobs report may be too optimistic.
About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991.
The bulk of the miss occurred in the calculations for the first quarter of this year, the Labor Department said. The economy shrank at a 6.4 percent annual pace in the first three months of 2009, the worst performance since 1982. The figures raise the possibility that the government’s calculations continue to miss the mark.
“We are probably still underestimating job losses,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There could be another 30,000 to 40,000” that the data isn’t picking up, he said.
That would mean the loss of jobs for September could turn out to be as high as 300,000, rather than the 263,000 reported today by the Labor Department. Today’s report also showed the jobless rate climbed to 9.8 percent last month, a 26-year high. The potential revision for the year through last March would mean that the economy lost 5.6 million jobs for the period instead of the 4.8 million now on the books. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aGBkhROUjNds
REAL ESTATE-MORTGAGES-FORECLOSURES
-U.S. Foreclosure Filings Jump 23% to Record in Third Quarter. U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc.
A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the Irvine, California-based seller of default data said today in a report. One out of every 136 U.S. households received a filing, the highest quarterly rate in records dating to January 2005.
“The problem is prime loans going into foreclosure and people being underwater and losing their jobs,” 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 really bad number.”
Mounting foreclosures mean U.S. home prices probably will resume falling, analysts from Amherst Securities Group LP in New York said Sept. 23. A “shadow inventory” of 7 million properties are in the foreclosure process or likely to be seized, up from 1.27 million in 2005, they said.
The pace of prime and so-called alt-A loan defaults is accelerating as subprime defaults slow, Standard & Poor’s analysts led by Diane Westerback said yesterday in a report. Prime loans are those made to borrowers with the best credit records while alt-A loans are considered riskier because they were often granted without documenting the borrower’s income. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aFofq9_za8Is
-Foreclosures: ‘Worst three months of all time’. Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter a sign the plague is still spreading. Read more here-http://money.cnn.com/2009/10/15/real_estate/foreclosure_crisis_deepens/?postversion=2009101507
-Southern California Home Prices Fall on Foreclosures. Southern California house and condominium prices fell 11 percent in September from a year earlier as foreclosures dominated sales, MDA DataQuick said.
The median price dropped to $275,000 from $308,500 a year earlier, the San Diego-based research company said today in a statement. The number of homes sold rose 5.1 percent from a year earlier to 21,539 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.
Transactions involving houses or condominiums that had been foreclosed on at some point in the past year accounted for 40 percent of all home sales in Southern California last month, MDA DataQuick said. That was down from almost 42 percent in August and a record of almost 57 percent in February. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aeaPGMk4vTnw
-At foreclosure auctions, broken dreams on sale. The seven-bedroom, three-bath house in this city’s West Garfield Park neighborhood had once been someone’s American Dream. But at a recent auction of about 100 foreclosed houses and condos, it was just Property No. 20 and drawing no bids from a roomful of buyers despite its bargain-basement price.
“Any interest in this home at $7,000?” fast-talking auctioneer Renee Jones asked the crowd. “If not, we’ll move on.” Saddled with swollen portfolios of foreclosed and unsold properties in the housing crisis, U.S. lenders and builders are turning to professional auctioneers to help them unload the unwanted real estate in a hurry.
It is an open question whether the auctions indicate that the U.S. real-estate market is recuperating or is still in intensive care. But the rapid-fire, under-the-hammer sales usually resorted to only after every other effort to market a property has failed are on the rise across the United States, providing a colorful burst of activity in a corner of the weak economy that needs all the life it can get.
“Over the last two years, we’ve progressively seen more and more of these,” said Chris Longly, the deputy executive director of the National Auctioneers Association trade group. “It’s a sign of the times.” Hard data on the number of foreclosed properties being sold at auction are hard to come by. “The foreclosure market is a moving target right now,” said Dave Webb of Hudson & Marshall, one of the biggest auctioneers in the market.
But Hudson & Marshall and its rivals say they are gearing up for more in the coming months, convinced that a moratorium on foreclosures earlier this year only postponed what they believe is an inevitable avalanche of new repossessions. “The foreclosures are going to explode again,” said Webb. Read more here-
http://www.reuters.com/article/newsOne/idUSTRE59E01B20091015
© 2011, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – October 20, 2009
Posted by Worldwide Precious Metals on Tuesday, October 20, 2009
The Goldbugg Report – October 13, 2009
October 13, 2009
-Gold Prices May Rise to $1,650
-Gold, ‘Off The Charts’, May Target $1,500: Technical Analysis.
-Clive Maund silver market update.
GOLD
-Gold Prices May Rise to $1,650, James Sinclair Says. Gold may climb to $1,650 an ounce by early 2011 on demand for an alternative to holding dollars and other currencies, said James Sinclair, a commodity investor and the head of Tanzanian Royalty Exploration Corp.
“The carry trade has dropped the dollar as a currency of choice,” Sinclair, the chief executive officer of Surrey, British Columbia-based Tanzanian Royalty, said today in a Bloomberg Radio interview. “Gold is competition to currencies.”
The spot price is heading for the ninth annual gain as demand rises for a hedge against inflation and the dollar heads toward a loss for the year. Some investors are buying the metal on concern that ballooning U.S. government debt will drive the dollar lower.
There is an “extreme amount of liquidity that has been injected in the financial system, not just in the U.S., but around the globe,” Sinclair said. The dollar has been undermined by major trading partners suggesting an alternative to the greenback and by China’s attempts to “internationalize” its currency by issuing more debt, Sinclair said.
President Barack Obama has increased marketable U.S. debt to an unprecedented $7.1 trillion as the government borrows to revive growth. Goldman Sachs Group Inc. has predicted that the U.S. will sell about $2.9 trillion of debt in the two years through next September. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6fYQA6UmP0E
-Gold, ‘Off The Charts’, May Target $1,500: Technical Analysis. Investors should hold onto long positions in gold as bullion has “significant upside potential” to reach as high as $1,500 an ounce, Barclays Capital said, citing trading patterns.
“Having rallied ‘off the charts’, we are left to resort to projections and extrapolated trendlines to forecast where the move might stop,” Jordan Kotick, global head of technical analysis at Barclays Capital, wrote in a note e-mailed today. So-called trendlines are used to determine momentum and are found by connecting an asset’s high prices and low prices over a given period to form a channel.
“Channel resistance currently is at $1,370; history suggests a run at $1,500,” Kotick wrote. “Taking it a step at a time, in the coming weeks, we view consolidation above $1,020 as extremely positive, targeting $1,050 initially, and $1,120,” he added. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a0m8QhfjdEG4
-Top-ranked manager John Hathaway of the Tocqueville Gold Fund offers this astounding prediction: The price of the precious metal could rise to more than $5,000 an ounce. Hathaway, who manages $1 billion at the Tocqueville fund, sees gold soaring for several reasons, including rising inflation and the rather curious fact that in two previous instances the price of an ounce of gold and the level of the Dow Jones industrial average have come close to converging.
In 1933, when gold traded at $32 an ounce, the Dow bottomed out at 50 in February. In 1980 gold climbed to its high of $850 on Jan. 21, when the Dow closed at 873. Today Tocqueville sees something similar happening, with gold rocketing to $5,000 or $10,000 an ounce (the Dow is now at about 9700). Cnnmoney.com
-Gold will continue to set new highs Blanchard. Analysts at gold dealer Blanchard & Co. see the recent upwards trend in the gold price as sustainable and likely to continue. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90375&sn;=Detail
-U.S. gold economist, Jeffrey Nichols, seems more bullish than ever on the prospects for substantial upwards movement in the price of gold over the next few years considering the latest development in the markets, perhaps even more so than in his previous analyses. While Nichols has tended to be a gold bull in the past he has also been one of the more sober commentators amongst this genre so his developing views do require some attention.
Nichols concludes that thanks to extremely expansionary monetary policy and with a little help from ETF investors, central banks, and new or evolving markets like China and India – the gold price will continue to move ahead. He reckons $2,000 to $3,000 is on the cards in the next few years. Read more here-
http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=90221&sn;=Detail
-Bill Strazzullo, chief market strategist at Bell Curve Trading, says oil is a moving target and predicts it will trade in a range between $55-$85/barrel. Gold, however, is a different animal altogether. “Gold has the most potential here,” Strazzullo says.
While bears are concerned about deflationary pressures, some high-profile hedge funds are scooping up gold futures and Strazzullo is going with the same theme. He predicts gold could soon hit $1200 per ounce, on its way to $1400. Read and watch more here-http://finance.yahoo.com/tech-ticker/article/347728/Commodity-Strategy-Gold-Has-More-Upside-Potential-vs.-Oil-Strazzullo-says
-NIA, National Inflation Association, Says Gold Could Rise to $5,400. Read more here-http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=PR&date;=20091006&id;=10469369
-Peter Schiff: U.S. Rally Is Doomed, Gold Will Hit $5000. Unlike the “legitimate bull markets” of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a “rally in a bear market,” and is lagging the rest of the world “for a reason.”
The worst is not over, according to Euro Pacific Capital’s Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold. A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce “in the next couple of years,” and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
Schiff believes gold is currently “climbing a wall of worry” but will eventually become as hot as tech stocks in 1999 and start moving up $100 per day. Schiff’s forecast is based on his view the U.S. dollar is going to collapse under the weight of our massive deficit and reckless policies of the Obama administration, which he compares to the massive spending programs of the 1960s, which paved the way for gold’s ascent in the 1970s. “Obama is making the same mistakes as Bush, but he’s doing them on a grander scale,” says Schiff. Read more here-http://finance.yahoo.com/tech-ticker/article/342802/Peter-Schiff-U.S.-Rally-Is-Doomed-Gold-Will-Hit-5000 Watch video here-
http://www.youtube.com/watch?v=4NtvRJ9I6Ng&feature;=player_embedded
-$5,000/oz gold? Rob McEwen says it’s coming in 2014 or 2015. When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.
In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either in 2014 or 2015. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=89220&sn;=Detail
-Clive Maund gold breakout alert! Gold is in position to embark on a major uptrend here that is expected to result in it tacking on a 30%-60% gain in the space of about 6 months. Silver should make spectacular gains during the same period. Read more here-http://news.goldseek.com/CliveMaund/1254841200.php or http://news.goldseek.com/CliveMaund/1254722760.php
-Two days ago, the price of gold broke out to a new high and we are delighted with this result. As you will recall, we were expecting an upward breakout in gold and it looks as though its price will now surge over the following months. It is noteworthy that since the breakout occurred, gold has managed to stay above the previous high.
The longer the price of gold stays above US$1,030, the greater the probability that the yellow metal will stage a spectacular rally until spring next year. It is our contention that this breakout is the real deal and the pathetic action of the US Dollar Index supports our view. Rather than rally, the American currency has embarked on another southbound journey and this is extremely bullish for gold.
Furthermore, the recent zoom in silver and the precious metals mining stocks is additional evidence that this breakout is not a head fake. Figure 1 highlights the recent breakout in gold. As you will observe, gold’s bull-market has been punctuated by lengthy consolidations and this is the third time gold has broken out towards the end of the third calendar quarter.
If history is any guide and the trend consistency is intact, this rally will continue until spring next year and we could see a 40-50% advance! Should this rally materialise, the mining stocks will go ballistic and silver will rocket above its previous bull-market high.
In light of the recent breakout, we suggest that you hold on to your positions in the precious metals sector and add more capital. The long wait is finally over and precious metals bulls are about to get rewarded! We plan to hold on to our positions for several months and will consider booking profits when we see an epic blow-off early next year. Puru Saxena-Read more here-http://www.321gold.com/editorials/saxena/saxena100809.html
-The economy imploded a year ago. It was traumatic and devastating to many, but it wasn’t really surprising to serious gold investors. Those who seemed most surprised should not have been: reporters in the mass media who are supposed to be our guardians. They had ignored, and even suppressed, explicit warnings about everything that came to pass.
Yet now, when many in the media review what transpired one year ago and even have the chutzpah to draw “lessons” of what we supposedly now know they overlook their own complicity in what happened. And in their list of lessons they neglect to mention obvious conclusions:
* Debt cannot be papered over.
* Inflated currency is no substitute for gold.
* A personal portfolio should be diversified beyond stocks.
* Consumer confidence cannot be manipulated indefinitely.
* Politicians can’t ensure prosperity for this generation by bankrupting the next.
The media instead go to the same “experts” who were surprised by the economic meltdown to tell us what lessons we, the duped, should now draw. Usually their lessons come down to this: we should take their advice again more regulation, higher taxes, more government spending, more lawyers and bureaucracy. Read more here-
http://news.goldseek.com/GoldSeek/1254809220.php
-As dollar fades, gold’s currency shine brightens. As the dollar’s dominance fades with the emergence of a multipolar world, gold may stand to gain the most of all assets thanks to an unlikely quality neutrality.
While no major currency is likely to replace the dollar anytime soon, the need for an alternative is clear, and growing. China among others is considering how to diversify its more than $2 trillion in foreign exchange reserves; talk of using other currencies to trade oil or commodities continues to circulate.
Supply constraints mean there is no chance of a full revival of the gold standard era, when currencies were pegged directly to gold, but investors say gold’s duel role as both currency and asset make it an almost irresistible buy for years to come as financial geopolitics add risk into global markets.
“The fact that gold has a currency aspect without being tied to any country is key to enhancing its value as an asset,” said Koichiro Kamei, managing director at financial research firm Market Strategy Institute. “The realization that gold can be turned into anything spread quickly and widely as people used it to raise dollars last year when they were short of dollars.” Read more here-http://www.reuters.com/article/hotStocksNews/idUSTRE5963BX20091007
-John Embry Sept 25th commentary. Gold is entering a strong seasonal period. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2009/09_25_2009.pdf
-Mike Zielinski of the Mint News Blog reports today that because of high demand for gold and silver coins, the U.S. Mint has suspended production of gold and silver collector coins so that it may concentrate on bullion coins. Read more here-http://www.gata.org/node/7867
-New gold suppression documents examined on King World News. Listen here-http://www.gata.org/node/7852
-Peter Grandich: GATA has beaten the gold bears. Read more here-http://www.gata.org/node/7870
-Swiss money manager concurs with GATA on gold rigging. Read more here-http://www.gata.org/node/7857
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,600 the silver price would be $20.00
Gold to silver ratio at 70 to 1 with gold at $1,600 the silver price would be $22.86
Gold to silver ratio at 60 to 1 with gold at $1,600 the silver price would be $26.67
Gold to silver ratio at 50 to 1 with gold at $1,600 the silver price would be $32.00
Gold to silver ratio at 40 to 1 with gold at $1,600 the silver price would be $40.00
Gold to silver ratio at 30 to 1 with gold at $1,600 the silver price would be $53.33
Gold to silver ratio at 20 to 1 with gold at $1,600 the silver price would be $80.00
Gold to silver ratio at 15 to 1 with gold at $1,600 the silver price would be $106.67
-I invest for inflation. In 1971 President Nixon took the world off the gold standard, which means the world’s central banks can print as much money as they want. I was in Vietnam in 1972 and saw what happens when people do not trust paper money. Rather than try to live below my means and save money, I invest in gold, silver, and oil commodities that go up in price as the government prints more money.
When investing for inflation, I am not investing for cash flow. In this case, I am investing to protect my wealth from the predatory practices of the Federal Reserve Bank, the U.S. Treasury, and the ultra rich manipulating the world economy.
China does not trust the U.S. dollar. Today China is using U.S. dollars to buy commodities such as oil, copper, gold, and silver. The good news is silver is still inexpensive. In 2007 gold was approximately 50 times more expensive than silver. In 2009 the gap is 60 times which means silver is a bargain.
Silver is used in the electronics industry and is consumed daily; stock piles of silver are dwindling. On top of that, for the first time in modern history, there is more gold in the world than silver. In other words, silver is more valuable than gold. The good news is, at less than $20 an ounce, almost anyone can afford to start preparing for the worst and building their own house of silver. Robert Kiyosaki-Read more here-http://finance.yahoo.com/expert/article/richricher/192575 Read and watch video interview here-http://moneynews.newsmax.com/streettalk/silver_investment_kiyosak/2009/09/25/264718.html
-Silver analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7853
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1254713506.php
-Indian bank to start selling silver bars. HDFC, a large gold seller is looking to sell into the silver retail market because it says investment demand is growing faster than jewellery. Read more here-http://mineweb.net/mineweb/view/mineweb/en/page32?oid=90344&sn;=Detail
-Silver institute Q3 report. Read report here-http://www.silverinstitute.org/images/pdfs/3q09.pdf
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: When Banks Start Lending, Watch Out! Amazingly, massive printing by governments around the world hasn’t resulted in massive inflation at least in terms of crazy price movements. But don’t get complacent.
From Kyle Bass’s latest investor letter comes this chart of the US monetary base, and obviously the big, gold-shaped “excess reserves” spike stands out. This is basically cash that banks are hoarding. As he notes, if this V-shaped recovery materializes as the market expects, the banks start lending, inflation lies in wait, and will roar back to life. Read more here-http://www.businessinsider.com/chart-of-the-day-us-monetary-base-2009-10
-Chart of the week: The Dollar Collapse Is A Huge Part Of This Rally. Earlier today, David Rosenberg called the stock market rally a “money illusion,” since without the benefit of the dollar collapse, things look a lot worse.
Well, the rally isn’t 100% based on the dollar just about 50%. As you can see here, since early May, when the Dollar really started breaking down the S&P; 500 as measured in Euros is up less than half of what the S&P; 500 is up in Dollar terms. Read more here-http://www.businessinsider.com/chart-of-the-day-sp-500-in-dollars-and-euros-2009-10
-”Henry Ford was right. A prosperous economy requires that workers be able to buy the products that they produce. This is as true in a global economy as a national one.” John J. Sweeney-Bio here-http://en.wikipedia.org/wiki/John_Sweeney_%28labor_leader%29
-”I’ve not see gold’s fundamentals this bullish in years.” Peter Grandich, a metals writer at Agoracom
-Probably the biggest key is that gold recently spent two weeks above $1,000 and we believe gold is prepared for a breakout that will take its price anywhere from $1,200 to $1,700 an ounce. Gold’s long-term reverse head and shoulders pattern, one of the most powerful patterns in charting is in a breakout mode. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1254675600.php or http://news.goldseek.com/InternationalForecaster/1254934483.php
-The gold price is still significantly below its inflation-adjusted high. The price hit $850/oz in January 1980, which represents a price today of about $2,300/oz when adjusted for inflation.
Telegraph.co.uk
-About gold, the Adens note that “gold’s peak in 1980 at $850 is the equivalent of about $2,300 in current dollars. Gold has not even approached that level yet and the situation is far more serious now than it was then.”
“The focus now is on the next phase of the current rise. If we continue to use proportions, the bull market’s second rise from 1976 to 1980 gained 750%. Using the same growth and applying it to the current bull market, we could see gold eventually reach $4100 during the next run-up.
And if you take the entire bull market gain in the 1970s at 2300% and extrapolate, then $5800 would be the equivalent upside target.” Long-term, the Adens expect an inflationary collapse. Aden Sister-Read more here-http://www.marketwatch.com/story/story/print?guid=C9D3BD6A-5539-4824-9D64-32BCEBF54820
-Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting against subprime securities, is buying shorter-term debt and precious metals, anticipating hyperinflation will lead to higher interest rates. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aS3y4MpdNi_Y
-Jim Rogers, the investor who predicted the commodities boom earlier this decade, expects gold to pass its inflation-adjusted 1980 peak of $2,312. “Gold is going to be much higher over the course of the bull market, in a decade or however long it lasts,” he says. Rogers, who in the past has criticized the Federal Reserve for being lax on inflation, considers gold the ultimate safe haven in times of financial stress. Cnnmoney.com
-FDR said “there is nothing to fear but fear itself” and yet is fear that is helping drive every asset class right now. The action in all of the markets has been very interesting. The equity market continues to trade on light volume this tells you that there is little conviction and that it does not take much in the way of buying activity to generate whippy rallies.
But to see the S&P; 500 now within 15 points from a post-collapse high, to see the yield on the 10-year Treasury note back below 3.2%, despite the gargantuan new supply, and to see gold break out to all-time highs, is remarkable. The only possible explanation comes from a market analyst on Bloomberg yesterday it is not greed, but fear. Institutional equity investors fear missing out on the rally.
Bond investors fear deflation and the stock market is way overdone and is ripe for a steep correction. The gold bugs fear that the fiscal and monetary largesse globally will lead to inflation and fear that the U.S. dollar is on the verge of collapse. Never before has fear felt so reassuring pick an asset class, and it’s going up in price. David Rosenberg-Gluskin/Sheff
-Stiglitz Deflation Threat Pushes Fed to Stay at Zero. The U.S. faces the possibility of deflation for the first time since the Eisenhower administration, a threat that may prompt the Federal Reserve to keep interest rates near zero through next year. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ame31IjWda6w
-ECB, BOE Leave Rates Unchanged to Support Economic Recoveries. The European Central Bank and the Bank of England kept their benchmark interest rates at record lows to support a recovery from the worst economic slump since World War II.
The ECB left the main rate at 1 percent and President Jean- Claude Trichet signalled at a press conference in Venice that the ECB has no plans to raise borrowing costs, describing their level as “appropriate.” The U.K. central bank kept its rate at 0.5 percent and maintained a program to buy 175 billion pounds ($278 billion) of government bonds with newly created money. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aifGEopfb2uc
-Is the U.S. Preparing to Bomb Iran? Is the U.S. Stepping Up Preparations for a Possible Attack on Iran’s Nuclear Facilities? Read more here-
-Majority in U.S. Would Back Attack to Prevent Iran Nuclear Bomb. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aNvqCq5beGAE
-Report Says Iran Has Data to Make a Nuclear Bomb. Senior staff members of the United Nations nuclear agency have concluded in a confidential analysis that Iran has acquired “sufficient information to be able to design and produce a workable” atom bomb. Read more here-http://www.nytimes.com/2009/10/04/world/middleeast/04nuke.html?_r=3
-Iran Inspection Set for Oct. 25, UN Atomic Chief Says. Mohamed ElBaradei, head of the United Nations nuclear agency, said inspectors would visit Iran’s newly disclosed uranium processing plant on Oct. 25, as he called on Tehran to assure the world it wasn’t building a bomb. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=atQNoVZrfy04
-Iran conflict could send oil to high: Raymond James. Oil prices may surge to a record if conflict over Iran’s uranium enrichment leads the oil producer to slash exports or block the Strait of Hormuz, Raymond James analysts said in a Monday research note.
The note says that the risks of a military strike against Iran’s nuclear facilities are rising, which could potentially cut off the OPEC nation’s 2-million-barrels-a-day of exports. It could also lead to a blockage of 20 percent of global oil supplies which are transported through the Gulf’s Strait of Hormuz, the note said.
While the threat of a disruption due to the standoff between the West and Tehran over its nuclear program has pushed up oil prices from time to time over recent years, oil markets have remained calm amid rising tensions during the past month.
“With oil (prices) now around $70 a barrel we would argue that the market isn’t factoring in the risks,” said Pavel Molchanov, one of the report’s authors, in a telephone interview. “Catalysts for higher oil prices could include more saber-rattling, or Iran reverting back to a more confrontational stance.” Read more here-
http://www.reuters.com/article/gc08/idUSTRE5944T120091005
-North Korea Says Dismantling Its Nuclear Weapons ‘Unthinkable.’ Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aJS46gmAKirs
-Gourmet magazine closes after 70 years. Downturn and ad drought claim longstanding Gourmet magazine. Publisher Condé Nast announces 3 other closures: Cookie and bridal magazines Elegant Bride and Modern Bride. Read more here-http://money.cnn.com/2009/10/05/news/companies/gourmet_magazine/index.htm?postversion=2009100517
-Q+A-How do you know you have the flu? Read more here-http://www.reuters.com/article/newsOne/idUSN0643876320091008
-Most Babies Born Today Will Live 100 Years, Scientists Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid;=aGCHVoAxPlu8
-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
-Blue Diamond Fetches Asian Record of $5.7 Million at Sotheby’s. An 8.74-carat blue diamond, the size of a hazelnut, fetched HK$43.8 million ($5.7 million) in Hong Kong, the most expensive of its type sold at auction in Asia.
The emerald-cut, so-called fancy intense blue gem, went to an anonymous phone buyer after a two-minute tug-of-war with at least four rivals that escalated at a rate of HK$1 million a bid. The diamond has the third-highest grade of VVS1, which means it is very slightly flawed, according to host Sotheby’s.
A carat is one-fifth of a gram. New York-based Sotheby’s says it holds the per-carat world auction record for any gemstone with its May sale of a 7.03-carat cushion-shaped fancy vivid-blue diamond in Geneva for 10.5 million Swiss francs ($9.5 million); it was sold to Hong Kong property tycoon Joseph Lau.
“Only about a handful of such diamonds exist in the world,” said Fyzee Thambi, a Hong Kong-based gem dealer, in an interview at the venue yesterday. “That price is a bargain. In better economic times, people would have paid much more for it.” Diamonds are prized for being portable stores of value. Read more here-
http://www.bloomberg.com/apps/news?pid=20601088&sid;=aRQFbHxkoXpc or http://www.idexonline.com/portal_FullNews.asp?id=33045
-Diamonds aren’t forever, the pipes are running dry. According to Rio and BHP Billiton analysis, most existing mine resources for rough stones will be gone within 15 years. This is because new diamond discoveries are becoming increasingly rare. According to Rio, annual discoveries of kimberlite ”pipes” kimberlite is a host rock for diamonds have fallen (on a five-year moving average basis) to little more than 100.
And history shows that only one in 10 kimberlite pipes contain diamonds and only one in 100 of those are economic to mine. The lack of new discoveries since the mid-1980s means the world’s mine reserves of rough diamonds have fallen from 80 years’ supply to the 15 years that Rio now forecasts. Read more here-
http://www.smh.com.au/business/diamonds-arent-forever-the-pipes-are-running-dry-20090923-g2sp.html
-American Museum of Natural History Showcases 25 Notable Diamonds. A new diamond exhibit at the American Museum of Natural History in New York City displays 25 outstanding diamonds. On show is an intense pink brilliant set in gold with small pink diamonds, all coming from the Argyle Mine in Australia, and designed by Carvin French.
Another impressive diamond is a round, brilliant-cut, 5.4-carat diamond pendant surrounded by 20 sapphires in white gold setting, designed in 1960. Five vivid, colored diamonds representing blue-green, orange-yellow, purplish-pink, blue, and orange gems from the Olympia Diamond Collection are also displayed.
The colored diamond collection is on loan from Scarselli Diamonds and curated by gemologist Joshua Sheby. Fancy, naturally colored diamonds graded as vivid indicate they that they display the most color saturation and are very rare finds. Idexonline.com
-Are we in for a diamond price bubble? Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=90371&sn;=Detail
THE FALL OF THE U.S. DOLLAR
-The demise of the dollar. In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning along with China, Russia, Japan and France to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years. Read more here-http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
-Russia Today interviews journalist Robert Fisk who rocked the currency markets. Watch more here-http://www.gata.org/node/7876
-Saudis, Russians, Kuwaitis deny oil dollar-dump plan. Read more here-http://www.gata.org/node/7864
-New documents from Zero Hedge show longtime U.S. fear of oil trade’s dollar dump. Read more here-http://www.gata.org/node/7866
-Reuters follows Independent’s story on oil’s dollar dump. Read more here-http://www.gata.org/node/7862
-Ambrose Evans-Pritchard: Strengthening yuan, not oil trading, will dethrone dollar. Read more here-http://www.gata.org/node/7868
-Asian central banks intervene to slow dollar’s fall. Read more here-http://www.gata.org/node/7874
-China calls time on dollar hegemony. You can date the end of dollar hegemony from China’s decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners. Read more here-http://www.telegraph.co.uk/finance/china-business/6266790/China-calls-time-on-dollar-hegemony.html
-UN calls for new reserve currency. The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the “privilege” of building a huge trade deficit. “Important progress in managing imbalances can be made by reducing the reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity,” UN undersecretary-general for economic and social affairs, Sha Zukang, said.
Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: “It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.” He said: “Greater use of a truly global reserve currency, such as the IMF’s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes,” he said.
The SDRs are the asset used in IMF transactions and are based on a basket of four currencies the dollar, euro, yen and pound which is calculated daily. China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington-based IMF. Read more here-http://www.breitbart.com/article.php?id=CNG.e272eaa74dccc30f21c6ff7638b0f37b.461&show;_article=1
-Max Keiser: Dollar to be buried way before 2018. Watch video here-http://www.russiatoday.com/Top_News/2009-10-06/dollar-funds-americas-wars.html or
http://www.youtube.com/watch?v=D7dH4e8HYFA&feature;=player_embedded
-More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ad4mbyFqcjg0
98 U.S. BANKS SHUTDOWN
-Regulators close more banks. Regulators have shut Warren Bank in Warren, Mich., and two small banks in Colorado and Minnesota, boosting the number of failed U.S. banks this year to 98 as loan defaults rise in the worst financial climate in decades. Read more here-http://apnews.myway.com/article/20091003/D9B3KTJ80.html
GLOBAL BANKING CRISIS
-U.K. Faced ‘Bank Runs, Riots’ as RBS and HBOS Neared Collapse. A year ago today, Royal Bank of Scotland Group Plc and HBOS Plc were close to collapse, causing a chain reaction that could have ended with riots in U.K. cities, security analysts and economists said.
Bank failures would have forced the government to cancel police leave and deploy troops as the breakdown of the financial payments system threatened the ability of utilities to provide essential services, said David Livingstone, a fellow at the Royal Institute for International Affairs in London, a former adviser to the government’s Cobra crisis response committee.
“You are talking about a situation with mass disorder and panic,” the former Royal Navy officer said in an interview. There would be “riots, pandemonium, everyone fending for themselves.” Read more here-http://www.bloomberg.com/apps/news?pid=20601083&sid;=aMfETcYI2t7Y or http://www.bloomberg.com/apps/news?pid=20601109&sid;=aUa2a9yR5M8w
-An inconvenient truth: financial crises are inevitable. The IMF’s new early warning system to avoid crises such as the credit crunch is doomed to disappoint, says Edmund Conway. Read more here-http://www.telegraph.co.uk/finance/comment/edmundconway/6249065/An-inconvenient-truth-financial-crises-are-inevitable.html
-The Bank, whose job it is to support low-income countries, has had to hand out so much cash in the wake of the financial crisis that it faces a shortfall in what it can spare for new projects within 12 months.
“By the middle of next year we will face serious constraints,” said its president Robert Zoellick, as he launched a major campaign to persuade rich nations to pour more money into the Washington-based institution. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6255816/World-Bank-could-run-out-of-money-within-12-months.html
-Banks brace for Latvia’s collapse. The Baltic States are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political “breakdown” in Latvia. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6263039/Banks-brace-for-Latvias-collapse.html or
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a2dW2kp6cCA0
-Stiglitz Says Bank Stress Tests May Not Reflect Industry Health. Nobel Prize-winning economist Joseph Stiglitz said stress tests carried out across the financial system may not reflect the health of the banking industry.
“There’s a question of whether you can trust stress tests,” Stiglitz told Bloomberg News today at an event in Dublin. “If you had announced at the end of stress tests” that the banks “would not pass, it would have caused panic.” Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aQBrHL2NC6ek
-Government Watchdog Says Treasury and Fed Knew Bailed-Out Banks Were Not Healthy. Senior Officials Had Financial Concerns About Nine Bank Institutions Receiving TARP Funds. Read more here-http://abcnews.go.com/Business/lied-watchdog-treasury-fed-knew-bailed-banks-healthy/story?id=8748299 or
http://www.bloomberg.com/apps/news?pid=20601103&sid;=a8m5sPx1dFAc
-Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt. The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Units of Frontier Financial Corp.,Towne Bancorp Inc. and Steel Partners Holdings LP are among 26 firms with more than one-fifth of their loans 90 days overdue or not accruing interest as of June 30 a level of distress almost five times the national average according to Federal Deposit Insurance Corp. data compiled for Bloomberg News by SNL Financial, a bank research firm. Three reported almost half of their loans weren’t being paid.
While regulators may not force firms on the list to close, requiring them to raise capital and curb loans may impede recovery in Florida, Illinois and seven other states. The banks are among the most vulnerable of a larger group of lenders whose failures the FDIC said could cost $100 billion by 2013.
“There are some zombie banks out there,” said Bert Ely, chief executive officer at Ely & Co., a bank consulting firm in Alexandria, Virginia. “Neither the banking industry nor the economy benefits from keeping weak banks in business.”
Ninety-five banks have failed this year at the fastest pace in almost two decades, depleting the FDIC’s insurance fund. The agency proposed on Sept. 29 that financial firms prepay three years of premiums, which would add $45 billion of reserves. The fund sank to $10.4 billion as of June 30, the lowest since 1993. It will run at a deficit starting this quarter, the agency said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXZinRhF5tlA
-U.S. banks slow to absorb commercial property losses: report. A U.S. Federal Reserve report found that banks in the country are slow to take losses on their commercial real estate loans that have been hit by slumping property values and rental payments, the Wall Street Journal said.
Citing a Sept 29 presentation made by Fed analyst K.C. Conway to banking regulators, the paper said the report’s remarks suggested that regulators were preparing for a rerun of housing-related losses that plagued many banks after the residential property bubble burst. Read more here-http://www.reuters.com/article/ousivMolt/idUSTRE5960S020091007
SOROS-BASICALLY BANKRUPT BANKS RESTRAIN U.S.
-Billionaire investor George Soros said the U.S. economic recovery will be sluggish as “basically bankrupt” financial companies and indebted consumers impede it. “The U.S. will be very slow in recovery,” Soros said in a panel discussion in Istanbul, where the annual meetings of the International Monetary Fund and World Bank took place. “The United States has a long way to go.”
Financial companies in the Americas have written down or lost $1.1 trillion since the financial crisis began two years ago, while the U.S. savings rate has risen to its highest level in 24 years as consumers retrench. Soros signalled a stronger rebound in Europe, a view at odds with the IMF. The Washington- based lender last week said the U.S. economy will grow 1.5 percent next year, five times the pace of the euro area.
“Europe has been less damaged,” Soros said today. The European Central Bank may be faster than the Federal Reserve to start withdrawing stimulus, he said, adding that it is “too early, certainly for the United States,” for policy makers to start reversing their emergency measures.
Policy makers may struggle to revamp the regulation of the financial system now that the economy and markets are recovering, he said. “It will be very difficult to accomplish,” he said. “The crash of 2008 now seems like a bad dream and people like to treat it like a bad dream and forget about it and get back to business as usual.” Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ajYVNCQSHgTg
U.S. DEFICIT-DEBT
-U.S. Budget Deficit Estimate $1.4 Trillion. The U.S. government spent a record $1.4 trillion more than it collected in the fiscal year ended September 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued.
Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said. The Treasury Department will report the actual deficit later this month. The deficit for fiscal 2008 was $459 billion. Read more here-http://www.nytimes.com/reuters/2009/10/07/business/business-uk-usa-budget.html
-Social Security Applications Almost Double Because of Recession. Applications for Social Security benefits rose almost 50 percent more than expected this year because of the recession, according to the federal retirement program.
“We are seeing a significant increase in both retirement and disability applications as a result of the recession,” said Mark Lassiter, a Social Security spokesman. The 150,000 extra retirees may add to the financial pressure on the entitlement program. In May, Social Security trustees said expenses would exceed revenue beginning in 2016, one year earlier than their previous forecast. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=auyVsU9FRcts
-Chart of the week: Besides The Fed, Nobody Is Buying Agency Debt. Where would we be without the Fed and its printing press? There’s been a lot of debate about the appetite of foreign investors of our debt Treasury auctions continue to be strong, even as noises emanate from overseas about wanting to dump the dollar.
But here’s a stark fact, via the Council on Foreign Relations: Only the Fed is buying agency debt. Foreign buyers, who once consumed it voraciously, have been net sellers so far this year. Read more here-http://www.businessinsider.com/chart-of-the-day-who-bought-us-government-deb-2009-10
U.S. UNEMPLOYMENT
-Last Friday, the Labour Department reported that nonfarm payrolls decreased by 263,000 in September. As a result, today’s chart provides some perspective on the US job market. Note how the number of jobs has steadily increased (top chart) over the long-term.
During the last economic recovery, however, job growth was unable to get back up to trend (first time since 1960). More recently, nonfarm payrolls have pulled away from its 50-year trend by a record percentage (bottom chart). In fact, the number of US jobs is currently at level first seen in early 2000. Read more here-http://www.chartoftheday.com/20091002.htm?T
-September Unemployment: ACTUAL LOSS 995k. Read more here-http://www.321gold.com/editorials/denninger/denninger100509.html
-U.S. Unemployment Probably Higher Than Reported, Silvia Says. Unemployment in the U.S. is probably higher than September’s 9.8 percent rate reported by the Labor Department today because the number of people looking for work is declining, economist John Silvia said.
“People are just disappearing,” Silvia, 61, chief economist at Wells Fargo Securities in Charlotte, North Carolina, said today in a Bloomberg radio interview. “Discouraged workers go up. Marginal workers go up.” The 263,000 jobs lost last month brought the total since the recession began in December 2007 to 7.2 million the most since the Great Depression.
The so-called participation rate, which represents the proportion of the population the workforce, declined to 65.2 percent in September, the lowest level since May 1986, from 65.5 percent in August. “The reason the unemployment rate is not going up faster is because you have a lot off people dropping out,” said Silvia, a former congressional economist. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aYxjmA7Mh96Q
-U.S. Unemployment Now Lasts Longer Than Benefits. For the first time, the average amount of time it takes fired employees to find a new job exceeds the length of their standard unemployment benefits.
The CHART OF THE DAY shows the average duration of unemployment is now 26.2 weeks, longer than the 26 weeks of state benefits normally provided to workers who lose their jobs. It’s the first time that has occurred since the Bureau of Labor Statistics began keeping records in 1948. Read more and see chart here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=ajY2EJWqg3ZE
-For the first time in three decades, a U.S. recession may wipe out all the jobs created during the previous expansion, according to Ed McKelvey, a senior economist at Goldman Sachs Group Inc. in New York.
Pending payroll revisions and the likelihood that employment will keep dropping in coming months mean the 8.3 million jobs created from 2003 through 2007 will be lost, McKelvey wrote in an Oct. 6 note to clients.
The only other time that’s happened in the post-World War II era was during the “aborted” recovery sandwiched between the 1980 and 1981-82 recessions, McKelvey said. “The current situation is obviously quite different,” he wrote. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aBH460YDfWSs
-Chart of the week: The Long, Long Job Search. Last weeks jobs report was ugly by nearly every measure. There were huge job losses, income growth was weak, and the work week hit a record low again.
And here’s another depressing measure: The duration of time people spend unemployed. Today’s chart measures the share of the labour force that has been unemployed at least 15 weeks. As you can see, we’re in uncharted territory. Read more here-http://www.businessinsider.com/chart-of-the-day-employment-2009-10
REAL ESTATE-MORTGAGES-FORECLOSURES-RENTS
-U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday. Read more here-http://www.reuters.com/article/businessNews/idUSTRE59747820091008
-Home Sellers in U.S. Cut Prices by $28.4 Billion, Trulia Says. U.S. home sellers cut their asking prices by a total of $28.4 billion to attract buyers as the real estate recovery stalled, Trulia Inc. said.
The average discount was 10 percent as of Oct. 1, the San Francisco-based real estate data provider said today. Homes listed for more than $2 million were cut the most, with owners taking an average of 14 percent off the original price. Luxury homes accounted for 25 percent of all of the reductions.
Sales of existing U.S. homes unexpectedly fell in August for the first time since March, according to the National Association of Realtors, signaling the recovery will be slow to gain speed. The median price dropped 12.5 percent from August 2008.
“Consumers have to be slashing the prices of the homes they list,” Pete Flint, chief executive officer of Trulia, said in an interview. There’s a “significant inventory” of homes for sale. “You’re still going to see further price declines before the market stabilizes in 2010.”
Half of the 10 states with the highest percentage of discounted homes are in the Northeast: Massachusetts, Rhode Island, Connecticut, New Hampshire and New Jersey. A third of residences for sale in those states were reduced at least once, Trulia said.
New York, California and Florida accounted for 35 percent of the total value of price cuts nationally. In Nevada, Idaho, Arizona, Wyoming, Hawaii, Utah and California, sellers have dropped an average of 13 percent off the original price, according to Trulia. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aPKdx2VMGEBg
-MGM Mirage said its CityCenter Las Vegas construction project announced that a 30 percent price reduction will be offered at closing to the existing buyers of CityCenter’s three luxury residential offerings: The Residences at Mandarin Oriental, Las Vegas, Veer Towers and Vdara Condo Hotel. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8Pt_NymMTu4
-The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.
“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.
The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The jump has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOmu318hOZr4
-Foreclosures mark pace of enduring U.S. housing crisis. Every 13 seconds in America, there is another foreclosure filing. That’s the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.
There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.
If anything, the country’s worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment. Read more here-http://www.reuters.com/article/newsOne/idUSTRE59705J20091008
-California Hotel Foreclosures Triple in Travel Slump. Hotel foreclosures in California more than tripled in the first nine months of this year as business travelers and vacationers cut spending.
Foreclosures including the 400-room St. Regis Monarch Beach resort in Dana Point climbed to 47 in January through September from 15 a year earlier. Properties in default more than quadrupled to 259, Irvine, California-based Atlas Hospitality Group said in a statement. Atlas specializes in selling hotels. The survey didn’t include states other than California.
Declining occupancy rates and a dearth of credit for refinancing loans obtained during the U.S. real estate boom are squeezing the travel industry. Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks the performance of securities tied to mortgages on commercial property.
“Urban areas are dependent on a mix of business, convention and leisure travel,” said Robert Mandelbaum, research director for PKF Hospitality Research in Atlanta. “There’s been a tremendous decline in business and convention travel.”
Lodging owners are struggling after adding rooms and properties from 2004 to 2007, when financing was easy to come by because banks could bundle loans into commercial mortgage-backed securities and sell them on to investors. About $83.4 billion in hotel-backed securities were issued in those years, according to Realpoint. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=axGEYgpz4Ciw
-U.S. Office Vacancies Reach Five-Year High of 16.5%, Reis Says. U.S. office vacancies rose to a five- year high in the third quarter, as job losses deepened and employers abandoned space in the recession, property research firm Reis Inc. said.
Vacancies climbed to 16.5 percent from 13.7 percent in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, New York-based Reis said in a report. Effective rents, the amount actually paid by tenants, fell 8.5 percent, the biggest year-over-year drop since 1995.
“The decline in effective rents really accelerated after the fall of Lehman Brothers,” Victor Calanog, director of research at Reis, said in a statement. “Tenants will continue shedding occupied space as jobs are lost.” Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid;=aEfOnZ74Jis0
-U.S. Apartment Vacancies Hit 23-Year High of 7.8%. U.S. apartment vacancies rose to 7.8 percent in the third quarter, the highest since 1986, as rising unemployment reduced rental demand, Reis Inc. said.
Actual rents paid by tenants, known as effective rents, declined 2.7 percent from a year earlier, the New York-based property research firm said in a report today. Asking rents, or what landlords sought, fell 1.8 percent from a year earlier.
Job losses and falling wages are shrinking the pool of potential tenants. The U.S. unemployment rate rose to 9.8 percent in September, the highest since 1983, the Labor Department said Oct. 2. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a0aLTAleG.1Q
-Dropping Rents Will Drag House Prices Down with Them. The vacancy rate for rental apartments in the U.S. is now 7.8% and climbing, says the Wall Street Journal. This is the highest vacancy rate in 23 years.
Worse, the vacancy rate is expected to keep climbing through the winter, ultimately hitting the highest rate on record. This is good news for renters and bad news for landlords. It’s also bad news for anyone who owns and would like to sell a house. Read and watch more here-http://finance.yahoo.com/tech-ticker/article/349606/Dropping-Rents-Will-Drag-House-Prices-Down-with-Them?tickers=^dji,^gspc,hd,l,kbh
-U.S. apartment values, down about 35 percent from their peak, will probably fall further as rising unemployment cuts demand for rentals, said Ronald Zuzack, managing director of BlackRock Inc.’s real-estate unit.
“I think the valuations could go down another 10 percent,” Zuzack, of BlackRock Realty Advisors Inc., said today during a panel discussion at the RealShare Apartments 2009 conference in Los Angeles. “Apartments follow job growth.”
About $819 million of apartment buildings were sold in the U.S. in August, the latest month available, according to New York-based Real Capital Analytics Inc. That was down 18 percent from July. Building prices averaged $75,000 per apartment unit, compared with more than $120,000 in early 2007, the data provider said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a5kRSSzoORcs
© 2011, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – October 13, 2009
Posted by Worldwide Precious Metals on Tuesday, October 13, 2009
The Goldbugg Report – October 06, 2009
October 6, 2009
-Important Memo from Precious Metals International Ltd.
- Gold hits record high with dollar under pressure
- GOLD: BREAKOUT ALERT – POWERFUL UPTREND IMMINENT – target and trajectory… By: Clive Maund
October 5th, 2009
6:00 p.m. NYT
Memo to All Retail Dealers
Topic: Dollar ↓ Precious Metals ↑
For those who saw this coming back in 2000, 2001 and started accumulating Gold & Silver within the Gold $260.00 range and Silver in the $3.80 range, to-days price levels of $1,000.00 plus Gold and $17.00 plus Silver are not a surprise.
Now the storyline for Precious Metals is becoming even more serious than anyone could possibly have foreseen eight or nine years ago. The case is building for a major upward move in prices that will make the price movement since 2000 seem moderate at best.
Never before in our modern world, has there been a more compelling justification for the ownership of Gold and Silver.
Most foreign governments whose reserves are US Dollar based are terrified of a collapse in the US Dollar and the impact it would have on their economies.
Central Banks are now demonstrating that they are “Net Buyers” not “Net Sellers” of Gold.
The total unfunded US. Dept. obligations is now approaching 150 Trillion Dollars and the Fed just keeps printing & printing & printing – ultimately flooding the market with paper money and devaluing the US Dollar.
US Interest Rates are so low now that Treasury Auctions are not attractive to Foreign Governments and therefore must be supported by the Fed.
US Government Gold reserves, (if they even exist, The Government refuses to have those reserves audited) are worth less than 300 Billion at to-days prices. That won’t go very far towards paying down 150 Trillion.
There appears only one direction for the US Government to take
Raise Interest Rates
Create Inflation
(Remember the late 70’s and early 80’s)
All the above and now, China, Russia, Japan, France, Saudi Arabia, Abu Dhabi, Kuwait, and Qatar are rumored to be finalizing plans to eliminate the pricing of Middle East Oil in US Dollars, no later than 2018 ( Don’t be surprised to see these rumors denied by all concerned). The transitional currency in the move away from the dollar may well be Gold, according to Chinese banking sources. The plan calls for the new currency (petrol money) to be based on a basket of currencies including the Japanese yen, Chinese yuan, the euro, gold and a new unified currency planned for nations in the Gulf Co-Operation Council.
This now tells us why countries like Germany, France, China, and the Middle East have been increasing their Gold reserves and taking Delivery from New York, and London Depositories.
It would appear from all of the above that the smart money should be headed in to Gold and Silver A.S.A.P.
It certainly seems as though the potential for any serious downside movement in Precious Metals Prices from here is “Slim to none and Slim just left Town”, as the potential for a massive “Short Squeeze” is building.
Perhaps we are now approaching the crossroads, where a major breakout in Prices is about to take place, One that has been in the making since the early 1990’s.
The Long Term money is placed for the upside – is yours?
We quote Mr. Ed Steer of Casey Research “Its time to get Long & Strong”.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to Buy or Sell.
GOLD
- Gold hits record high with dollar under pressure, http://www.marketwatch.com/story/gold-hits-record-high-with-dollar-under-pressure-2009-10-06?siteid=bnbh
-GOLD: BREAKOUT ALERT – POWERFUL UPTREND IMMINENT – target and trajectory… By: Clive Maund, http://news.goldseek.com/CliveMaund/1254841200.php
-Peter Schiff: U.S. Rally Is Doomed, Gold Will Hit $5000. Unlike the “legitimate bull markets” of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a “rally in a bear market,” and is lagging the rest of the world “for a reason.”
The worst is not over, according to Euro Pacific Capital’s Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold. A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce “in the next couple of years,” and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
Schiff believes gold is currently “climbing a wall of worry” but will eventually become as hot as tech stocks in 1999 and start moving up $100 per day.
Schiff’s forecast is based on his view the U.S. dollar is going to collapse under the weight of our massive deficit and reckless policies of the Obama administration, which he compares to the massive spending programs of the 1960s, which paved the way for gold’s ascent in the 1970s. “Obama is making the same mistakes as Bush, but he’s doing them on a grander scale,” says Schiff. Read more here-http://finance.yahoo.com/tech-ticker/article/342802/Peter-Schiff-U.S.-Rally-Is-Doomed-Gold-Will-Hit-5000 or http://www.321gold.com/editorials/schiff/schiff092509.html or http://finance.yahoo.com/tech-ticker/article/342659/Bernanke-Is-Wrong!-The-Economy-Is-Getting-Worse-Not-Better-Schiff-Says
-Peak gold and weak dollar means $2,000+. A highly regarded resource sector expert who discusses his field fervently, Byron King is unconvinced that the recession is behind us, he is equally sure that the “bottomless pit” mentality of stimulus spending will wreck the dollar. Those are among the reasons he sees $2,000-per-ounce gold on the not-too-distant horizon. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90003&sn;=Detail or http://news.goldseek.com/GoldSeek/1254253200.php
-An important event occurred September 30th. Though it has received little attention, it warrants mention, and for this reason, I now highlight it. Gold closed on the Comex in New York at $1,008.00. It was gold’s highest ever monthly close, as we can see on the following chart.
New records are always important. In this case, it confirms that gold’s uptrend in US dollars continues. Think about the significance of this event. Everyone who measures the value of the gold they own in terms of the US dollar is now showing a gain in their gold holding.
Though gold has not made a new monthly record high against other currencies, I suggest being patient. It will happen soon enough, given that central banks around the world continue to debase national currencies. Every currency is falling against gold, some are just falling faster, and the US dollar in this regard is ‘leading’ the pack I should say, falling the fastest. James Turk-Read more here-http://goldmoney.com/commentary-another-new-record.html
-Preserve Your Wealth with Precious Metals Updated. It’s time to preserve your portfolio’s purchasing power. A minimum 10 percent allocation in precious metals is considered adequate in a bull market, but a much larger allocation of 20 percent or more 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 and preserve your hard-earned wealth.
Physical bullion will keep its value regardless of whether the economy is headed for 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. Precious metals are the only currency that will survive intact in this environment, because while governments can print infinite amounts of money, they cannot “print” more precious metals.
More and more investors and institutions are turning to precious metals, because 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. Nick Barisheff-Read more here- http://www.321gold.com/editorials/barisheff/barisheff092909.html
-Asset Class of the Decade: Gold. Read more here-http://news.goldseek.com/GoldSeek/1254031740.php
-Gold Price Consolidation periods. Read more here-http://www.321gold.com/editorials/schwensen/schwensen100109.html
-Pricing U.S. homes in gold reveals that housing has fallen by two-thirds from its 2005 peak. Priced in gold, the median house bought 460 ounces of gold in 2001 and 490 ounces at the peak in 2005 a gain of 6%, considerably less than the nominal price in dollars.
Had a homeowner eschewed the blandishments of the housing bubble in 2001 and sold his/her home for 460 ounces of gold and rented for eight years, he/she could now buy a home for 160 ounces of gold and have 300 ounces in hand. Read more here-http://www.oftwominds.com/blogsept09/housing-gold09-09.html
-Gold to go above $1,100 in 2010 Deutsche Bank. A weaker dollar and government deficit fuelled inflation should help push the yellow metal to a new high. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90106&sn;=Detail
-RCR reckons more gold price downside than upside short term. Australian research consultancy RCR takes a cautious fundamentals-based view on gold price prospects looking for a trading range of $950-$1,000 in next half year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90010&sn;=Detail
-The case for inflation and gold. Top investors in precious metals are waiting for a pullback to buy, but they say gold looks like a promising inflation hedge well into the future. China is hungry for it, too. Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-case-for-inflation-and-gold.aspx?page=all
-Gold Tells You U.S. Bubble Hasn’t Popped Yet. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid;=ajPCIYcGX8t4
-Schmidt’s Gold Thoughts. We can expect near full monetization of the Obama Regime’s massive deficits in the future. Ultimately, the Federal Reserve will be forced to “deliver cash by trucks” to the U.S. Treasury to finance that deficit. That will get us back on the glory road for $Gold to US$1,700+. Read more here-
http://news.goldseek.com/NedSchmidt/1254204180.php
-Gold: Hyperinflation: Millions, Billions, Trillions And Then? John Ing-Read more here-http://www.gold-eagle.com/editorials_08/ing092409pv.html
-Peter Grant: Gold is a bargain, even above $1,000. Read more here-http://www.gata.org/node/7848
-Indians own more gold than the citizens of any other country. They use the glittering metal as ornaments to flaunt family wealth, as a source of retirement savings and as insurance against calamities.
But lately, gold has become something else: collateral, and the basis of one of the country’s fastest-growing businesses, gold loans. While pawning the family jewels would be a sign of distress in the West, trading gold for cash increasingly is viewed in India as the equivalent of taking out a home equity loan to expand a business or simply to buy things.
“This is the rural credit card,” said V. P. Nandakumar, chairman of the Manappuram Group, one of the country’s biggest gold loan companies. “This is the only way really that someone gets an instant loan within three minutes.” Read more here-http://www.nytimes.com/2009/09/29/business/global/29gold.html?_r=2&ref;=business&pagewanted;=print
-New Central Bank Gold Agreement went live on Sunday. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=89833&sn;=Detail
-Bundesbank won’t sell gold in first year of new sales agreement. Read more here-http://www.gata.org/node/7828
-Fed chairman’s 1975 memo explains need for gold price manipulation. Read more here-http://www.gata.org/node/7839
-Paul asks Fed: Are you in the gold market? Read more here-http://www.gata.org/node/7841
-Numismaster’s Heller notes GATA’s disclosure about Fed. Read more here-http://www.gata.org/node/7842
-Zero Hedge: The CIA chimes in on gold control. Read more here-http://www.gata.org/node/7833
-The hero of ‘Zero,’ Dan Ivandjiiski. Read more here-http://www.gata.org/node/7843
-On CNBC: ‘When you own gold, you’re fighting every central bank.’ Read more here-http://www.gata.org/node/7835
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,500 the silver price would be $18.75
Gold to silver ratio at 70 to 1 with gold at $1,500 the silver price would be $21.43
Gold to silver ratio at 60 to 1 with gold at $1,500 the silver price would be $25.00
Gold to silver ratio at 50 to 1 with gold at $1,500 the silver price would be $30.00
Gold to silver ratio at 40 to 1 with gold at $1,500 the silver price would be $37.50
Gold to silver ratio at 30 to 1 with gold at $1,500 the silver price would be $50.00
Gold to silver ratio at 20 to 1 with gold at $1,500 the silver price would be $75.00
Gold to silver ratio at 15 to 1 with gold at $1,500 the silver price would be $100.00
-Kiyosaki: Silver is My No. 1 Investment. Robert Kiyosaki, author of “Rich Dad, Poor Dad,” recommends investing in real estate and commodities, but he tells Dan Mangru of Newsmax TV that silver is now his top investment. “If you’re afraid of inflation, which you should be, I would think silver is the No. 1 investment today.”
“To protect against inflation, do what the Chinese are doing,” he says. “The Chinese are buying commodities: copper, oil, gold, silver, land.” For those who are poor, Kiyosaki has this advice: “Change what you think. If you’re expecting the economy to come back, I think you’re in a dream land.”
Some people believe in the following myth, he says: “This idea that the U.S. is the greatest country on earth, and Obama is here to save you, and the government is going to take care of you. That’s called socialism.” “And I think you really better start changing your thinking, because they’re not going to save you. They’re going to save themselves.”
Investors must be self-reliant, Kiyosaki says. “I got financially educated when I was a kid. I don’t expect anybody to take care of me. I don’t turn any money over to a retirement account. I don’t trust mutual funds. I don’t trust banks. I trust myself.” The solution is to “get educated and get smart with my money,” he says. “We’ve been trained like Pavlovian dogs to turn our money over to Wall Street.”
To become rich, especially in the wake of financial crisis, “you’ll have to stop thinking the way you think and start thinking differently and start doing things differently.” He says that as long as we have a middle class, we’ll be an advanced nation. But, “the problem with the middle class is that they’re not moving from middle class to rich. The middle class is now moving from middle class to poor.” Read and watch video interview here-http://moneynews.newsmax.com/streettalk/silver_investment_kiyosak/2009/09/25/264718.html
-In July, state-run China Central Television (CCTV) began a campaign that pushes the purchase of silver bullion as investment opportunity. Analysts say silver has been undervalued in the last few years, and is a good investment for individual investors, according to CCTV.
“The investment threshold [for silver] is not high, and is more suitable for the general public,” said Want Chunli, GM of Beijing’s Caibai Shopping Mall, the first to offer silver as an investment opportunity. “Silver is much cheaper than gold.”
Silver’s investment potential is best measured by the silver-gold ratio, or the price of gold divided by the price of silver. Over the past five years, the ratio has held fairly steady, requiring 55 ounces of silver to buy an ounce of gold. Earlier this year, as gold increased at a faster rate than sliver, the ratio skyrocketed to 80 to 1. It has since corrected to around 60.
Money Morning’s Krauth says that when this relative price ratio does correct, it tends to overshoot. “I see it going to 50 at least,” Krauth said. “With gold at $1,000, that means silver could trade to $20 or even higher, which is another 20% from [the current price].”
Krauth sees China returning to an asset-backed currency and says ownership of silver could help the average citizen, even if its central bank is unable to diversify out of the U.S. dollar fast enough. The more Chinese citizens who own silver, “the stronger the country will be in the eventuality that the world establishes a new world reserve currency backed by (most likely) precious metal(s).”
China’s middle class is estimated at 300 million roughly equal to the entire U.S. population. And that consumer group in China is growing. As those incomes continue to rise, so, too, will the demand for silver. China’s use for silver goes beyond jewellery or as a safeguard against inflation. Thanks to the antibacterial properties of silver ions, the white metal is used for everything from socks to wash machines, to name a few. Read more here-http://www.moneymorning.com/2009/09/28/silver-upstages-gold/
-The Silver Shortage Will Come. I think Ted Butler spoke the truth in a recent speech he gave: “The supply/demand set up in silver, which has evolved over an incredibly long period of time, has been one continuous process promising to culminate in an explosion in price at some point.
Quite simply, we are rapidly approaching that defining moment when there just won’t be enough physical material to go around at anything but rapidly escalating prices. Those escalating prices will encourage and drive others, including industrial consumers, to enter what should become a buying frenzy.
Superimpose upon that the sudden destruction of a decades-old downward price manipulation and you have all the necessary ingredients for a price event that will be referred to forever.” Read more here-http://news.silverseek.com/SilverSeek/1254150488.php
-Perfect storm for silver brewing as antibiotics substitute Silver Institute. Silver may soon replace antibiotics as an alternative for healing, and is increasingly gaining ground in the burgeoning field of nanotechnology. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=89805&sn;=Detail
-One Unique Silver Fundamental. Roland Watson-Read more here-http://news.silverseek.com/SilverSeek/1254022821.php
-Sprott’s Embry warns investors to make sure ETFs backed by precious metals. Investors should confine their exposure to actual physical metal or only to paper products with regular audits that support precious metals backing.
“I’ll stick to a target of $1,500 in the next six months but I am comfortable with the notion of it trading at several multiples of the current price before the bull market runs its course.”
Embry forecasts that the gold-silver ratio, which is currently just under 60, to decline precipitously as the bull market in precious metals gathers steam.” Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=89796&sn;=Detail
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7831
-Jim Sinclair interviewed by King World News. Listen here-http://www.gata.org/node/7829
-GATA’s Murphy and Powell interviewed by King World News. Listen here-http://www.gata.org/node/7830
-Just look at this hoard of Anglo Saxon gold found in Staffordshire in England last week, weighing more than five kilograms along with 2.5 kilograms of silver. It is one of the greatest archeological finds of recent times, and was discovered in a field with a metal detector.
How it got there is a mystery. It is not burial gold but appears to be a private hoard of precious metals. It could have been stolen and hidden or just hidden, perhaps by royalty judging from the exquisite workmanship. For historians it is a clue to the past of a time for which almost all written records have vanished. But for monetarists surely the hoard also has huge significance.
Doubtless in Anglo-Saxon times there were many rich people. Where is their wealth today? Put your money into gold and silver and it seemingly lasts forever, and that is what has been so special about precious metals over the centuries. At today’s price this hoard would be worth around $250,000 for the gold and $1,500 for the silver. Spot the undervalued precious metal!
However, it does also highlight the security aspect of storing precious metals. Be careful if you bury your treasure that you note its location or your wealth might not be uncovered for 1,300 years still at least it will still be worth something. How much will stock in Microsoft be worth in 1,300 years or a dollar banknote? Peter Cooper
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: Massive Housing Overhang Will Swamp The Market. The latest Case-Shiller reading showed another sequential uptick in July, which is all fine and well, but watch out: There’s a huge flood of houses being held back from the market, either due to bank-ownership, or loan delinquency.
Check out the chart below, from Amherst Securities. It shows the number of delinquent mortgages that have yet to be liquidated a number that Amherst puts at a shocking 7 million (135% of the number of houses sold in a year right now). Eventually the houses attached to these loans have to hit the market. When they do, expect them to go at a firesale.
Read more here-http://www.businessinsider.com/chart-of-the-day-housing-overhang-2009-9
-Chart of the week: What, You Think The Savings Rate Can’t Go Higher? This chart should give chills to anyone hoping that Americans will stop saving and start spending again. For one thing, we’re way below the personal savings rate we saw in the early 70s, let alone the savings rate in the pre-Greenspan era.
Plus, as David Goldman points out, demographics isn’t on our side. With the recent wealth shock and the aging population, there are a lot of folks eager to hold on to every last dollar they’ve got. Read more here-http://www.businessinsider.com/chart-of-the-day-personal-saving-rate-2009-9
-Do we really want the people who created $40 trillion of unfunded liabilities in Social Security and Medicare in charge of our health care? Faceless bureaucrats, power-lusting politicians, and people spending other people’s money are a recipe for disaster. Edward Crane-Bio here-http://en.wikipedia.org/wiki/Ed_Crane
-”Fish see the bait, but not the hook; men see the profit, but not the peril.” Chinese Proverb
-The same government that requires a taxpaying citizen to document every statement on his tax return, decrees that questioning a welfare applicant demeans and humiliates him. Ronald Reagan
-Whenever there is some trouble in any area of the economy, the simplest solution to many people is ‘Let the government fix it.’ Yet every time the government uses its money or its power to favour this group or that the net result is such a web of supports, subsidies, interventions and controls, that it is almost impossible for a nation to find its way back into a dynamic system of really free enterprise. Lawrence Fertig-Bio here-http://en.wikipedia.org/wiki/Lawrence_Fertig
-”The most important thing for us is to find Osama bin Laden. It’s our number one priority and we will not rest until we find him.” Sept 13, 2001 President George W. Bush
-”I don’t know where he is. I have no idea and I really don’t care. It’s not that important. It’s not our priority.” Mar 13, 2002 President George W. Bush
-’The ultimate result of shielding men from the effects of folly,’ said the Victorian philosopher Herbert Spencer, ‘is to fill the world with fools’. Read more here-
-“Bernanke, Geithner and Summers didn’t see the crisis coming so why are they still there?” Bernanke is like “a pilot who didn’t see a hurricane.” Nassim Taleb, author of “The Black Swan” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ajnBClVe3IrM
-I invest for inflation. In 1971 President Nixon took the world off the gold standard, which means the world’s central banks can print as much money as they want. I was in Vietnam in 1972 and saw what happens when people do not trust paper money. Rather than try to live below my means and save money, I invest in gold, silver, and oil commodities that go up in price as the government prints more money.
When investing for inflation, I am not investing for cash flow. In this case, I am investing to protect my wealth from the predatory practices of the Federal Reserve Bank, the U.S. Treasury, and the ultra rich manipulating the world economy.
China does not trust the U.S. dollar. Today China is using U.S. dollars to buy commodities such as oil, copper, gold, and silver. The good news is silver is still inexpensive. In 2007 gold was approximately 50 times more expensive than silver. In 2009 the gap is 60 times which means silver is a bargain.
Silver is used in the electronics industry and is consumed daily; stock piles of silver are dwindling. On top of that, for the first time in modern history, there is more gold in the world than silver. In other words, silver is more valuable than gold. The good news is, at less than $20 an ounce, almost anyone can afford to start preparing for the worst and building their own house of silver. Robert Kiyosaki-Read more here-http://finance.yahoo.com/expert/article/richricher/192575
-Since those in control of the US have demonstrated their unwillingness to allow recessionary forces to do their necessary work of correcting the extreme imbalances within the economy, there are only two options left default and deflationary implosion ruin, or a comprehensive takeover of the country by its creditors, both of which options probably occurring after a period of runaway inflation as the Fed and government desperately try to stop the inevitable.
If the former occurs the shockwaves will reverberate around the world, like last year, and we can expect a collapse in commodity and stock markets. Until that happens it will be case of inflate and inflate, to forestall rising rates and liquidity problems, which will make gold and silver probably the best investments around, but you sure don’t want to be around once the music stops.
It is therefore to be hoped for the common good that the US authorities make the right decision and surrender to the mercy of their creditors before it’s too late. Either way the American Empire is finished. Clive Maund-Read more here-http://news.goldseek.com/CliveMaund/1253887200.php
-Money figures show there’s trouble ahead. Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn, gently or otherwise. Read more here-
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6234939/Money-figures-show-theres-trouble-ahead.html or http://www.gata.org/node/7832
-Japan tips ever deeper into deflation. Japan is sliding into the deepest deflation since the Second World War, forcing the new-broom Democrats to abandon their strong yen policy within weeks of taking office. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6244429/Japan-tips-ever-deeper-into-deflation.html
-Pacific Investment Management Co.’s Bill Gross says investors should expect total returns on equities of about 5 percent annually as consumers curb spending and increase savings.
“Returns mimic nominal” gross domestic product, Gross, manager of the world’s biggest bond fund, said in an interview yesterday with Bloomberg Radio.
“Nominal GDP is the growth rate of wealth on an annual basis. The new normal is 2 to 3 percent GDP and real growth of 1 to 2 percent.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aG7VszWk.pBA
-Pacific Investment Management Co. strategic adviser Richard Clarida said the U.S. savings rate may exceed 8 percent, hurting consumer spending and weighing on the economic recovery. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aHM.2Uhxnnr4
-IMF’s Strauss-Kahn Seeks Recovery First, Then Inflation Fight. Former U.S. Federal Reserve Chairman Alan Greenspan expressed concern over inflation, while Dominique Strauss-Kahn, the International Monetary Fund’s managing director, speaking to the Yalta European Conference in southern Ukraine, suggested first securing an economic recovery.
“Going out of the crisis will have consequences, we need to discuss an exit strategy,” said Strauss-Kahn during the video link. “But we need to secure the recovery before we address the problem” of inflation. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=acVqrXjLdOP4
-IMF Cuts Forecast for Global Losses to $3.4 Trillion. The tally, released in a semi-annual report today, was based on a new methodology after criticism of an April estimate of about $4 trillion. Banks’ losses on bad assets are projected to increase from July 2009 through next year by $470 billion in the euro area, $420 billion in the U.S. and $140 billion in the U.K., the report said. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aCHss4gvkku8
-The U.S. has lent, spent or guaranteed $11.6 trillion to bolster banks and fight the longest recession in 70 years, according to data compiled by Bloomberg. Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=ahys015DzWXc
-Atlanta’s Georgian Bank became the 95th bank failure of the year, according to the Federal Deposit Insurance Corp. on Friday. First Citizens Bank and Trust Company Inc. of Columbia, S.C., will assume all of the deposits of Georgian Bank, estimated at about $2 billion as of July 24.
Georgian Bank also had total assets of $2 billion, which First Citizens agreed to purchase. The cost of the failure to FDIC’s deposit-insurance fund is $892 million. Georgian Bank also marks the 19th bank failure in the state this year. Read more here-http://www.marketwatch.com/story/story/print?guid=A70453E1-9478-44D9-8050-A527434EEFBD
-US large-loan bank losses triple to $53 billion. U.S. regulators said total losses from large loans at banks and other financial institutions nearly tripled to $53 billion in 2009, due to a deteriorating economic environment and continued weak underwriting standards. Read more here-http://finance.yahoo.com/news/US-largeloan-bank-losses-apf-3121886908.html?x=0&.v=3
-FDIC Proposes Banks Prepay Fees Through 2012, Raise $45 Billion. The Federal Deposit Insurance Corp. proposed asking banks to prepay three years of premiums to replenish reserves dented by a rash of bank failures that the agency said will cost $100 billion through 2013. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aS7aI40OeGLI
-The Federal Deposit Insurance Corp.’s plan to rebuild its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=auEG9sH4Cs2g
-Social Security strained by early retirements. Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that’s happened since the 1980s.
The deficits $10 billion in 2010 and $9 billion in 2011 won’t affect payments to retirees because Social Security has accumulated surpluses from previous years totalling $2.5 trillion. But they will add to the overall federal deficit.
Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn’t expect the increase to be so large.
What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security. “A lot of people who in better times would have continued working are opting to retire,” said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. “If they were younger, we would call them unemployed.”
Job losses are forcing more retirements even though an increasing number of older people want to keep working. Many can’t afford to retire, especially after the financial collapse demolished their nest eggs. Read more here-http://apnews.myway.com/article/20090927/D9AVHRDG0.html
-US Faces Retro 70s Inflation: Jim Rogers. The US faces high inflation because of the weak dollar and the Federal Reserve’s policy of printing money to counter the effects of the crisis, legendary investor Jim Rogers told CNBC Thursday.
Price rises in the US are already steeper than the inflation rate reported by the government, Rogers added. “There’s no question the US is vulnerable to hyperinflation down the road or certainly the inflation we saw in the 1970s, I would expect that to come back in the foreseeable future, certainly in the next few years,” he said.
“The true inflation rate in America? It’s certainly at least 6 or 7 percent, the US government lies about it, as you know, everybody who shops knows that prices are up, everybody except the US government, and I wish we knew where they shopped so we can shop there too and get good prices.”
Rogers repeated his view that the Fed’s quantitative easing program is “debasing the currency” and said he was “extremely worried” about the fate of the dollar over the long term. Read more here-http://www.cnbc.com/id/33114243 Watch video here-http://www.cnbc.com/id/15840232/?video=1281408467&play;=1&#
-U.S. Consumer Confidence Unexpectedly Fell to 53.1 in September. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=arJNVLWMwak0
-Spain tips into depression. Spain is sliding into a full-blown economic depression with unemployment approaching levels not seen since the Second Republic of the 1930s and little chance of recovery until well into the next decade, according to a clutch of reports over recent days. Read more here-http://www.telegraph.co.uk/finance/economics/6228390/Spain-tips-into-depression.html
-U.S. Northeast May Have Coldest Winter in a Decade. The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a3xIDCXcK5kc
-Swine Flu May Cause $20 Billion Damage to Businesses, U.S. Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a7zYwBPKGkpA
-Values of Collector Cars Soar. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=anPL3PNpi94Y
-Mercedes, Ferrari Lots Top at $4 Million Auction. Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=aTOGpc6FqebA
-How is the economy doing? Look in your underwear drawer. It looks like 2009 was a bad year for men’s underwear. Mintel, a consumer research firm, says that sales of men’s skivvies dropped 2.3 percent from 2008. Meanwhile, NPD Group, another firm, argues that the decline was more on the order of 12 percent. Either way, it’s a fair bet that many underwear drawers are looking a bit ragged. Read more here-http://www.dailyfinance.com/2009/09/29/how-is-the-economy-doing-look-in-your-underwear-drawer/
-The man in charge of recovering assets from Bernard Madoff says there is about $18 billion still out there that he hopes to recover for victims of the scam. But it won’t be easy. Morley Safer reports. Read and watch more here-http://www.cbsnews.com/video/watch/?id=5345013n&tag;=contentMain;cbsCarousel
-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
-Diamonds aren’t forever, the pipes are running dry. According to Rio and BHP Billiton analysis, most existing mine resources for rough stones will be gone within 15 years. This is because new diamond discoveries are becoming increasingly rare. According to Rio, annual discoveries of kimberlite ”pipes” kimberlite is a host rock for diamonds have fallen (on a five-year moving average basis) to little more than 100.
And history shows that only one in 10 kimberlite pipes contain diamonds and only one in 100 of those are economic to mine. The lack of new discoveries since the mid-1980s means the world’s mine reserves of rough diamonds have fallen from 80 years’ supply to the 15 years that Rio now forecasts. Read more here-
http://www.smh.com.au/business/diamonds-arent-forever-the-pipes-are-running-dry-20090923-g2sp.html
-Petra Unearths Diamond the Size of a Chicken Egg. Petra Diamonds Ltd., a miner of the stones in Africa, said it unearthed a gem the size of a chicken egg at the Cullinan mine that may be among the 20 largest “high quality” rough diamonds discovered. “Initial indications are that it is of exceptional color and clarity, which suggest extraordinary potential for its polished yield,” Chief Executive Officer Johan Dippenaar said in a statement today.
The 507.6-carat stone, weighing more than 100 grams (3.53 ounces), may sell for more than $20 million, Brock Salier, an analyst at Ambrian Partners Ltd. in London, wrote in a note. “That would probably be a guide,” Dippenaar said, when asked about the estimate on a conference call. “We certainly hope it’s not that little.”
The world’s biggest certified diamond is the 3,106-carat Cullinan, found at the mine near Pretoria, South Africa in 1905. It was cut to form the Great Star of Africa and the Lesser Star of Africa, set in the Crown Jewels of Britain. Petra sold a 7.03-carat blue diamond, cut from a 26.58-carat rough stone found at the mine, for $9.48 million in May. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=atAnHWtM_vL0
-Less Diamonds From Australia in 2009-10. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=32983
-Sans Setting, Smithsonian Diamond Bares Its Beauty. Read and watch more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/09/23/AR2009092302062.html
-Suite101.com reports that people are looking to surpass traditional diamond engagement rings, and are now going for colored diamonds. Blue diamond engagement rings are currently a very popular choice. According to the website, blue diamond engagement rings are becoming a new trend.
However, natural colored diamond engagement rings are a rare find and are thus pretty costly. It has been said that one in every 10,000 diamonds produces color, although modern technology has ways to enhance the natural process of producing colored diamonds.
Blue diamond engagement rings are available for a wide range of prices. The choices are broad, making it easy to find a unique blue colored diamond according to the lady’s preference.
According to Suite101.com, people are getting bored with traditional engagement rings and are searching for something that will make them stand out. Blue diamond rings achieve just that sense of uniqueness. Read more here-http://www.israelidiamond.co.il/english/News.aspx?boneId=918&objid;=5886
-Skinner, Inc., one of the nation’s leading auction houses, today announced the stunning success of its Tuesday, September 15th Fine Jewelry sale. Rare and impressive colored diamonds and gemstones from two collections one from the famed ballroom dancer, Verna E. Winegar and other from an All My Children’s actress were hotly contested by a number of bidders.
The sale’s overall theme was “big and bold” with one-of-a-kind pieces fetching considerable prices. With buyer’s premium, the auction took in $2,148,915.00, nearly a half million dollars over the pre-sale estimate high of $1.3M.
The top seller of the day was a fancy twin-stone diamond ring, set with an intense blue pear shaped diamond weighing 1.26 cts., and a brownish pink diamond weighing 1.20 cts. (lot 308) estimated at $80,000 to $120,000, but selling for an astounding $225,150. Other top sellers included a vivid yellow diamond solitaire weighing 3.65 cts. (lot 390) estimated at $15,000 to $25,000, but going for $68,730.00. Read more here-http://www.prnewswire.com/news-releases/skinner-fine-jewelry-auction-nets-over-2m-61158142.html
U.S. DEBT CRISIS MAY CAUSE “FALL OF ROME” SCENARIO
-U.S. budget deficits will continue to pile up in the next decade, eventually reaching an unsustainable level that may result in an economic collapse, according to Richard Duncan, author of “The Dollar Crisis.”
The U.S. has little chance of resolving its deteriorating financial position because the manufacturing industry continues to shrink, leaving the nation with few goods to export, said Duncan, now at Singapore-based Blackhorse Asset Management.
In “The Dollar Crisis,” first published in 2003, Duncan argued that persistent current account deficits by the U.S. were creating an unsustainable boom in global credit that was destined to break down, resulting in a worldwide recession.
“The bad news is at the end of a 10-year period we’re still not going to have fixed the problem,” Duncan said in an interview in Hong Kong yesterday. “Eventually it will lead to high rates of inflation well down the line and really destabilize things to the point where there may be irreparable damage. A kind of ‘Fall of Rome’ scenario.”
The federal budget deficit will total $1.6 trillion this year, while combined shortfalls are forecast to total $9.05 trillion in the next 10 years, according to projections from the nonpartisan Congressional Budget Office.
The U.S. has run a current account deficit every year since 1982 except one, with a peak of $788 billion in 2006. Foreign purchases of U.S. debt has propped up the dollar and allowed a credit-fuelled spending boom by the nation’s consumers, according to Duncan. Read more here-http://bloomberg.com/apps/news?pid=20601083&sid;=aJ6jnKWHrQgI
U.S. DOLLAR-EURO-INTEREST RATES
-World Bank says don’t take dollar’s place for granted. World Bank President Robert Zoellick said the United States should not take the dollar’s status as the world’s key reserve currency for granted because other options are emerging.
In excerpts released on Sunday from a speech that he is to deliver on Monday, Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources. “The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” he said. “Looking forward, there will increasingly be other options.” Read more here-http://www.reuters.com/article/businessNews/idUSTRE58Q1YU20090927
-Dollar Share of Reserves Drops as Euro Allocation Hits Record. The dollar’s share of global currency reserves fell in the second quarter to the lowest level in a decade as the holdings of euros rose to a record, according to the International Monetary Fund.
The U.S. currency’s portion dropped to 62.8 percent in the period ended June 30, from 65 percent in the prior quarter and 62.9 percent a year earlier. The euro’s share rose to a record 27.5 percent from 25.9 percent while the pound and yen gained. The increase in the euro’s shares may encourage more criticism of the dollar’s role as the world’s main reserve currency. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=adlcCx_aGFBU
-Federal Reserve General Counsel Scott Alvarez said audits of monetary policy by the U.S. Congress could lead to higher interest rates and reduced confidence in central bank policy.
Congressional audits of monetary policy could “cause the markets and the public to lose confidence in the independence of the judgments of the Federal Reserve,” Alvarez told the House Financial Services Committee today in response to a question from Representative Dennis Moore, a Kansas Democrat. Alvarez said in his prepared remarks the audits would probably “chill” the central bank’s discussions on interest rates. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=adDANopNzewM
-Kohn Says Low Fed Rates Likely Warranted for ‘Extended Period.’ Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aIgFCM8BbP24
U.S. UNEMPLOYMENT
-Bernanke Says Jobless Rate May Be Above 9% in 2010. Federal Reserve Chairman Ben S. Bernanke said U.S. economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aGF8BaePGjJg
-ADP Says U.S. Companies Cut 254,000 Jobs This Month. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ahgZLX4E7w8M
-U.S. Initial Jobless Claims Rose 17,000 to 551,000. The number of Americans filing first-time claims for jobless benefits rose more than forecast last week, a sign companies are still cutting workers as the economy pulls out of the recession.
Applications rose by 17,000 to 551,000 in the week ended Sept. 26, from a revised 534,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance fell in the prior week to 6.09 million, the least since April. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aK.lfBMa.8hk
-The unemployment rate for young Americans has exploded to 52.2 percent a post-World War II high, according to the Labor Dept. meaning millions of Americans are staring at the likelihood that their lifetime earning potential will be diminished and, combined with the predicted slow economic recovery, their transition into productive members of society could be put on hold for an extended period of time. Read more here-http://www.nypost.com/p/news/business/the_dead_end_kids_AnwaWNOGqsXMuIlGONNX1K
-Nearly half the nation’s 25 biggest retail chains expect to hire fewer holiday workers this season than they did last year, another sign that retailers aren’t counting on recession-strained shoppers to relax the tight grip on their pocketbooks this year.
About 40% of stores surveyed across a broad swath of retailing, including consumer-electronic chain Best Buy Inc., teen-retailer American Eagle Outfitters Inc., and luxury-goods seller Saks Inc., told the Hay Group, a human resources consulting firm, that they expect to hire between 5% and 25% fewer temporary workers this year than last, when the recession forced many retailers to trim staff in response to falling sales.
That’s a grimmer outlook than the Hay survey found a year ago, when 29% of retailers said they would be slashing their holiday workforce. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1254034800.php or http://news.goldseek.com/InternationalForecaster/1254334139.php
-U.S. Job Seekers Exceed Openings by Record Ratio. Despite signs that the economy has resumed growing, unemployed Americans now confront a job market that is bleaker than ever in the current recession, and employment prospects are still getting worse. Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000.
According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed. And even though the pace of layoffs is slowing, many companies remain anxious about growth prospects in the months ahead, making them reluctant to add to their payrolls. Read more here-http://www.nytimes.com/2009/09/27/business/economy/27jobs.html
DAVID ROSENBERG COMMENTARY
-U.S. consumer confidence takes a tumble in September. Consumer confidence not only surprised to the downside in September but the Conference Board index actually fell to 53.1 from 54.5 with both the ‘present situation’ and the ‘expectations’ component failing to build on the August rebound. Before we go any further on the details, let’s recall the following:
• Historically, by the time the S&P; 500 rebounds 60% from the trough, the confidence index is sitting at 92.0;
• The month recession ends, the index is, on both an average and median basis, sitting at 72.0;
• During an economic expansion, the consumer confidence averages 102.0; in a recession, it averages 72.4.
Just to put a 53.0 reading into proper perspective. It’s still recessionary. Some pundits claim that the market is pricing in mid-cycle earnings, which means we can look three years out. Well, all we can say is that in the third year of the recovery, consumer confidence is typically sitting at 88.0.
The only categories who actually saw their confidence level rise in September were the ones in the lowest income strata less than $25,000 (their confidence rose two points). After all, they’re the only ones really benefiting from all the government intervention into the economy and the markets. David Rosenberg-Chief Economist & Strategist Gluskin/Sheff
-FED surveys suggest caution. The Chicago Fed’s national activity index, which is arguably the most reliable economic barometer around given its breadth of subcomponents, posted a -0.90 print in August and the key three-month average came in at -1.09, which, to be sure, is much better than the -1.61 figure in July, the -2.15 reading in June and the horrendous -3.63 posting at the turn of the year.
However, the Chicago Fed warns that anything at -0.70 or more negative than that still signals an economy that is in contraction mode, though it is certainly not uncommon at all to be seeing a number like we saw in August occur after GDP has had its inflection point. Our contention is that the equity market priced out the recession six-months ago and is now basically discounting three years worth of economic and profit growth.
Indeed, on some valuation metrics, the S&P; 500 is now trading at peak, not merely mid-cycle price-book, price-earnings and price-dividend ratios. Remember, the reason why the tortoise won the race in the end was because the hare tired himself out. David Rosenberg-Chief Economist & Strategist Gluskin/Sheff
-ADP sags again. The economists like to point out that employment lags the cycle. However, in a credit contraction, it is much more of a leading indicator than many believe, and the latest ADP data is another signpost of a very soft U.S. labour market. The ADP employment tally for the U.S. showed a 254k loss in September versus consensus expectations of a 200k decline.
Of course, the mantra of many is that the pace of layoffs is subsiding this was the smallest decline since July 2008 and that this is actually encouraging news. How weak is that? It’s like saying that your golf score is going up but at a slower rate than it was last year. You can’t pay the bills and feed the kids on “less negative” employment data and we know of no sustained or solid recovery that has ever occurred on productivity growth alone.
Note that the small business sector, which has no access to the capital markets as large companies do and are vulnerable to the relentless cutback in bank lending, is now at the forefront of the job declines down 100k in September and down 2.2mln year-to-date. For the first time ever, we have experienced a 60% surge in the equity market from a low over a six-month span in which employment slumped 2.5 million.
Let’s talk about what is normal. What is normal is that after a low, and every low in hindsight is an oversold low, we are up 60% three years into the economic expansion and have already created over two million jobs. So let’s get a grip on this flashy but very dangerous rally liquidity can only take you so far without the fundamentals.
-More signs of a soft employment backdrop. In addition to the Manpower hiring intentions hitting a new record low, we saw from the Conference Board survey that a mere 3.4% of respondents saw jobs as being “plentiful”, which was the lowest reading in 26 years.
Not only that, but the just-released Business Roundtable showed that only 13% of CEOs plan to hire in the next six months (even though 51% see a pick-up in sales activity they obviously don’t expect it to be sustained). At the same time, a separate CFO poll contained in the FT revealed that on a scale of 1 to 100, the average grade on the U.S. economic was 54.2.
Okay that’s a passing grade, but hardly worth the peak multiples we are currently seeing in the equity market. Too much air, too many fumes, and we find it amusing that as panic-stricken portfolio managers add to their positions, corporate insiders are trimming theirs. David Rosenberg-Chief Economist & Strategist Gluskin/Sheff
-The economy looks sick outside of government stimulus. Now that Cash-for-Clunkers is over, auto sales are collapsing again. Edmunds.com says the run-rate so far in September is down to 8.8 million units at an annual rate, but we see now that JD Power’s tracking is down to 590,000, which would be little better than a 7.0 million rate or half the pace of August and 24% below the already-depressed levels of a year ago.
The November 30th expiry date for the first-time homebuyer subsidy, and this group has been responsible for one-third of housing activity, may also have something to do with the below-consensus sales figures for August that came out last week. But don’t worry Uncle Sam is coming back to the rescue. Congress is moving to extend emergency jobless benefits to over one million workers who are about to see their benefits expire by year-end.
The House already approved on Tuesday a 15-week extension in states with unemployment rates of 8.5% or higher (oh that only includes 27 states right now, by the way) and now Congress is looking at extending and expanding the homeownership tax credit. The short-term-ism in fiscal policymaking in terms of still trying to promote consumption and credit remains is fully intact and is actually quite sad because the U.S. boomer population is seriously short of savings needed to fund a boom in the retirement community over the next two decades.
A Harvard University report shows that 60% of Americans do not have enough savings to fund their retirement. Why the government wants to resist the natural trend towards higher savings rates is well, it’s unnatural. When your homeownership rate is over 67% and your consumption-to-GDP ratio is over 70%, you’re no exactly suffering from under-spending.
David Rosenberg-Chief Economist & Strategist Gluskin/Sheff
CLUNKERS ENDS WITH A DIVE
-General Motors Co., Toyota Motor Corp. and Ford Motor Co. said sales fell in September as waning demand after the “cash for clunkers” rebates cut industry deliveries to the second-slowest rate this year.
GM deliveries tumbled 45 percent, while Toyota dropped 13 percent, both worse than analysts had estimated. Ford slid 5.1 percent, and Chrysler Group LLC, Honda Motor Co. and Nissan Motor Co. also posted declines.
“We knew sales would slow down significantly after the cash for clunkers surge,” said Stephen Spivey, senior auto analyst at Frost & Sullivan in San Antonio. “October will tell you what kind of rebound comes off that dip.”
U.S. auto sales plunged 23 percent, and the seasonally adjusted annual sales rate fell to 9.22 million units, said industry researcher Autodata Corp. of Woodcliff Lake, New Jersey. July and August were the only months in 2009 when the sales pace topped 10 million, a level that Ford and researcher J.D. Power & Associates expect the U.S. to surpass for the year.
The industry is coming off an August surge that snapped a streak of monthly sales declines dating to 2007. Buyers responded to the U.S. government’s offer of as much as $4,500 to trade in older, less fuel-efficient light vehicles from July 27 through Aug. 24, with almost 700,000 purchases. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aZCyQESao0lg
-Chart of the day: The Amazing Cash-For-Clunkers Cliff Dive. This is what an economic strategy of pulling it forward looks like. In August, car buyers were going nuts with a $4,500 incentive to trade clunkers in for brand new cars.
Many warned, of course, that these sales would simply end up decreasing future sales, getting us nowhere. Well, September’s here, and… yeah. A monthly sales rate of over 14 million units annualized quickly fell to just above 9 million. Read more here-http://www.businessinsider.com/chart-of-the-day-us-auto-sales-2009-10
REAL ESTATE-MORTGAGES-FORECLOSURES-RENTS
-Home Prices in 20 U.S. Cities Rose by Most Since 2005. Home values in 20 U.S. cities climbed in July by the most in almost four years, helping stem the record plunge in household wealth that’s depressed spending. The S&P;/Case-Shiller home-price index rose 1.2 percent in July from the prior month, the biggest gain since October 2005, the group said today in New York. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=a1rwpx5RvEFg
-Pending Sales of Existing Homes in U.S. Rose 6.4% in August. The number of contracts to buy previously owned homes in the U.S. increased more than forecast in August, reinforcing signs of a rebound in housing, industry figures showed today.
The index of signed purchase agreements, or pending home sales, rose 6.4 percent after a 3.2 percent gain in July, the National Association of Realtors announced in Washington. The gain was the seventh in a row. Compared with a year earlier, pending sales rose 12.4 percent. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aFH0zI40heAc
-Last week, it was reported that the median price of a single-family home dropped 2.3% in August. The stock market sold off on the news. For some perspective into the all-important US real estate market, today’s chart illustrates the US median price of a single-family home over the past 39 years.
Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased. That brings us to today’s chart which illustrates how housing prices are currently 30% off their 2005 peak. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has seen that home appreciate by a mere 4%.
Not an impressive performance considering that three decades have passed. Over the past two months, single-family home prices have resumed their decline and remain (until proven otherwise) in an accelerated downtrend. Read more here-http://www.chartoftheday.com/20090925.htm?T
-U.K. house prices increased the most in two years during September as confidence in the property market improved, Hometrack Ltd. said. The average cost of a home in England and Wales rose 0.2 percent from August to 156,100 pounds ($248,000), the London- based property-research company said in an e-mailed statement today. The increase, the biggest since June 2007, left house prices 5.6 percent lower than a year earlier, the smallest annual decline in a year. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aj_pV6hwFdu8
-Fannie and Freddie Delinquencies Move Into Uncharted Territory. Home prices have posted six straight months of increases, but few housing analysts are prepared to give a clean bill of health to the housing patient. (There are exceptions.) One big reason: Borrowers continue to miss loan payments.
Rising delinquency rates point to an eventual increase in homes that will go into and sell out of foreclosure. Finding a bottom for the housing market gets a bit easier once the market can adjust and absorb that distressed inventory. Fannie Mae and Freddie Mac, the two state-backed mortgage-finance giants, both showed that serious mortgage delinquencies (those that are three months or more late) continue to reach into uncharted territory.
The serious delinquency rate on single-family home loans backed or held by Fannie Mae crossed 4% in July for the first time ever, to 4.17%. One year ago, the rate was at 1.45%. Freddie Mac reported that its serious delinquency rate reached 3.13% in August, up from 2.95% last month and 1.11% one year ago.
Fannie’s worst performing loans are “Alt-A” loans, a step between prime and subprime, that were made in 2006 and 2007. Delinquencies on the Alt-A book of business reached 11.9% at the end of June, compared to 3.94% for all loans. Serious delinquencies on Alt-A loans originated in 2006 and 2007 hovered around 17%.
Many of those Alt-A loans, which didn’t require income documentation and became known as “liar’s loans,” had interest-only features that allowed borrowers to defer principal payments for an initial period or option adjustable-rate mortgages, which allow borrowers to make minimal payments at first only to face sharply higher ones later. Look for more problems as more borrowers begin to see their loans recast, requiring larger monthly payments. Read more here-http://blogs.wsj.com/developments/2009/09/30/fannie-and-freddie-delinquencies-move-into-uncharted-territory/
-Fannie Mae Mortgage Defaults Climb to Record in July. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aLrsqYzA6oX4
-The Mortgage Machine Backfires. With the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers.
The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom. Now, however, this clever setup is coming under fire. Legal experts say the fact that the most recent assault comes out of Kansas, a state not known for radical jurists, makes the ruling even more meaningful. Read more here-http://www.nytimes.com/2009/09/27/business/27gret.html
-Walking Away From Affordable Mortgage May Become Winning Gambit. Scott Conroy pays the mortgage every month on his one-bedroom condominium in San Diego, even though it’s worth 33 percent less than what he owes and it may take more than a decade to break even.
Homeowners like Conroy who can afford their monthly payments are weighing whether to sell and pay the difference, stick it out until housing prices recover, or walk away. In the U.S., 26 percent of borrowers owe more than their home is worth, said Karen Weaver, global head of securitization research for New York-based Deutsche Bank Securities. In parts of California, Florida and Nevada, it’s as high as 75 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a_yVFTDSiHhY
-Recession Rising Like Phoenix With Area Delinquencies Surging. Drive up to the Peaks Corporate Park in north Scottsdale, Arizona, and the only person you’ll encounter at the luxury office complex is a security guard.
The development was planned to offer executive suites with views of the McDowell mountains, neighbors such as General Electric Co. and a location just minutes away from Jack Nicklaus’s Desert Mountain golf courses. Plans to lure tenants haven’t materialized and today the complex in this city next to Phoenix is empty, the entrance blocked by a traffic barricade.
Delinquencies in the Phoenix area on loans backed by office, industrial, retail and apartment properties have risen more than five-fold since March, according to data compiled by Bloomberg. The Phoenix region has the second-worst U.S. delinquency rate, behind Detroit’s 10 percent. In Phoenix, the economic recovery looks a lot like a recession. Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=ak__6D.HTBQM
-San Francisco’s Prime Office Rents Fall 37%, Most Since 2001. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=afZUmP1qFy48
© 2011, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – October 06, 2009
Posted by Worldwide Precious Metals on Tuesday, October 6, 2009
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