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The Goldbugg Report – November 24, 2009
November 24, 2009
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Worldwide Precious Metals
GOLD
-Super-rich seen buying gold, selling hedge funds. The investment preferences of the world’s wealthiest families have shifted significantly in favour of gold and other commodities and away from hedge funds in the wake of the financial crisis, according to a survey of family offices and advisers of the super-rich.
Two-thirds of the 100 respondents to a survey by the Family Office Channel, a new website, said that super-rich families are now more likely to invest in gold and other commodities. They are also more interested in bond investments and in holding higher amounts of cash as part of an “instinctive retreat to ultra-safe asset classes.”
By contrast, two-thirds of respondents said the wealthiest families are less likely to invest in hedge funds and structured products investments offering capital protection with one in three reporting “greatly reduced” interest in these holdings.
Private equity and commercial property are also much less popular asset classes, while attitudes to residential property investment remain largely unchanged. Read more here-
-Hinde’s Hedge Fund Advances 44% After Dumping Equities for Gold. Hinde Capital Ltd.’s hedge fund gained 44 percent this year after selling its holdings in the biggest mining companies to buy gold.
The Hinde Gold Fund made the switch in October 2008, having previously held equal weightings in equities and gold, according to Ben Davies, co-founder of the fund. He declined to say which stocks the fund had sold.
Gold is heading for a ninth annual gain, the best run since at least 1948. The metal rose 29 percent this year, and traded at a record yesterday, as a weakening dollar spurred investors to seek a store of value. Some also bought gold to guard against inflation. U.S. consumer prices will expand this quarter after three contractions, a Bloomberg survey of 63 economists showed.
“Gold is as undervalued as in 2001 and 2002,” Davies said by phone from London. “We’re in an early stage of inflation.” The switch from equities to bullion limited the fund’s loss to 18 percent last year, Davies said. Gold will comprise at least 75 percent of the fund this year, with holdings in smaller miners accounting for a further 15 percent, he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a6S6FWbcFMZM
-Gold Investors Should Switch From Equities To Bullion Barings. Read more here-http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=6545c72b-7ea7-44d9-96eb-a0cba4c7b48e
-Is $6,300 fair value for gold? The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs.
Dylan Grice from Société Générale says it smells much the same today. Read more here-http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002059/is-6300-fair-value-for-gold/
-Jim Rickards: If gold is money again, it goes to between $4,000 and $11,000. Jim Rickards, director of market intelligence for McLean, Virginia-based consulting firm Omnis, was allowed onto CNBC again today to make gold-friendly comments. You may recall his blunt statement on CNBC back in September: “When you own gold, you’re fighting every central bank in the world”
Today Rickards remarked that the United States and China are devaluing their currencies against each other in a game of chicken, that gold should easily reach $2,000 per ounce next year just as a matter of supply and demand, and that if gold should start being considered money again, it would have to rise to between $4,000 and $11,000 to support the big increase in the world’s money supply. Read and watch more here-http://www.gata.org/node/8051
-Gold at $5,000 an ounce? Don’t disgard it. Gold remains in focus and its price can still explode higher, writes Martin Hutchinson. When money is easy and demand moves much faster than supply, prices can explode. In 18 months from July 1978, gold went from $185 per ounce to $850. That’s $2,400 in today’s dollars. And interest rates then were much higher than now. A similar price rise from here would bring gold to more than $5,000 per ounce. Read more here-http://www.telegraph.co.uk/finance/breakingviewscom/6587195/Gold-at-5000-an-ounce-Dont-disgard-it.html
-Gold Could Hit $1,400 This Year: CEO. The gold rally is far from over and the price of the precious metal could hit $1,400 per troy ounce by the end of the year and keep rising from there, James Turk, chairman and founder of GoldMoney, told CNBC.
“In this current run I think you’re going to see 1,200 to 1,400 (dollars per troy ounce) by the end of this year, and next year I think it’s going to continue,” Turk said. Investors are moving out of paper gold and into physical gold due to increased risk aversion and that’s what’s been driving the price higher over recent months, Turk said.
“If we look back to 1983 when the Dow broke out above a thousand over the next few years the Dow Jones Industrials tripled in price. I think the same thing is possible for gold,” Turk said. Gold has been one of the best performing asset classes this decade and is only in the second stage of its bull market, he said. “We have a long way to go before we get the speculative parabolic stage,” he added. Watch video here-http://www.cnbc.com/id/34010551?__source=RSS*tag*∥=RSS
-Housing savant Paulson now looks to gold. Paulson & Co. to buy shares of gold-related investments in 2010. Paulson to invest $250 million. Billionaire John Paulson, who earned his hedge fund billions when he bet against the housing bubble, is waging a new noteworthy bet. Paulson is investing as much as $250 million in a new gold fund next year. Read more here-
http://money.cnn.com/2009/11/18/news/companies/John_Paulson_gold_fund/index.htm
-Gold to Outperform U.S. Stocks on Stimulus, Marc Faber Says. Gold, which climbed to a record today, will outperform U.S. stocks as investors turn to the bullion on further government stimulus spending, said Marc Faber, publisher of the Gloom, Boom & Doom report.
The support level for the commodity will now be at $1,000, which was the precious metal’s resistance level previously, Faber said in a Bloomberg Television interview in Singapore today.
“What will continue to happen is that the S&P; 500 and the Dow Jones will go down relative to gold,” Faber said. “I think gold will go up more” from its support level.
The outlook for gold sparked a debate between economist Nouriel Roubini and Jim Rogers earlier this month. Rogers, the investor who predicted the start of the commodities rally in 1999, said Roubini is wrong about the threat of bubbles in gold and emerging-market stocks. Roubini, who predicted the global economic crisis, said a forecast by the investor that gold will double to at least $2,000 an ounce is “utter nonsense.”
“Will it go $2,000, $200,000 or $2 trillion? I don’t know,” Faber said. “But if you have money printing in the world, then the price will over time rise. It will go up more for things that you just can’t increase the supply, and the supply of precious metals is very limited.”
Gold is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect themselves from potential currency debasement and inflation. Policy makers worldwide have set interest rates near zero and spent $2 trillion to pull the world economy out of the worst recession since World War II.
“With the crisis, people are realizing gold is a good asset to have,” Pierre Gay, chief executive officer at Newedge Financial Asia-Pacific, said in a Bloomberg Television interview today. “For me, the potential for gold is pretty high.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aSoEpFEjNz3o
-Faber Says `Sky Will Be The Limit’ for Rising Gold Price. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T;=Faber%20Says%20%60Sky%20Will%20Be%20The%20Limit%27%20for%20Rising%20Gold%20Price&clipSRC;=mms://media2.bloomberg.com/cache/vuZkPHEkdyfM.asf
-Jim Rogers: There Is No Gold Bubble! Read more here-http://www.businessinsider.com/jim-rogers-there-is-no-gold-bubble-2009-11
-Jim Rogers: Buy Gold Not Gold Stocks. Read more here-http://www.thestreet.com/story/10627203/1/jim-rogers-buy-gold-not-gold-stocks.html?puc=_tscrss
-U.K. Royal Mint Quadruples Production of Gold Coins. The U.K.’s Royal Mint, established in the 13th century, more than quadrupled production of gold coins in the third quarter after demand for the metal increased as investors sought to hedge against a weakening dollar.
Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than tripled to 100,391.3 ounces, the data show.
Gold is set for a ninth annual gain as countries have cut interest rates to near zero percent and spent $2 trillion to pull the global economy out of the worst recession since World War II. The metal reached a record in London yesterday and has gained about 29 percent this year, while the dollar has dropped 7.3 percent against a basket of six currencies.
“There’s still a total lack of confidence in the financial system,” David Russell, a director at Dublin-based brokerage and bullion dealer GoldCore Ltd., said in an interview. “Investors are seeing the benefits of diversifying into gold. Smaller investors are clued into the fact that inflation possibilities are a worry for the future.”
Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=ajSyUvek1EtE
-U.S. Mint resumes selling certain gold coins amid strong demand. Read more here-http://www.gata.org/node/8043
-The lifting of Vietnam’s ban on gold imports could have some remarkable effects on the market. Shifting sands in the gold investment market means that European countries are now in the vanguard when it comes to investment bar purchases; with local gold prices doubling since April 2006, will Vietnam now come back to the fore? Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=92778&sn;=Detail
-Buy Gold as Insurance. Frank Holmes, CEO of U.S. Global Investors, says investors should have 10% of their portfolio in gold for insurance purposes. He also reveals what other precious metals he’s buying. Watch video here-http://www.thestreet.com/video/10625847/buy-gold-as-insurance.html?puc=_tscrss&s;=1#49993600001
-Chartists sense golden opportunity for bullion. With record-high gold moving further into uncharted territory, analysts who study past chart patterns to predict future behavior are getting acclimatized and see any correction as an opportunity to lengthen exposure.
Even as chart signals show signs of strain they say the market’s long-term uptrend is intact, in line with the dollar’s downward trajectory, with prices targeting $1,200 an ounce by the end of 2009 and an eventual target of $1,500 by mid-2010. Read more here-http://www.reuters.com/article/ousivMolt/idUSTRE5AH2S520091118
-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1258318980.php
-Ultimate store of value is gold. Read more here-http://www.321gold.com/editorials/saxena/saxena111309.html
-South African gold on final deathwatch as top grade scientist finds residual gold is more than 90% less than claimed. Research shows that production rates should fall permanently below 100 tonnes a year within the coming decade. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=93062&sn;=Detail
-Peak Gold: Yearly Gold Production Is Now On A Permanent Downwards Slope. Read more here-http://www.businessinsider.com/understanding-the-dynamics-of-peak-gold-production-2009-11
-Gene Arensberg: Big gold and silver shorts starting to retreat. Read more here-http://www.gata.org/node/8041
-BlackRock says central banks will be net buyers of gold. Read more here-http://www.gata.org/node/8030
-Russia’s state repository Gokhran will sell 30 tonnes of gold to the central bank in 2009 instead of offering it to the market, Russia’s finance minister said on Wednesday, adding that the operation will not be repeated in 2010.
Alexei Kudrin also told reporters that Gokhran will use the funds raised from the operation to buy 31 billion roubles ($1.08 billion)worth of diamonds from state miner Alrosa and may purchase the same amount again in 2010.
The government had planned to sell 20-50 tonnes of gold to help plug a budget deficit in the first major sale since the fall of the Soviet Union. Thirty tonnes would represent 0.5 to 1.25 percent of global consumption of the metal, which soared in price to a record high this month, but the open sale was later cancelled after information about it leaked. Read more here-
-Mauritius buys 2 tons of gold from IMF. Read more here-http://www.gata.org/node/8038
-John Embry Nov-Dec commentary. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2009/11_27_2009%20Financial%20front_the%20four%20horsemen%20are%20riding.pdf
-Eric Sprott: Gold Momentum’s Picking Up Dramatically. Read more here-http://news.goldseek.com/GoldSeek/1258300800.php
-Kevin Kerr: Gold is the New Reserve Currency. Watch video here-http://watch.bnn.ca/clip236272#clip236272
-Jim Sinclair’s gold interview at King World News. Listen here-http://www.gata.org/node/8023
-When it comes to gold, history itself wears a tin-foil hat. Read more here-http://www.gata.org/node/8029
-Chart of the week: How The Old Gold Bugs Lost Control Of Gold. Latest data from the World Gold Council shows just how much the gold market has changed in just under two years.
Essentially, the more traditional sources of demand for gold, ie. jewelry, industry, gold bar hoarders, and coins have been falling.
Meanwhile, gold demand from new retail investment products has skyrocketed from just 7% of total gold demand in 2007 to a whopping 27% most recently. That’s almost a 4x increase in their share of demand in under two years. Given that market prices are generally driven by incremental changes in supply and demand, clearly the new retail style gold players are now driving the market.
The true gold bugs of yesteryear are no longer in charge. Though they’re probably not complaining given that retail demand is making them rich. Just realize that retail demand can be a fickle friend. Read more here-http://www.businessinsider.com/chart-of-the-day-retail-investments-share-of-total-gold-demand-2009-11
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,400 the silver price would be $17.50
Gold to silver ratio at 70 to 1 with gold at $1,400 the silver price would be $20.00
Gold to silver ratio at 60 to 1 with gold at $1,400 the silver price would be $23.33
Gold to silver ratio at 50 to 1 with gold at $1,400 the silver price would be $28.00
Gold to silver ratio at 40 to 1 with gold at $1,400 the silver price would be $35.00
Gold to silver ratio at 30 to 1 with gold at $1,400 the silver price would be $46.67
Gold to silver ratio at 20 to 1 with gold at $1,400 the silver price would be $70.00
Gold to silver ratio at 15 to 1 with gold at $1,400 the silver price would be $93.33
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1258302432.php
-Poor man’s gold may be an investor’s treasure. Silver’s a severely undervalued ‘investment opportunity of a lifetime’. Silver’s not so much a poor man’s gold anymore and investors may soon realize that the white metal’s the real treasure. True, at $18 per ounce, silver is cheap trading around 60 times less than gold’s record price of more than $1,100. But year to date, it’s climbed 52% in value compared with gold’s rise of around 25%, according to data from FactSet Research.
Silver is a precious metal, after all, one that has historically outperformed gold in a bull market and doubles as an industrial metal and supplies of it are depleting at a much more rapid pace. “Silver is unique in terms of being both a monetary and an industrial metal,” the Bullion Services Team at GoldCore said in a recent report, pointing out that it’s severely undervalued. “Silver remains the investment opportunity of a lifetime.”
Gold’s prices have climbed nearly 11% in the last two months. In that same time span, silver’s up by only 3.1%. And “investors looking for returns continue to wager on higher gold prices, whether it be on concerns over equity or currency markets or to make quick short-term profits,” according to CPM Group’s latest Precious Metals Advisory. But investors would be better served to turn their eye toward silver.
“Silver is highly correlated to the safe haven of gold and is, in effect, a leveraged sister of the precious yellow metal,” according to GoldCore, an international bullion dealer. “Thus, informed investors use gold more for wealth preservation purposes and silver in order to make a return.” That’s particularly important to keep in mind as investors change the way they perceive the paper-asset markets.
As stocks, currencies, bonds and other paper assets have begun to disappoint investors, investor attitudes have been shifting, said Mark Leibovit, chief market strategist for VRTrader.com. “What begins as a trickle ends as a tidal wave when the panic peaks [and] when public revulsion at the U.S. dollar begins, the tidal wave will become a tsunami,” he said.
Under that scenario, “silver, far more volatile than gold, will benefit most,” he said.
“Silver’s allure as an investment is evermore appealing as a hedge against fading fiat currencies that are getting inflated into oblivion,” said Scott Wright, an analyst at financial-services company Zeal LLC. This is “measurable via skyrocketing investment demand” for physical bullion and exchange-traded funds, he said, pointing out that the iShares Silver Trust has already increased its holdings by 29% in 2009. From the start of this year through the end of October, total silver holdings in exchange-traded funds were up 36.3%, according to data from CPM Group.
The sale of silver coins and minted bars also offers a good gauge of demand. Over at The Perth Mint, total silver ounces sold as coins and minted bars is five times higher in the 2008-2009 year compared with 2005-2006, according to data from the Mint, which is owned by the Government of Western Australia. During the same period, gold ounces sold as coins and minted bars have more than doubled. U.S. Silver Eagle coin sales were up 72.6% in October from a month ago up 106.2% from October 2008, CPM Group data showed.
“Although fabrication demand is important, it is investment demand that tends to have a more dynamic effect on silver prices,” said Chintan Parikh, a commodity analyst at CPM Group in New York. “This is because of the larger dollar volumes of money that can be involved with investment demand, the speed and intensity with which investment demand trends can rise, fall and reverse course, and the ultimately total discretion that investors have over whether they wish to be involved in silver at all,” he said.
But while some agree that benefits for silver’s precious metal characteristics have outweighed the pluses from its industrial uses, that industrial label may soon turn out to be of lesser hardship. “The industrial uses for silver are numerous and generate substantial additional demand for silver outside its precious metal usage,” said Patrick Kerr, managing director at Amerifutures Commodities & Options.
True, silver’s suffering from a falloff in demand from the photography world as consumers turn to the digital age, but industries are finding other uses for the versatile metal, including medical applications, and actually consuming supplies as they use them. “Silver is consumed and gone forever in most applications,” said Julian Phillips, an editor at SilverForecaster.com. On the other hand, “huge efforts are made to recover gold, so essentially it is not consumed.” Gold’s much higher value prompts great efforts to recycle it.
In fact, “all the gold mined in the world ever is still with us, but a huge amount of silver has been used in photography, mirrors and other industrial uses in the last 200 years,” according to the GoldCore report. “The low price of silver makes recovery and recycling uneconomic.” So “industrial demand has been outstripping mining supply for most of the last 20 years, driving above-ground supply to historically low levels” and silver production has been flat in recent years, while demand has been increasing, the report said.
As a result, refined silver stocks are near an all-time low, with stocks dropping from around 2.2 billion ounces in 1990 to around 300 million ounces today, it said. “At one time, silver was more expensive than gold, but that was in the days of Egypt’s Pharaohs,” said Phillips. And while no one wants to say that will ever happen again, most analysts expect that silver prices will soon react to gold’s recent gains.
Prices for silver could spike to $20 between now and December, according to CPM Group. GoldCore expects to see prices at well over the nominal high of $50 an ounce and, eventually, surpass the inflation-adjusted high of some $130 per ounce in the coming years. “Ultimately, silver tends to exhibit its largest spurts in the latter stages of a major gold up legs,” said Zeal’s Wright. “Once speculators and investors start to get excited about this metal, it can really fly and fast.” Read more here-
http://www.marketwatch.com/story/story/print?guid=ECE2C8D2-FC88-4221-BD01-9BFB72ED253A
-Silver Prices to Hit New Highs in 2010. Silver may yet outshine gold in 2010 as spot prices for the white metal respond to the prospect of a surge in industrial demand. With a little additional help from investment demand, silver may even rally into the $25 range. So says Chintan Parikh, a commodity analyst at the CPM Group a leading New York-based commodities research, consulting, asset management and investment banking organization.
“Prices may spike as high as $25,” he says. At the very least, it should breach its most recent high, which was set at $20.79 in the spring of 2008, he adds. Parikh says much of this impetus for higher prices is being driven by the fact that traditional industrial end users of silver, such as the ever-burgeoning global electronics industry, have in recent weeks begunto replenish severely depleted inventories.
In fact, silver inventories became so run-down during the financial crisis that it may take up to six months to fully rebuild them to normal levels. Parikh also notes that demand from the industrial sector tends to be quite price inelastic, meaning that buyers have few options other to pay prevailing prices.
Another key driver for 2010 will be the advent of new market places for silver, including pent-up demand for silver-zinc batteries in ‘smart’ automobiles and an array of portable electronic devices, Parikh says.
In fact, the widespread adoption of silver-zinc batteries is going to be “one of the major drivers behind a rise in prices because it may absorb a lot of silver,” he adds. Though this important new application for silver might not necessarily become a major factor in demand for silver as early as next year, it promises to become a very sizeable marketplace, he suggests. And especially for automobiles.
Notably, China is forecast to become a huge adopter of electric cars to curtail its rising dependence on foreign oil and to reduce its air pollution. In fact, electric cars and hybrid plug-ins will account for more than half the auto market in China by 2020, according to Dr. Wolfgang Bernhart, an auto industry expert with the international think tank, Roland Berger.
Furthermore, silver-zinc batteries are destined to generate major market share as they are said to be much safer, more environmentally-friendly and far more energy-efficient than lithium-ion batteries (which currently dominate the markets for smart cars and portable electronics).
Also, the ever-expanding industrial sector for silver now includes LCD/plasma television screens, solar panels, water purification and even medical and superconductivity applications. It is also finding a critical new use in biocides (which use silver in chemical agents to kill dangerous bacteria, including superbugs).
GFMS, a renowned London precious-metals consulting firm, concurs that overall fabrication demand (which also includes the photography, jewelry silverware sectors) is expected to rebound to “normal levels” in 2010. And the emergence of key new markets for silver is sure to help power this recovery, according to Neil Meader, research director at GFMS.
“It is becoming an increasingly industrial metal and novel new uses will also likely assist the recovery in silver’s demand,” he says. However, the restocking of inventories for more of silver’s traditional uses will likely be the most powerful demand driver in the near-term, Meader suggests. It may even help propel silver prices into new territory to the extent that “a peak (in prices) could occur late this year or early next year.”
The revitalization of industrial demand is an inevitable consequence of silver’s growing importance as a high tech metal. In fact, this has grown year on year since 2001 to the onset of the financial crisis. And it only dipped a meager 1.4% to 447 million ounces in 2008.
This long-term growth trend is set against a backdrop of a multi-year rally in silver prices during this time frame, with gold’s poorer cousin refusing to be upstaged. It actually tripled in value to average US $15 in 2008 (in spite of its short-lived collapse to around $9). And it is continuing to trend higher this year now that supply/demand dynamics are beginning to reflect a return to a normal economy. All of this clearly demonstrates the price inelasticity of industrial demand.
Ironically, investment demand is also mostly shrugging off higher prices. Not only is there strong physical demand for silver bullion coins and bars, but the recent emergence of silver exchange-traded funds like theiShares Silver Trust is also creating strong additional demand.
Parikh notes that silver offers a safe haven in times of economic upheaval, while it also has the potential for significant investment returns. “Silver is a unique metal that wins whether the economy is going well or is in bad shape,” he says. “In the latter, the investor buys it as a hedge against the downturn in the economy and the markets. And if the economy improves, then the industrial demand increases.” Read more here-http://www.321gold.com/editorials/davis/davis111609.html or http://news.silverseek.com/SilverSeek/1258382340.php
-Butler sees increasing shortage of silver, risk of exchange closing. Listen here-http://www.gata.org/node/8025
-Silver is it about to explode? Read more here-http://news.silverseek.com/SilverSeek/1258468717.php
-Is silver’s salvation upon us? Advances in technology, increasing focus on reducing human interaction with bacteria, and tracking goods and people are all good news for silver and the price of the industrial metal, which has lagged for so long, says Jessica Cross, CEO of VM Group.
Long regarded as the poor cousin of gold, the metal, which is mainly used in industrial applications as well as to make jewellery, has bright prospects, with off take in a spectrum of new products put at just below 350 million ounces by 2020, Cross argued in a presentation at the LBMA Conference earlier this month.
The silver price is currently trading around $18.50/oz, a level that it traded around in the first half of 2008 when it broke up to just shy of $21. These two spikes were unparalleled, certainly since 1985, with the metal touching slightly north of $8.50 just once since then.
Looking at the history of the silver market, Cross said about two thirds of the mined metal is a by product of other minerals like copper, gold and lead, making it difficult to determine a price at which silver production would fall in a natural supply and demand scenario. Being a by-product, the metal will come onto the market almost regardless what the price is for it.
One of the major users of silver, the photographic film sector, is being particularly hard hit as consumers turn to digital cameras. A graph of silver demand by the sector shows a steady decline since a peak above 200 million ounces in the early 1990s to well below 150 million ounces in 2009.
Another anchor on silver prices, which tend to take direction from the waxing and waning gold price, is that a lot of silver used in a range of applications like photographic film, electronics and batteries tends to be recycled, bringing back about 400 million ounces a year of the metal to the market.
But the days of huge recycling could be drawing to an end, Cross said, pointing to a host of technological advances needing silver, including wound care, food hygiene and water, wood preservatives, textiles, solar panels and radio frequency identification tags.
“These new end uses for silver are set to pick up the demand slack left by the shrinking photographic industry,” she said. “But, unlike photographic film, these end uses do not generate vast amounts of recycled metal. In general the metal is going to be taken off the market for good.”
Silver’s time has come, she said. “The change is coming about as a result of silver’s unique properties as a biocide as well as is superior conductivity,” she said. “The interesting thing is that many of the world’s worries and woes today are playing right into the hands of silver and this metal appears to be in the right place at the right time in a number of applications.”
Radio frequency identification tags, used in identity documents, passports and stock controls, are growing in use. China, for example is spending $6bn to install these devices in identity documents for all its citizens and in transport tickets, she said.
London-based metals consultancy VM Group estimates use of these tags will grow to more than 30 billion by 2020 from around seven billion now. Each tag contains about 10 milligrams of silver on average, absorbing nine million ounces of silver from the 2.3 million ounces currently.
Solar panels and mirrors could absorb another 50 million ounces by 2020 compared to 18 million ounces now. Wood preservative coatings could account for up to 100 million ounces a year as chromate copper arsenic, the existing wood preservative is phased out.
There were no estimates of the amount of silver that could be used in plasters and bandages, which use silver for its anti-bacterial properties. These properties also feed into the clothing and textile sector where body odours and bacteria are eliminated.
Silver is also used in water purification devices and to store food. It could take up around 95 million oz by 2020. “Superimpose this good news on the tonnages of silver that have gone into the ETFs (silver-backed exchange-traded funds) and you have an underlying strength within this market to justify its current price strength,” Cross said.
The gold:silver ratio is expected to narrow. At current prices you can buy 64.4 ounces of silver for the price of a single ounce of gold. “The current market conditions indicate that gold has become overpriced and silver has become underpriced, suggesting there will be a shift in assets from gold to silver,” said Jeffrey Lewis, who edits Silver-coin-investor.com.
“Since 1970, the ratio of the number of ounces of silver you could buy with one ounce of gold has run as high as 80:1 and as low as 20:1, with a mean of 54:1. Today’s ratio is moderately higher than 54:1; in fact, the ratio is nearing 62:1, suggesting that there will be a correction in either the price of gold, or silver will advance to make up the deficit,” he said. Read more here-http://www.miningmx.com/news/gold_and_silver/is-silver-salvation-upon-us.htm
-Revenues from Silver Inks and Pastes to Reach $3.6 Billion in 2016. Read more here-http://www.azonano.com/news.asp?newsID=14691
PLATINUM-PALLADIUM
-Platinum deficit forecast for 2010. The introduction of a platinum-backed exchange-traded fund (ETF) in the United States could add 200,000 oz of fresh demand to the market, which will be in a small surplus of 140,000 oz this year, Johnson Matthey said on Tuesday. “Overall, the platinum market should tighten in 2010 and could move into a modest deficit as the world economy improves,” Johnson Matthey said in its 2009 interim platinum review.
This should support the platinum price, but many of the gains made in the price in the year to end-September have been fuelled by a weak US dollar and a strong gold price as well as investor interest in the metal rather than fundamental reasons. Platinum could trade as high as $1,550/oz in the next six months if the gold price remains strong. If the dollar strengthens and investors sell out of gold, platinum could fall as low as $1,280 in the same period.
The review showed the platinum demand for this year sliding 4.4% to 5.92 million oz, with the auto sector taking a third less metal to make autocatalysts than it did the year before.
This was offset by an astonishing 80% uptick in demand for platinum in jewellery, rising a million ounces to 2.45 million oz, just shy of the 2.48 million oz the autocatalysts makers wanted this year.
The surprise figure is the expected 900,000oz of additional demand expected from China, lifting offtake to a record 1.75 million oz this year on the back of restocking by jewellers and consumer demand triggered by relatively low metal prices.
“Although we expect industry restocking to slow in the second half of 2009, consumer purchasing should still maintain demand at close to record levels,” Johnson Matthey said in its report. Read more here-http://www.miningmx.com/news/platinum_group_metals/Platinum-deficit-forecast-for-2010.htm
-Johnson Matthey bullish on platinum, palladium, sees deficits. Read more here-http://www.miningweekly.com/article/platinum-palladium-outlook-bullish-deficits-on-way-johnson-matthey-2009-11-17
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: An Inflation Warning Sign. In a speech on Monday, Federal Reserve chairman Ben Bernanke said he did not see inflationary threats on the horizon. Perhaps that is because he’s looking in the wrong place. The prices of crude goods, those in the earliest stages of production, have been inflating for most of the year.
The willingness to pay more for crude goods probably indicates that businesses are predicting selling finished goods at higher prices. In other words, this is a strong indicator of inflationary expectations. Read more here-http://www.businessinsider.com/chart-of-the-day-producer-price-index-crude-goods-2009-11
-Chart of the day: Will Holiday Spending Recover This Year? Holiday sales will be the great test of our recovery. Wall Street analysts and industry insiders are predicting a mild uptick in sales over last year’s historic loss. The forecast from the International Council of Shopping Centers is for 1% growth and $242 billion, which seems rather conservative.
But what if ICSC is too optimistic? The forecasted number is lower than the peaks of 2006 and 2007 but slightly higher than the $239 billion spent during the holidays in 2005. We’re skeptical about the proposition that Americans will spend slightly more this year than they did in 2005. That year unemployment was half of what it is now and median home prices had gone up 13.4%. Are we really ready to spend like we did back then? Read more here-http://www.businessinsider.com/chart-of-the-day-traditional-holiday-spending-2009-11
-”Don’t let the fear of the time it will take to accomplish something stand in the way of your doing it. The time will pass anyway; we might just as well put that passing time to the best possible use.” Earl Nightingale: Was a motivational author and speaker
-”The hardest thing in investing is to ride a bull market all the way to the end.” Richard Russell-Read more here-http://www.financialpost.com/story.html?id=2228952
-Gold at $1,200/oz before year end remains a possibility but talk of a gold ‘rush’ and gold ‘frenzy’ is exaggerated. Gold is up less than 5 times in 10 years (5X $250/oz = $1,250/oz) whereas in the 1970s gold rose by more than 25 fold from $35/oz in 1971 to over $850/oz in January 1980. A gold rush is likely coming as there is no fever like gold fever, but we are a long way from there yet especially as most of the public in the investment world is actually selling their gold rather than buying it. Goldcore
-There are several ways you can look at to determine where gold should be selling at. We believe the easiest way is to clock official and real inflation since 1980. Official inflation would put gold at $2,400 and real inflation at $6,700, or to quote John Williams $7.150. This is all scientific and the numbers are real. The question that follows is how much gold does central banks have left of their 31,000 tons 15 years ago?
We believe it is less than 5,000 tons. We also believe there is a derivative covered short of between 50,000 to 100,000 tons. There is no way of actually knowing, because governments and other players refuse to tell us what their positions are. They say we do not have a need to know or it is a state secret.
That means there is no free market. We are told that total economic reserves of gold to be mined are 50,000 tons. That, of course, means any shorts beyond that cannot be covered. That means higher prices. Yes, we do have peak gold and lots of uncoverable shorts. That means gold has a long way to go to the upside along with silver. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1258562162.php or http://news.goldseek.com/InternationalForecaster/1258308120.php
-U.S. Treasury Confident Congress Will Increase Debt Ceiling. The Obama administration is confident Congress will raise the country’s debt limit by year end to avert a showdown similar to the one that shuttered parts of the government in 1995, administration officials said.
The White House wants an increase of at least $1 trillion to $1.5 trillion, according to a person familiar with the deliberations between lawmakers and the administration. Record budget deficits are pushing the national debt closer to the $12.1 trillion statutory limit.
The administration’s request, higher than a proposed increase already passed in the House of Representatives, would get the government through the November 2010 midterm congressional elections without needing another increase. Earlier this month, Treasury officials acknowledged they’ll need more borrowing room by year-end to avoid market disruptions. Read more here-http://www.bloomberg.com/apps/news?pid=20601074&sid;=aWXDnpFProiY
-Trade Deficit in U.S. Increases by Most Since 1999. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aN1mKmvVAZp4
-California Deficit May Reach $21 Bln, Analyst Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=appTQwkQVpZ4
-Nine U.S. States Face California-Type Budget Crisis, Pew Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=anG43t4P6kho
-U.S. cities face growing budget gaps in the next two years because they’ll lag behind an economic recovery lifting the national and state governments, a study says. Property-tax collections, the largest city revenue source, haven’t bottomed, the National League of Cities report said, because assessments don’t yet reflect lower values, putting budgets under pressure “for the next several years.”
The S&P; Case-Shiller Index of home prices in the 20 largest metropolitan areas in August was about 29 percent below its July 2006 peak. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aP7nqKfbt7QE&pos;=9
-U.S. Initial Jobless Claims Unchanged at 505,000. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aE5S0GOy9vXo
-Click the following image to see the progression of unemployment in the US. View image here-http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html
-The worst is yet to come: Unemployed Americans should hunker down for more job losses. Read more here-http://www.nydailynews.com/opinions/2009/11/15/2009-11-15_the_worst_is_yet_to_come_unemployed_americans_should_hunker_down_for_more_job_lo.html#ixzz0X8Jd1Z7e
-‘Road Trip’ Shows U.S. Stimulus Falls Short, ING Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aUS_VbBG90.0
-Shipper CMA CGM Sees Demand Recovering in Europe, Not in U.S. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=a5p8AwCL8Z_0
-6 double dip warning signs. The recovery from the Great Recession has likely started. But many economists are worried about falling into another downturn. Here’s what has them concerned. Read more here-http://money.cnn.com/galleries/2009/news/0911/gallery.double_dip_warning_signs/index.html
-Bernanke Signals ‘Extended’ Period May Become Longer. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=axtsFVRyRBOE&pos;=3 or
http://www.bloomberg.com/apps/news?pid=20601068&sid;=a1LQpeoa7_Qg
-Fed May Not Increase Rates Until 2012, Bullard Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a6b235jJZM_g&pos;=3
-Pimco’s Gross Says Risk of Bubbles Rises on Low Rates. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aiUtCw0GRZy4
-The reason there is a wave of mortgage refinancings coming in the housing market for one, and not only that, but in the commercial space, there are 2.7 trillion of debt coming due through 2011 and another 1.5 trillion of leveraged loans (see page 24 of Thursday’s FT). In other words, the default rate is going to rise even further and the Fed tightening policy would only aggravate that situation. In other words, the Fed is simply immobile for at least the next two years. David Rosenberg-Gluskin/Sheff
-Dominique Strauss-Kahn expects basket of currencies to eventually displace dollar. Read more here-http://www.theglobeandmail.com/report-on-business/crash-and-recovery/imf-head-eyes-currency-change/article1366060/ or http://www.gata.org/node/8016
-Meredith Whitney, the analyst who has no “buy” recommendations on U.S. banks, said valuations on lender stocks are too high and what “scares” her most is the government stepping away from buying mortgage-backed securities.
“The banks are still grossly overvalued,” Whitney said today in an interview on Bloomberg Radio. “People are expecting something great to happen in 2010 and I think they are going to be severely disappointed.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=acyezZUH_MYo&pos;=5 Watch video here-http://www.cnbc.com/id/33972133
-So far, Q3 S&P; 500 operating EPS is coming in at $15.27 still down around 2% YoY from a year ago and well below the $21.11 consensus expectation at the start of the year. Still no evidence of a turnaround in sales deflating 10.7% YoY for what will be the fourth decline in a row. Cost cutting and productivity gains remain the dominant theme, hence operating margins are holding at a high level of 7.23% (versus the 15-year average of 6.60%). David Rosenberg-Gluskin-Sheff
-When looking for where the buying power for U.S. equities has been coming from, there have been three primary sources.
1. Hedge funds who have had their margin lines re-established this year.
2. Equity portfolio managers taking cash ratios back down to late -2007 levels.
3. And short covering, which seems to be ongoing as short funds try and reverse at least part of the average 31.5% loss suffered this year. So what we just saw a 3.24% plunge in short interest on the Big Board through the last half of October goes a long way towards explaining this latest move in the major averages to new post-crisis highs. David Rosenberg-Gluskin/Sheff
-When champagne sales are going down and prices being cut, even in the midst of a 60%+ rally in the stock market, you know that we are into a secular theme of thrift even among the well-heeled among us. Have a look at Champagne Sales are Going Flat on page B1 of the Saturday NYT. And believe me, it’s not just the high-end that is hurting still according to the NPD Group, restaurant sales in the U.S.A. are down 3.0% since the summer, the steepest decline in decades (see What’s Eating McDonald’s on page 32 of BusinessWeek). David Rosenberg-Gluskin/Sheff
-U.S. consumer shopping habits have changed on a semi-permanent basis. Yes, the government can step in time and again to distort human nature and try to reverse the rising trend in the personal savings rate, but left to their own devices, households are in a thrifty state. This came through loud and clear in the latest Deloitte survey, which showed that more than 25% of the 10,878 consumers polled say they have permanently altered their shopping patterns in view of the asset and credit collapse this cycle.
And what did Wal-Mart Treasurer Charles Holley have to say yesterday in the aftermath of its earnings report? (Wal-Mart’s sales were a puny +2.4% YoY off a depressed YoY basis, profits were underpinned by improved productivity and inventory management.) Here its (can you handle the truth?): “The shopper has reset how he is spending money and that has affected retail in demand”.
Moreover, getting frugal also means getting small and in this new era, a most amazing thing is happening. Not only are consumers downsizing their auto purchases, but the size of the homes that are now being built is shrinking see the front page of today’s Wall Street Journal for evidence (Builders Downsize The Dream Home). Pure and simple the days of impressing our friends with the winding staircase are gone. David Rosenberg-Gluskin/Sheff
-New food price crisis a matter of time-UN. A new food price crisis is only a matter of time, the U.N. food envoy said on Tuesday, criticising world leaders for not tackling what he saw as the key factors behind price spikes in 2008 speculation and biofuels.
The U.N. Special Rapporteur Olivier De Schutter also said a U.N. food summit in Rome failed to address the domination of global food markets by large agri-business corporations.
“Maybe it will be April 2010, maybe April 2011, but we will have a new food price crisis because the direct causes of the 2008 spike are still there,” De Schutter said in an interview.
“There are indications already, because oil prices are going up and they are very closely linked to agricultural commodities prices. As soon as a big producer will be in difficulty speculation will set in,” he told Reuters. Read more here-http://www.reuters.com/article/swissMktRpt/idUSLH70163320091117
-Lions Ex-Stadium, Once Super Bowl Host, Sells for $7.25 a Seat. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=adFUGa0HXuZo
-Nicolas Cage: Movie star, foreclosure victim. Hollywood actor’s financial troubles continue as he loses two New Orleans homes worth $6.8 million in foreclosure auction. Read more here-http://money.cnn.com/2009/11/13/real_estate/Nicolas_Cage/index.htm
-Want to live in JR’s home? Dallas Larry Hagman selling off his $11million green mansion. Read more here-http://www.dailymail.co.uk/tvshowbiz/article-1229362/Want-live-JRs-home-Dallas-Larry-Hagman-selling-11million-green-mansion.html#ixzz0XKy3aB3m
-Will Ferrell tops list of Hollywood’s most overpaid stars as Ewan McGregor comes a close second. Read more here-http://www.dailymail.co.uk/tvshowbiz/article-1229339/Will-Ferrell-tops-list-Hollywoods-overpaid-stars–Scots-star-Ewan-McGregor-close-second.html#ixzz0XKyPlYQ3
-Breast Implants Cost 120 New York Flights for Finnair Flyers. First it was free flights, hotel rooms and magazine subscriptions. Now, Finnair Oyj, Finland’s biggest airline, has a new idea for attracting frequent flyers: free plastic surgery in exchange for air miles. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aV3NQ0TzSNsw
-Record 49.1 Million Americans Faced Hunger in 2008, USDA Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aU7.USapeRRs
-Ed Stein political cartoons drawn from gold-related issues. Read more here-http://www.gata.org/node/8026
-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
-Jewels of historical significance garnered strong prices at Sotheby’s Magnificent Jewels sale, held in Geneva on November 17. The Roxburghe Rubies suite brought in $5,719,290 against a presale estimate of $618,000 to $1,097,000, with the necklace selling for $4,299,974 and the earrings going for $1,469,335. Overall, the Magnificent Jewels sale generated $36,682,714 (CHF 37,011,375), with 79 percent sold by lot.
David Bennett, Sotheby’s chairman of jewelry for Europe and Middle East, said: “The Roxburghe Rubies, a magnificent suite, comprised of a ruby and diamond rivière necklace and earrings, the property of Mary, Duchess of Roxburghe, attracted extraordinary presale attention at exhibitions around the world, both for the quality of the rubies and the significant historical provenance, and sold for $5.7 million (CHF 5,821,000), five times the high estimate and a world-record price for a ruby suite.
“A remarkable array of colored diamonds was led by the price of $3.1 million (CHF 3,162,500) for a very impressive fancy vivid yellow diamond and included two new world-record prices per carat for green and intense blue diamonds,” Bennett added. Chatila bought the fancy vivid yellow diamond, a 74.80-carat, cut-cornered, rectangular, modified brilliant-cut stone that was mounted in gold, for $3,134,417, which fell within the presale estimate range.
Sotheby’s called its 2.52-carat, vivid green diamond the largest of its kind to appear at auction and it sold there for $3,078,914, which was slightly below the corresponding presales estimate. Another rare find was a fancy intense blue, brilliant-cut, 3.17-carat diamond ring, which sold to Chatila for $2,523,500, within its presale estimate. A fancy pink, cushion-shaped, 6.63-carat diamond fetched $1,413,833, which was also within the presale estimate range. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28667 or
http://www.bloomberg.com/apps/news?pid=20601088&sid;=a5S9.x.HjoTE or http://www.bloomberg.com/apps/news?pid=20601088&sid;=aP9wcC1Cjk.0
-Sotheby’s Auction Results for the Magnificent Jewels sale in Geneva. View here-http://www.sothebys.com/app/live/lot/LotResultsListPrint.jsp?sale_number=GE0905&action;=A&show;_lot_name=Y or http://www.sothebys.com/app/live/lot/LotResultsDetailList.jsp?event_id=29134&sale;_number=GE0905&show;_lot_name=Y
-Christie’s Geneva Sale Totals $32M. Christie’s Jewels: The Geneva Sale was 82 percent sold by lot and totaled $32,281,500 earlier today. Jean-Marc Lunel, head of the sale, said, “With $70 million of jewelry changing hands in two days at the Geneva auctions, the star lot of the week at Christie’s was an exceptional D flawless diamond of 62.30 carats purchased by Aleks Paul of Essex Global Trading for $8,051,000.
This shows the clear resurgence of the jewelry market and we look forward to exciting sales in Hong Kong, New York and London in early December.” Paul won the top three lots at the sale, starting with that 62.30-carat diamond, which was a type IIa pear, for $129,230 per carat. The second lot was comprised of a 3.30-carat, rectangular-cut, fancy intense blue and a 3.90-carat, E, VS2 diamond ring by Wolfers, which sold for $2,675,000.
Paul offered the top bid for a fancy vivid, fancy intense and fancy blue diamond clasp: $2,675,000. The top three lots sold well above their presale estimates. Other sale highlights included a 24.92-carat, pear-shaped, light blue, VVS2 diamond ring, mounted by Cartier, Type IIb, that sold for $1,555,000. A 13.91-carat, oval-shaped D, VVS2 diamond ring fetched $1,203,000. Selling slightly above its presale estimate was a 7.03-carat, oval-shaped Burmese ruby and diamond ring designed by Graff, which sold for $1,131,000.
The final lot that sold for more than $1 million was a 65.20-carat, cushion-shaped, fancy intense yellow, VS2 diamond pendant that sold for $1,035,000, within its presale estimate range. Christie’s noted that a 19.13-carat, briolette-cut, fancy grayish-yellowish green chameleon diamond-pendant necklace set a record price at auction for a chameleon at $987,000. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28668
-Rio Tinto Drops 5 Customers from Distribution System. Rio Tinto Diamonds has restructured its marketing distribution system and cut five select diamantaires from its program as the company projects further declines in its production capacity. “We have cut our long term customer base from 25 to 20 companies due to the fact that our production has fallen and will continue to change in the near future,” said Patrick Coppens, marketing manager at Rio Tinto at the Antwerp Diamond Symposium Monday.
Rio Tinto, which has full ownership of the Argyle mine in Australia, a 60 percent stake in Diavik mine in Canada, and a 78 percent share of the Murowa mine in Zimbabwe, cut production during 2009 in response to the financial downturn. The company’s diamond output during the first nine months of 2009 fell 31 percent to 9.575 million carats. Even as it ramps up production again, output is expected to remain inconsistent as it transforms Argyle and Diavik from open pit to underground operations.
Coppens explained that the company is moving to a tender system, or “mechanism that is driven by market dynamics” for a minor portion of production, while the remaining major portion will be provided to ensure long term supply to its customers. He did not name the five customers that have been dropped from the select diamantaire program. Read more here-
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28630
-Hyperinflation Worries? Buy My Jewelry, Richemont’s Rupert Says. South African billionaire Johann Rupert suggested investors stock up on bespoke Cartier necklaces or Van Cleef & Arpels rings if they’re concerned that economic stimulus programs and government debt will fuel inflation.
“If we enter hyperinflation, you’re going to be so glad that you bought that stuff two months or six months ago,” Rupert told investors on a call today that followed results from Cie. Financiere Richemont SA, which is controlled by his family. “If inflation picks up, you’re going to see people running into your stores, buying high jewelry.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601093&sid;=aXNQ5AJkxDWg
SOCIETE GENERALE TELLS CLIENTS HOW TO PREPARE FOR GLOBAL COLLAPSE-2012 MELTDOWN?
-Société Générale has advised clients to be ready for a possible “global economic collapse” over the next two years, mapping a strategy of defensive investments to avoid wealth destruction. In a report entitled “Worst-case debt scenario”, the bank’s asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of “deleveraging”, for years. As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse,” said the 68-page report, headed by asset chief Daniel Fermon.
It is an exploration of the dangers, not a forecast. Under the French bank’s “Bear Case” scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010. Governments have already shot their fiscal bolts.
Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade. Read more here-http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html
-Wall Street’s 2012 meltdown sweepstakes. Don’t say we didn’t warn you this time a new crash is dead ahead. Paul Farrell-Read more here-
http://www.marketwatch.com/story/story/print?guid=DA7661EF-56D3-4363-9408-2210BB2BA5B0
U.S. BANK FAILURES HIT 123
-Bank failure toll reaches 123. Regulators close two Florida banks and on in California, costing the FDIC $986.4 million. Two Florida banks and one in California failed Friday night, bring the 2009 national tally to 123. Regulators closed Century Bank, Federal Savings Bank in Sarasota, Fla., Orion Bank in Naples, Fla., and Pacific Coast National Bank in San Clemente, Calif. Read more here-http://money.cnn.com/2009/11/13/news/economy/bank_failure/index.htm
REAL ESTATE
-U.S. housing crisis hits new level. A record one in seven mortgages are in foreclosure or delinquent; even those with safe credit ratings are losing homes. The Mortgage Bankers Association said Thursday a record one in seven U.S. mortgages, or four million homeowners, were in foreclosure or at least one payment late in the third quarter.
The housing market accounts for about 20 per cent of the U.S. economy, and a stabilization in plummeting property values is seen as a key pillar of an economic recovery. Americans with solid credit ratings comprised 33 per cent of the quarter’s foreclosures. The highest jobless rate in 26 years made it impossible for many homeowners to make their payments in the quarter. Read more here-http://www.theglobeandmail.com/report-on-business/us-housing-crisis-hits-new-level/article1370396/
-Mortgage delinquencies hit another record in 3Q. The pace at which people fell behind on their mortgages slowed during the summer for the third consecutive quarter, but the overall delinquency rate hit another record, a new report shows. For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That’s up 58 percent from 3.96 percent a year ago.
Being two months behind is considered a first step toward foreclosure, because it’s so hard to catch up with payments at that point. The rate was up 7.6 percent from the second quarter. That’s a much smaller jump than the 11.3 percent rise in the second quarter from the first, and the 14 percent leap seen in the quarter before that.
While the slowing growth rate is a positive sign, the increase shows there’s still a lot of problematic mortgages out there, said F.J. Guarrera, vice president of TransUnion’s financial services division. The company doesn’t expect the figure to start declining until the middle of 2010.
Two things must get better before mortgage delinquency rates start reversing themselves, he said: home values and unemployment. “Until we see improvement in both of those areas, it’s possible that it will take longer for delinquency to improve,” Guarrera said. The statistics, which are culled from TransUnion’s database of 27 million consumer records, show that mortgage delinquencies remain highest in the four states where the crisis has hit the worst.
- In Nevada, the rate reached 14.5 percent, up from 7.7 percent a year ago.
- In Florida, the rate was 13.3 percent, up from 7.8 percent last year.
- In Arizona, the rate hit 10.4 percent, up from 5.5 percent in 2008.
- In California, the rate jumped to 10.2 percent, from 5.8 percent last year. Read more here-http://apnews.myway.com/article/20091117/D9C18RSG4.html
-U.S. Office Vacancies May Approach 20% Next Year. Office landlords in the U.S. will confront vacancy rates approaching 20 percent next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc. and Grubb & Ellis Co. said today. Jones Lang, the world’s second-biggest publicly traded commercial property firm, predicted vacancies will rise to 19.5 percent late next year, while Grubb & Ellis estimated a peak of 18.7 percent.
“The road to economic recovery throughout 2010 will remain turbulent,” Chicago-based Jones Lang said in a report. “While 2010 will be the year a global commercial real estate recovery begins, robust, broad-based growth is not expected until 2011.”
Demand for offices, retail space and apartments dropped during the recession as rising unemployment cut the space needed to house workers and prompted consumers to reduce spending. The delinquency rate for all types of commercial real estate loans held by banks may top 10 percent by the second quarter of 2010, Jones Lang said.
Offices will be the last type of commercial property to recover, said Robert Bach, chief economist for Santa Ana, California-based Grubb & Ellis. Next year “won’t feel like a classic recovery, but it will certainly feel better than 2009,” Bach said in a conference call.
Higher U.S. office vacancies will reduce rents 5 percent to 7 percent in 2010, according to Jones Lang. Leasing may reach bottom in the fourth quarter of 2009. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a8SYz0MnZLbo
-FDIC Sells Most Real Estate Since 1994 on U.S. Banking Debacle. The Federal Deposit Insurance Corp. has already sold the most real estate this year since 1994 as the regulator takes over properties held by failed lenders.
The FDIC raised $727 million from building and land sales in the first nine months of 2009 compared with $1.16 billion in the whole of 1994, according to FDIC data. The Washington-based agency sold 1,706 properties, according to its Web site, the highest number since 2,045 in 1996.
The failure of 148 lenders since 2007 is giving homebuyers and real-estate investors the chance to purchase office buildings, undeveloped land for houses and even gas stations from the FDIC. The agency may also have hundreds of millions of dollars in loans for sale from shuttered banks.
“It seems that they’re a little understaffed and they’re very busy trying to fold a bank a weekend or five banks a weekend,” Barry Sternlicht, the chairman and chief executive officer of Starwood Property Trust Inc., said on a conference call yesterday.
The FDIC real-estate sales are helping companies including CB Richard Ellis Group Inc. and closely held Prescient Inc., which are brokering transactions, and J.P. King Auction Co., which has held FDIC auctions in Detroit and Atlanta.
More than 900 properties sold through Sept. 30 were in Georgia, by far the most of any state, according to FDIC data. Georgia also led in bank failures since 2007, with 27 lenders collapsing. Minnesota was second with 114 properties sold and California third with 112, according to FDIC data. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aIcNcx3Hm80o
-Deutsche Bank Drowning in Vegas on Costliest Bank-Owned Casino. Deutsche Bank AG’s Cosmopolitan Resort & Casino complex in Las Vegas, already the most expensive debacle in the city for a single lender, is now two years behind schedule, $2 billion over budget and under water — literally.
Deutsche Bank, the resort’s owner since it foreclosed on developer Ian Bruce Eichner last year, requires 24-hour pumps and containment walls after workers hit an aquifer below the Nevada desert floor. It’s another challenge for a project whose delays and redesigns have sparked lawsuits from condominium buyers and sales agents amid record declines in Las Vegas’s gambling revenue, home prices and hotel-room bookings. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=apdCk2i8v.tI&pos;=12
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – November 24, 2009
Posted by Worldwide Precious Metals on Tuesday, November 24, 2009
The Goldbugg Report – November 17, 2009
November 17, 2009
-Gold Price Won’t Drop Below $1,000 an Ounce Again, Faber Says.
-Peter Schiff on Fox Business Gold soon at $5000 or more.
-Silver Set to Soar as it did in the 1970s.
GOLD
-Martin Armstrong, gold at $5,000. Read more here-http://www.scribd.com/doc/22417671/GOLD-5000-11-11-09
-Gold Price Won’t Drop Below $1,000 an Ounce Again, Faber Says. Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
News last week of bullion purchases by the Indian and Sri Lankan governments raised speculation that other countries would follow suit. “We will not see less than the $1,000 level again,” Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
China will keep buying resources including gold, he said. “Its demand for commodities will go up and up and up,” he added. “Emerging economies will grow at the fastest pace.”
In contrast, Western countries will be lucky to avoid economic contraction, while the Federal Reserve will maintain interest rates near zero percent, he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=az6qQ8ZuXg9M
-India, the world’s biggest gold consumer, bought 200 metric tons from the International Monetary Fund for $6.7 billion as central banks show increased interest in diversifying their holdings to protect against a slumping dollar.
The transaction, equivalent to 8 percent of world annual mine production, was the IMF’s first such sale in nine years and propels India to the ninth-biggest government owner globally, according to figures from London-based research company GFMS Ltd. The country previously held 358 tons, the data show. The news was a “surprise because everybody was talking about China being the buyer,” said James Moore, an analyst at TheBullionDesk.com.
“The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.”
India purchased the gold at an average price of about $1,045 an ounce, according to an IMF official on a conference call. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=al7qXOH.bVn8 or http://www.reuters.com/article/wtUSInvestingNews/idUSSP37590020091103
-Record gold price not an issue for Indian jewellers. Read more here-http://mineweb.co.za/mineweb/view/mineweb/en/page34?oid=92465&sn;=Detail
-Praise for gold purchase by Reserve Bank of India. Read more here-http://www.gata.org/node/7989
-India invests in the gold rush. Watch video here-http://news.bbc.co.uk/2/hi/asia-pacific/8352739.stm
-India-IMF Deal: Tipping Point for Gold. Read more here-http://www.kitco.com/ind/Holmes/holmes_nov102009.html
-Sri Lanka’s gold buy estimated at 5.3 tonnes. Read more here-http://www.gata.org/node/7998
-A rock-solid case for gold reserves. Like India, the Bank of Canada should rely less on the U.S. dollar and more on gold. Read more here-http://www.gata.org/node/8012
-Peter Schiff on Fox Business Gold soon at $5000 or more. Watch video here-http://www.youtube.com/watch?v=61×9aWmX_nw
-Hold Cheer Until Gold Hits $1,500. Read more here-http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId;=8390
-Gold Breakout Targets $1500. Read more here-http://www.kitco.com/ind/Hamlin/nov112009.html
-Where does the price of gold go from here? A price range of $1,300 to $1,500 looks likely next year but, there could be a short term pull back as some profits are taken first. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=92456&sn;=Detail
-Gold prices to touch $1300 per ounce: Tom Pawlicki. Read more here-http://www.commodityonline.com/futures-trading/technical/Gold-prices-to-touch-$1300-per-ounce:-Tom-Pawlicki-12652.html
-Gold: how high can the price go? Gold has reached an all-time high, breaking through the $1,100 an ounce barrier on a weaker US dollar and the continued appetite from investors for the precious metal’s safe-haven attributes. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6537637/Gold-how-high-can-the-price-go.html
-Barrick shuts hedge book as world gold supply runs out. Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world’s top producer Barrick Gold.
Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.
“There is a strong case to be made that we are already at ‘peak gold’,” he told The Daily Telegraph at the RBC’s annual gold conference in London. Read more here-
-Gold Mining Stocks May Underperform Bullion: Technical Analysis. Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid;=aZUC5PjV6Alk
-Gold Stock Peak and the Dow to Gold Ratio. Read more here-http://news.goldseek.com/GoldSeek/1257429659.php
-Clive Maund gold market update. Our long-term chart which shows the bullmarket in gold from early on in this decade in its entirety enables us to define a minimum target for the uptrend, as it should at least get to the upper return line of the trend channel shown.
This gives us a ballpark target at about $1400 and it could go higher depending on when it reaches this return line, and higher still of course if it should break out of the top of this uptrend in a parabolic acceleration, which is quite possible given the worsening Fiat shambles. Read more here-http://news.goldseek.com/CliveMaund/1257717600.php
-Aren’t we sitting on a gold mine? The price isn’t right, but it doesn’t matter all that glitters won’t be sold. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/11/06/AR2009110604799_pf.html
-Martin Murenbeeld gets more bullish on gold. Read more here-http://www.miningmx.com/news/gold_and_silver/murenbeeld-gets-more-bullish.htm
-John Dizard: Why gold is certain to move higher. Read more here-http://www.gata.org/node/8000
-Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/nov102009.html
-Fundamentals Of Precious Metals Have Changed. Read more here-http://www.kitco.com/ind/Wiegand/nov122009.html
-Which Will Come Out on Top Paper or Gold? Read more here-http://www.gata.org/node/8002
-Inside the global frenzy for gold. Read more here-http://www.gata.org/node/7999
-Canada’s BNN interviews Agoracom’s Peter Grandich on gold. Read more here-http://www.gata.org/node/7991
-Grandich challenges Nadler to debate on gold. Read more here-http://www.gata.org/node/8004
-Nadler refuses Grandich’s challenge to debate. Read more here-http://www.gata.org/node/8008
-Investment firm chief backs GATA on Bloomberg Asia TV. Read more here-http://www.gata.org/node/8006
-Vietnam acknowledges trying to push gold price down. Read more here-http://www.gata.org/node/8013
-Gold suppression is public policy and public record, not ‘conspiracy theory.’ Read more here-http://www.gata.org/node/8001
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
-Clive Maund silver market update. The long-term chart for silver looks chaotic compared to that for gold, not helped by the violent plunge last year which saw it drop from a high near $21 to a mere $8.50 at the low. It has spent this year to date slowly making up the lost ground which has involved it laboriously working its way through the overhanging supply set up by the plunge.
The good news is that with the recent break above more concentrated resistance in the $16 area, there is now not that much more resistance to go before it breaks into the clear by advancing above last year’s highs, and with gold looking set to continue to make strong gains, a breakout to new highs is probably not very far off. Read more here-
http://news.silverseek.com/CliveMaund/1257641258.php
-King World News interviews silver market analyst Ted Butler. Listen here-http://www.gata.org/node/7995
-Louise Yamada Says Silver May Be Poised to `Break Out’. Watch here-http://www.bloomberg.com/avp/avp.htm?N=av&T;=Louise%20Yamada%20Says%20Silver%20May%20Be%20Poised%20to%20%60Break%20Out%27&clipSRC;=mms://media2.bloomberg.com/cache/vu4ORcVZzQ_4.asf
-Silver Set to Soar as it did in the 1970s. Read more here-http://www.321gold.com/editorials/obyrne/obyrne110309.html
-Current silver:gold ratio suggests silver very undervalued. This article suggests that silver is undervalued compared to gold by anywhere from 10% to 50% based on historical gold to silver price relationships. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=91955&sn;=Detail or http://www.kitco.com/ind/Wilson/nov122009.html
-I’m often asked my view on the best way to play the current runup in gold, and typically my answer to that question includes a suggestion to look at silver. Frank Holmes-Read more here-http://seekingalpha.com/instablog/389729-frank-holmes/34605-silver-bullet-still-on-the-rails
-Commodity funds switching to copper, silver and natural gas. With funds increasing investment in commodity indices, interest is moving to reallocate funding in a more sophisticated way away from wheat and into copper, silver and gas among others. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=92016&sn;=Detail
-Demand for Silver Increases As Gold Prices Soar in Gujarat. Read more here-http://www.israelidiamond.co.il/english/News.aspx?boneId=918&objid;=6103
-Will Silver Outperform Immediately or Will We Need to Wait a Little Longer? Read more here-http://news.silverseek.com/SilverSeek/1257884533.php
-When Will Silver Make Its ‘Move’? Read more here-http://www.gold-eagle.com/editorials_08/nielson110809.html
-Gold’s Rally Suggests Silver Will Ride the Coattails. Read more here-http://www.kitco.com/ind/Lewis/nov112009.html
-GoldSeek Radio interviews GoldMoney’s James Turk. Listen here-http://www.gata.org/node/8009
-CFTC’s Chilton expects position limits soon for energy, metals. Read more here-http://www.gata.org/node/8010
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: The Bailout Has Transformed Into An MBS Buying Program. When the financial crisis hit its high tide last year the Federal Reserve used a couple of blunt instruments to rescue financial institutions.
The largest of the credit easing policy tools were the Fed’s programs direct lending to financial institutions, including opening the discount window to investment banks and extending an unprecedented credit line to AIG. It also provided credit to “key credit markets” in the form of loans and guarantees to money market funds and asset backed securities markets.
But over the course of 2009, those program have shrunk or been phased out. Meanwhile, one program, the Fed’s purchase of mortgage back securities, has grown by more than enough to make up for the decline of those program. What this means is that despite the rollback of some Fed bailout programs, the market is still highly leveraged to the balance sheet of the Fed. Read more here-http://www.businessinsider.com/chart-of-the-day-credit-easing-policy-tools-2009-11
-As for the argument that U.S. dollars are backed by the biggest gold reserves in the world, so holding them in reserve is relatively safe, that’s rubbish. True, the U.S. has a lot of gold, 8,100 tonnes of it officially, or 77 per cent of its reserves. But it’s well known in bullion circles that a lot or most of it has been lent out to banks and what not, that sell it short, depressing its value. Fabrice Taylor, Globe and Mail, November 11, 2009
-“Gold looks to be on target to hit $1,300 before the end of the year,” said Wallace Ng, the Hong Kong-based chief trader at Fortis Bank’s commodity-derivatives unit. “It will still be the dollar in the driving seat.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ay5FHp0soVxQ&pos;=7
-A massive plus for gold and for silver at this time is that they are still off the radar of the vast majority of investors, who innocently believe that their Fiat masters have ridden to their rescue on the recently created tidal wave of manufactured liquidity, and consider gold and silver to be the province of fringe wing survivalist eccentrics. We are thus still a long, long way from the kind of frothy public involvement that will mark the beginning of the end of the Precious Metals bull market. Clive Maund, 07 November 2009
-An economics professor at a local college made a statement that he had never failed a single student before, but had failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said, “OK, we will have an experiment in this class on the present administration’s plan”.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F. The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that. Jsmineset.com
-“Mark Dice, a California native, tried to sell a one ounce Canadian gold bullion coin for $50 but no one knew how much it was worth, nor were they interested. Unfortunately for them, one ounce of gold is $1,100 USD. According to Daily Paul, Mark Dice, founder of The Resistance and proponent of the 9/11 Truth Movement, stood in a California neighborhood near the beach trying to sell a one ounce Canadian gold coin but nobody in the area had the vaguest idea of how much it was worth nor were they interested.
Some were not interested just because it was Canadian. Dice talked to one couple and the gentleman said it is actually worth $200. Majority of people who Dice asked said they did not have any money on them nor would they pay anything for the gold coin, not even $5 or a Starbucks cup of coffee.
In the past, Dice has produced similar videos where he asked students at Berkeley what year the September 11, 2001 attacks occurred and surprisingly no one knew the answer.” Digital Journal.com-Watch video here-http://www.youtube.com/watch?v=Gk5aRIz17fk
-We ask how can taxpayers pay $15 trillion for US government debt over the next ten years? That does not count state, county and state debt. Then there is personal and corporate debt. The problem is that the debt cannot be paid. As a result the US will copy Argentina’s policies of the late 1990s. That is to print money until you can’t anymore, causing hyperinflation. This is the only way the debt can be dealt with.
This approach, instead of purging the system and getting it over with in a few years, has already dragged on six years with five to ten years to go. Today’s tactics by the Illuminists will guarantee 30% plus inflation in 2011 and 30 to 40 percent unemployment, before the dollar crashes and gold hits $6,700 an ounce. It shows you how desperate these people are to hold onto power and to loot American taxpayers.
It should be noted that over and over again Keynesianism has been a failure. Anyone who does not advocate the Austrian school has to be blind or a total opportunist. Changes will only come to America and many other countries, when it is forced upon it, not because people do not want change, but those entrenched in power will have to be led away kicking and screaming in order for change to take place.
There will be changes when it comes over the next few years; it will now be violent and those now in power will pay a terrible price. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1257961974.php or http://news.goldseek.com/InternationalForecaster/1257699600.php
-The U.S. economic recovery still faces many hurdles, including a persistently weak labor market and strained household budgets, Janet Yellen, President of the Federal Reserve Bank of San Francisco, said on Tuesday. Yellen said in a speech to a local organization she was not worried about inflation, arguing instead that the possibility of a problematic drop in consumer prices remains the greater risk.
“The strength and durability of the expansion is in question,” Yellen said. “Some of the rebound is due to temporary government programs and a swing in inventory investment that will not provide an ongoing source of growth.”
“The danger is that demand may grow at too anemic a pace to support vigorous expansion,” said Yellen. Addressing the nation’s battered housing market, Yellen said signs of stabilization were an important positive. But she cautioned that the high unemployment rate, currently at a 26-year high of 10.2 percent, raised the threat of a renewed wave of foreclosures that could again pressure home prices.
The outlook for commercial real estate is “worrisome,” Yellen said. Given the recession’s toll, U.S. consumers are still strapped for cash, and stagnant incomes are not helping.
“High unemployment, weak job growth, and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery,” said Yellen.
Another possible impediment to a vibrant recovery is the banking sector, which is still facing a mountain of bad loans, Yellen argued. Read more here-
http://www.reuters.com/article/companyNewsAndPR/idUSN1031029820091110
-Recovery Looks Like ‘L’ Without Job Growth: David Blanchflower. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.ehWt.VbFrk
-Assets in money-market funds have fallen to $3.3 trillion as of Nov. 3, from a peak of $3.9 trillion as the market crisis accelerated in early 2009, according data from iMoneynet, a research firm in Westborough, Massachusetts. Bloomberg-Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXn606_6sjx4&pos;=6
-All that ‘dry powder’ the bulls talk about is indeed being put to use money market fund assets fell an additional $29.3 billion last week. But the proceeds are heading towards bond funds, which had estimated inflows of $10.2 billion on top of $11.2 billion the week before. A further $239 million were directed into hybrid funds and this was in addition to $979 million the prior week as well. U.S. equity funds, as it turns out, suffered a $2.6 billion net outflow yet again.
This is remarkable and a testament to the resolve of the twice-burnt, thrice-shy general investing public. So far, the general public has stayed the course and is focused on income growth as opposed to strictly capital appreciation in its quest for sustainable long-term risk-adjusted returns in the face of a hedge-fund driven 60% rally in stocks from the lows. For a good ‘take’ on what this all means, have a look at page 5 of the Sunday NYT business section In Fund Flows, a Caution for Stocks. David Rosenberg-Gluskin/Sheff
-The Standard & Poor’s 500 Index may drop as much as 15 percent by the end of the year as declines in bank stocks signal an imminent fall, said Mary Ann Bartels, head of technical analysis at Bank of America Corp. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=amOcUYTmIOq8
-SocGen’s top analyst sees market lows next year. Albert Edwards, a top analyst with French bank Societe Generale, expects global markets to hit a new low in 2010, adding that he would not be surprised if the global economy enters another recession next year. Read more here-http://www.reuters.com/article/ousiv/idUSTRE5A90MT20091110
-Nine U.S. States Face California-Type Budget Crisis, Pew Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=anG43t4P6kho
-Outlook for Japan Is ‘Very, Very Grave’ on Debt, Says Halpenny. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a1fY.oxaNRT0
-Gorbachev Says Obama Should Start Afghan Withdrawal. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aP_6NUKjFaSM&pos;=8
-Obama Seeks Signal for Eventual End to Afghan War. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aE9WnvvyarhM
-Iranian President Mahmoud Ahmadinejad called on the US to choose between Israel and Iran on Tuesday night, according to Iranian state media. Read more here-
http://www.jpost.com/servlet/Satellite?cid=1257770037656&pagename;=JPost%2FJPArticle%2FShowFull
-Israel says photos prove weapons ship came from Iran. Israel released documents and pictures on Wednesday which it said provided proof that a massive arms shipment seized at sea last week came from Iran. Read more here-http://ca.news.yahoo.com/s/afp/091111/world/mideast_conflict_israel_iran_weapons_2
-Banker’s bonuses: 40% bigger this year. Global financial firms are planning to increase bonus payments as strong financial markets propel banks back to profitability. Read more here-
http://money.cnn.com/2009/11/09/news/economy/bank_bonuses/ or http://www.bloomberg.com/apps/news?pid=20601109&sid;=aR0E6lSBRfs8&pos;=11
-Goldman Sachs boss says banks do “God’s work”. Read more here-http://www.reuters.com/article/ousivMolt/idUSTRE5A719520091108
-Billionaire Bill Gates says Wall St pay too high. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idCNN1138630720091112
-Carnegie Hall Stagehand Moving Props Makes $530,044. Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=agzioCanEd0s
-Joe Montana Seeks $49 Million for 500-Acre Property. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aLRG65YFRJvw
-Swine Flu Infects 22 Million, Kills 3,900 in U.S. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a0Qvnf8T6uQM
-Swine flu skepticism demands deft response. Read more here-http://www.reuters.com/article/idUSTRE5A52FU20091112
-Seasonal Flu Shots Don’t Protect Against Swine Flu, Study Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid;=a.HdTk60eNz0
-Asteroid passes just 8,700miles from Earth with only 15 hours warning. Read more here-http://www.dailymail.co.uk/sciencetech/article-1226672/Asteroid-scrapes-past-Earth-just-8-700miles-away–15-hours-warning.html#ixzz0WblOSFfn
-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
-Christie’s annual Fall Sale of Magnificent Jewels will feature more than 250 gemstones and pieces of jewelry valued in excess of $33 million. Taking place on Dec. 1 at the Hong Kong Convention and Exhibition Centre, the sale will be a showcase of important diamonds, fine colored gemstones, top jadeite jewels and signed creations from the likes of Bulgari, Cartier, Graff, Van Cleef and Arpels and Wallace Chan.
The sale will also include four magnificent jewels from an esteemed private collection, including “The Vivid Pink,” a 5-carat fancy vivid-pink diamond with potentially flawless clarity set in a ring by Graff. It is estimated to fetch between $5 million and $7 million. The collection also includes a second ring set by Graff, this one featuring a 9.03-carat oval-shaped fancy vivid-yellow diamond with VVS1 clarity, estimated between $900,000 and $1.2 million.
Aside from The Vivid Pink, fans of colored diamonds will find a rare, rectangular-cut fancy intense-blue diamond weighing in at 3.02 carats ($940,000-$1.28 million), a 0.84-carat rectangular-shaped fancy red diamond ($250,000-$375,000), and a pair of 8.52-carat and 8.39-carat pear-shaped fancy yellow internally flawless diamond ear pendants ($400,000-$600,000). Read more here-http://www.nationaljewelernetwork.com/njn/content_display/fashion/jewelry-auctions/e3id386c4a26251b0b543b08ff543f18183
-A selection of rare natural-colored diamonds and historical jewels will be on auction at Sotheby’s Nov. 17 sale in Geneva. Approximately 400 lots are set for the auction block and are estimated to fetch more than $29.5 million. An array of important and unique natural blue, green and pink diamonds will be featured in the sale. Among the most anticipated of pieces up for auction is a pear-shaped fancy vivid-blue diamond with a modified brilliant cut and weighing 5.96 carats. It is estimated to fetch between $5.5 million and $7.5 million, and follows up the sale of the “Star of Josephine.”
The latter, a cushion-shaped fancy vivid-blue diamond, sold at Sotheby’s Geneva’s May 2009 auction for $9,488,754, or about $1.35 million per carat the current world auction record price per carat for a blue diamond and any gemstone. A rare cushion-shaped vivid-green diamond with a modified brilliant cut and weighing 2.52 carats represents the largest vivid-green diamond ever to appear at auction. It is estimated between $3.1 million and $5.1 million.
Additional colored diamonds to be featured include a cushion-shaped fancy pink diamond weighing 6.63 carats; a cut-cornered rectangular-shaped fancy vivid-yellow diamond with a modified brilliant cut, weighing 74.8 carats and mounted on a yellow gold ring; and a very rare fancy intense-blue brilliant-cut diamond ring of 3.17 carats. The pink is expected to fetch between $1.3 and $1.9 million; the yellow, between $2.5 million and $3.5 million; and the blue, between $1.6 million and $2.6 million. Read more here-
-An Andy Warhol painting of 200 dollar bills was sold for $43.8 million at a New York art auction by London-based art collector Pauline Karpidas, more than 100 times what she paid in 1986. Five bidders vied for Warhol’s 1962 “200 One Dollar Bills” at the Sotheby’s sale last night and it went to an unidentified phone buyer.
The 7 1/2-foot wide silkscreen canvas comprises repetitive images of one-dollar bills, reproduced in tones of black on grey, with a blue Treasury seal. Karpidas offered the work, according to two people familiar with the situation. She paid $385,000 for the painting at a 1986 Sotheby’s sale. “We’ve seen nothing like this recently,” said New York dealer Tony Shafrazi. “This is a masterpiece.” Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=aVVV8IsOLCOs
THE INFLATION TIME BOMB
-The public debt will likely pass $12 trillion this week, up another trillion since March. With Obama’s left flank calling for a second stimulus which is really a third stimulus if you count George Bush’s tax rebates there’s still no serious discussion about how to deal with debt. The bond market is telling us not to worry. But if history is any guide, the bond market is wrong.
I’m referring to Treasury Inflation Protected Securities, TIPS for short, in particular those that reflect long-run inflation expectations. The current spread tells us to expect annual inflation averaging a bit over 2 percent for the next 30 years. That would be fairly benign. And fairly wrong. Why? Because it assumes U.S. political leadership will put the country on a sustainable fiscal path. I highly doubt it will happen.
In a note to clients last month, Société Générale strategist Dylan Grice explained the connection between debt and inflation. Turning Milton Friedman on his head, Grice argued that “inflation is always and everywhere a fiscal phenomenon.” Money printing may be the vehicle, but the “root cause” of inflation tends to be “a government unable to pay its way.”
You see the real inflationary threat isn’t the $12 trillion public debt, which on its own is serviceable. The problem is $63 trillion worth of unfunded obligations for healthcare and social security. Putting these figures in context, the U.S. government’s total liabilities are 19 times current tax receipts. “Bear in mind that the U.S. consumer is widely seen as dead in the water with debt at 1.3 times income,” says Grice.
There are three ways to confront this mountain of debt.
Scenario 1: We essentially default, like Argentina, refusing to pay our debts once they’ve become too burdensome to service. The dollar would crash as the United States loses access to capital markets. The government would be forced to print money to pay expenses.
Unlike Argentina, however, we print the currency in which our debt is payable, so this scenario most likely won’t happen.
Scenario 2: We default through inflation. Policymakers are so desperate to avoid Japan-style deflation that the Fed will keep printing money to buy risky assets while Treasury pours on the stimulus to keep people employed. The Fed says it won’t run the printing press to pay the debt, but if the only alternative is default, they’ll have no choice.
Scenario 3: We put Medicare and Social Security on a sustainable path, cutting benefits or raising taxes dramatically. This would require a level of political will we’ve never demonstrated.
Right now, TIPS are betting on Scenario 3. I hope they’re right, but just in case, I’m planning for Scenario 2. Read more here-
http://blogs.reuters.com/rolfe-winkler/2009/11/10/the-inflation-time-bomb/
-The Next Crisis: Spiraling Inflation Part 1. The US economy contracted for four consecutive quarters since October 2008, something we have not seen since the Great Depression. A V-shaped recovery is simply not in the cards because the credit crisis has caused deep, systemic damage.
Having said that, if the recession ends this year, it certainly won’t be because the global economy is healthy. Bank of Canada Governor John Carney and US Federal Reserve Chairman Ben Bernanke are proudly predicting that GDP will turn positive later in 2009, but much of that growth will be the result of trillions of dollars of government spending.
There is only one politically acceptable way to pay for those trillions, and that is to expand the money supply at an explosive rate. That is exactly what the US Federal Reserve has been doing for the past year. But history and economics tell us that rapid increases in the money supply spell big trouble for investors because they set the stage for spiralling inflation. Here are four big reasons to worry about inflation. Nick Barisheff-Read more here-http://news.goldseek.com/GoldSeek/1256832927.php
FIVE MORE U.S. BANKS FAIL
-Five more banks fail 120 for the year. Banks in California, Georgia, Michigan, Minnesota and Missouri were shuttered, costing the FDIC a total of $1.5 billion. Read more here-
http://money.cnn.com/2009/11/06/news/economy/bank_failures/index.htm or http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ayPwsBV1DI3c
U.S. OCT BUDGET DEFICIT WIDENS TO $176.4 BILLION
-The U.S. budget deficit widened in October from a year earlier, reaching a record for that month, as rising unemployment cut revenue at the start of the first full fiscal year under President Barack Obama.
The excess of spending over revenue widened to $176.4 billion last month, compared with a deficit of $155.5 billion in the same month a year earlier, the Treasury Department announced today in Washington in its monthly budget statement. It was a record 13th consecutive shortfall and the fifth-largest monthly gap on record, the department said.
Unemployment in the U.S. at a 26-year high of 10.2 percent in October and spending from the $787 billion economic stimulus plan are straining the Treasury’s finances. The government is headed for a second straight year of a deficit exceeding $1 trillion. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aTOGfwzRmEHY
U.S. UNEMPLOYMENT
-Broader Measure of U.S. Unemployment Stands at 17.5%. Read more here-http://www.nytimes.com/2009/11/07/business/economy/07econ.html
-Last week, the Labor Department reported that the unemployment rate increased to 10.2% a 26-year high. For some perspective on the current state of the labor market, today’s chart illustrates the unemployment rate since 1948. As today’s chart illustrates, today’s move above the 10% threshold marks only the second time such a move has occurred during the post-World War II era.
It is also worth noting that the unemployment rate has tended to peak shortly after the end of the recession. Following the previous two recessions, however, the unemployment rate kept rising for many months following the beginning of an economic “expansion.” Read more here-http://www.chartoftheday.com/20091106.htm?T
-Chart of the day: We’re Bleeding Jobs, But Blood Loss Is Slowing. U.S. unemployment hit a shocking 10.2% in October. Worse yet, the “real” unemployment rate, which adds in things such as discouraged workers who have dropped out of the labor force, hit 17.5%. Ouch. What are we Europe? Yet there’s some light at the end of the tunnel.
While the unemployment rate and “real” unemployment rate rose in October, the rate of deterioration (year over year change) for both measures kept falling, as shown below. Moreover, the trend of the more conservative “real” unemployment rate (in red) improved faster than that of standard unemployment (in blue).
Thus we’re still bleeding jobs and it hurts, but the blood loss is slowing rapidly and starting to come under control. Hopefully the patient still has a pulse by the time the blood stops. Read more here-http://www.businessinsider.com/chart-of-the-day-unemployment-rate-2009-11
-America’s “Jobless Recovery.” The Labor Department on Friday reported that headline unemployment in the United States has now climbed to 10.2%, a 26-year high. I use the word “headline” purposefully because the true unemployment rate is much higher.
If discouraged workers who have stopped looking for work and other similar categories excluded from the headline number are added back in (which calculation is provided in the Labor Department’s U-6 report), then unemployment is 17.5%, which is approaching levels last seen during the Great Depression. It is further evidence to confirm a point I have already made that we are moving into another Great Depression.
This outlook of course conflicts with the so-called “jobless recovery” scenario being bandied about by various politicians and policymakers and dutifully trumpeted by the mainstream media. Like many things coming from Washington D.C. these days, it cannot be believed.
A true economic recovery must of course be fueled by job creation. Personal income and then in turn, personal spending is the driver of economic activity. If people are losing jobs as has been the case now for 22 straight months, the longest stretch on records dating back 70 years they do not have employment income, and as a consequence, their spending will be curtailed. So a “jobless recovery” is nothing more than a figment in the mind of the clever spin-meister who created that term. It is, at worst, propaganda, which alienates people and further reduces the credibility of politicians and policymakers.
Here’s how John Williams of ShadowStats.com describes this current slump and highlights the importance of personal income: “The most severe economic downturn since the onset of the Great Depression continues the downturn is structural, tied to consumer income growth failing to keep up with inflation. The traditional offset to weak income issues in recent years has been encouragement of consumer debt expansion. Such debt expansion, however, is not available at present, at least not in quantities that would support an expanding economy.” James Turk-Read more here-http://www.fgmr.com/americas-jobless-recovery.html
-U.S. unemployment rate headed for 12.0-13.0%. There are serious structural issues undermining the U.S. labour market as companies continue to adjust their order books, production schedules and staffing requirements to a semi-permanently impaired credit backdrop. The bottom line is that the level of credit per unit of GDP is going to be much, much lower in the future than has been the case in the last two decades.
While we may be getting close to a bottom in terms of employment, the jobless rate is very likely going to be climbing much further in the future due to the secular dynamics within the labour market. But in a nutshell, to be calling for a 12.0-13.0% unemployment rate is meaningless except that it is very likely going to be a headline grabber. The most inclusive definition of them all, the U6 measure of the unemployment rate, which includes all forms of unemployed and underemployed, is already at 17.5%.
The posted U3 jobless rate that everyone focuses on is at 10.2% (though if it weren’t for the drop in the labour force participation rate, to 65.1% from 66.0% a year ago, the unemployment rate would be testing the post-WWII high of 10.8% right now). The gap between the U6 and the official U3 rate is at a record 7.3 percentage points. Normally this spread is between 3-4 percentage points and ultimately we will see a reversion to the mean, to some unhappy middle where the U6 may be closer to 15.0-16.0% and the posted jobless rate closer to 12%.
This will undoubtedly be a major political issue, especially in the context of a mid-term elections and the GOP starting to gain some electoral ground. Think about it. We haven’t yet hit bottom on employment but that will happen at some point. Employment is not going to zero, of that we can assure you. But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first?
Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began.
So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over perhaps even years. David Rosenberg-Gluskin/Sheff-Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aHmxIMR1DFq0
OIL-NAT GAS
-Peak oil closer than IEA forecasts show: report. The world is closer to a peak in oil supply than International Energy Agency estimates admit, UK newspaper The Guardian reported in its Tuesday edition, citing an unidentified “whistleblower” at the IEA.
The IEA, which advises 28 industrialized countries on energy policy, is scheduled to release its World Energy Outlook on Tuesday. It 2008 Outlook forecasts world oil supply will rise to 106 million barrels per day in 2030.
“Many inside the organization believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further,” the Guardian quoted the IEA source as saying. Read more here-
http://www.reuters.com/article/ousiv/idUSTRE5A85JT20091110
-Key oil figures were distorted by US pressure, says whistleblower. Read more here-http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency or http://www.caseyresearch.com/displayCdd.php?id=273
-Oil at $100 Doesn’t Compute as OPEC Output Pace Grows. OPEC is increasing output at the fastest pace in two years, adding to near-record inventories and threatening speculators betting on $100 crude with losses. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=azBYyQJsjFF0
-Crude Oil Is ‘Coiled’ to Spring to $85: Technical Analysis. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=akW_.xVfKQPI
-Crude Oil Falls on Larger-Than-Expected U.S. Supply Increase. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aLtIM89Ufbjw
-IEA Expects Gas Glut as Unconventional Output Rises. There may be an “acute glut” of natural gas in the next few years because of rising production of so-called unconventional fuel in the U.S. and Canada, according to the International Energy Agency.
Global unconventional gas output will rise to 629 billion cubic meters in 2030 from 367 billion cubic meters in 2007, or to 15 percent of worldwide supply from 12 percent, the Paris- based adviser to 28 countries said in its annual World Energy Outlook. Gas supply capacity is set to outpace annual demand growth of 2.5 percent between 2010 and 2015, the IEA said.
“The looming gas glut could have far-reaching consequences for the structure of gas markets and for the way gas is priced in Europe and Asia-Pacific,” the IEA said in the report today.
Companies such as Chesapeake Energy Corp. and Statoil ASA are investing in unconventional sources for gas including shale rock and coal seams. Shale gas is locked in non-porous rock that made the reserves inaccessible until producers developed new drilling techniques in the 1990s.
U.S. natural gas prices in September fell to $2.409 per million British thermal units on the New York Mercantile Exchange, the lowest in more than seven years, as demand from chemical plants and power producers slumped. Read more here-http://www.bloomberg.com/apps/news?pid=20602099&sid;=aYg3CSlzQrkc
REAL ESTATE
-There are still too many houses. House prices have pulled out of their free fall, but don’t expect them to recover until we work through a huge property glut. Read more here-
http://money.cnn.com/2009/11/10/news/economy/too.many.houses.fortune/index.htm?eref=patrick.net
-Fewer U.S. Homeowners Owe More Than Properties Are Worth. The number of U.S. homeowners who owe more than their properties are worth fell in the third quarter as values stabilized and some homes were lost to foreclosure, Zillow.com said. About 21 percent of owners of mortgaged homes were underwater, down from 23 percent in the second quarter, the Seattle-based real estate data provider said today in a report.
“The decline in the percentage of homeowners with negative equity is a positive sign, and is directly attributable to the stabilization of home values from the second quarter to the third,” Zillow Chief Economist Stan Humphries said in a statement. “It is also attributable to many homeowners who were previously underwater on their mortgage losing their homes to foreclosure.” Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=att2nsux_fFo
-Getting Serious About Your House and the Market. When Matthew White, a landscape architect, decided two years ago to sell his 1,300-square-foot apartment in Philadelphia, he knew real estate prices were plummeting. Nevertheless, he thought he could get $760,000, about what he had paid two years earlier, because he had made many improvements to the space, an airy penthouse with two verdant terraces.
“It’s an incredible property, with spectacular views,” he said. Within a month, he got what he considered an “insulting” bid of $525,000. Five price reductions later, he wishes he had taken that offer. “I wasn’t realistic about what I could get,” said Mr. White, whose apartment is currently listed for $449,900. “It is such a special place, but now I realize that doesn’t matter during a recession.”
“Your home is where you live,” said Kathy Wetmore, a Houston real estate agent, not an investment with a guaranteed return. Recalling several boom and bust cycles in her 22-year career, she added, “You make money in business, not in real estate.” Read more here-http://www.nytimes.com/2009/11/05/garden/05appraisal.html?pagewanted=print
-U.S. Foreclosure Filings Surpass 300,000 for 8th Straight Month. U.S. foreclosure filings surpassed 300,000 for an eighth straight month as unemployment made it tougher for homeowners to pay their bills, RealtyTrac Inc. said.
A total of 332,292 properties received a default or auction notice or were seized by banks in October, up 19 percent from a year earlier, Irvine, California-based RealtyTrac said today. One in every 385 households received a filing. The tally fell 3 percent from September, the third consecutive monthly decline.
“The foreclosure problem is still with us and will keep prices down,” Stephen Miller, chairman of the economics department at the University of Nevada at Las Vegas, said in an interview. “The real issue is we don’t know what inventory banks are holding that they have yet to put on the market.”
Distressed real estate transactions accounted for 30 percent of all home sales in the third quarter as the median price fell 11 percent from a year earlier to $177,900, according to the National Association of Realtors. U.S. unemployment surged to a 26-year high of 10.2 percent in October as payrolls fell by 190,000 workers, the Labor Department said last week. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aaXO2EVjAjb4&pos;=6
-Commercial Real Estate ‘Crisis’ Looming for U.S.: Chart of Day. “A crisis of unprecedented proportions is approaching” in the U.S. commercial real-estate market, according to Randall Zisler, chief executive officer of Zisler Capital Partners LLC.
The CHART OF THE DAY displays quarterly returns on commercial property apartment buildings, hotels, industrial sites, offices and stores as compiled by the National Council of Real Estate Investment Fiduciaries. Returns were negative for the past five quarters, the longest streak since 1992.
Property prices have fallen by 30 percent to 50 percent from their peaks, Zisler estimated yesterday in a report. The plunge has wiped out the equity in most real-estate deals that relied on debt financing since 2005, he wrote. Read more and view chart here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=atReshofT51c&pos;=15
-If You Thought the Housing Meltdown Was Bad. That’s right, the next train wreck will be in commercial real estate. Couldn’t be worse than last year’s residential market crash? That remains to be seen. But it’s coming soon, probably as early as the second quarter of next year, and there’s nothing that can prevent it. The government will intervene, trying desperately to delay the day of reckoning, and may even succeed.
For a while. But make no mistake about it, that train is going off the tracks no matter what. Every part of the sector from multifamily apartment buildings to retail shopping centers, suburban office buildings, industrial facilities, and hotels has accumulated a huge amount of defaulted or nonperforming paper. It’s an impossible, swaying structure that cannot long stand. Read more here-http://news.goldseek.com/GoldSeek/1257793668.php
-L.A.-area real estate agents are holding open mansions. Amid the market downturn, the public is welcome to see some properties listed for more than $10 million. Read more here-
http://www.latimes.com/business/la-fi-open-house5-2009nov05,0,3700158,print.story
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – November 17, 2009
Posted by Worldwide Precious Metals on Tuesday, November 17, 2009
The Goldbugg Report – November 10, 2009
November 10, 2009
-Can gold hit $1,500?
-Gold may touch $4,000 during this bull run.
-Current Gold/Silver Ratio Screams: Buy All Things Silver
GOLD
-India, the world’s biggest gold consumer, bought 200 metric tons from the International Monetary Fund for $6.7 billion as central banks show increased interest in diversifying their holdings to protect against a slumping dollar.
The transaction, equivalent to 8 percent of world annual mine production, was the IMF’s first such sale in nine years and propels India to the ninth-biggest government owner globally, according to figures from London-based research company GFMS Ltd. The country previously held 358 tons, the data show. The news was a “surprise because everybody was talking about China being the buyer,” said James Moore, an analyst at TheBullionDesk.com.
“The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.”
India purchased the gold at an average price of about $1,045 an ounce, according to an IMF official on a conference call. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=al7qXOH.bVn8 or http://www.reuters.com/article/wtUSInvestingNews/idUSSP37590020091103
-RBI buys half of IMF’s gold for sale; who’s next? Read more here-http://in.reuters.com/article/economicNews/idINIndia-43625720091103?sp=true
-Q+A Why is India buying IMF gold? Read more here-http://uk.reuters.com/article/idUKBOM33873420091103
-India dumps dollars for IMF gold is China next in line? The news that the IMF has sold virtually half the gold it has approved for sale to India surprised some observers although the growing Asian giant is, on reflection, a logical purchaser. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=91828&sn;=Detail
-Central banks will become global net buyers of gold, the World Gold Council’s chief executive officer said today at a conference in Edinburgh. “I believe that central banks will be net buyers over time,” Aram Shishmanian told the conference. Bloomberg
-Is India clearing the way for gold ‘moonshot’? India’s IMF bullion purchase excites the gold bugs. Let Mary Anne and Pamela Aden tell the story. Their Aden Forecast first came to fame in the great gold bull market 30 years ago. The Adens are careful and adroit traders, and have a strong track record according to Hulbert Financial Digest, but they were speculating that gold might ultimately reach $5,800 when I last looked.
Last night they wrote in a hotline: “Gold is the big news this week. It hit another new record high today, quickly closing in on the $1,100 level. This followed yesterday’s $31 jump, which clearly propelled gold well above its previous high. The news that India bought 200 tons of the [International Monetary Fund's] gold (half of what it’s planning to sell) at these high prices, and in one fell swoop, was incredibly bullish.
It was viewed as a strong sign that gold is not too expensive and the Indians, who have a long gold history, obviously believe it’s going high.” The Adens conclude: “Our next target for gold at $1,200 is looking more realistic.” Read more here-http://www.marketwatch.com/story/story/print?guid=D3BFF5F0-FDEE-4D98-96D2-47BB8D03655C
-India Shows Hedge-Fund Savvy With Huge Gold Buy: William Pesek. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ae2wslm0YHgc
-We are still contemplating the massive gold purchase by the Reserve Bank of India the largest in at least 30 years that took up half of what the IMF intends to sell. Look for China to come in next.
But here is the reality. All India did was bring gold to a 6% share of its total FX reserves from 4%. Fifteen years ago, that representation was closer to 20%. China has increased its gold holdings by 76% over the past six years but they are a mere 1.9% of the aggregate 2.2 trillion of reserves and Russia’s gold holdings is just under 5%. This is not the 1990s when Bob Rubin was running a hard U.S. dollar policy, U.S. fiscal deficits were vanishing and gold production was on the rise.
Today’s world is exactly the opposite. Policymakers beginning in the 1990s wanted disinflation and got it. Now they want inflation it will take years, maybe a decade, but it will come. For the near-term, we are still optimistic on Treasury securities but be forewarned that this view has an expiry date that is earlier than the peak we are likely to see in gold.
It is very clear that central banks are behaving in a way that would suggest that gold is now again being considered a currency within the global monetary system. As we said before, it is all about relative scarcity and a well-defined supply curve fiat currency at this juncture does not share that quality. As a good friend reminded me yesterday, when the Fed was created nearly a century ago, it was acceptable to have at least 40% of the money supply backed by gold reserves. The U.S. now has 8,133 tons of gold in reserve, which equates to $285 billion at this year’s pricing.
Meanwhile, the Fed has spiked the punchbowl to such an extent that the monetary base now stands at $1.7 trillion. Do the math under the old regime (which indeed hamstrung the Fed), the U.S. alone would need to buy an incremental $400 billion of bullion or the equivalent of what would be nearly four times the typical level of annual demand. We could do the same calculation based on M2 but we don’t want anyone falling off their chairs. David Rosenberg-Gluskin/Sheff
-Sri Lanka’s central bank has been buying gold for the past five or six months as it diversifies its reserves amid volatile markets, the bank’s governor said in an interview on Thursday. “We have been fairly strong accumulators of gold reserves over the past few months,” Sri Lanka Central Bank Governor Ajith Nivard Cabraal told Reuters in a telephone interview from the southern Indian city of Chennai.
“We haven’t stopped yet,” he added, declining to quantify how much gold the central bank had bought or how much of the more than $4.8 billion of the country’s reserves were in gold. “Many countries are today diversifying. They are also looking at intrinsic value of their reserves, so gold would be a natural candidate for that kind of reserve accumulation,” he said. Read more here-http://www.gata.org/node/7983
-It would be cheaper for China to buy domestically mined gold than purchase bullion the International Monetary Fund is seeking to sell, a former adviser to the People’s Bank of China said on Thursday.
Asked whether China should emulate India, which last month bought 200 tonnes of IMF gold at an average price of $1,045 an ounce, Li Yang told reporters on the sidelines of a financial forum: “China’s gold is much cheaper than that.” Read more here-http://in.reuters.com/article/businessNews/idINIndia-43702720091105
-Fed statement may let gold continue upward course. Read more here-http://www.gata.org/node/7981
-Gold Being Rediscovered as a Monetary Asset. Read and watch more here-http://www.cnbc.com/id/15840232?video=1317326752&play;=1
-The latest commentary by Sprott Asset Management’s chief investment strategist, John Embry, argues that central bank and government treasury talk about withdrawing “stimulus” funds from the world financial system is a con job and that the desperate basement of world currencies will continue, causing gold and silver prices to go berserk.
Embry’s commentary appeared in Investor’s Digest of Canada and is headlined “Con Job in the Financial Markets Continues. Read more here-http://www.gata.org/node/7987 or
-Can gold hit $1,500? The price of gold is flirting with $1,100 an ounce. Many other precious metals continue to surge. How much higher can gold go and what’s it all mean? Read more here-http://money.cnn.com/2009/11/04/markets/thebuzz/index.htm
-Gold may touch $4,000 during this bull run. Here are 10 compelling reasons why gold is going to do well this year.
The Stimulus Effect: Including $1 trillion in cash infusions, the stimulus plan will pump $9.7 trillion into the economy, according to Bloomberg. As the Globe & Mail reports flatly, “Many believe that the monetary stimulus efforts will cause a spike in inflation,” driving gold higher.
COMEX Traders Predict $1,600 Gold… by December: If gold trades at or above $1,600 by December, some 100,000 call option contracts will be “in the money.” Big-money players Goldman Sachs and JPMorgan are reportedly helping to drive the action, ahead of a huge purchase of gold futures contracts.
“Big Money” Inflows: In 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold, too, including Eton Park Capital, Green light Capital and Hayman Advisors.
China’s Doubling Down! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries and into gold, this will help fuel the next leg of the run-up.
Demand Building across the Board: Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540%… another trigger for the coming gold boom.
The Paper Dollar’s 30% Drop: Since 2001, the U.S. Dollar Index has tanked 30%… while gold has risen 300%. With all the downward pressure on the dollar, and inflation on the way, this trend is about to pick up steam.
Gold/Dow Ratio Signals $8,000 Gold: During major gold bull markets (and corresponding equity bears), gold and the Dow converge at a 1-to-1 ratio. During the last gold bull, the Dow sank to 850 and gold rose to $850. The Dow is now over 8,000… But even if it fell to 4,000, we could see $4,000 gold before this bull run is over!
U.S. Treasury Dept. Signals $5,468 Gold: Currently, the U.S. government holds about 286.9 million ounces of gold. It has printed about $1.569 trillion worth of paper dollars. If each dollar were backed by gold, that would put the price at $5,468.80 an ounce.
Riding the “Commodity Super Cycle”: Jim Rogers expects the Commodity Super Cycle to drive commodity prices higher for another eight years… including gold. And he’s stockpiling the yellow metal by the day. Every pullback, says Rogers, is another buying opportunity. Considering he’s been dead right on every major trend of the past 40 years, we wouldn’t bet against him.
Historic Model Predicts $6,214 Gold: During the last gold bull, the yellow metal ran from $35 an ounce to $850, a 24-fold increase. This bull started with gold at $255.95, meaning that if historic trends hold, the price target would be $6,214 an ounce. Read more here-http://www.commodityonline.com/news/Gold-may-touch-$4-000-during-this-bull-run-22567-3-1.html
-Rob McEwen, founder of Goldcorp Inc., said the recent decline in gold’s price is temporary and that the metal will reach $2,000 an ounce by the end of 2010. “There is a seasonal low in this part of the year; I wouldn’t be disturbed by it,” McEwen said.
“I think by the end of 2010 we will be at $2,000; by the end of this cycle it will be at $5,000.” He gave no timeframe for the end of the cycle. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aobedrOd8X4o
-Gold to Make New Highs Above $2000, Says Commodity Maven Frank Holmes. Read and watch more here-http://news.goldseek.com/GoldSeek/1256919865.php
-$1,160 is Gold’s Next Target Level: Charts. Read more here-http://www.cnbc.com/id/33632775?__source=RSS*blog*∥=RSS
-Gold Spells Trouble for Greenback: Charts. The value of gold and silver are on the rise, but this spells trouble for the declining dollar index which could push as low as 66 points, according to Chris Zwermann, strategist from Zwermann Financial.
While gold strength spells trouble for the US dollar, the silver market is likely to rise with gold pushing the spot silver value to more than $20 per ounce, he said. Read and watch more here-http://www.cnbc.com/id/33615933
-Rogers Says Roubini Is Wrong on Bubbles as Gold, Stocks Rally. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a8fc.G.WUIP8
-Roubini Says Rogers’s Forecast of $2,000 Gold ‘Utter Nonsense’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aOfwpkHV2clM
-Got Gold Report: Gold, silver futures in backwardation. Read more here-http://www.stockhouse.com/Columnists/2009/Nov/3/Got-Gold–Report–Gold,-silver-futures-in-backward
-King World News interviews GATA’s Douglas on ‘imaginary’ gold. Listen here-http://www.gata.org/node/7953
-Cashing in Memories, at $1,000 an Ounce. Read more here-http://www.nytimes.com/2009/11/01/nyregion/01critic.html?_r=2&pagewanted;=print or http://www.gata.org/node/7958
SILVER
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Current Gold/Silver Ratio Screams: Buy All Things Silver! Read more here-http://news.silverseek.com/SilverSeek/1257377703.php
-Silver set to soar as it did in the 1970’s. Silver remains very undervalued on an historical basis and is undervalued even against gold. While gold has begun to receive some interest from a small minority of retail investors, silver remains the preserve of relatively few contrarian investors and the media and financial press rarely if ever covers silver. And yet silver is quite likely in the intermediate stage of a bull market that will rival or surpass that of the 1970’s.
Silver is currently worth less than $17.00 per ounce. 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 months. 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.
Silver is unique in terms of being both a monetary and an industrial metal. Silver is priced at less than $17/oz today. The average nominal price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today’s dollars and adjusted for inflation that would equate to an inflation adjusted average price of some $60/oz and $44/oz in 1979 and 1980. It is for this reason that we believe silver will be valued at well over $50/oz in the coming years and silver remains the investment opportunity of a lifetime. Read more here-
http://news.silverseek.com/SilverSeek/1257267140.php
-Xerox claims printable electronics breakthrough with silver. Read more here-http://www.pcmag.com/article2/0,2817,2354848,00.asp
-US Mint Silver Bullion Sales Top Annual Record. Read more here-http://news.coinupdate.com/us-mint-silver-bullion-sales-top-annual-record-006/
-US Mint Gold and Silver Coin Demand Sets October Records. Read more here-http://www.coinnews.net/2009/11/02/us-mint-gold-and-silver-coin-demand-sets-october-records/
-Trade Imbalances Are Silver’s Bullish Signal. Read more here-http://news.silverseek.com/SilverSeek/1257283566.php
-Ted Butler silver commentary. Read more here-http://news.silverseek.com/SilverSeek/1257430207.php or http://www.gata.org/node/7986
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7955
-Take the Long View for Gold & Silver. When gold reached its record high against the US dollar of $1064.20 on October 13th, the price of gold in euros, Swiss francs and British pounds did not confirm. On that day they were still below their recent high by 10.1%, 7.5% and 4.4% respectively. Technically, this result was a bearish divergence, which can be a warning sign that the market’s internal condition is deteriorating. For example, bearish divergences often signal a top.
Whether or not gold was signalling a potential top, the argument could be made and many have made it – that gold was rising solely because of dollar weakness, rather than underlying fundamental strength. It is an argument that on the surface seems plausible, but it is one that is not supported by an obvious fact. Namely, gold has been rising against all of the world’s major currencies this decade, and for the past eight years has appreciated by double-digit rates of return against all of them. However, gold’s progress at any moment in time is very much dependent on relative currency movements.
For example, in 2008 gold dropped -14.9% in terms of the Japanese yen while at the same time it appreciated 44.3% against the British pound. But from 2001 through 2008, gold’s performance against these two currencies is similar, rising 13.6% p.a. on average against the yen and 17.1% p.a. against the pound.
What’s more, last year’s results are to a certain extent being corrected this year. Through October, gold is up by 16.7% against the yen and only 4.8% against the pound, which makes my point. We live in a world of floating currencies that bob up-and-down relative to each other, but they are all sinking against gold, as evidenced by gold’s double-digit rates of appreciation this decade against all of them, as shown in the following table (which also presents separately, gold’s results this year for the ten months through October 31st).
|
Gold % Annual Change |
|||||||||
|
USD |
AUD |
CAD |
CNY |
EUR |
INR |
JPY |
CHF |
GBP |
|
|
2001 |
2.5% |
11.3% |
8.8% |
2.5% |
8.1% |
5.8% |
17.4% |
5.0% |
5.4% |
|
2002 |
24.7% |
13.5% |
23.7% |
24.8% |
5.9% |
24.0% |
13.0% |
3.9% |
12.7% |
|
2003 |
19.6% |
-10.5% |
-2.2% |
19.5% |
-0.5% |
13.5% |
7.9% |
7.0% |
7.9% |
|
2004 |
5.2% |
1.4% |
-2.0% |
5.2% |
-2.1% |
0.0% |
0.9% |
-3.0% |
-2.0% |
|
2005 |
18.2% |
25.6% |
14.5% |
15.2% |
35.1% |
22.8% |
35.7% |
36.2% |
31.8% |
|
2006 |
22.8% |
14.4% |
22.8% |
18.8% |
10.2% |
20.5% |
24.0% |
13.9% |
7.8% |
|
2007 |
31.4% |
18.6% |
10.4% |
23.0% |
17.9% |
17.5% |
24.7% |
21.5% |
29.2% |
|
2008 |
5.8% |
32.5% |
32.4% |
-1.1% |
11.9% |
30.4% |
-14.9% |
0.2% |
44.3% |
|
Annual Average |
16.3% |
13.3% |
13.6% |
13.5% |
10.8% |
16.8% |
13.6% |
10.6% |
17.1% |
|
31-Oct-2009 |
17.7% |
-8.7% |
4.0% |
17.8% |
11.3% |
13.7% |
16.7% |
13.1% |
4.8% |
Interestingly, the results for silver are similar. Silver had a relatively bad year in 2008 against most currencies because it was sold aggressively in the deleveraging that occurred after the collapse of Lehman Brothers. But look in the table below at the remarkable results that silver has achieved so far this year.
|
Silver % Annual Change |
|||||||||
|
USD |
AUD |
CAD |
CNY |
EUR |
INR |
JPY |
CHF |
GBP |
|
|
2001 |
-0.1% |
8.5% |
6.1% |
-0.1% |
5.3% |
3.1% |
14.4% |
2.3% |
2.7% |
|
2002 |
4.8% |
-4.6% |
4.0% |
4.9% |
-11.0% |
4.3% |
-5.0% |
-12.6% |
-5.3% |
|
2003 |
24.0% |
-7.3% |
1.4% |
23.9% |
3.2% |
17.7% |
11.9% |
11.0% |
11.9% |
|
2004 |
14.3% |
10.2% |
6.5% |
14.3% |
6.4% |
8.6% |
9.6% |
5.4% |
6.5% |
|
2005 |
29.6% |
37.7% |
25.5% |
26.3% |
48.1% |
34.6% |
48.8% |
49.3% |
44.4% |
|
2006 |
45.3% |
35.3% |
45.3% |
40.5% |
30.4% |
42.6% |
46.7% |
34.8% |
27.5% |
|
2007 |
15.4% |
4.1% |
-3.1% |
8.0% |
3.5% |
3.2% |
9.5% |
6.7% |
13.5% |
|
2008 |
-23.8% |
-4.7% |
-4.7% |
-28.9% |
-19.5% |
-6.2% |
-38.8% |
-27.9% |
3.8% |
|
Annual Average |
13.7% |
9.9% |
10.1% |
11.1% |
8.3% |
13.5% |
12.1% |
8.6% |
13.1% |
|
31-Oct-2009 |
44.2% |
11.8% |
27.4% |
44.3% |
36.3% |
39.2% |
42.9% |
38.6% |
28.4% |
So the point of this analysis is to forget about the bearish divergences and other noise that can easily distract one from the big picture, which is clear from the above tables. It does not really matter whether gold is up or down one week or one month in terms of one currency or another. Let the professional currency traders and speculators worry about those fluctuations. Focus instead on the big picture and take a long view.
In the long run, all currencies are losing purchasing power against gold, which is the important point. Don’t get caught up in the daily, weekly or even monthly price changes in the precious metals that occur as a result of the volatility of fiat currencies.
We therefore need to ignore the noise that can easily distract us from the big picture. And one way to do that is to continue following the strategy I have been recommending all decade. Save gold, and/or save silver. Accumulate precious metal month-in and month-out under a cost averaging program, and view the gold and silver accumulated in this way to be your savings account. Savings are always a good thing, particularly so when you are saving sound money. James Turk-Read more here-http://goldmoney.com/commentary-take-the-long-view-for-gold-and-silver.html
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: Bernanke Rips A Page From Japan’s Suicidal Playbook. Let’s hope that Bernanke doesn’t keep playing by Japan’s suicidal 1991 interest rate playbook for too much longer. The chart below shows Japan’s 1991-2006 interest rates on top of our current U.S. interest rate cycle.
While Mr. Bernanke is trying to temporarily fight deflationary forces in the economy after the massive housing bust, don’t forget that Japan’s low interest rate policy lasted far longer than they had initially expected. And they lost a decade of economic growth by not allowing prices to fall when they should have. If we follow Japan, our rates would stay low until 2022.
Sure, the U.S. dynamics are different. Yet if Bernanke follows the Japan model for just a quarter as long as Japan did, while we might not lose a decade of growth, we might set off a decade of dollar-destroying inflation. Read more here-http://www.businessinsider.com/chart-of-the-day-japan-vs-us-interest-rates-2009-11
-It is Japan we should be worrying about, not America. Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world’s second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending and allowing it to push public debt beyond the point of no return. Read more here-
-Quotes from the great depression. Read more here-http://alethonews.blogspot.com/2009/11/quotes-from-great-depression.html
September 1929-”There is no cause to worry. The high tide of prosperity will continue.” Andrew W. Mellon, Secretary of the Treasury.
October 14, 1929-”Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board.” New York Times
December 5, 1929-”The Government’s business is in sound condition.” Andrew W. Mellon, Secretary of the Treasury
December 28, 1929-”Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression.” Associated Press dispatch.
-This weeks major event was FOMC’s unanimous decision to keep “Interest rates exceptionally low” for an “extended period of time.” This means that US dollar will remain the carry trade currency of choice as we transit to new ground with a major reserve currency as a carry trade currency. There are no rules or experience with this phenomenon.
Professor Roubini says $2000 gold is nonsense. I agree. It is probably going to a minimum of Alf Field’s lowest estimate of $3000. Professor Roubini might consider the old saying of “Never say never.”
I can’t tell you how many emails have I received telling me that gold would NEVER trade over $1000. One caller told me gold would never trade over $1000 in his lifetime, so I enquired how old he was. He hung up. Jim Sinclair
-India, like China, understands the virtues of gold. This is why they have snapped up 200 tons of gold from the IMF at around $1,045 per ounce or $6.7 billion. The UK does not understand gold, that is why Gordon Brown sold most of the nation’s gold in 1999 at virtually the low of $250.
Instead the UK has today spent $51 billion on propping up bankrupt banks. Royal Bank of Scotland received another $41 billion today making it the costliest bailout worldwide with a total of $75 billion. Lloyds Bank received another $10 billion. The US is of course also spending printed money on rescuing bank creditors with 115 bank failures so far in 2009.
So who is likely to make the best return on their investment, India with their gold or the UK or US with their bankrupt banks. We certainly know who we will put our money on.
Matterhorn Asset Management-Read more here-http://goldswitzerland.com/index.php/india-buys-gold-uk-buys-banks/ or http://goldswitzerland.com/index.php/final-warning/
-Central banks lead subtle shift away from dollar. Read more here-http://www.reuters.com/article/newsOne/idUSTRE5A25KO20091103
-FX strategists in poll expect long, slow slide for dollar. Read more here-http://www.gata.org/node/7979
-Ron Paul, Be Prepared for the Worst, The large-scale government intervention in the economy is going to end badly. The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans.
The Fed has already overseen a 95% loss in the dollar’s purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year. Read more here-http://www.forbes.com/forbes/2009/1116/opinions-great-depression-economy-on-my-mind_print.html
-Ron Paul interviewed by King World News. Listen here-http://www.gata.org/node/7956
-White House says projected deficits unsustainable. Projected U.S. budget deficits are too high and could force up interest rates and crowd out investments unless the country takes action, the White House budget chief said on Tuesday.
The Obama administration reported a record U.S. budget deficit for last fiscal year of $1.4 trillion, or 10 percent of gross domestic product, after it moved to rescue the economy and some of the biggest U.S. banks from the worst recession in 70 years.
Next year’s fiscal shortfall is expected to be about the same size, and current projections show $9 trillion in deficits over the next 10 years, averaging about 5 percent of GDP, said Peter Orszag, director of the Office of Management and Budget. “Deficits of this size are serious, and ultimately unsustainable,” Orszag said at New York University. Read more here-
http://www.reuters.com/article/ousiv/idUSTRE5A23HQ20091103
-Deficits Over Time and the Interest Paid on Them. Read more here-http://blog.newsweek.com/blogs/wealthofnations/archive/2009/10/28/deficits-over-time-and-the-interest-paid-on-them.aspx
-U.S. state and local government pensions are underfunded by $1 trillion and may need to seek federal guarantees for their debt, according to Orin Kramer, chairman of New Jersey’s Investment Council. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZCJ6B6hlvUE&pos;=7
-Illinois Teacher Fund Confronts $35 Billion Unfunded Liability. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=atzvnSNhv8ig
-Stock Market ‘Bubble’ to End, Morgan Stanley Says. The global stock market rally, which resembles the bull run between 2003 and 2007, will end as government spending slows after so-called easy money boosted asset prices, according to Morgan Stanley. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a.YErMIwMYKA
-The Federal Reserve repeated it will keep interest rates near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=amE4MRLU_acw&pos;=1
-Bank of Canada Deputy Governor John Murray said a strong Canadian dollar threatens economic recovery and reiterated a pledge to keep the bank’s benchmark lending rate at a record low through June unless the inflation outlook shifts. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=afzrOFS899hQ
-A Visual History of the Federal Reserve System from JP Koning. Read chart here-http://financialgraphart.com/history_of_fed_free.pdf
-Personal bankruptcies surge 9%. Number of Americans filing for bankruptcy continues to climb. Total bankruptcies expected to top 1.4 million in 2009, highest in 4 years. Read more here-http://money.cnn.com/2009/11/04/news/economy/October_consumer_bankruptcy/index.htm?postversion=2009110412
-U.S. Inflation to Appear Next in Food and Agriculture. Read more here-http://www.reuters.com/article/pressRelease/idUS199272+30-Oct-2009+PRN20091030
-Iran’s Military Power Subject to New U.S. Study Used for China. Iran’s military will be subject for the first time to the kind of U.S. assessment reserved for China’s expanding forces as lawmakers seek a more accurate analysis of the Persian Gulf oil power’s strengths and strategy.
Congress ordered an annual report on Iranian military goals and capabilities, including the country’s missile and nuclear programs, in a provision tucked into a 1,200-page measure authorizing defense spending. President Barack Obama signed the bill into law last week. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a9llyoTKyef0&pos;=15
-Iran Raises Uranium Output as Photos Show Need for Wider Checks. Satellite photos indicate that Iran has increased production at a uranium mine, underscoring the need for wider UN inspections to determine whether the country is trying to build a nuclear weapon. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aMtzNb9WS83I&pos;=13
-Israel Official Says Hamas Rockets Can Reach Tel Aviv. The Islamic Hamas movement in the Gaza Strip can now launch rockets capable of reaching the Israeli metropolitan area of Tel Aviv, Deputy Foreign Minister Danny Ayalon said at a Jerusalem briefing.
“We know they have tried to, and have obtained missiles that reach 60 kilometers (37 miles),” Ayalon said today. “Tel Aviv and its vicinity are now under the range of Hamas.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a6jwVybuY9rc
-Israel Seizes 500 Tons of Hezbollah-Bound Iran Arms. The Israeli navy intercepted a ship heading for Syria and seized an unprecedented 500-ton haul of weapons from Iran intended for the Shiite Muslim Hezbollah militia in Lebanon, the army said.
“This is the largest cache of smuggled weapons ever to be seized by Israel,” an army spokeswoman, Avital Leibovitz, said in a phone interview today. “The cache includes thousands of rockets as well as hand grenades and mortar shells.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ajq8.fQK6B.M
-NKorea claims to expand arsenal of atomic bombs. Read more here-http://www.breitbart.com/article.php?id=D9BO6DAG1&show;_article=1
-The financial crisis has mauled Las Vegas like no other city. What was once the land of luxury and excess is now the home of empty houses and broken dreams. While the city and its investors keep hoping for a turnaround, others see long, lean years ahead. Read more here-http://www.spiegel.de/international/business/0,1518,657616,00.html
-Food-Stamp Recipients Rise to Record 36.5 Million. About 36.5 million people, almost one out of every eight Americans, received food stamps in August, the most ever, as the U.S. jobless rate rose to a 26 year high, government reports show. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a7OeMakQXtWw or http://www.breitbart.com/article.php?id=D9BNKH3O1&show;_article=1
-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
-Christie’s Fall Sale of Magnificent Jewels, to be held in Hong Kong on Dec. 1, will feature “The Vivid Pink,” a 5-carat fancy vivid-pink diamond with potentially flawless clarity set in a ring by Graff. It is estimated to fetch between $5 million and $7 million. Read more here-http://www.nationaljewelernetwork.com/njn/content_display/fashion/jewelry-auctions/e3id386c4a26251b0b543b08ff543f18183
-“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, 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
NO END TO THE BANKING CRISIS
-CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy to cut $10 billion in debt after the credit crunch dried up its funding and a U.S. bailout and debt exchange offer failed.
CIT listed $71 billion in assets and $64.9 billion in debt in a Chapter 11 filing in U.S. Bankruptcy Court in Manhattan. The U.S. Treasury Department said the government probably won’t recover much, if any, of the $2.3 billion in taxpayer money that went to CIT. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a3.t_GrxbL2U&pos;=1 or
http://www.economist.com/daily/news/displaystory.cfm?story_id=14787579&fsrc;=nwl
-9 banks in major holding company fail. FBOP’s banks in California, Illinois, Texas and Arizona bring the number of ‘09 failures to 115. Depositors insured up to $250,000. Nine subsidiaries of FBOP Corp., a multistate holding company that included California National Bank of Los Angeles, succumbed Friday to the nationwide banking crisis, bringing to 115 the number of banks closed by regulators so far this year.
The Federal Deposit Insurance Corp. said the nine banks in California, Illinois, Texas and Arizona that made up the privately held FBOP were taken over by U.S. Bancorp (USB, Fortune 500) of Minneapolis. The banks, which had combined assets of $19.4 billion and deposits of $15.4 billion, will open Saturday as U.S. Bank branches.
The nine banks are Bank USA N.A. of Phoenix, California National Bank of Los Angeles, San Diego National Bank of San Diego, Pacific National Bank of San Francisco, Park National Bank of Chicago, Community Bank of Lemont in Lemont, Ill., North Houston Bank in Houston, Madisonville State Bank in Madisonville, Texas, and Citizens National Bank of Teague, Texas. Together, the nine banks had 153 offices. Read more here-http://money.cnn.com/2009/10/30/news/economy/fbop_failure/index.htm?postversion=2009103022 or
http://www.reuters.com/article/wtUSInvestingNews/idUSTRE59U05420091031?pageNumber=2&virtualBrandChannel;=0 or http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a2qyJNCkvneA
-Bank Failures Buffeting FDIC Efforts to Bolster Insurance Fund. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a2uv1dlCirt8
-Stiglitz Says U.S. Is Paying for Failure to Nationalize Banks. Nobel Prize-winning economist Joseph Stiglitz said the world’s biggest economy is suffering because of the U.S. government’s failure to nationalize banks during the financial crisis.
“If we had done the right thing, we would be able to have more influence over the banks,” Stiglitz told reporters at an economic conference in Shanghai Oct 31. “They would be lending and the economy would be stronger.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aGR4KXaGwxd8
-Roubini Says U.S. Banking Mergers May Create ‘Bigger Monster’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aJRnB5UgnWto&pos;=4
-Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc will receive 31.3 billion pounds ($51 billion) in a second bailout from the U.K. taxpayer as the two banks agreed to cap bonuses. The Treasury will inject 25.5 billion pounds of capital into RBS, for a total of 45.5 billion pounds, making it the costliest bailout of any bank worldwide. The government will fund about a quarter of Lloyds’s 21 billion-pound fundraising. Both banks said they won’t pay cash bonuses to workers earning more than 39,000 pounds this year.
The rescue will bring the U.K. closer to full ownership of RBS, while Lloyds will escape government control. Lloyds Chief Executive Officer Eric Daniels will raise funds from money managers to avoid the Treasury’s asset insurance plan, which would give the government a majority stake. He’s betting bad loans will drop after the Bank of England said the country’s recession was nearly over. Stephen Hester, RBS’s CEO, will by contrast accept more government oversight and insure 282 billion pounds of his banks’ riskiest assets with the Treasury.
“There is now a very fine line between RBS being nationalized and the stake the government now holds,” said Danny Gabay, director of Fathom Consulting in London and a former Bank of England economist. “This contrasts with Lloyds’s willingness to fight harder for its independence.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aaT.lcVDG6WA&pos;=1
-Royal Bank of Scotland to Cut 3,700 Jobs at Branches. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aH87D1AkENzE
-Bank of Ireland reports huge loss. Bank of Ireland has announced losses of almost 1bn euros (£895m) for the six months to the end of September. The bank has said that the total value of loans that it thinks might not be repaid will be 6.9bn euros (£6.1bn) for the period to April 2011. It has warned the Irish government that it may require another infusion of taxpayers’ capital. Read more here-http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/8341796.stm
REAL ESTATE
-Chart of the week: Housing Needs To Keep Falling. More ammo for the housing bears here: Despite the dips in both the Case-Shiller and FHFA Home Price Indices, houses still aren’t affordable based on historical price/income ratios.
Historically, both indices have generally tracked Mean Household Income, but as this chart in a new report from St. Louis Fed (.pdf) indicates, as of the middle of this year, there’s still no convergence. And based on the upswing in Case-Shiller numbers over the summer, that’s still the case. Remove all of the extraordinary government support from the market, and it’s easy to see prices dipping below the lines before they stabilize. Read more here-http://www.businessinsider.com/chart-of-the-day-house-prices-and-median-household-income-2009-11
-Chart of the week: First-Time Homebuyers Rising To Dominate Housing Market. First time home buyers have risen from a tiny percentage of the market for homes to making up a significant portion of the market. Even the panic at the end of 2008 barely slowed down the first timers.
In the most troubled markets, such as Las Vegas, Nevada, the first time buyers are actually dominating the market. FHA loans are extremely popular with first time home buyers, which is one reason that the market for homes has become so dependent on the FHA. (Our thanks to DQNews.com for the data used in this chart.) Read more here-
http://www.businessinsider.com/chart-of-the-day-first-time-homebuyers-dominate-the-market-2009-11
-Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash. Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.” “All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets.
“Occupancy rates are going down. Rent rates are going down and the capitalization rate the return that investors are demanding to buy a property are going up.” U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc.
The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19. Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.
“The American consumer will no longer be able to serve as the motor for the world economy,” said Soros, 79. His comments came in the same week that Capmark Financial Group Inc. filed for Chapter 11 bankruptcy protection after originating $60 billion in commercial property loans in 2006 and 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aoRYl03Rw1_g
-U.S. Home Price Slump to Last to Mid-2010, Pimco Says. The slump in U.S. housing prices is unlikely to end before the middle of next year, and statistics portraying rising values are misleading, according to Pacific Investment Management Co.
An S&P;/Case-Shiller index for 20 metropolitan areas showed values rising 4.8 percent in the four months through August after a record 33 percent drop from its July 2006 peak. Such statistics are being distorted by U.S. efforts to reduce foreclosures, which are temporarily limiting sales of seized homes, said Scott Simon, Pimco’s mortgage-bond chief.
“It only makes prices look like they’re going up,” Simon said yesterday in a telephone interview. “Think about it this way: If you had 100 percent of the sales as foreclosure sales, prices would look like they went down a ton, and if you had none, prices would look like they went up a ton.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=awyQa2v2Phtk
-High-End Home Prices Haven’t Bottomed Out, Pimco Says. Prices on the most expensive houses have yet to reach bottom because there’s limited political support for helping the wealthy, according to Pacific Investment Management Co.
“It’s very, very popular to help the median and below in terms of the mortgage market, but the high end, there’s just not a lot of sympathy,” said Scott Simon, Pimco’s mortgage-bond chief. “‘Oh yeah, that guy bought a $2 million house. We should bail him out.’ That’s just not a thought.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aW8pvpaT7_n4
-Real Estate Price Plunge Makes U.S. Homeownership Perilous Path. Kajal and Vishal Dharod paid $559,000 in 2006 for a new four-bedroom house built in Rancho Cucamonga, California. Today, it’s worth about $360,000. “We don’t know how we can come back from a loss like that,” said Kajal Dharod, 29, a first-time homeowner with a $4,200-a-month mortgage. “Buying the house was a mistake.” Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a5Mu8v6dknLo
-It was the most expensive real estate deal in U.S. history. Now it’s poised to become one of the biggest flops. At the height of the real estate bubble in 2006, an investment group led by New York City real estate firm Tishman Speyer Properties and BlackRock Realty Advisors paid $5.4 billion for a pair of gigantic Manhattan apartment complexes known as Stuyvesant Town and Peter Cooper Village.
The price seemed outrageous to many, but the company believed it had a winning strategy: It would aggressively convert thousands of rent-regulated apartments occupied by middle-class families into luxury units that would fetch top dollar. Three years later, to the glee of many New York renters, the tactic has been a bust.
Tenants fought back, conversions happened much slower than expected and a state court ruled Thursday that about $200 million in the company’s new rent increases were improper. Real estate analysts say the ownership group is now just two to three months away from a likely default on the $3 billion mortgage it used, along with a $1.4 billion secondary loan, to buy the property. Read more here-http://news.yahoo.com/s/ap/20091025/ap_on_bi_ge/us_meltdown_biggest_bust
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – November 10, 2009
Posted by Worldwide Precious Metals on Tuesday, November 10, 2009
The Goldbugg Report – November 3, 2009
November 3, 2009
-Peter Schiff, “Buy Gold!!!” http://www.youtube.com/watch?v=Aicc3siQiHQ
-Gold Sweeps to Record High Above $1, 080 – http://www.nytimes.com/reuters/2009/11/03/business/business-uk-markets-precious.html?_r=2
-IMF sells India 200 tonnes of Gold for $6,7bn- http://www.businessday.co.za/articles/Content.aspx?id=85875
GOLD
-Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says. Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith.
“In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”
Gold rose to an all-time high this month as governments including the U.S. boosted debt to combat the global recession. “When the U.S. dollar crashes, all the paper currencies have to crash, otherwise if their currencies are too strong, their economies will be weak,” said Smith, who issued similar gold forecasts in May and earlier this month. “Another excellent buying opportunity for investors is silver.”
Smith joins investors including Shayne McGuire, director of global research at the Teacher Retirement System of Texas, and Jim Rogers in forecasting higher gold prices. Pension funds will increase gold holdings as currencies decline, McGuire said on Oct. 22. Gold will probably top $2,000 in the next decade as the dollar weakens, Rogers said Oct. 7.
The ratio of silver to gold, currently at 62.35, will be “cut in half” in the next three to five years as millions of people in South Asia and China buy the metal as an alternative because they can no longer afford gold, Smith said. Silver has soared 46 percent this year to $16.65 an ounce. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aIGhSsRwtkoE
-Pension Funds to Buy Gold as Insurance, McGuire Says. Pension funds will increase gold holdings to acquire “financial insurance,” pushing prices higher as currencies drop, according to Shayne McGuire, director of global research at the Teacher Retirement System of Texas.
“I think the largest institutions like our own are realizing that we barely own any,” McGuire said in an interview in Hong Kong. “The same thing applies to most of the pension funds which manage trillions of dollars in world wealth.”
Record government debt and interest rates close to zero percent are pushing gold higher for a ninth straight year as investors seek to protect their wealth against the prospect of rising inflation and currency debasement. Teacher Retirement, backed by $95 billion in assets, has launched its first internally managed gold fund, worth $250 million, invested in precious metals, mining stocks and exchange-traded funds. McGuire is the portfolio manager of this new fund.
The fund is “a reflection of our interest in gold,” said McGuire, the author of “Buy Gold Now” published in March 2008 that correctly predicted the metal will rally. “That’s mostly because of diversification” that benefits our overall portfolio. Gold represents only 0.4 percent of total global financial assets valued at around $200 trillion in 2007, McGuire said, adding the future focus for the metal was investment demand.
“The interest in the gold sector continues to be strong,” said Stephen Goodman, investment banker with New York-based Casimir Capital L.P. “We are pleased to connect a growing number of institutional investors globally with opportunities.”
“I don’t think the question really is what is gold worth but what are currencies not worth,” McGuire, 43, said yesterday. “Consider the tremendous fiscal excess that major governments have made to prevent the world economy from collapsing,” he said. Owning gold today is “financial insurance,” he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601103&sid;=aXmYglOn5Sac
-Investment to drive gold price to $2,000-$3,000 or more but only over a few years. Jeff Nichols sets out his views on gold and the gold price in a presentation in Hong Kong. Gold guru Jeff Nichols, in his latest presentation to a Far Eastern audience at the Gold Outlook Asia conference in Hong Kong last Thursday, made some very pertinent points regarding gold and the U.S. and global economy the two being very much interlinked. Some of his particular comments were as follows:
The root cause of the current world economic crisis has been decades of easy money, low interest rates, a persistently expansionary monetary and fiscal policy by the U.S. aided and abetted by China and the other major Asian exporting countries.
These same policies are now responsible for the bull market in gold a bull market that will likely to carry the metal into the $2,000 to $3,000 range or even higher over the next few years, but not immediately.
The U.S. economy is showing signs of life only because of massive injections of liquidity from the Fed and unprecedented fiscal stimulus from by the U.S. Treasury along with a temporary period of inventory restocking.
There remains a significant risk of a “double-dip” recession with further contraction and a second down-leg in U.S. equity prices yet to come.
In lieu of paying down America’s huge debts, we can expect currency debasement and higher rates of inflation to reduce the real value of its debts at home and abroad. And, with higher inflation and a depreciating dollar, gold will likely continue its spectacular rise. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91524&sn;=Detail or http://nicholsongold.com/2009/10/hong-kong-speech-gold-market-situation-outlook/
-Interviewed Friday on CNBC’s “Fast Money” program, Gartman Letter editor Dennis Gartman said he sees gold becoming the world’s reserve currency and the dollar continuing down for the next year while being very oversold for the moment as gold is overbought. Read and watch more here-http://www.gata.org/node/7934
-Gold’s ongoing consolidation in the $1045-to-$1060 area is very constructive to its ongoing bull market. However, end of months are always very tricky because of option expiry. The gold cartel writes a lot of calls in their market interventions aimed at capping the gold price. As a consequence, they often bomb gold at month-end so that as many of their calls as possible expire out of the money, thereby enabling the gold cartel to earn the entire premium.
Even though October expiry is not a big month (compared to November expiry, for example), it is normal to expect some selling pressure this coming week. In fact, the selling pressure to drop the gold price before option expiry has already started. Please take a close look at the following intraday chart from Kitco.
Note the sharp drop in gold on Friday (the green line) after 10.00am New York time, which corresponds to the completion of the London afternoon fix just after 3.00pm London time. This drop was vintage gold cartel action to paint the tape. They do this by hitting the paper market after the physical market in London is all but closed for the week and when trading in New York is thin just before the weekend. But in contrast to month-ends in past years when there would be essentially a straight line drop, someone came in and bought the dip at $1050.
In other words, gold is a much different market over $1000 because of all the new players being attracted to gold. As an example, Comex open interest has surged from earlier this year. We can therefore conclude that the gold cartel has its work cut out if it aims to drive gold lower this month-end. In other words, there is a lot of money on the sidelines waiting to buy dips that could derail the gold cartel’s plans.
The gold cartel’s objective will be to drop gold this coming week to the $1030s to trigger all of the sell-stops around that area, which the gold cartel will then use to cover its shorts. In the past, I would normally say they could do it, but because there are so many new players entering the market, I am less certain now that the gold cartel can actually drop gold to that level.
We will soon find out if these new players are ‘weak hands’ and get shaken out of their trading positions if the gold cartel is successful in driving gold lower into option expiration. Conversely, it is also possible that these new players are ‘strong hands’ and buy any dip, which is what happened on Friday. If that happens again, then I expect we head higher this week regardless whether or not it is a month-end. The following chart remains very bullish. Gold is breaking out from the huge base it has formed over the past two years.
If we see a drop into the $1030s (a 50% probability for this week), it will be an ideal opportunity for traders to add to their position. James Turk-Read more here-
http://www.fgmr.com/gold-october-25-2009.html
-Gold Jewellery in China to Have ‘Double-Digit Growth’. Read more here-http://www.bloomberg.com/apps/news?pid=20601091&sid;=ade9eDv2frpk
-Gold Blast-Off Starts Friday? Read more here-http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId;=8134
-Why Gold Has a LONG Way to Go. Read more here-http://www.caseyresearch.com/displayCdd.php?id=260
-Gold gives a precious insight into economy. Read more here-http://www.gata.org/node/7931
-Golden Accumulation Opportunity. Read more here-http://news.goldseek.com/GoldenJackass/1256848621.php
-The semi-return of the gold standard. Read more here-http://curiouscapitalist.blogs.time.com/2009/10/26/the-semi-return-of-the-gold-standard/?xid=rss-topstories
-Ned Schmidt’s Gold Thoughts commentary, read more here-http://www.kitco.com/ind/Schmidt/printerfriendly/oct272009.html
-Gold Gets Little Help From a Declining Dollar: Chart of Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ar6sqQSEp0Ys
-Ian Gordon and Christopher Funston of the Longwave Group in Surrey, British Columbia, Canada, this week published an illustrated study arguing that a deflationary collapse of the world financial system is more likely than an inflationary one and that gold will perform even better in deflation. The Gordon/Funston study is titled “Winter Warning.” Read more here-
http://www.longwavegroup.com/winterwarning/2009/pdf/2009_Winter_Warning_Volume_10_Issue_1.pdf
-Russia cuts gold sale estimates, may sell only domestically. Read more here-http://finance.yahoo.com/news/Russia-considering-gold-apf-3094119456.html?x=0&.v=1 or http://www.gata.org/node/7947
-The Gulf region’s first gold exchange traded commodity (ETC), a new investment vehicle launched earlier this year, is seeing only modest growth due to regional unfamiliarity with the product. Read more here-http://www.reuters.com/article/MiddleEastInvestment09/idUSTRE59R2J720091028 or http://www.gata.org/node/7942
-Gold: India’s Capital Asset through History. Read more here-http://mises.org/story/3781
-Gold Coin Output to Drop by 32% on Demand, Austrian Mint Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aRL6_p76u8oU
-’The gold price is too high now. No one wants to buy’. Speculators have driven the price of gold to record levels at the expense of demand from the jewellery sector, making it prone to a correction, according to dealers at a bullion conference. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6407428/The-gold-price-is-too-high-now.-No-one-wants-to-buy.html or http://www.bloomberg.com/apps/news?pid=20601082&sid;=aHUnCUNWdi5g
-Merv Burak: Who has that much gold to short? Read more here-http://www.gata.org/node/7937
-GATA Chairman Murphy interviewed by King World News. Listen here-http://www.gata.org/node/7930
-GATA is right about gold manipulation, Hathaway tells King World News. Listen here-http://www.gata.org/node/7928
SILVER
Silver set to Soar as it did in the 1970’s – http://news.silverseek.com/SilverSeek/1257267140.php
Gold to silver ratio at 80 to 1 with gold at $1,900 the silver price would be $23.75
Gold to silver ratio at 70 to 1 with gold at $1,900 the silver price would be $27.14
Gold to silver ratio at 60 to 1 with gold at $1,900 the silver price would be $31.67
Gold to silver ratio at 50 to 1 with gold at $1,900 the silver price would be $38.00
Gold to silver ratio at 40 to 1 with gold at $1,900 the silver price would be $47.50
Gold to silver ratio at 30 to 1 with gold at $1,900 the silver price would be $63.33
Gold to silver ratio at 20 to 1 with gold at $1,900 the silver price would be $95.00
Gold to silver ratio at 15 to 1 with gold at $1,900 the silver price would be $126.67
-Silver May Advance to $20 as Dollar Drops, Bank of America Says. Silver may jump to $20 an ounce next year supported by a weaker dollar and increased industrial and investment demand, according to Bank of America Merrill Lynch, which dubbed the metal “the golden child.”
Silver has doubled from last year’s low as the U.S. currency dropped and central banks cut interest rates, Michael Widmer and other strategists wrote in a report received yesterday. “Looking forward, exchange rates are set to support silver,” the report said.
Investors have raised precious-metal holdings, including gold and silver, to guard against a gain in inflation and declines in the dollar. Silver held in ETF Securities Ltd.’s exchange-traded commodity products rose to a record 21.199 million ounces as of Oct. 22, according to the company. “We believe that a spike towards $20 an ounce is possible in 2010,” the strategists said. Still, “after the recent sharp price rises, we are cautious on silver in the near term.”
Silver is up 43 percent this year. The metal, which last traded at more than $20 in March 2008, has declined about 10 percent from a 15-month high on Oct. 14. Emerging-market governments will probably continue to diversify their reserves out of the dollar, weakening the U.S. currency and boosting the euro, said the report, which was dated Oct. 23. The dollar may end 2009 at $1.50 to the euro, it said, citing the bank’s currency strategists.
Some silver and gold investors “increase their exposure to these precious metals for similar fundamental reasons, such as a weakening dollar or an increase in liquidity,” the report said. “Given that silver is cheaper than gold, market participants can substitute into the less expensive alternative.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601012&sid;=aiZxK2TRfPR8
-How To Play The Gold-Silver Ratio. Read more here-http://www.hardassetsinvestor.com/features-and-interviews/1/1827-how-to-play-the-goldsilver-ratio.html
-Bank Reserves Lend Many Reasons to Bank on Silver. Read more here-http://www.kitco.com/ind/Lewis/oct272009.html or http://news.silverseek.com/SilverSeek/1256856644.php
-Silver, pgms and gold should all trade higher in 2010 Scotia Mocatta. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91221&sn;=Detail
-David Morgan silver commentary, What Is Your Exposure? Read more here-http://news.silverseek.com/SilverInvestor/1256848756.php
-Silver containing wound dressing launched into $15 billion global market. In yet another medical application for silver, Advanced Medical Solutions has launched a silver-containing wound dressing for the global woundcare market.
British specialist technology company, Advanced Medical Solutions (AMS), which supplies the $15 billion global woundcare market with advanced woundcare dressings and tissue adhesives for wound closure has announced a new silver-containing dressing. This has already been launched in the U.S. and is being introduced into the European and other international markets this month.
Systagenix Wound Management, the marketing and distribution partner for AMS’s fibre-based silver alginate technology, has expanded its existing anti-microbial wound dressings offering with the introduction of AMS’s SILVERCEL Non-Adherent Hydro-Alginate Dressing. The company notes that silver is widely recognised as a safe and effective broad-spectrum anti-microbial agent for infection control.
In 2003, AMS developed a range of wound dressings whereby silver fibres were incorporated into its proprietry calcium alginate technology which allows a controlled and sustained release of silver into the wound without compromising the performance of the base alginate a natural wound dressing derived from seaweed. The global silver alginate market is currently estimated at around $350 million and growing at 15% per annum.
The new wound dressing should also have application in the military market as well as for accident applications and demonstrates the growing usage for silver in medical applications as noted on Mineweb last month (see Perfect storm for silver brewing as antibiotics substitute Silver Institute).
Such medical usage is one of the growing new markets for silver, and while it may take a long time to replace the losses from the switchover to digital from film in the photographic sector, it is becoming a significant market for the sector. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=91435&sn;=Detail
-Xerox Develops Silver Ink for Cheap Printable Electronics. Xerox has developed an ink which can be used to print circuits onto plastics, films, and textiles. Although circuits printed on flexible materials aren’t new, Xerox’s method may be cheap and easy enough to open the doors to many new possibilities for flexible electronics. Read more here-
http://www.physorg.com/news175870685.html
-Ted Butler explains his hope CFTC will act against manipulation. Listen here-http://www.gata.org/node/7932
-Mining ‘wall of debt’ severely constraining global supply growth prospects. The severe debt position faced by the world’s biggest mining companies will have an adverse impact on future supply growth and hence could lead to sharply higher commodity prices. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=91344&sn;=Detail
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Charts of the week: Cash-For-Clunkers MASSIVELY Distorted GDP. If anyone mentions the just-released 3.5% U.S. third quarter GDP growth, just throw this chart in their face. Cash for Clunkers clearly distorted the U.S. economic figures in an unsustainable fashion.
According to the Bureau of Economic Analysis (BEA), motor vehicle output spiked a seasonally-adjusted 157.6% quarter on quarter. This is completely unprecedented. Vehicle output is clearly going off a cliff next quarter. The question will be how low can the blue line below go.
Next quarter, we won’t just be returning to business as usual for auto output. Don’t forget that Cash for Clunkers pulled future auto demand, ie. some of Q4 demand, into Q3. Thus Q4 is likely to be very weak since many people who planned to buy a car in Q4 probably took advantage of Clunkers and bought in Q3.
To put this into GDP terms, according to the BEA the spike you see below added 1.66% to the U.S. GDP growth figure reported. Thus without it, GDP growth would have been only 1.89% (3.5% – 1.66%) in Q3.
Now imagine if next quarter the blue line below goes down into negative territory as it did just two quarters ago. Next quarter, not only are we unlikely to get Q3’s boost, but motor vehicle output data could subtract from GDP as well. So watch out for the cliff. Read more here-
-Charts of the week: Why Stimulus Money Didn’t Juice Consumer Spending. Back in May of 2008, the IRS began mailing out a bunch of special tax rebates aimed at stimulating consumer spending and boosting the economy. The question was: would Americans use the extra cash to pay off debt, save for a rainy day or go shopping?
The Bureau of Labor statistics clues us in on how the stimulus worked out with this particular chart. 49% of recipients used their rebate to pay off debt, nearly 18% decided to save it, and about 30% went shopping and spent it.
Breaking the chart down further, we can see that husband and wife couples were the largest demographic to go shopping and to save their money. As far as paying off debt goes, 65.2% of single parents with at least one qualifying child paid off existing debt. Read more here-http://www.businessinsider.com/chart-of-the-day-use-of-2008-economic-stimulus-payments-2009-10
-The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. Ernest Hemingway
-A government big enough to give you everything you want, is strong enough to take everything you have. Gerald Ford
-In a surprise move, the World Trust Fund managed by Lazard Asset Management has dumped the U.S. dollar as its primary currency in favour of the pound sterling. To quote the fund’s filing.
In response to comments from a number of shareholders and potential investors in the Fund about the liquidity of the Fund’s shares, the Board, having consulted with the Fund’s brokers, Arbuthnot Securities, believes that having a larger number of shares in issue with a lower share price than at present and changing the currency in which the shares are traded from US dollars to Sterling, should assist in improving the marketability and liquidity of the Fund’s shares and support the attraction and retention of a diverse shareholder base.
You’d think the fall in the U.S. Dollar Index since March (down from 89 to 75) has something to do with Lazard’s decision, but nevertheless, this is a stunning statement to read. Will other asset managers follow suit? Could it be a sign that the U.S. dollar is in jeopardy of losing its reserve currency status? Time will tell, but this is something we are going to keep a close eye on. And you should too. Chris Wood-Casey Research
-Stock funds have had net outflows of capital out of the market for the past six weeks. Insiders at corporations are selling with glee. Thirty times more sell orders than buy orders. Even CALPERS, the world’s fourth largest pension fund has cut equity holdings to 49%, the lowest since 1993. British pensions have the lowest equity holdings in 35 years. This leads us to believe that, due to the character of pension plans that long-term momentum has changed and will remain more conservative for some time to come.
They could cut back much further and we may not see them on the long side in a big way until a bottom is reached and a decisive uptrend is in place. It is no wonder US Treasures are so strong. We know fiduciaries are perpetually wrong, but irrespective the trend for whatever reason is for less participation in the equity market.
Maybe for once they are being smart and following the insiders who are selling 30 times more than they are buying. A recent example was the CEO of one of our short recommendations, Robert Toll, of Toll Brothers, a homebuilder, who last month sold 1.6 million shares of his company’s stock. Stock repurchases are off 65% as well. Bob Chapman
-This is the first time ever that the S&P; 500 has ever rallied 60% in six months. The Dow reached 10,000, when it should not have exceeded 8,500. That shows you the distortion and manipulation going on and points up the now blatant activities of the President’s “Working Group on Financial Markets,” which, of course, operates in secret. As a tribute to this phony rally we have lost 2.5 million jobs over its tenure, when two million are normally created.
Are there no professionals out there that get it? They cannot all be that dumb, and they are not that dumb. They are engaging in a conspiracy of silence. They want to be thought well by their peers at the club. They do not want to be ostracized in the Wall Street click. We know we were there for 28 years, of course, always on the outside looking in, permanently known as goldie.
If you want to see where the US stock market is eventually going take a look at Japan from 1992 to today. 70% losses and still unable to get out of its own way with an economy still in depression. Incidentally, if the US market copies Japan, which we believe it will, we could easily fall to 3,800 to 4,200 on the Dow and we’ll be very lucky if it holds there.
Others whose opinion we respect are looking for 2,800. Wall Street is pricing into the market earnings not only for 2010 but 2011 as well, which is very dangerous in such an environment. We are still in the worst credit crisis since the 1930s.
Trailing P/E on operating earnings is 27 times. When the Dow was 14,168 in 2007, it was 18.8 times. Reported trailing earnings are 180 times, whereas in 10/07, it was 23.4 times. In 10/87, it was 20.3 times. That should give you something to think about if you are in the market.
Normally P/E’s should be 14.5 times. Instead of chasing an overpriced goose you should be participating in the bull markets in gold, silver and commodities. That is where safety, preservation of capital and possible large gains are to be found, both short and long term. Why fiddle with an overextended bear market rally when you can gain in relative safety.
Get rid of those bonds, stocks, CDs, cash value life insurance policies and annuities, which are really uninsured and in the stock market waiting to again fall 40% to 70% in value. The crisis is not over; it is still in the beginning. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1256760000.php or http://news.goldseek.com/InternationalForecaster/1256487594.php
-S&P; 500 Overvalued by 40%, Set to Fall, Smithers Says. The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aXTcHEJFiNQk
-For some long-term perspective, today’s chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s.
Also, the inflation-adjusted Dow is now a little more than double where it was at its 1929 peak and trades a mere 51% above its 1966 peak not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 54% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today. Read more here-http://www.chartoftheday.com/20091023.htm?T
-An Overview Of The Fed’s Intervention In Equity Markets Via The Primary Dealer Credit Facility. Read more here-http://news.goldseek.com/GoldSeek/1256760300.php
-Rogoff, Ferguson Say Global Financial Crisis Is Not Yet Over. The global financial crisis isn’t over, said Harvard University professors Kenneth Rogoff and Niall Ferguson, who challenged assertions by Group of 20 leaders at last month’s meeting in Pittsburgh.
“The G-20 is right that it’s over for all the banks they guaranteed,” Rogoff, former chief economist at the International Monetary Fund, said today in an interview with Bloomberg Radio. As a consequence of bailouts and stimulus measures, “the financial crisis may eventually morph into a government-debt crisis.”
G-20 leaders last month adopted a framework for more durable economic growth as they sought to prevent a replay of the worst crisis since the Great Depression. They pledged to strengthen international financial regulations, rein in banker pay and keep stimulus measures in place until growth takes hold.
“Crises last longer than most people think,” said Ferguson, a Harvard University professor and author of “The Ascent of Money: A Financial History of the World.
“Most crises, major financial crises worthy of the name depression or indeed recession, last significantly longer than a day and they can be measured more in the thousands of days. I think it would be very unwise to say it’s over.” Ferguson added that “within our lifetimes the United States will cease to be the world’s largest economy.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aaCFRyAA0G98
-Mikhail Khazin: U.S. will soon face second “Great Depression”. Read more here-http://www.tumen.kp.ru/print/article/24189/396866
-Malpass Says U.S. Economy Will Slow, Enter ‘Gloomy Period’. Economic growth in the U.S. will slow after the rebound in the third quarter and enter “a very gloomy period” of high unemployment, said economist David Malpass, president of Encima Global in New York.
“We are moving into this very gloomy new normal” of 2 percent growth and a “very high unemployment rate,” Malpass said today in an interview on Bloomberg Radio. As a result, “Washington will reach around and thrust around desperately” for new programs to boost growth. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSAZljzzFz44
-Bill Gross: Assets Are $15 Trillion Overvalued And Fed Will Keep Rates At 0% Forever To Keep The Fantasy Alive. Here are some key points from his monthly letter. Read more here-http://www.businessinsider.com/henry-blodget-bill-gross-assets-are-15-trillion-overvalued-and-fed-will-keep-rates-at-0-forever-to-keep-the-fantasy-alive-2009-10 or
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/Midnight+Candles+Gross+November.htm
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Over the past 30 years, paper asset prices rose 2X as much as they should have based on economic fundamentals
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This was the result of leverage
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The asset price rise in turn pumped up the economy’s fundamentals
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The government wants to restore the “old normal” (2007) not the “new normal” (slower growth as asset prices return to trend)
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Therefore The Fed will keep rates at 0% for at least 18 months into sustained 4% growth
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Next year, when the inventory restocking effect wears off, 4% will be tough
-Economy in U.S. Expands for First Time in a Year. The U.S. economy returned to growth in the third quarter after a yearlong contraction as government incentives spurred consumers to spend more on homes and cars.
The world’s largest economy expanded at a 3.5 percent pace from July through September, figures from the Commerce Department showed today in Washington. Household purchases climbed 3.4 percent, the most in two years.
Policy makers will now focus on whether the recovery, supported by government spending and tax credits, can be sustained into 2010 and generate jobs. The record $1.4 trillion budget deficit means President Barack Obama has little room for manoeuvre as he tries to keep unemployment from rising above 10 percent, while Federal Reserve policy makers wind down emergency programs in a bid to prevent a surge in inflation. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aCi2EYr.5RhY
-Consumer Confidence in U.S. Unexpectedly Decreases. Confidence among U.S. consumers unexpectedly fell in October for a second month as Americans fretted about a lack of jobs. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aXoBJs5ajTF0
-Stimulus jobs overstated by thousands. An early progress report on President Barack Obama’s economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports. Read more here-
http://apnews.myway.com/article/20091029/D9BKMVMG0.html
-GMAC May Receive Third Bailout From U.S. Government. GMAC Inc., the lender that received two government bailouts totalling $13.5 billion, is negotiating with the Treasury Department for a possible third lifeline next month, people familiar with the matter said.
The U.S. is studying a capital injection of $2.8 billion to $5.6 billion, according to the people, who declined to be identified because the transaction hasn’t been agreed upon. GMAC may require less than the full amount because an improving market has made conditions less dire than envisioned, said one of the people. The Detroit-based lender also sold $2.9 billion of federally backed debt today. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=abvqTkQC.Ft4
-Clunkers: Taxpayers paid $24,000 per car. Auto sales analysts at Edmunds.com say the pricey program resulted in relatively few additional car sales. Read more here-
http://money.cnn.com/2009/10/28/autos/clunkers_analysis/index.htm or http://features.csmonitor.com/economyrebuild/2009/10/28/report-cash-for-clunkers-was-a-lemon/
-The Full Story Of How Tim Geithner Secretly Bailed Out Wall Street And Screwed The Taxpayer Last Fall. Read more here-http://www.businessinsider.com/henry-blodget-how-tim-geithner-secretly-bailed-out-wall-street-and-screwed-the-taxpayer-last-fall-2009-10
-Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange. The decision by the world’s biggest oil exporter could encourage other producers to abandon the benchmark and threatens the dominance of the world’s most heavily traded oil futures contract. It is the main contract traded on Nymex.
The move reveals the growing discontent of Riyadh and its US refinery customers with WTI after the price of the price of the benchmark became separated from the global oil market this year. Read more here-http://www.gata.org/node/7943
-Food will never be so cheap again. Biofuel refineries in the US have set fresh records for grain use every month since May. Almost a third of the US corn harvest will be diverted into ethanol for motors this year, or 12pc of the global crop. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6432538/Food-will-never-be-so-cheap-again.html
-Commodities Top Asset Pick in Global Poll: Chart of the Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=apVRxjb5rZCw
-Buy food price rises are almost guaranteed. Read more here-http://www.telegraph.co.uk/finance/markets/6432855/Buy-food—price-rises-are-almost-guaranteed.html
-McDonald’s to shut business in Iceland. McDonald’s Corp will shutter its business in Iceland because it is too expensive for the franchise to operate after the country’s financial crisis.
The world’s largest fast-food company said on Monday that all three of its restaurants in Iceland, operated by franchisee Jon Ogmundsson, would stop operating at midnight on October 31.
Ogmundsson has run the McDonald’s restaurants since 2004. He told Reuters that the decision to close the restaurants was mainly due to the severe depreciation of the Icelandic krona and high taxes on imported food. Read more here-http://www.reuters.com/article/ousivMolt/idUSTRE59P50O20091026
-Iran Reply to UN Fuel Plan Falls Short of Acceptance. The United Nations nuclear agency was consulting with the world powers and Iran after the country failed to fully accept a UN-brokered plan to provide it with fuel for a medical-research reactor. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=avjBEF5mOvbo
-Iran May Evade U.S. Sanctions as U.A.E. Keeps Up Fuel Shipments. A U.S. effort to pressure Iran into nuclear concessions by curbing gasoline imports may have little impact because the United Arab Emirates and other countries are willing to keep shipping fuel to the Islamic Republic. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=azco7oK2Dd.g
-1 in 6 Americans in poverty, new formula shows. A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government’s official figure.
The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate as 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week.
That’s higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula. That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. As a result, official figures released last month by the Census may have overlooked millions of poor people, many of them 65 and older. Read more here-http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/10/21/MNNT1A8FFH.DTL
-Buffett Beats Gross in Global Poll as Investor With Most Wisdom. Read more here-http://www.bloomberg.com/apps/news?pid=20601070&sid;=aXAO557NzJdg
-Philly’s Winning Title Makes Analysts Recall Depression. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ayDkFIPfkSVI
-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
-Christie’s Dubai Jewels Sale Nets $4M. Christie’s Dubai jewels and watch sale garnered $3.9 million the auction house reported. The top lot was a pair of Asscher cut diamonds, 15.19 carats and 15.04 carats, VS, J, which sold for $518,500, or $17,150 per carat. Other highlights included an oval shaped, 25.35 carat, VS1, fancy intense yellow diamond, which sold for $446,500, or $17,600 per carat. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28432
-The largest vivid-green diamond ever to appear at auction is one of the rare natural-colored diamonds and historical jewels being sold at the Sotheby’s November 17 sale at the Hotel Beau Rivage in Geneva. A total of around 400 lots are set to be auctioned off and could bring close to $30 million. The green diamond is a cushion-shaped stone with a modified brilliant cut.
It weighs 2.52 carats but because of the rarity of natural diamonds of this color it is estimated to sell for $3.1 million to $5.1 million. Another expensive rare stone at auction will be a pear-shaped fancy vivid-blue diamond with a modified brilliant cut, it weighs 5.96 carats and is expected to fetch between $5.5 million to $7.5 million.
Other gorgeous colorful diamonds up for sale include a cushion-shaped fancy pink diamond weighing 6.63 carats and a cut-cornered rectangular-shaped fancy vivid-yellow diamond with a modified brilliant cut, weighing 74.8 carats and mounted on a yellow gold ring. Read more here-http://www.luxist.com/2009/10/28/rare-green-diamond-up-for-auction-at-sothebys/ or
-Sotheby’s upcoming sale of Magnificent Jewels in New York on December 9th will offer a selection of diamonds of varying colors, shapes, sizes and estimates, as well as an array of colored precious stones and one-of-a-kind signed pieces by master jewellers.
The international auction house’s recent fall sale of Important Jewels in New York on October 19th fetched a total of $13,843,100, exceeding pre-sale expectations of $9.3-12.3 million. Diamonds dominated the top ten prices earned at the auction, which sold 90.6 percent by value and 83.5 percent by lot. Nearly 65 percent of the sold lots achieved prices above their high estimates.
Following the success of Sotheby’s recent Hong Kong sale, the performance of the Important Jewels auction in New York showed that demand for important diamonds and signed jewellery is strong not only in overseas markets but also in the United States, noted Sotheby’s, which said that bidder participation was global with new buyers from Asia, Europe and the US as well as established private collectors.
A Fancy Intense Yellow Diamond Ring of 14.24 carats performed well, bringing $386,500 (est. $250/300,000), there was spirited competition for signed jewels including the Tiffany & Co. Fancy Vivid Yellow Diamond Ring, 9.55 carats, which brought $446,500 or $47,000 per carat (est. $250/350,000). Read more here-
http://www.diamondintelligence.com/magazine/magazine.aspx?id=8301
-“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
U.S. BANK FAILURES-GLOBAL BANKING PROBLEMS
-Bank failures stack up: Now 106 for 2009. Banks in Florida, Georgia, Illinois, Minnesota and Wisconsin, were shuttered, costing the FDIC an estimated $356.6 million.
http://money.cnn.com/2009/10/23/news/economy/bank_failure/?postversion=2009102318 or http://apnews.myway.com/article/20091024/D9BHE7RG0.html
or http://www.marketwatch.com/story/story/print?guid=F2B5651E-A9F7-4FA4-9394-2D0D3181A97D
-Depositors bring down Dutch bank. Customers of the Dutch bank DSB have forced it into bankruptcy by withdrawing £550m of their savings in just 12 days. They were encouraged by campaigner Pieter Lakeman who runs the Mortgage Grievances Foundation. He appeared on Dutch television on Thursday 1 October and told customers it was “in their personal and collective interest to take their money out”.
Professor Jacob de Haan of Groningen University said Mr Lakeman was protesting about the way the bank lent money. He told Radio 4’s Money Box programme: “The bank was under attack and being criticised for being aggressive.
Many people borrowed much more than they could afford and as a consequence some were in severe financial troubles.” He added that Pieter Lakeman believed it to be in the interest of those borrowers if the bank went bust. Read more here-http://news.bbc.co.uk/2/hi/business/8323991.stm
-TARP chief: Banks possibly ‘in more danger now’. Read more here-http://politicalticker.blogs.cnn.com/2009/10/21/tarp-chief-banks-possibly-in-more-danger-now/
-U.K. Banks ‘are a threat to economic recovery’. Read more here-http://www.dailymail.co.uk/news/article-1223220/Banks-threat-economic-recovery.html or
-No relief in sight for Main Street banks. With loan losses still mounting, some regional banks aren’t looking to return to profitability until 2011. Read more here-
http://money.cnn.com/2009/10/26/news/companies/regional_banks/index.htm?postversion=2009102614
U.S. DOLLAR
-Clive Maund U.S. dollar alert. The dollar is at a crossroads and there are two probable scenarios. One is a final plunge following the recent grinding decline to an intermediate low that is followed by an intermediate reversal. The other is that it suddenly breaks out upside from the severe downtrend it has been stuck in since early March and rallies strongly, strongly because it is likely to be juiced by a sudden wave of panic short-covering. Read more here-http://news.goldseek.com/CliveMaund/1256573111.php
-Peter Schiff dollar commentary Dollar Forced to Abdicate. Read more here-http://www.321gold.com/editorials/schiff/schiff102309.html
-Turkey to drop dollar in trade with Iran, China. Read more here-http://www.gata.org/node/7944
-The Dollar Depends on Politicians Now. He could do what Paul Volcker did, and raise dollar interest rates to send a message to the market that he will not allow the dollar to be destroyed. But that is not likely to happen. There has been no indication that Mr. Bernanke will raise interest rates anytime soon, much less raise them to the level needed to convince the market that he intends to preserve the purchasing power of the dollar. Read more here-http://www.fgmr.com/dollar-depends-on-politicians-now.html
-Because people generally calculate the price of goods and services only in terms of the national currency of the country where they live, it is not easy for them to recognize what is happening to the value of the currency. To truly understand what is happening to the currency, they also need to calculate prices in terms of gold, which today is one of the world’s most misunderstood asset classes. For this reason, gold’s traditional and rightful role in finance and commerce is not fully appreciated, with the result that gold is undervalued.
This situation creates an opportunity for everyone who recognizes this undervaluation. Gold, just like any other asset, will be properly valued in time as its usefulness increasingly becomes better recognized because its attributes become better understood. Gold is money without counterparty risk and money that maintains its purchasing power over long periods of time. This last point is important.
A rising gold price means that the national currency in which gold’s price is being measured is being inflated, or more precisely, the currency is losing purchasing power. Consider what is happening to the US dollar. For example, the price of crude oil has climbed from $25.76 on January 3, 2000 to $80.50 this past Friday, an obvious decline in the dollar’s purchasing power.
During this same period gold has risen from $288.50 to $1055.60. In other words, an ounce of gold today buys approximately the same amount of crude oil it did at the beginning of this decade, while the dollar buys much less. I have therefore prepared the following base-100 analysis chart to correctly present gold by illustrating how badly the dollar has been losing purchasing power.
1) The blue line shows how much less foreign currency the dollar can buy now. The currency basket is the US Dollar Index, and the dollar buys only 75 units compared to 100 at the start of the decade.
2) The red line is the key. The dollar could purchase 100 units of gold at the start of the decade, but today only purchases 27, a 73% decline in the dollar’s purchasing power.
3) The black line shows the dollar’s purchasing power in terms of crude oil, which trends pretty much in the same direction as gold, but obviously with considerable volatility. Compared to 100 units at the start of the decade, the dollar now purchases only 32, though this is an improvement from the only 18 units the dollar purchased during the spike in crude oil prices in mid-2008.
Thus, when we say the price of gold is rising, we are grabbing the wrong end of the stick, which contributes greatly to today’s misunderstanding of gold. To be correct, we should be saying that the purchasing power of the dollar is falling. And when it is compared to gold, it is clear that the purchasing power of the dollar is falling a lot. Read more here-http://www.fgmr.com/true-picture-of-the-us-dollar.html
ERIC SPROTT COMMENTARY
-Eric Sprott’s and David Franklin’s latest “Markets at a Glance” monthly commentary. This months piece, from Sprott Asset Management in Toronto, is entitled “Surreality Check Part Two… Dead government walking”…”The equity market performance in November 2007 masked the underlying problems plaguing the financial system at the time, and it’s blindingly apparent that it is doing the same again today. The government has assumed most of the financial system’s liabilities in a giant game of ‘kick the can’.” Read more here-
http://www.sprott.com/Docs/MarketsataGlance/MAAG_10_2009.pdf
We do not mean to pick on the United States alone. The proclivity to overspend has spread to most governments throughout the developed world. According to recent estimates, the countries that make up the G20 will face a combined budget deficit of 10.2% of GDP in 2009, the biggest since World War II. The US leads this ‘rogues gallery’ of government spending on a percentage of GDP basis at 13.5%, followed closely by Britain and Japan at 11.6% and 10.3%, respectively. If governments choose to continue down this path, it must be questioned where all their funding will come from, not to mention the impact it will have on their respective currencies.
Hemingway wrote that a man goes broke “slowly, then all at once”. We believe the same sentiment can be applied to governments. If fiscal abuses continue unabated, confidence eventually erodes until investors just stop lending. It happened famously to Lehman in September 2008, and it is happening now to the US government. The Q2 Flow of Funds Report published by the Federal Reserve revealed that the Federal Reserve purchased as much as half of the newly issued treasuries in the second quarter.
This means that the Federal Reserve isn’t merely supporting the market for US treasuries…it is the market for US treasuries. Printing new dollars to support an almost $9 trillion dollar budget deficit that stretches out over the next ten years puts the US on the road to ruin, and the major governments of the world have noticed and are taking action. How could they not after all? Most of these countries have historically supported their own currencies by stockpiling an average of 63% of their foreign currency holdings in US dollars.
Recently, however, it was revealed that the US dollar now makes up only 37% of new foreign reserve holdings. There is also little doubt that the USD is now a hot topic in central bank circles. A recent article in Britain’s “Independent” revealed secret meetings held between the Arab states, China, Russia, Japan and France to replace US dollar transactions for oil with transactions made in a basket of major currencies including the euro, the yen and the Chinese yuan.
Officials in several of the participating countries denied the talks or any knowledge of them, but that didn’t stop the US dollar from selling off when the story broke. We interpret these actions by foreign governments to be evidence of this erosion of confidence. We don’t know when this will translate into a failed auction for US debt, a currency crisis or other significant event, but the signs that the world is losing economic confidence in the US government are becoming more pronounced every week.
So what can be done to avert catastrophe? As Will Rogers’ once said, “if you find yourself in a hole, the first thing to do is stop digging” Put simply, the US government must reduce its spending. It is the only effective way to directly address its unfunded obligation issues. Closing Social Security to new entrants and using vouchers to reduce the cost of Medicare, as recommended by Kotlikoff, are economically valid options that should be considered.
Unfortunately, neither Congress nor the President have shown a willingness to heed Will’s advice thus far. We believe the US government’s current trajectory presents one of the greatest macro-economic risks at play today. The Federal Reserve and the US government have assumed the toxic financial trash that brought the banking system to its knees a year ago.
By monetizing debt to support their budget deficit and ‘save the system’, both entities have chosen to walk a well worn path traveled by so many governments before them. Like dead men walking, the US government is merely biding its time until the moment of truth. Unlike Fannie Mae, General Motors or Citigroup, however, there is no one left to grant a reprieve.
REAL ESTATE-MORTGAGES-FORECLOSURES
-Chart of the week: Why The Home Sales Decline Wasn’t Significant. While U.S. new home sales reportedly fell 3.6% in September from August, this change was not statistically significant. Why not? Because the margin of error was +/- 10.6%. That means the range of possibilities was actually 6.6% to -13.8%. So the government doesn’t even know if home sales rose or fell:
Department of Commerce: If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.
In fact, if we break down the data into its four regional components, only the Mid-west showed a statistically significant sales change (positive) in September. All this data can be found here. In the Midwest home sales reportedly rose by 34% with a confidence interval of 2.3% – 65.7%.
Thus the only statistically significant conclusion from this release was a positive one. So either don’t freak out about reported -3.6% figure, since it wasn’t statistically significant — or take the release as a slight sign of statistically significant sales growth in the Midwest. Read more here-http://www.businessinsider.com/chart-of-the-day-why-the-home-sales-decline-wasnt-significant-2009-10
-3 signs of the next real estate collapse. The latest bubble is about to burst, but this time it’s in the commercial market. Here’s how to see it coming. When the FDIC closed Chicago’s Corus Bank last month, it may have signaled the beginning of the next shock to the banking system: commercial real estate defaults.
Corus, whose balance sheet was larded with bad construction loans, is just one of many banks that have a slew of this debt on their books. Refinancing the $2 trillion in commercial mortgages will be tough, as property values decline. And in this new age of cautious lending, few banks are willing to refinance loans.
“There is a lack of new debt,” says Michael Haas, a real estate attorney at Jones Day. “There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago.”
Now, in a situation eerily similar to the subprime crisis, the result is likely to be a wave of foreclosures and loan defaults that could, in turn, trigger a collapse in the market of the structured bonds backed by commercial real estate and construction debt. But when, and how bad will it be? Here are three indicators to watch. Read more here-
http://money.cnn.com/2009/10/21/real_estate/commercial_real_estate_bubble.fortune/index.htm
-’Double bubble’ means more real estate trouble. Developers face huge crunch as downturn hits office buildings, malls, hotels. Read more here-
http://www.msnbc.msn.com/id/33404369/ns/business-personal_finance/
-Capmark Files for Bankruptcy with $21 Billion in Debt. Capmark Financial Group Inc., the lender owned by companies including Goldman Sachs Group Inc. and KKR & Co., filed for bankruptcy protection after posting a second-quarter loss of about $1.6 billion.
The company listed consolidated debt of $21 billion and consolidated assets of $20.1 billion as of June 30, according to Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. Forty-three affiliates also sought protection.
Capmark, based in Horsham, Pennsylvania, is one of the largest U.S. commercial real estate finance companies, with more than $10 billion in originations, according to Moody’s Investors Service. The company, formerly known as GMAC Commercial Holding Corp., services more than $360 billion of debt. It has struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994. Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid;=a3Z4h4E8kNp8
-Home Prices in 20 U.S. Cities Rise for Third Month. A gauge of home prices in 20 U.S. cities rose in August for a third consecutive month, bolstering the case that an economic recovery is at hand.
The S&P;/Case-Shiller home-price index climbed 1 percent from the prior month, seasonally adjusted, after a 1.2 percent increase in July, the group said today in New York. From a year earlier, the gauge fell 11.3 percent, less than forecast.
Rising home sales, due in part to government programs including the first-time buyer credit and efforts to lower borrowing costs, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Sustained gains in household spending, the biggest part of the economy, may be harder to come by as joblessness mounts.
“We’re nearing the bottom in home prices,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “Right now the government is helping to stabilize housing.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aGshF0Pgo1Wc
-U.S. New-Home Sales Fall as Credit Nears Expiration. Sales of new U.S. homes unexpectedly fell in September, a sign the housing recovery may lose momentum after a government tax credit expires. Sales decreased 3.6 percent to a 402,000 annual pace, lower than the median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. The median price of a new home dropped 9.1 percent from September 2008.
Contracts signed last month will probably not be able to close before an $8,000 first-time homebuyer tax credit expires at the end of November, raising concern the market will retrench in coming months as unemployment and foreclosures climb. Economists view stabilization in housing as key to any rebound from the worst recession in seven decades.
The report “tempers enthusiasm about the rebound in housing,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, whose forecast was the lowest among economists surveyed. “Key to keeping the market on track is extending the credit and sustaining low mortgage rates.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aqefq0RL5oW8
-U.S. Home Vacancies at 18.8 Million as Lenders Seize Properties. About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.
The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.
The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P;/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.
“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ayjET7O1JS38
-California House Prices Decline 7.3% on Foreclosures. California single-family home prices dropped 7.3 percent in September from a year earlier, helping boost the number of houses sold, the state Association of Realtors said.
The median price for an existing detached house fell to $296,090 from $319,310 a year earlier, the Los Angeles-based group said today in a statement. The price rose 1.1 percent from August, the seventh consecutive month-on-month increase.
Sales of foreclosed homes accounted for 42 percent of existing-property transactions in California in August, research company MDA DataQuick said Oct. 15. The Realtors said the number of existing houses sold climbed 2.1 percent last month from September 2008, boosted by lower prices and a federal tax credit for first-time homebuyers. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aBDc6X_kkrDw
-U.S. foreclosures spike in new regions in 3rd qtr. U.S. mortgage defaults ebbed in some hard-hit cities in the third quarter, but unemployment created new trouble spots as foreclosures set a record in the quarter, real estate data company RealtyTrac said on Wednesday. Foreclosure activity declined in five of the top 10 metro areas from a year earlier, at least temporarily aided by government programs to modify terms of home loans.
Job loss as well and mortgage rate resets, however, are severely curbing the ability of homeowners to make timely payments. Many metro areas with the 50 highest foreclosure rates had sharp increases in filings during the past three months.
“Rising unemployment and a new variety of mortgage resets continue to gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” James J. Saccacio, RealtyTrac’s chief executive, said in the company’s quarterly Metropolitan Foreclosure Market Report.
U.S. unemployment reached a 26-year high of 9.8 percent in September. Foreclosure filings which include notice of default, auctions and bank repossessions rose 5 percent in the third quarter from the prior quarter and 23 percent from a year ago, RealtyTrac reported earlier this month.
One in every 136 households with a loan got a filing in the quarter, a record since the firm started tracking them in the first quarter of 2005. Filings were reported on more than 937,000 properties in July through September.
All of the cities with the 10 highest foreclosure rates were in California, Florida and Nevada, led by Las Vegas, Nevada; Merced, California; and Cape Coral-Fort Myers, Florida. Las Vegas had a third-quarter foreclosure activity rate of 5.13 percent, affecting one in 20 households with loans. Read more here-
http://www.reuters.com/article/wtUSInvestingNews/idUSNYS00747920091028
-Foreclosure plague: It’s spreading. Las Vegas always wins the title for worst foreclosure rate in the country. But these 5 cities have the fastest-growing foreclosure rates. And they’re not the usual suspects. Read more here-http://money.cnn.com/galleries/2009/real_estate/0910/gallery.foreclosures_worst_cities/index.html
-Foreclosures: Worst-hit cities. Foreclosure rates are easing in some of the hardest-hit areas, but the plague is spreading to new cities.
http://money.cnn.com/2009/10/28/real_estate/foreclosures_worst_cities/index.htm
-In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. After five hours of calling out a drumbeat of “no bid” for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag. “OK,” he said. “We only have 300 more pages to go.” Read more here-http://www.reuters.com/article/newsOne/idUSTRE59O17F20091026
-Deserted shopping mall bleak symbol of Fed bailout. Read more here-http://uk.reuters.com/article/idUSTRE59K01420091021?sp=true
© 2009, Worldwide Precious Metals.
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The Goldbugg Report – November 3, 2009
Posted by Worldwide Precious Metals on Tuesday, November 3, 2009
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