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The Goldbugg Report – December 29, 2009
December 29, 2009
-Several analysts predict a rise in gold prices to dizzying heights in the next two years, but if those forecasts prove true, even gold bugs will need to stay alert to ensure that gains in the metal aren’t overwhelmed by losses on other parts of their portfolio.
-’Gold at $ 2,000 becoming acceptable to investors’.
-NIA Declares Silver Best Investment for Next Decade.
GOLD
-In the last secular bull market in gold (and other tangibles) ending in 1980 gold, interest rates, and inflation all moved up in concert. And once the crisis ended, they all moved down in concert. Read more here-http://www.caseyresearch.com/displayCdd.php?id=302
-Several analysts predict a rise in gold prices to dizzying heights in the next two years, but if those forecasts prove true, even gold bugs will need to stay alert to ensure that gains in the metal aren’t overwhelmed by losses on other parts of their portfolio.
That’s because the economic conditions under which one would expect gold to thrive resemble an investor’s nightmare possible hyperinflation, collapse of the U.S. dollar or a surge in yields on Treasury’s may be conditions under which other asset classes such as fixed income and equities could take a major hit.
“For gold to rise further, people have to continue to be fearful of economic recessionary conditions worsening instead of improving, political developments both at home and globally, and financial markets deteriorating instead of continuing to improve,” said Jeffrey Christian, a managing director at CPM Group.
Mark O’Byrne, a director at bullion dealer GoldCore said gold could “rally much higher in the event of another systemic crisis where large banks, corporates and or even countries go bankrupt.”
It could also go much higher in the event of serious inflation or stagflation, in the event of a dollar crisis or an international monetary crisis, or a serious geopolitical incident, he said. And “at least one of these scenarios is quite possible in 2010 or 2011.”
Those scenarios aren’t at all friendly to the rest of an investor’s portfolio. Gold futures rose as high as $1,218 an ounce in early December before sliding back to the low $1,100 area. A number of analysts say gold could see new highs over the next few years, thanks to the flood of liquidity in the global financial system in the wake of quantitative easing measures by central banks around the world in the wake of last year’s financial crisis.
“The right fundamentals for gold remain in place and look set to remain in place for the foreseeable future,” said O’Byrne. “This makes $3,000 per ounce gold an increasingly likely long-term price target.” Kevin Kerr, president of Kerr Trading International said the precious metal’s “more likely to hit $3,000 than $800 in the next two years.”
“I am bullish longer term on the U.S. and global economies, but I feel the die has been cast for lower fiat currency prices in years to come and a global shift out of the dollar and into commodities as the new reserve currency,” he added.
Kerr listed hyperinflation, more job losses in the U.S., negative interest rates for an extended period of time, efforts to price crude oil in currencies other than the U.S. dollar and attempts by China to move a larger part of its foreign currency holdings into gold as conditions that would support a further increase in the yellow metal’s prices.
A number of other commentators have also been known for their bullish views on gold. CLSA Asia-Pacific Markets, for instance, has for a while maintained that gold could hit $3,360 by the end of this decade. Economic analyst Marc Faber, Gluskin Sheff chief economist David Rosenberg, investor Jim Rogers, investment manager David Tice have all been reported in the media as saying that gold prices could reach a range between $2,000 and $3,000.
And Amerifutures managing director Patrick Kerr lists gold purchases by central banks, “the deepest pockets of them all,” as one of his 10 reasons why gold could shoot up to between $5,000 and $10,000 an ounce. Read more here-http://www.marketwatch.com/story/story/print?guid=6BF840F7-49FD-4311-B721-24A35ABCC0D0
-Gold Beats All in Decade of ‘Fear and Greed’: Chart of the Day. Investors who bought gold or commodities at the beginning of the decade should have tripled their money by the time the ball drops in New York’s Times Square on Dec. 31. Stock holders will be poorer.
The CHART OF THE DAY shows returns on six asset classes, including reinvested interest or dividends where applicable. A $100 investment in gold would now be more than $380 while the same sum in commodities would have grown to about $357, according to the Standard & Poor’s GSCI Enhanced Total Return Index. Stock investors lost $10 in the decade.
Gold’s nine-year bull market was recently given extra impetus by concern that $12 trillion of government spending to rein in the worst global recession since the 1930s will trigger inflation. China’s thirst for the raw materials needed to fuel its export machine helped push up the price of commodities from copper and lead to plastics and coal.
“That’s fear and greed at the same time,” said Toby Nangle, director of asset allocation at Baring Investment Services Ltd. in London. “The fear of inflation is in the gold price. Commodities and oil show emerging markets emerging, and the rest is the developed markets submerging.”
Holders of U.S. high-grade corporate bonds made a profit of about $90 on their investment, as did Treasury investors, according to Bank of America Merrill Lynch index data. Buyers of crude oil saw their $100 turn into $268 after it rose to more than $500 in 2008, based on the futures contract for West Texas Intermediate.
Stocks lost about 10 percent, including reinvested dividends, according to the S&P; 500 Total Return Index. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aHuMwsIjMF.U&pos;=15
-Gold to hit US$1400 to US$1450 in 2010. There is scarcely a bank left in the world that has not upgraded its gold price assumptions in the last several weeks. You can now add J.P. Morgan to the list, where analyst John Bridges expects gold to hit a whopping US$1,400 to US$1,450 an ounce in the second quarter of 2010. Read more here-http://www.financialpost.com/personal-finance/story.html?id=2368864
-Agoracom’s chief market analyst, Peter Grandich, analyzed the correction in gold and contended that the risk in gold is $100 on the down side against $1,000 on the up side. Read more here-
-John Embry’s December commentary. Gold’s rally has many years and thousands of dollars to go. Read more here-
-Is The Gold Bull Over? If Not, How High Can Gold Go? Read more and watch video here-http://truthingold.blogspot.com/2009/12/is-gold-bull-over-if-not-how-high-can.html
or http://goldswitzerland.com/index.php/egon-von-greyerz-on-cnbc-squawk-box-europe/
-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1261390953.php
-Donald Cox gold market update. We see no big reason why gold outperformance should be over. After its breathless run to $1220, it’s entitled to correct back toward $1,000 or even a bit below that level without ending its bull market. Read more here-http://www.zerohedge.com/article/don-coxe-gold or http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94810&sn;=Detail
-Ned Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/dec212009.html
-Nervous money will limit gold’s downside risks. A more sober assessment of gold’s likely price patterns suggests upwards movement may be limited for the time being, but downside risk is also relatively muted. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94772&sn;=Detail
-’Gold at $ 2,000 becoming acceptable to investors’. Read more here-http://www.commodityonline.com/news/Gold-at-$-2000-becoming-acceptable-to-investors-23987-3-1.html
-What’s next for the soaring price of gold? Read more here-http://www.gata.org/node/8163
-Passport Capital’s experiment: Owning physical gold. Read more here-http://www.gata.org/node/8174
-Building a wall of worry. Commentary: Sentiment picture for gold is rapidly improving. Read more here-http://www.marketwatch.com/story/story/print?guid=08E7B1DC-6398-46B4-925E-87FB1E041254
-Porter Stansberry: Gold Is “Nowhere Near the Top.” Read more here-http://news.goldseek.com/GoldSeek/1261174176.php
-Jim Sinclair interviewed by King World News. Listen here-http://www.gata.org/node/8170
-Tocqueville’s John Hathaway interviewed by King World News. Listen here-http://www.gata.org/node/8161
-David Tice interviewed by King World News. Listen here-http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/12/19_David_Tice.html
-Gene Arensberg: Commercial traders hugely short the dollar. Read more here-http://www.gata.org/node/8172
-Here’s a look at the five-year chart of the greenback using the Dollar Index as a proxy. The Dollar Index shows the U.S. dollar against a basket of competitive paper currencies.
In the chart, the Dollar Index is shown in yellow, gold is shown in green, and the gold stocks in orange. What do these charts mean for gold? Read more here-http://www.caseyresearch.com/displayCdd.php?id=306
-Russian central bank buys finance ministry’s gold. Russia’s Finance Ministry has sold 30 metric tons of gold to the country’s central bank for $1 billion, an official said Monday, saying the cash will be use to help ease the crisis in the country’s budget. Read more here-http://www.gata.org/node/8167
-Royal Canadian Mint explains how it lost gold. More than $3 million in government gold was unwittingly sold off at a fraction of its value as refinery slag, while $8 million more was miscounted and never left the Royal Canadian Mint, the Crown corporation revealed today in a full accounting of how it lost track of a fortune in gold for a year.
A series of miscalculations and blunders in its gold refinery dating back to 2005 were responsible for 17,500 troy ounces of gold going missing from the mint’s Sussex Drive inventory count last October, the mint announced in a 12-page report. That’s the equivalent of almost 44 400-ounce bars and worth more than $20 million in today’s prices. Read more here-
-Eric deCarbonnel graphs the gold suppression scheme. Read more here-http://www.gata.org/node/8173
-Jacqui Smith calls for ‘cash-for-gold’ websites to be regulated. Former Home Secretary Jacqui Smith blames a rise in burglaries on the prominence of gold websites that allow you to exchange jewellery for cash. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6816806/Jacqui-Smith-calls-for-cash-for-gold-websites-to-be-regulated.html
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
-NIA Declares Silver Best Investment for Next Decade. We are less than three weeks away from entering the next decade. The most important thing you need to know entering 2010 is that silver is the single best investment for the next decade. In our opinion, investing into silver is the only sure way to tremendously increase your purchasing power over the next ten years.
Throughout world history, only ten times more silver has been mined than gold. If you go back about 1,000 years ago between the years 1000 and 1250, gold was worth ten times more than silver worldwide. From year 1250 to 1792, the gold to silver ratio slowly increased from 10 to 15 and the Coinage Act of 1792 officially defined a gold to silver ratio of 15.
The ratio remained at 15 until forty-two years later when the ratio was increased in 1834 to 16, where it remained until silver was demonetized in 1873. The gold to silver ratio remained between 10 and 16 for 873 years! It is only over the past 100 years that the gold to silver ratio has averaged 50.
History will look back at the artificially high gold to silver ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. Next decade, the fiat currency experiment will end badly in a currency crisis. The wealthiest people will be those who bought silver today. Read more here-http://www.silverbearcafe.com/private/12.09/investment.html
-NIA’s Top 10 Predictions for 2010. Read more here-http://inflation.us/top10predictions2010.html
-Silver may continue to outshine gold’s performance in 2010. Read more here-http://www.business-standard.com/india/news/silver-may-continue-to-outshine-gold%5Cs-performance-in-2010/380155/
-Ted Butler silver commentary. Read more here-http://www.gata.org/node/8168
-Ted Butler’s weekly interview with King World News. Listen here-http://www.gata.org/node/8160
-All I Really Need To Know About Money, I Learned From A Silver Dime. Read more here-http://news.silverseek.com/SilverSeek/1261147077.php
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: Supbrime Delinquencies Continue To Soar. The latest data out of the Officer of the Comptroller of the Currency is not promising. Seriously delinquent mortgages increased in every category in Q3. Regular prime mortgages haven’t exploded higher, but good old fashioned subprime and alt-A continue to blast to new heights. Read more here-http://www.businessinsider.com/chart-of-the-day-seriously-delinquent-mortgages-2009-12
-“Money won’t create success, the freedom to make it will.” Nelson Mandela, former President of South Africa
-Congress and the Obama administration are taking a bigger role in the rescue of the economy from the Federal Reserve, shifting the strategy to stimulus spending from central bank lending.
The amount the Fed and U.S. agencies have lent, spent or guaranteed since September is $8.2 trillion. Bloomberg-Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ac8_SSGoo5V4
-Seems that Buy & Hold does work, if one buys and holds the right stuff! Ned W. Schmidt
-Gold will trade through $1224 to $1278 and then onward to $1650. After $1650 has been achieved, we will move on to Alf and Martin’s numbers. Jim Sinclair
-I see gold going to $2,000 by the end of 2010 and $5,000 by the end of the bull run. Rob McEwan-Watch video here-http://watch.bnn.ca/#clip249411
-I think the dollar is going to fall for years. It’s not going to fall every day, or every week. There are going to be periods of time where the dollar rallies — that’s how markets work. Like a bull market climbs a wall of worry, a bear market follows a slope of hope. And there’s always going to be hope that the dollar is going to recover, based on “maybe the Fed will raise interest rates,” “maybe the U.S. economy will improve.”
But none of that is going to help the dollar. I think the dollar’s fate has been sealed by the policies being pursued by the government and the Federal Reserve, and unfortunately it’s a grim fate. I think $5,000 is a reasonable expectation of where gold is headed over the course of the next several years, based on monetary and fiscal policy that is in place.
Now if the government were to reverse course if they suddenly brought the budget into surplus, and if the Fed aggressively raised interest rates back up to a reasonable level, say 5%, 6%, or 7%, not just a quarter-point every few months then gold would probably not get to $5,000. Peter Schiff-Read more here-http://www.fool.com/investing/general/2009/12/11/the-future-of-gold-the-dollar-and-more.aspx
-James Turk-Hyperinflation Watch. Contrary to common belief, hyperinflation does not arise from too much bank lending. The sole cause of hyperinflation is always too much government spending. The pattern is as follows.
The government spends more money than it is receiving in taxes, which forces it to borrow. As these deficits grow, they eventually exceed the market’s capacity or willingness to lend money to the government. Invariably, the central bank steps in and provides the government with the money it needs by creating it as the saying goes ‘out of thin air’, or what governments today call “quantitative easing”. The central bank does this in either of two ways.
In cash currency economies, where most commerce is completed by making payments with paper-currency, the central bank cranks up the printing press. Examples are the Weimar Germany hyperinflation in the early 1920s, and just recently, Zimbabwe.
Much has been made of the huge bank excess reserves “sitting idle” at the Fed. It has been said that hyperinflation is not possible when the banks are sitting on such huge reserves, instead of lending them into the economy. This thinking is flawed because it ignores that there are two sides to the Federal Reserve’s balance sheet.
Those reserves are not just sitting there, as if they were in a vacuum. These reserves have funded the Fed’s purchase of US government debt, putting it and the US dollar on the road to hyperinflation. Read more here-http://www.fgmr.com/december-23-2009-what-causes-hyperinflation.html
-The Inflation Bomb Hiding On The Fed’s Balance Sheet. One of the sources of the growth of the monetary base has been the $1 trillion of purchases of mortgage backed securities by the Fed. Much of that hasn’t yet made its way into the broader economy, and instead sits on bank balance sheets.
Actually, much of it is on deposit with the Fed itself, where banks can earn risk-free interest instead of lending it to home buyers at risk of losing their jobs or businesses still suffering from diminished consumer demand. When the economy begins to recover, the Fed will need to reduce the monetary base to prevent all those dollars from flooding the market and triggering hyper-inflation. Read more here-http://www.businessinsider.com/how-the-feds-mortgage-securities-purchases-create-inflation-2009-12
-Nobel Prize-winning economist Joseph Stiglitz says the U.S. needs to prepare for a second stimulus package as there’s a “significant” chance growth will slow in the second half of 2010.
The world’s largest economy isn’t likely to expand fast enough to create jobs for new entrants into the labor force or compensate for increases in productivity that will reduce demand for workers, Stiglitz told reporters in Singapore today.
“The likelihood of this slowdown is very, very high and there’s a significant chance it may be in a negative range,” he said. “If the economy recovers, we don’t need to spend the money. If you don’t prepare now and the economy turns out to be as weak as I think it will likely be, then you are in a very difficult position.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aqt9C2.TVFdw
-The Great Stabilisation. The recession was less calamitous than many feared. Its aftermath will be more dangerous than many expect. Read more here-http://www.economist.com/opinion/displayStory.cfm?story_id=15127608
-The survival of Irish banks is threatened by a wave of mortgage losses, as house prices slump and unemployment surges, according to Morgan Kelly, an economics professor dubbed the country’s “Doctor Doom.”
Some 3.3 percent of Irish mortgage borrowers were at least 90 days behind in their repayments at the end of September, more than double the share in June 2008, the country’s Financial Regulator said yesterday.
“The Irish banks remain as zombies whose only priority is to reduce their debt, and who face complete destruction from mortgage losses,” said Kelly, a professor at University College Dublin, in a research paper dated Dec. 21. “The Irish state can do nothing but watch as the second wave of the mortgage defaults sweeps in and drowns them.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aHxeJ2.zzoRg
-Largest 200 pension schemes in deficit by £100 billion. Britain’s largest private pension schemes are more than £100 billion in deficit for the first time, it was disclosed yesterday. Read more here-
-US pensions go bust, gold crashes, China flops, Bunds soar, predicts Saxo. America’s Social Security Trust Fund will go bankrupt; both gold and the Japanese yen will crash; and China’s currency will devalue as bad loans catch up with the over-stretched banking system all in the course of 2010. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6835576/US-pensions-go-bust-gold-crashes-China-flops-Bunds-soar-predicts-Saxo.html
-Oil Rebound Keeps Most-Accurate Forecasters Bullish. Oil’s biggest annual rally since 1999 is poised to continue with gains of at least 19 percent next year as the global economy recovers and OPEC curtails production, the most accurate crude forecasters say.
Societe Generale SA’s Mike Wittner and Hannes Loacker at Raiffeisen Zentralbank Oesterreich AG, whose predictions this year that were within 9 percent of market levels, now say oil will average $92.50 and $88, respectively, in the fourth quarter of 2010, up from current prices of about $74 in New York. The median Wall Street estimate is for an increase to $83. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aG5c8OnDKeEw
-U.S. Economy Grew at 2.2% Annual Rate Last Quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aVeAMaVRygoM
-Small-business bankruptcies rise 81% in California. With credit tight and consumers still pinching their pennies, many business owners find they can’t go on. Read more here-
http://www.latimes.com/business/la-fi-smallbiz-bankruptcy22-2009dec22,0,4357844,print.story
-8 in 10 say U.S. economy in poor shape. Read more here-http://money.cnn.com/2009/12/22/news/economy/cnn_poll_weak_economic_conditions.cnnw/index.htm
-Ben Stein: My dinner with Warren Buffett. Read more here-http://money.cnn.com/2009/12/18/news/warren_buffett_stein.fortune/index.htm
-Iran’s president on Tuesday dismissed a year-end deadline set by the Obama administration and the West for Tehran to accept a U.N.-drafted deal to swap enriched uranium for nuclear fuel. The United States warned Iran to take the deadline seriously.
Mahmoud Ahmadinejad also accused the U.S. of fabricating a purported Iranian secret document that appears to lay out a plan for developing a critical component of an atomic bomb.
Ahmadinejad’s remarks underscored Tehran’s defiance in the nuclear standoff and also sought to send a message that his government has not been weakened by the protest movement sparked by June’s disputed presidential election. He spoke a day after the latest opposition protest by tens of thousands mourning a dissident cleric who died over the weekend. Read more here-http://apnews.myway.com/article/20091222/D9COJ8K00.html
-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/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
-Carrie Underwood’s engagement ring estimated to cost from $150,000 to more than $1 million. Read more here-http://www.vancouversun.com/sports/Carrie+Underwood+engagement+ring+estimated+cost+from+more+than+million/2374675/story.html
-World’s Most Expensive PS3 is Covered in Gold, Diamonds. Read more here-http://gamercrave.com/worlds-most-expensive-ps3-covered-in-gold-diamonds/1241/
-Diamonds Hold Allure as Gem of an Investment. Despite the financial meltdown, luxury assets such as wine and art are drawing strong interest from rich buyers, some looking at the goods as investments. Now, promoters of diamonds are hoping to add the precious stones to the investment mix.
The ‘Vivid Pink’ sold in Hong Kong for $10.8 million. Record sales at recent auctions, set by Asian bidders, is spurring talk of a surge in high-end diamond demand. Several investment funds focusing solely on diamonds have launched or are in the works and are hoping to take advantage.
Asian bidders, especially from mainland China, represent a growing presence at auctions, says Patti Wong, chairwoman of Sotheby’s Asia. At a Sotheby’s auction in New York City earlier this month, five of the top 10 buyers were Asian.
The most expensive item a 30.48 carat oval diamond went to a buyer from mainland China for approximately $4.11 million. At a Christie’s auction in Hong Kong this month, a colored diamond, called “The Vivid Pink,” sold for $10.8 million, setting a record for a gemstone of its kind.
It’s unclear if the buyers were after the rocks for investment purposes or simply to enjoy. But proponents are hoping to turn diamonds traditionally seen as ornaments into wealth-accumulating vehicles. Read more here-http://online.wsj.com/article/SB126099490068094349.html
U.S. STOCK MARKET PERFORMANCE WORST IN 200 YEARS
-Since End of 1999, U.S. Stocks’ Performance Has Been the All-Time Clunker; Even 1930s Beat It. The U.S. stock market is wrapping up what is likely to be its worst decade ever. In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.
Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade. The period has provided a lesson for ordinary Americans who used stocks as their primary way of saving for retirement.
Many investors were lured to the stock market by the bull market that began in the early 1980s and gained force through the 1990s. But coming out of the 1990s when a 17.6% average annual gain made it the second-best decade in history behind the 1950s stocks simply had gotten too expensive. Companies also pared dividends, cutting into investor returns. And in a time of financial panic like 2008, stocks were a terrible place to invest.
With two weeks to go in 2009, the declines since the end of 1999 make the last 10 years the worst calendar decade for stocks going back to the 1820s, when reliable stock market records begin, according to data compiled by Yale University finance professor William Goetzmann. He estimates it would take a 3.6% rise between now and year end for the decade to come in better than the 0.2% decline suffered by stocks during the Depression years of the 1930s.
The past decade also well underperformed other decades with major financial panics, such as in 1907 and 1893. “The last 10 years have been a nightmare, really poor,” for U.S. stocks, said Michele Gambera, chief economist at Ibbotson Associates. While the overall market trend has been a steady march upward, the last decade is a reminder that stocks can decline over long periods of time, he said. Read more here-http://finance.yahoo.com/banking-budgeting/article/108453/investors-hope-the-10s-beat-the-00s?mod=bb-budgeting
-As the first decade of the new millennium rapidly comes to a close, today’s chart takes a look back at the decade that was. Today’s chart begins shortly after the stock market as well as the nation was partying like it’s 1999 (i.e. dot-com boom). The proverbial punch bowl was taken away early in 2000 and the Nasdaq suffered its 2 1/2 year dot-com bust.
The market eventually bottomed and began a five-year rally thanks in part some infamous financial innovations (i.e. Ninja loans No Income, No Job, and no Assets). Then as it became apparent that those financial innovations weren’t quite as innovative as first hoped, the system went into near meltdown. Over the past nine months, the Nasdaq has been rallying (albeit at a pace that is slowing over time) and is currently testing resistance. All in all, a tough decade. Read more here-http://www.chartoftheday.com/20091218.htm?T
U.S. BANK FAILURES HIT 140-BANKS WITH POLITICAL TIES DID BEST
-Seven U.S. Banks Are Seized, Raising Year’s Failure Toll to 140. Seven U.S. banks were seized by regulators, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.
Banks with $14.4 billion in total assets were closed yesterday in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.
Two of the closures were in California. The assets and deposits of Federal Bank of California in Santa Monica were bought by closely held OneWest Bank, which acquired IndyMac Federal Bank this year. Imperial Capital Bank was bought by City National Corp., the Beverly Hills-based parent of City National Bank, which expanded in Southern California with the purchase.
“Imperial Capital Bank is a very good fit for City National, given that eight of its nine locations are in communities we serve,” City National Chief Executive Officer Russell Goldsmith said in a statement. “We’re pleased to contribute to the increased stability of the banking system.”
Federal Bank was the biggest lender seized yesterday, with $6.1 billion of assets and $4.5 billion in deposits, according to the FDIC. Based in La Jolla, Imperial Capital had assets of $4 billion and $2.8 billion in deposits.
Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aA4tDKBIB6Ek or http://money.cnn.com/2009/12/18/news/economy/bank_failure/index.htm
-Banks with political ties did best with bailouts, study concludes. U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.
Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business.
Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds. Political influence was most helpful for poorly performing banks, the study found.
“Political connections play an important role in a firm’s access to capital,” Sosyura, a University of Michigan assistant professor of finance, said in a statement. Read more here-
U.S. DEBT CRISIS
-Not too long ago, a billion dollars in a governmental budget was a lot of money. Then we got into hundreds of billions. People understood that this was a lot, just because of all the zeros. Now, unfortunately, the number has become small: the world “trillion,” as in $1.2 trillion for health care reform, seems so tiny. But it has 12 zeroes behind it, which is so easy to forget.
If the government stays on the course it’s been on for the past forty years without a radical change, the federal government will soon have a $10 trillion budget. In other words, the federal budget deficit will be $1.4 trillion. Just to make the size more visible, that’s $1,400 billion.
Our colleague Rob Arnott, who always does terrific research, wrote in his recent report that “at all levels, federal, state, local and GSEs, the total public debt is now at 141% of GDP. That puts the United States in some elite company only Japan, Lebanon and Zimbabwe are higher. That’s only the start.
Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP. Less than three years ago our total indebtedness crossed 500% of GDP for the first time.” Add the unfunded portion of entitlement programs and we’re at 840% of GDP.
The world has not seen such debt levels in modern history. This debt is not serviceable. Imagine that total debt is 557% of GDP, without considering entitlements. The interest on the debt will consume all the tax revenues of the country in the not-too-distant future. Then there will be no way out but to create more debt in order to finance the old debt.
It assures a period of economic devastation. In a last, desperate attempt, politicians at the federal and local levels will raise taxes to astronomical heights to raise revenues. And that only assures destruction of the economy. Forget the fable of economic recovery. Unless there is a change in Washington by next year’s election, there will be no way to turn back.
Japan’s recession is now 19 years old. It has the highest debt-to-GDP level (227%) of any industrialized country. The Fitch rating agency is talking about a potential downgrade of Japan’s debt. Japan’s stock market is still down 75% from the high in 1990. We predict it will make new bear market lows next year. That will make it a 20-year-long bear market on the way to 25 years. The bulls in the U.S. should consider that possibility in the formerly great United States of America.
I do not believe the bullish theory that the U.S. situation is different than Japan’s. Ours is so much worse. Is it any wonder that our biggest creditors, China, Russia and the Middle East, are diversifying out of the dollar and into gold? Read more here-http://www.forbes.com/2009/12/18/government-budget-deficit-personal-finance-financial-advisor-network-treasury-debt_print.html
-Playing Ponzi-The legacy of the financial crisis will continue for some years yet in advanced economies. Read more here-http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=15108456&fsrc;=nwl
-U.S. debt ’serious’ concern for Canada, Flaherty warns. Read more here-http://www.financialpost.com/story.html?id=2371606
-James Turk: Government debt defaults may end socialism. Read more here-http://www.gata.org/node/8164
CHINA-WORLD DOESN’T HAVE MONEY TO BUY MORE U.S. TREASURIES
-It is getting harder for governments to buy United States Treasuries because the US’s shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday. The comments by Zhu Min, deputy governor of the People’s Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.
Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.
China’s State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments. In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.
He then addressed where demand for that debt would come from. “The United States cannot force foreign governments to increase their holdings of Treasuries,” Zhu said, according to an audio recording of his remarks. “Double the holdings? It is definitely impossible.”
“The US current account deficit is falling as residents’ savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world,” he added. “The world does not have so much money to buy more US Treasuries.” Read more here-http://www.shanghaidaily.com/article/print.asp?id=423054 or http://www.caseyresearch.com/displayCdd.php?id=303
U.S. STATES JOBLESS FUNDS ARE BEING DRAINED IN RECESSION
-The recession’s jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks. The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.
Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.
Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.
“There’s immense pressure, and it’s got to be faced,” said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana’s unemployment program. “Our system was absolutely broke.” Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/12/21/AR2009122103269_pf.html
SHRINKING CREDIT THREATENS XMAS SALES
-Shrinking Credit Threatens Almost $9 Billion in Sales. Target Corp. and U.S. retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect.
Sales in November and December may fall 1.2 percent to $436.7 billion from the same period in 2008, said Britt Beemer, chairman of consumer polling firm America’s Research Group. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said in a Dec. 21 interview.
Target Chief Financial Officer Douglas Scovanner says the credit-card legislation is exacerbating a spending slump just as consumers begin to consider more discretionary purchases they would usually buy with credit. Items such as clothing, jewelry and home goods suffered steeper declines during the recession and are among the most profitable sales for retailers.
“It will mute the impact of the rebound that would have otherwise occurred,” Scovanner said. “Diminished availability of credit equals diminished spending.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=awQ8BD6YsPgA&pos;=5
REAL ESTATE
-Sales of U.S. New Homes Unexpectedly Fell in November. Purchases of new homes in the U.S. unexpectedly fell last month, indicating a recovery from the worst housing slump since the Great Depression will be slow to develop. Purchases dropped 11 percent to an annual pace of 355,000.
The prospect that a government tax incentive would expire, combined with a 10 percent jobless rate and competition from foreclosed properties may have hurt builders such as Beazer Homes USA Inc. Last month’s decrease signals a sustained housing recovery may be difficult to secure without additional assistance from policy makers.
“The tax credit put a Band-Aid over the housing problem and in October and November we ripped it off” as it was set to expire, said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected sales would fall. “Demand for housing is not likely to pick up on a consistent basis until we start to see some improvement in employment.”
The report from the Commerce Department showed the median price of a new home in the U.S. decreased to $217,400, from $221,600 a year earlier. Sales of new homes were down 9 percent from November 2008.
Construction cutbacks helped bring inventories down. The number of homes for sale fell to a seasonally adjusted 235,000, the fewest since April 1971. The supply of homes at the current sales rate increased to 7.9 months’ worth. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=al3GTnIut0Ao&pos;=1
-Sales of Existing Homes Increase More Than Forecast. Sales of existing U.S. homes in November rose to the highest level in almost three years as first-time buyers rushed to take advantage of a government tax credit and lower prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=awyE9Rp1UIK8
-More prime mortgages default in 3rd quarter. Also: Many homeowners with modified mortgages fall behind again. And the number of homes in foreclosure rises, though new foreclosures are steady, report shows. Troubled home loans continued to mount in the nation’s banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments.
For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency.
The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier. And more than half of all homeowners whose payments had been lowered through modification plans defaulted again.
The report, which covers about 34 million loans, or about 65% of all U.S. mortgages, underscores the obstacles to strengthening the nation’s rickety housing market. Stubborn unemployment is making it tough for millions of homeowners to pay their debts. In addition, many people whose monthly installments have been lowered still are unable to keep up with their payments.
Of the mortgages serviced by national banks and thrifts, only 87.2% were current and performing. It was the sixth straight quarter that the quality of those home loan portfolios had slipped.
“Mortgage performance continued to decline as a result of continuing adverse economic conditions including rising unemployment and loss in home values,” the report said.
Seriously delinquent mortgages loans 60 or more days past due and loans to delinquent borrowers who have filed for bankruptcy rose to 6.2% of the servicing portfolio. That’s a 16.7% increase over the second quarter and a 73.8% increase from a year earlier, the report said.
Of those seriously delinquent loans, the number of homes in the foreclosure process reached 1.09 million, about 3.2% of all the loans surveyed. Read more here-
http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,6921808,print.story
-More homes are poised to hit the market. A ’shadow’ inventory of properties close to foreclosure or seized but not yet for sale has been growing. A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the nation’s housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.
A variety of measures to keep discounted bank-owned properties off the market including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford has helped increase a backlog of so-called shadow inventory 55% in the year ended Sept. 30, according to a report released Thursday by First American CoreLogic, a Santa Ana-based real estate research firm.
Shadow inventory properties are homes that have not been tallied into official inventory numbers tracked by Realtors and other real estate professionals. They include homes taken back by lenders through foreclosures and similar actions, as well as homes whose owners are at least 90 days delinquent on their mortgage payments.
A year earlier, the pending supply of homes not yet up for sale totalled 1.1 million. A debate has emerged among real estate professionals and economists over how big an effect shadow properties will have on housing prices and sales if lenders unload them onto the market next year.
Some argue that lenders, concerned about potential losses, will moderate the pace of repossessions to avoid depressing the market. Others say efforts by the government won’t be able to keep up with the sheer number of defaults brought on by unemployment and depressed home values. Read more here-http://www.latimes.com/business/la-fi-foreclosures18-2009dec18,0,5999713,print.story
-The Second Wave of Mortgage Defaults. Our economy is about to relapse into the disease that sent us into the Great Depression: Part Deux. Subprime loans caused the initial illness. Option-ARMs will cause the relapse.
In the first half of the past decade, subprime loans were king. They were cheap and easy to get approved. Along with the subprime boom came subprime adjustable-rate mortgages (ARMs), which were equally easy to afford for a while.
Of course, the “A” and the “R” in ARM meant that the interest rate borrowers pay changes, or resets. The majority of these resets occurred between the summer of 2007 and the summer of 2008.
This period saw a massive amount of mortgage interest rate hikes, which caused millions of foreclosures. Things spiralled down from there, eventually freezing nearly all credit and causing the panic of 2008.
Of course, that’s the 50-cent version of recent history. There were plenty of other financial calamities that went along with this, including the bundling of mortgage-backed securities and risky derivative products.
If you believe the Obama White House and the glass-half-full press corps, you’d think this mess is now behind us. We are, after all, in a recovery right? Unfortunately, no one is talking about the second wave of ARM resets and foreclosures. Read more here-http://dailyreckoning.com/the-second-wave-of-mortgage-defaults/
-Borrowers with modified loans falling into trouble. Report says homeowners whose loan payments are cut by 20 percent or more still falling behind. Read more here-
http://finance.yahoo.com/news/Borrowers-with-modified-loans-apf-3676161618.html?x=0
-One of Five Modified Loans Fails in 90 Days. Read more here-http://www.upi.com/Real-Estate/2009/12/22/One-of-Five-Modified-Loans-Fails-in-90-Days/5021261517169/
-U.S. Commercial Property Falls to Lowest in 7 Years. Commercial property values in the U.S. declined in October to the lowest level in more than seven years as unemployment reduced demand for apartments, offices and retail space.
The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September to the lowest since August 2002. Prices were down 36 percent from a year earlier and are 44 percent below the peak in October 2007, Moody’s Investors Service Inc. said in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5joQkpA3l2Y&pos;=5
-U.K. Housing Market Recovery Will Fade Next Year, RICS Says. The U.K. housing market recovery will fade in 2010 as more homes become available to buy and officials start to exit emergency stimulus measures, the Royal Institution of Chartered Surveyors said. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=awpUTvnbXC_4
-Nice Home. Where’s the Rest of It? The author of the Craigslist posting in Las Vegas made no effort to disguise his or her intentions. “Stripping House Before Foreclosure,” the ad declared, offering potential buyers the cabinets and countertops, the sinks and toilets, the doors, the appliances, the sprinklers. Even the palm and citrus trees in the yard were for sale, with a catch.
“You dig,” the author advised. In Nevada and other states hit hard by the housing crisis, stripping fixtures and appliances from homes in foreclosure has become commonplace. Craigslist, the Web site for classified ads, functions as a bazaar where stripped items are sold openly. Often, the stripping is not done by strangers. It is done by the owner, just before the bank forecloses on the mortgage and takes the property back. Read more here-http://www.nytimes.com/2009/12/23/business/economy/23stripped.html?_r=2&pagewanted;=print
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – December 29, 2009
Posted by Worldwide Precious Metals on Tuesday, December 29, 2009
The Goldbugg Report – December 22, 2009
December 22, 2009
-Gold: how high will the price go in 2010?
-Gold & Silver What’s Next? Roger Wiegand
-Why Precious Metals Aren’t in a Bubble.
GOLD
-As I know it’s on the minds of many of you here’s a quick look at the corrections in gold so far this year. You can see that of the seven corrections, three have been as bad or worse than the current version.
While it may be premature to call this correction over, gold and silver do appear to be forming a solid bottom. In other words, I think this overdue stop on the road to higher prices won’t last overly long. If you are thinking of filling in your precious metals position, I wouldn’t put it off. David Galland Managing Director Casey Research
-James Turk-Gold Remains Firmly Within a Major Uptrend. In my last commentary I asked “What’s next for gold?” Answering my own question, I noted that “$1200-$1400 is a reasonable target for the end of this year, but first, it seems likely that gold will re-test support.”
In fact, gold kept climbing to above $1200, so my timing was off. Only now are we seeing the re-test of support that I had expected. Gold has fallen deeper than I envisioned, but it is clear from the following chart that gold’s technical position remains very bullish.
The above chart is very powerful. Note the following bullish features:
1) By hurdling above $1000, gold broke out from the ‘head & shoulders’ pattern (highlighted by the green lines) it formed over the past couple of years.
2) I have extended the right trend-line of gold’s base (the purple dashed line), and gold remains above this uptrend line.
3) Gold remains above its 200-day moving average.
All of these points make clear that gold remains firmly within a major long-term uptrend, which is the salient fact. The short-term ups and downs are merely noise that can easily distract us from the big picture. Gold is now in the second stage of its bull market, so the volatility of the past couple of weeks is to be expected. Increasing volatility is one of the traits of a bull market’s second stage.
In conclusion, last week’s shake-out did nothing to alter gold’s major long-term uptrend, which is not surprising. The problems confronting national currencies continue to deepen. They continue to be debased, so a lot more erosion of their purchasing power is to be expected.
For example, The Times of London on December 10th forecast that governments from 19 of the G20 countries will suffer fiscal deficits in 2010. Only Saudi Arabia is expected to operate with a surplus, and leading the list of the worst fiscal offenders are the UK, Japan, US and India each is expected to rack up a deficit of 10% of GDP or greater.
The amount of new debt that will be created in 2010 by the G20 means central banks around the world will be running their ‘printing presses’ day and night, debasing currencies at breakneck speed. Next year promises to be another big year for gold. Read more here-http://www.fgmr.com/december-13-2009-gold-remains-firmly-within-major-uptrend.html
-Jim Rogers: Gold Can’t Be in a Bubble if Nobody Even Owns it Yet. Jim Rogers, who has long been bullish on commodities, tells CNBC’s Maria Bartiromo that despite the recent spike in the gold’s price; the market is not experiencing a bubble.
“I wouldn’t think of selling [gold],” Rogers said. “If gold goes to $1,000 or pick a number I hope that I’m smart enough to buy more. Until last year central banks around the world were selling gold. Now you have the opposite. They’ve stopped selling and they are starting to buy as well. That’s a huge shift in the gold market and many other people worry about paper-money as well. So I think gold will certainly go to a couple of thousand dollars over the next decade. I mean that’s not a radical assumption.”
According to Rogers, gold will power the great commodities bull run that will last for the next decade. With many people worried about the deficit and paper money, gold will be a great investment and relatively few people are invested in it.
At a speech in Prague Rogers surveyed about 300 people, including big money managers, and 76 percent had never owned gold, he said. “So when you say it’s a bubble nobody owns gold yet,” Rogers said. Still, silver is preferable, with silver 70 percent off its all-time high and gold near it’s all-time high, he said. Watch video here-http://www.cnbc.com/id/34376063/
-Santer Says Gold May Rise to $2,000 Within 3 Years. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=adviser&T;=Santer%20Says%20Gold%20May%20Rise%20to%20%242%2C000%20Within%203%20Years&clipSRC;=mms://media2.bloomberg.com/cache/vahKRjthNrhU.asf
-Four pillars of gold price strength remain intact. Despite the recent setback in the gold price, the principal drivers of gold’s recent strength remain in play and don’t be surprised to see $1,500 gold next year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94497&sn;=Detail
-Gold heading for $1,500 before mid-2010 SocGen. The bank suggests buying into the recent commodities correction as it expects precious metals to outperform the rest over six months as investors’ fears intensify about inflationary pressures exacerbated by political interference. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=94594&sn;=Detail
-BMO’s bull case for gold could reach a peak price of $1,500/oz. BMO Capital Markets Global Strategist Bart Melek said there are “plenty of reasons to hold gold” with “considerable upside possible.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94628&sn;=Detail
-Gold: how high will the price go in 2010? Gold rose to a record high in 2009, but can it continue to rise above the $1,200/oz level, or will it fall back? Read more here-
-Four digit gold “magical” for investment psychology Hathaway. Tocqueville fund manager John Hathaway predicts public expectations regarding gold are about to pivot in a manner that leads to irrational exuberance for the precious metal. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94382&sn;=Detail
-VM mostly positive on metals prices for 2010. The latest Metals Monthly from the VM Group takes a generally positive view on the prospects for precious and base metals prospects in the year ahead. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94488&sn;=Detail
-Recent gold price dip, just a minor hiccough. While gold prices have fallen over the last few days on a slightly stronger dollar the fundamentals for the gold rally have not changed at all. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94461&sn;=Detail
-Russian Central Bank to buy 30 tonnes of gold from Gokhran. Russia’s Central Bank will increase its gold holdings by around 5% by buying 30 tonnes of gold from the State repository which had been planning to sell the gold on the open market. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=94430&sn;=Detail
or http://www.gata.org/node/8144
-Gold’s Old Enemies: Allies in 2010. A number of the world’s most prominent gold experts, including Sprott Asset Management’s John Embry, are expecting central banks to play a very supportive role in underpinning the rise in the gold market in 2010. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=94557&sn;=Detail
-Gold Buying by Central Banks May Send Signal to Sell. Read more here-http://www.bloomberg.com/apps/news?pid=20601080&sid;=arhlK7_y34Mg
-Fabrice Taylor: The gold bubble myth. Read more here-http://www.gata.org/node/8151
-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1260724320.php
-J.S. Kim: Disinformation obscures great opportunity in gold. Read more here-http://www.gata.org/node/8150
-Not Too Late to Buy Gold: Beware of Global Bumps Ahead, Lynn Tilton Says. Read more here-http://finance.yahoo.com/tech-ticker/not-too-late-to-buy-gold-beware-of-global-bumps-ahead-lynn-tilton-says-390792.html
-U.S. Mint resumes bullion coin sales with rationing. Read more here-http://www.gata.org/node/8147 or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=94454&sn;=Detail
-Gold & Silver What’s Next? Read more here-http://www.kitco.com/ind/Wiegand/dec112009.html
-How to Predict the Price of Gold. Read more here-http://news.goldseek.com/GoldSeek/1260477303.php
-James Turk-The Fractional Reserve Aspects of Gold ETFs. Read more here-http://www.gata.org/node/8157 or http://www.fgmr.com/fractional-reserve-aspects-of-gold-etfs.html
-Nouriel Roubini thinks he knows nearly everything about gold. Read more here-http://www.gata.org/node/8149
-What a revelation: Gold trading can rig currency markets. Read more here-http://www.gata.org/node/8146
-John Browne concedes gold price manipulation. Read more here-http://www.gata.org/node/8154
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
-With the gold: silver ratio at 65 ($1117/$17.10/oz), silver remains a compelling buy at these levels and will likely be the surprise outperformer in 2010 as it was in 2009 (up by more than 51% YTD as per table). Silver’s industrial uses should mean that the gold/silver ratio will likely gradually regress to the average in the last 100 hundred years which is close to 40:1.
If the tiny silver market was to see real funds enter it than the ration could return closer to the historical average of 15:1 as it did as recently as 1980. Silver remains less than half of its nominal record price in 1980 and very undervalued from a historical basis. Goldcore.com-Read more here-http://www.goldcore.com/research/silver-set-soar-it-did-1970s
-Getting Gold and Silver Back in Synch. One sign is the gold-to-silver ratio, or the price of gold divided by that of silver, which gives investors a sense of when either of the two precious metals is straying too far from its “fair” value. This market gauge, which has averaged about 54 since 1970, jumped to 84 at the height of the financial crisis in the fall of 2008 as investors seeking safety poured into gold.
Since then, the ratio has fallen back to about 66, thanks to silver’s 52% jump in value this year, which has far outstripped gold’s 27% gain. But the market’s slowness in returning to equilibrium has some analysts scratching their heads over what the next year could hold for the precious metals market.
Some observers say gold, which until recently had been hitting a nearly continuous series of records, could eventually lose some of its shine, helping restore the ratio to its average. But there’s another possibility: Silver’s mammoth gains could simply continue in a rebounding economy, even as gold rises more slowly. That means neither the yellow metal nor its secondary cousin would have to lose.
“There would tend to be a gravitational pull back” to the average, which is somewhere in the 50s, says Neil Meader, research director at GFMS Ltd., a London-based precious-metals consulting firm. Mr. Meader expects gold prices to eventually run out of steam and for silver to continue benefiting from rising industrial demand tied to the global economic recovery. Read more here-
http://online.wsj.com/article/SB10001424052748704201404574590011622195876.html
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1260721878.php
-Silver outperforms gold by +30% in 2009. Read more here-http://www.thehedgefundjournal.com/news/2009/12/14/silver-outperforms-gold-by-30-in-2009.php
-Silver buying may shoot up below $ 20 level. Read more here-http://www.commodityonline.com/futures-trading/technical/Silver-buying-may-shoot-up-below-$-20-level-13398.html
-Silver market analyst Ted Butler’s new commentary is a speculation on the possibility and consequences of a default by the New York Commodities Exchange’s silver futures market. The short position there, Butler writes, is so huge and concentrated that it could not possibly be delivered from Comex warehouses or world production.
Of course this does not address the possibility that there is some secret U.S. government silver stockpile underwriting the short position, which has to be considered, since the short position is almost entirely in the hands of the U.S. government’s main agent in the financial markets, JPMorganChase & Co.
But even any greater transparency arranged in the precious metals futures markets by the U.S. Commodity Futures Trading Commission could prove sensational. Butler’s commentary is headlined “Extreme Speculation.” Read more here-http://www.gata.org/node/8148
-Silver market analyst Butler’s weekly interview at King World News. Listen here-http://www.gata.org/node/8145
-Interview with silver expert David Morgan. Read more here-http://news.silverseek.com/SilverInvestor/1261029840.php
-Buyers spurn gold for silver. A leading bullion dealer says that there has been a marked interest from investors for silver in recent weeks. Read more here-
-Is the Price of World Silver the Result of Legitimate Market Discovery? Read more here-http://jessescrossroadscafe.blogspot.com/2009/12/is-price-of-world-silver-result-of.html
-Why Precious Metals Aren’t in a Bubble. Read more here-http://news.goldseek.com/GoldSeek/1260972676.php
U.S. BANK FAILURES HIT 133
-U.S. bank failure tally reaches 133. Regulators close regional banks in Florida, Kansas and Arizona, at a cost of $252.1 million to the FDIC. Read more here-
http://money.cnn.com/2009/12/11/news/economy/bank_failure/index.htm
-FDIC Boosts 2010 Budget, Staff as Bank Failures Rise. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a61K0Spsn2QU
-FDIC Approves Giving Banks Reprieve From Capital Requirements. The Federal Deposit Insurance Corp. gave banks including Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. a reprieve of at least six months from raising capital to support billions of dollars of securities the firms will be adding to their balance sheets.
Bank regulators including the FDIC and Federal Reserve want to permit a phase-in of capital requirements that rise starting next month under a change approved by the Financial Accounting Standards Board. The rule, passed in May, eliminates some off- balance-sheet trusts, forcing banks to put billions of dollars of assets and liabilities on their books. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNQ2cLJ8kCLo&pos;=6
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the day: The Average Investor Remains Terrified Of The Stock Market. While the federal reserve’s dollar ‘printing press’ keeps churning, all the excess dollars still aren’t ending up in stocks. Latest data from the Investment Company Institute shows that long term mutual fund flows for stocks were negative $9.8 billion during the last four weeks ending December 2nd.
Thus while the U.S. stock markets treaded water in November, mutual fund investors were heading for the exits, as their sentiment toward stocks remains weak. Just as it’s been since August. What are average investors in love with? Bonds. If excess dollars are supporting any market, it will have to be this one. $36.8 billion of new mutual fund money entered bonds just recently, which is a continuation of the massive bond-buying trend that started in January.
Even though bonds generally command higher quantities of investment funds than stocks all else being equal, the negative vs. positive flows shown in the chart below make it pretty clear where the current market consensus lies. The average mutual fund investor remains scared of stocks and fond of bonds. Read more here-
-A 53-per-cent rally in stocks from March lows won’t be enough to tempt Canadians back into equities in big numbers in 2010, top mutual funds executives say, forcing the industry to focus on more conservative products. Read more here-http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20091214.wfunds1214/business/Business/businessBN/ctv-business?ctvBeta=yes
-Chart of the day: U.S. Bureaucrats Have Way Better Benefits than you. When you choose a career, two of the biggest factors to consider are your benefits and your salary. If you’re the kind of person looking to make $500 million a year (a la Michael Milken), stay in the private sector. But for the rest of us, becoming a government employee seems like a more lucrative option.
According to the BLS, total employer compensation costs for civilian workers, which include private industry and state and local government workers, averaged $29.40 per hour worked in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour worked in September 2009.
State and local government employers spent an average of $39.83 per hour worked for total employee compensation in September 2009. But the killer part lies in the benefits. Health benefit employer costs were $4.43 per hour worked for state and local government and $2.01 in private industry. Ouch! Read more here-
http://www.businessinsider.com/chart-of-the-day-employer-cost-per-hour-worker-2009-12
-For feds, more get 6-figure salaries. The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.
Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months and that’s before overtime pay and bonuses are counted.
Federal workers are enjoying an extraordinary boom time in pay and hiring during a recession that has cost 7.3 million jobs in the private sector. Read more here-
http://www.usatoday.com/news/washington/2009-12-10-federal-pay-salaries_N.htm
-”There will come a time when you believe everything is finished. That will be the beginning.” Louis L’Amour-Read more here-http://en.wikipedia.org/wiki/Louis_L%27Amour
-”I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Jimmy Dean-Read more here-http://en.wikipedia.org/wiki/Jimmy_Dean
-The U.S. has no way of avoiding a financial Armageddon. John Williams, shadowstats.com
-”For those who think gold is already too expensive consider this from our dear friend Ian McAvity and his great newsletter, Deliberations… ‘Gold is about 52% higher than it was at its January, 1980 peak. Meanwhile, the CPI, which is the consumer measure of inflation, is 177% higher, the money supply is 464% higher and the stock market is nearly 900% higher.’
He notes, ‘I don’t think it untoward to suggest that gold is badly lagging a number of important yardsticks and at these levels it has some catching up to do.’ Gold could still reach $1300 to $1350 on this run, if it can hold above $1100. Aden Sisters-Read more here-http://www.marketwatch.com/story/story/print?guid=B81BF039-C183-4293-AF02-D7A268D9301D
-Since 1989, the Japanese stock market has had no fewer than four 50%-plus rallies and there still has been no period of growth that can be called a sustained expansion. David Rosenberg-Gluskin/Sheff
-The past two years have seen the greatest outpouring of money and credit from central banks and governments in history. In most countries interest rates cannot fall much lower being presently under 1% or close to zero. You might call this an attempt at fiat money recovery.
As a result of pump priming for the past six months or more investors have returned to the same gambling and risk taking they engaged in before, the losses of which caused the world economy to come to the edge of the financial abyss. All sectors of investment are again affected by a casino mentality. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1260974580.php or http://news.goldseek.com/InternationalForecaster/1260723600.php
-Mainstream economists called this downturn “The Great Recession”. This is truly a gentle way of saying “Depression”. When we can have the courage to come to grips with the fact that we did in fact experience a depression of sorts, which is by definition a credit event, then and only then can we draw a conclusion that a sustainable recovery will not get underway until the ratio of household credit to personal disposable income reverts to the mean (and goes to an excess in the opposite direction). I know it sounds harsh, but we shall endure believe it. Transition is rarely without pain.
The ratio of household debt to disposable income is up from a 30% ratio back in the 1950s to 125% today (though down from 139% at the peak in 2007). Mean reverting to a ratio closer to 60% means that the deleveraging process will be a multi-year event and by the time it is over, more than $7 trillion in additional household credit will have to be extinguished. For more on this see the unbelievably grotesque article on the front page of last Thursday’s (December 10) Wall Street Journal he New American Dream. David Rosenberg-Gluskin/Sheff
-We are not sure if this is a well known “fact”, but the U.S. government has a record $2.5 trillion of its debt, including bills, bonds and notes, rolling over in 2010. That, my friends, is 35% of the outstanding level of Uncle Sam’s marketable obligations having to be refinanced in one single year.
One has to wonder how the Fed is going to be able to raise interest rates in such a backdrop of massive rollovers; and if it doesn’t and the economy manages to exceed expectations or we get some inflation, how it is that the near-record steepness in the yield curve doesn’t continue in the coming year.
But very clearly, sovereign risk globally has taken over as the major potential flare-up for the coming year. Looking at the official projections for 2010, we have Japan’s government debt-to-GDP ratio hitting 227%; Italy at 120%; the U.S. and the U.K. both at 94%; Germany and France at 83%, and Canada at 79% (all levels of government). Rarely, if ever, has Canada been the one-eyed man to this extent in the land of the blind. David Rosenberg-Gluskin/Sheff
-Americans Want Government to Spend for Jobs, Send Bill to Rich. Americans want their government to create jobs through spending on public works, investments in alternative energy or skills training for the jobless. They also want the deficit to come down. And most are ready to hand the bill to the wealthy. Read more here-
http://www.bloomberg.com/apps/news?pid=20601070&sid;=awkrRPMONDW8
-Most Europeans Feel Worst of Crisis to Come on Jobs. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aVnbP7Z2T60A
-“I don’t think many people grasp just how much job creation we need to climb out of the hole we’re in. You can’t just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs more than 100,000 a month to keep up with a growing population.
And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment. How big? My back of the envelope calculation says that we need to add around 18 million jobs over the next five years, or 300,000 a month.
This puts last week’s employment report, which showed job losses of “only” 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we’ve been down so long that it looks like up to the financial press.” Paul Krugman
-Report: Nearly 50 percent of Detroit’s working-age population is unemployed. The unemployment rate in Detroit fell slightly last month to 27 percent. Read more here-http://www.mlive.com/news/detroit/index.ssf/2009/12/report_nearly_50_percent_of_de.html
-Sugar Jumps to Highest Price Since 1981 in New York on Deficit. Sugar rose in New York to the highest price in more than 28 years on renewed concern that the global output is lagging behind demand for a second year. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aiZOOsJfJj6A
-Obama’s Big Sellout. The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway. Read more here-
http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/print
-Airline Loss Forecast for 2010 Widens on Fuel, Fares. Airline losses in 2010 will total $5.6 billion, 47 percent wider than an earlier forecast, as oil prices rise while carriers compete for passengers with lower fares, the International Air Transport Association said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKETztcaDYpY&pos;=4
-Plug-In Cars May Not Soon Cut U.S. Oil Use, CO2, Study Finds. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=auIq_IVzAkDI
-Crunch Cuts Top Champagne Prices on This List of Festive Bubbly. Read more here-http://www.bloomberg.com/apps/news?pid=20601093&sid;=aoC7Ax0umJyQ
-Fed’s Bernanke Is Named Time’s ‘Person of the Year’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aha7dayF3enc&pos;=9
-Most Madoff Victims Denied SIPC Repayments a Year After Arrest. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aIiyVnSZxBLE
-US judge sets Allen Stanford trial for January 2011. Read more here-http://www.reuters.com/article/idUSN1718597720091217?type=marketsNews
or http://www.bloomberg.com/apps/news?pid=20601110&sid;=aumD.AqRGkYU
-Dumbest business moments of the decade. As the first 10 years of the century draw to a close, we take a long hard look at exactly what got us into this mess. Read more here-
http://money.cnn.com/galleries/2009/fortune/0912/gallery.dumbest_moments_decade.fortune/index.html
-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/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
-Rare Blue Wittelsbach-Graff Diamond Makes Public Appearance at Museum. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=33345
or http://www.elitetraveler.com/news_detail.html?nid=2155&n;=wittelsbach-graff-diamond-be-displayed-at-national-museum-natural-history
-Diamonds Hold Allure as Gem of an Investment. Despite the financial meltdown, luxury assets such as wine and art are drawing strong interest from rich buyers, some looking at the goods as investments. Now, promoters of diamonds are hoping to add the precious stones to the investment mix.
The ‘Vivid Pink’ sold in Hong Kong for $10.8 million. Record sales at recent auctions, set by Asian bidders, is spurring talk of a surge in high-end diamond demand. Several investment funds focusing solely on diamonds have launched or are in the works and are hoping to take advantage.
Asian bidders, especially from mainland China, represent a growing presence at auctions, says Patti Wong, chairwoman of Sotheby’s Asia. At a Sotheby’s auction in New York City earlier this month, five of the top 10 buyers were Asian.
The most expensive item a 30.48 carat oval diamond went to a buyer from mainland China for approximately $4.11 million. At a Christie’s auction in Hong Kong this month, a colored diamond, called “The Vivid Pink,” sold for $10.8 million, setting a record for a gemstone of its kind.
It’s unclear if the buyers were after the rocks for investment purposes or simply to enjoy. But proponents are hoping to turn diamonds traditionally seen as ornaments into wealth-accumulating vehicles. Read more here-http://online.wsj.com/article/SB126099490068094349.html
-A rare five-carat “vivid pink” diamond ring broke the world record at Christie’s jewelry auction in Hong Kong, selling for $10.8 million dollars at $2 million a carat. Watch video here-
http://uk.reuters.com/news/video?videoId=8130629
-“The diamond market continues to show remarkable strength despite the volatility of the financial world.” Rahul Kadakia, head of jewelry at Christie’s New York-Read more here-
http://www.idexonline.com/portal_FullNews.asp?id=33338
-Diamonds shine for 2010. Diamond prices could go up in the next few months as miners search for new sources of the gems and investors snatch them up to hedge their portfolios. Read more here-
http://www.torontosun.com/money/2009/12/12/12130111-sun.html
-Diamonds: Not Only A Girl’s Best Friend. Given the turbulence on global financial markets and the underlying cautious consumer sentiment, diamonds are becoming much more than a girl’s best friend.
By fusing the emotional aspect of diamond purchasing with the rational element of investing money in a valuable and steady tangible asset, the ingredients exist for the creation of a very powerful marketing message and the emergence of an exciting alternative ‘passion investment’. Read more here-http://www.commodityonline.com/news/Diamonds-Not-Only-A-Girl%E2%80%99s-Best-Friend-23723-3-1.html
-Australia’s 1Q Diamond Production -49%. Australia’s diamond production fell 49 percent to 2.449 million carats during its first fiscal quarter ending September 30, 2009, according to Australian Bureau of Agricultural and Resource Economics (ABARE). Output more than quadrupled from the previous quarter after the Argyle mine was closed for maintenance during the three months ending June 30.
Australia exported all its production from the September quarter, down 65 percent from one year earlier to $53.8 million (AUD 59 million) at $21.9 per carat (AUD 24 per carat). The country’s rough diamond imports by volume fell 7.5 percent to 111,000 carats with values down 4 percent to $100.3 million (AUD 110 million). The bulk of Australia’s diamond production is mined at the Argyle mine, owned by Rio Tinto. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=29008 or http://www.idexonline.com/portal_FullNews.asp?id=33342
AUSTRIA NATIONALIZES BANK
-ECB orders Austria to nationalise Hypo bank, fearing domino crisis. Austria has nationalised the Carinthian lender Hypo Group after it ran into trouble on hidden losses in Eastern Europe, offering a stark reminder that Europe’s banks are not yet out of the woods.
Finance minister Josef Pröll said the government had been forced by fast-moving events to take a 100pc stake in the bank, Austria’s sixth biggest lender with assets of €42bn (£38bn). “The risk situation of this bank has created an enormous threat to Austria, to its future as a financial centre, and to the whole economic region in recent days and weeks,” he said, speaking after a 14-hour emergency session overnight on Sunday.
Chancellor Werner Faymann sought to calm the fury of Austrian citizens and opposition leaders, saying there would have been “catastrophic consequences” if the bank had been allowed to fail. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6812031/ECB-orders-Austria-to-nationalise-Hypo-bank-fearing-domino-crisis.html
U.S.-GLOBAL DEBT CRISIS
-Moody’s warns of ’social unrest’ as sovereign debt spirals. Britain and other countries with fast-rising government debts must steel themselves for a year in which “social and political cohesiveness” is tested, Moody’s warned. Read more here-http://www.telegraph.co.uk/finance/economics/6819470/Moodys-warns-of-social-unrest-as-sovereign-debt-spirals.html
-House Votes to Raise U.S. Debt Limit to Almost $12.4 Trillion. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aE0KALGgkwJE&pos;=8
or http://money.cnn.com/2009/12/16/news/economy/debt_ceiling_increase_house_vote/index.htm
-US needs plan to tame debt soon, experts say. The U.S. government must craft a plan next year to get its ballooning debt under control or face possible panic in financial markets, a bipartisan panel of budget experts said in a report on Monday.
Though the government should hold off on immediate tax hikes and spending cuts to avoid harming the fragile economic recovery, it will need to make such painful changes by 2012 in order to keep debt at a manageable 60 percent of GDP by 2018, according to the Peterson-Pew Commission on Budget Reform.
Without action, investors could lose confidence in the United States, driving down the dollar and forcing up interest rates, said the former lawmakers and budget officials who crafted the report. That could cause a sharp decrease in the country’s standard of living. Read more here-http://www.reuters.com/article/idUSN1419042320091214?type=marketsNews
-Greenspan warns of threat from record deficit. Read more here-http://news.yahoo.com/s/nm/20091217/bs_nm/us_usa_deficit_greenspan
-Federal budget deficit for November hits $120.3B. Read more here-http://www.google.com/hostednews/ap/article/ALeqM5iWWPT8cAUpUCsmOZoABze-6XhwTAD9CGLVP00
-America’s debt burden starts to shrink. Read more here-http://blogs.reuters.com/rolfe-winkler/2009/12/14/americas-debt-burden-starts-to-shrink/
DRUG MONEY SAVED BANKS IN GLOBAL CRISIS
-Drug money saved banks in global crisis, claims UN advisor. Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions. Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations’ drugs and crime tsar has told the Observer.
Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago.
“In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said. Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said. Read more here-
http://www.guardian.co.uk/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims
U.S. FORGOES BILLIONS IN TAX ON CITI
-The U.S. government “quietly” agreed not to collect billions of dollars in potential taxes from Citigroup Inc as part of its deal to allow the bank to repay its taxpayer bailout, The Washington Post reported. The Internal Revenue Service issued a notice on Friday that extends the benefit to Citi and other companies in which the government owns a stake, the Post reported.
The Washington Post said the precise value of the IRS ruling depends on Citigroup’s future profitability and other factors, but the newspaper cited two accounting experts as estimating Citi would save at least several billion dollars. Read more here-http://www.reuters.com/article/idUSTRE5BF0G820091216
or http://www.washingtonpost.com/wp-dyn/content/article/2009/12/15/AR2009121504534_pf.html
JIM ROGERS-WHAT RECOVERY?-LONG TERM PROBLEMS FOR U.S. ECONOMY
-”It’s getting worse, not better.” That’s how Jim Rogers responds to the recent talk of improvement from President Obama, Treasury Secretary Geithner and Fed Chairman Bernanke, among others.
“Papering over the problem is not going to solve America’s problem,” Rogers says. “The idea you can solve a problem of too much debt and too much consumption with more consumption and more debt defies belief. I cannot believe that grownups would stand there and say that.”
History shows the only way to solve a financial crisis is “when people go bankrupt, you let them go bankrupt,” Rogers say. “Then, competent people come in, take over the assets, reorganize and you start over.” But rather than “take the pain and reorganize and start over,” as Sweden, South Korea and others have done, Rogers says America is “doing the Japanese model.”
Keeping zombie banks alive and bailing out their creditors will only prolong the pain, the famed financier predicts. “What has been happening is the government has been printing and spending a lot of money,” he says. “The problem is not solved they’re making the problem worse.”
Adding insult to injury, Rogers fears the “unintended consequences” of new regulations that inevitably come from politicians seeking someone to blame for the crisis. “The problems in last two years came from industries that are heavily regulated: banking, insurance, mortgage,” he notes. “Now what? You’re going to make the regulations tougher? It’s not the regulations, it’s the regulators.” Read more here-http://finance.yahoo.com/tech-ticker/article/388223/What-Recovery-America%27s-Problems
-Harvard’s Feldstein Says U.S. Economy Still Mired in Recession. The U.S. economy remains mired in a recession, prospects for next year are weak and home prices may resume declines, Harvard University economics professor Martin Feldstein said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aoBDcTKNS.oo&pos;=6
-Volcker Says ‘Basic Structure’ of Economy to Impede U.S. Growth. Former Federal Reserve Chairman Paul Volcker said imbalances in the structure of the U.S. economy pose a bigger challenge than the financial crisis and will impede economic growth for some time.
“We have another economic problem which is mixed up in this of too much consumption, too much spending relative to our capacity to invest and to export,” Volcker, an adviser to President Barack Obama, said today in Berlin. “It’s involved with the financial crisis but in a way it’s more difficult than the financial crisis because it reflects the basic structure of the economy.”
“It’s likely that economic growth is going to be pretty sluggish for a while,” Volcker said in a Bloomberg Television interview. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aL6KzrXJh418&pos;=5
-Eurosclerosis Is U.S. Diagnosis Not Japan Stagnation. The U.S. may have avoided the Japanese disease of prolonged stagnation only to end up with a dose of eurosclerosis: chronically high unemployment in a growing economy.
Economists are starting to extend their forecasts through 2011 and the results don’t look pretty. Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, forecasts that the jobless rate will rise to 10.75 percent by the middle of 2011 from 10 percent now.
Even optimists such as Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, see unemployment remaining well above the 20-year average of 5.6 percent. Kasman, projects the unemployment rate will average 9.9 percent in 2010 and 9.3 percent in 2011.
“We had been worried about turning into Japan,” says David Wyss, chief economist at Standard & Poor’s Corp. in New York. “But it may be more likely that we end up with sclerosis.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=agjD4W3DdFps
U.S. DOLLAR-FOREIGN CURRENCY
-Chinese central banker says dollar must weaken. Chinese central banker Zhu Min said that the dollar is set to weaken further and it will become more difficult for nations to buy U.S. Treasuries.
“When the U.S. has to fund its deficit through the combination of issuing more Treasuries and printing more dollars, it is inevitable that the dollar will continue to weaken,” Deputy Governor Zhu said at a forum in Beijing today. Read more here-http://www.gata.org/node/8155
-Gulf petro-powers to launch currency in latest threat to dollar hegemony. The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate. “The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.
The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.
Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank. The Emirates are staying out for now irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman. Read more here-http://www.telegraph.co.uk/finance/economics/6819136/Gulf-petro-powers-to-launch-currency-in-latest-threat-to-dollar-hegemony.html
-A Global Currency Coming Faster Than You Think. Watch here-http://eclipptv.com/viewVideo.php?video_id=8929
DOLLAR CRISIS WILL BRING MORE STIMULUS
-It was fitting that Richard Duncan sequestered himself in Bangkok to write his latest book “The Corruption of Capitalism,” a post-mortem of the credit bubble that crippled the world’s financial system. Duncan learned first hand from working in Thailand for most of the 1990s in the run-up to the Asian financial crisis that rapid credit growth causes excess capacity and leads to busts.
Then governments have to finance rescue plans very similar to what is now taking place around the world. After predicting in his 2003 book “The Dollar Crisis” that the U.S. property bubble would trigger a global recession, Duncan’s new book argues that governments will have to keep stimulating their economies because U.S. demand for cheap goods will not return to the halcyon days of the 2003 to 2007 boom.
Talk of an exit from the easy money policies in 2010 is entirely premature since investors will most likely see more U.S. stimulus spending next year to prop up demand. “This current round of stimulus will begin to wear out and everything will start to weaken again, and that will require another round of stimulus, not just from the U.S. but from China as well,” Duncan told Reuters. “If this stimulus is delayed or withdrawn, we will get significant drops in asset prices and go back into recession.”
Duncan is part of a group of economists like Marc Faber, Nouriel Roubini and James Grant, who believe the financial crisis is a symptom of something structurally wrong with the United States economy that will not be solved by the end of recession.
The institution of capitalism has been so corrupted by binges of borrowing financed with money printed on demand that governments now indefinitely have to take the reins of economies, Duncan argues in his book. “We can’t describe this economic system as capitalism, I describe it as statism,” he said. Read more here-http://www.reuters.com/article/idUSTRE5BF14420091216
INTEREST RATES
-Fed Keeps ‘Extended Period’ Pledge, Sees Rebound. The Federal Reserve repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the economy is strengthening. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a.G_8imggW6k&pos;=1 or http://money.cnn.com/2009/12/16/news/economy/fed_decision/index.htm
-Fed May Hesitate to Tighten in 2010 as Congress Debates Powers. Proposals in Congress to trim the Federal Reserve’s powers and subject it to greater scrutiny mean Chairman Ben S. Bernanke may have to think twice about raising rates in 2010 as long as unemployment stays high. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a_.PPhXquoVI
FOOD INFLATION-HYPERINFLATION
-Dairy, Meat Prices Will Spur Food Inflation, Wells Fargo Says. Rising milk, beef, pork and chicken prices will double the pace of U.S. food inflation next year as livestock supplies shrink and rebounding economies boost demand, said Michael Swanson, a senior economist at Wells Fargo & Co.
Food prices may jump as much as 6 percent in 2010, Swanson said. The U.S. Department of Agriculture on Nov. 25 forecast 3 percent to 4 percent food inflation next year, up from an estimated 1.5 percent to 2.5 percent in 2009.
Producers of cattle, hogs, dairy cows and poultry cut output after a jump in feed costs last year, reducing supplies as demand for meat is rising at home and abroad, Swanson said. Corn, the main source of animal feed, will rally next year because of record demand for grain to make ethanol, he said.
“Protein inflation is going to be much higher than people are anticipating,” Swanson said Dec. 9 in an interview from Minneapolis. “Corn is a proxy for feed costs, and right now the value of all meat and dairy output is below the price of feed on a long-term relative basis.” Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aubdC_KeCOvM
-Fastest Food Inflation Since Riots Means Milk Up 39%. Falling production in commodities from rice to milk is bad news for just about everyone except investors. Rice may surge 63 percent to $1,038 a metric ton from $638 on Philippine imports and a shortage in India, a Bloomberg survey of importers, exporters and analysts showed.
The U.S. government says nonfat dry milk may jump 39 percent next year, and JPMorgan Chase & Co. forecasts a 25 percent gain for sugar. Global food costs jumped 7 percent in November, the most since February 2008, four months before reaching a record, according to the United Nations Food and Agriculture Organization.
Farm prices this year lagged behind copper futures that doubled and oil’s 57 percent increase. A recovery from the worst recession since World War II would spur food demand and boost costs for buyers of commodities including milk processor Dean Foods Co. while increasing the number of hungry people that the UN says now exceeds 1 billion. Read more here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=aBYSp0.XfXZs
-Shadowstats’ John Williams: Prepare For The Hyperinflationary Great Depression. Read more here-http://www.zerohedge.com/article/shadowstats-john-williams-prepare-hyperinflationary-great-depression
REAL ESTATE
-Lockhart Says Housing May Take ‘Another Leg Down’. James B. Lockhart III, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency, said the U.S. housing decline may not be over.
Lockhart said at a conference in New York that he’s concerned there may be “another leg down” because of the pace of foreclosures. Foreclosures will “spike” unless the Obama administration’s programs to spur home loan modifications do more to reduce homeowners’ debts, he said.
“We need to be more aggressive in writing down mortgages and reducing principal to keep people in homes,” he said. “A spike could be pretty big.” Lockhart also said he expects that “hundreds of banks will be taken over.” The possibility comes from troubles in commercial real estate, which lags behind housing in finding a market bottom, he said. “We are overbuilt in many areas,” he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=ay2B7GJ6UuUE
-Is the Canadian Housing Market in a Bubble? At a time when personal income is down around 1% over the past year, we have seen nationwide average home prices soar over 20% and last month hit a record high; as did home sales. In real terms, home price appreciation is back to where it was in 1989. Of course, back then, interest rates were far higher but then again, the economy was in the late stages of a phenomenal multi-year economic expansion, not making a transition from deep recession to nascent recovery.
We are in no position to make a claim that there is a high degree of speculation in residential real estate as there was during the “flipping” mania of the late 1980s. Be that as it may, housing has become a very crowded asset class in Canada, as measured by the homeownership rate, which at last count was estimated at 68.4% which is not only a full percentage point higher than the current U.S. ratio but is the highest it has been on this side of the border in nearly four decades.
In answer to the question as to whether prices are in a bubble, all we will say is that when we ran some charts showing Canadian home prices normalized by personal income or by residential rent, what we found is that housing values are anywhere between 15% and 35% above levels we would label as being consistent with the fundamentals.
If being 15% to 35% overvalued isn’t a bubble, then it’s the next closest thing. We are talking about 2-3 standard deviation events here in terms of the parabolic move in Canadian home prices from their lows. David Rosenberg-Gluskin/Sheff
-Mortgage delinquencies rose to a new record in November and could remain high in December as Americans set aside more money for holiday expenses, Equifax Inc data show. Among U.S. homeowners with mortgages, 7.91 percent were at least 30 days late on payments in November, up from 7.76 percent in October, according to the monthly data the credit bureau provided exclusively to Reuters on Wednesday.
Delinquencies are an indication of future consumer bankruptcy filings, according to Equifax. “(Consumers) spend a lot more during November and December and they get behind and can’t get to their payments,” said Myra Hart, senior vice president of Analytical Services at Equifax.
No real improvement is possible until unemployment levels come down, she said in an interview. “We are about at the peak in terms of delinquencies,” Hart said. “Things probably won’t improve dramatically until jobs begin to be added. Delinquencies will stay at this level and may improve by small levels but we won’t see any real improvement till 2011.” Read more here-
http://www.reuters.com/article/idUSTRE5BF54420091216
-Shadow Inventory’ of U.S. Homes Climbs, Report Says. The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.
The “shadow inventory” rose from 1.1 million a year earlier. Such properties include those taken over by banks and mortgage companies and those where the loans are at least 90 days delinquent, the Santa Ana, California-based research firm said in a report today. The number of unsold homes listed for sale was 3.8 million in September, down from 4.7 million a year earlier, First American said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=auKSnUtGaDC4&pos;=7
-Luxury Homeowners in U.S. Use ‘Short Sales’ as Defaults Rise. Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
“The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.
As defaults on the biggest mortgages rise, borrowers such as Steve Holzknecht are turning to short sales to exit loans that now are larger than the market value of the house. In such a transaction, the lender agrees to accept less than a 100 percent payoff on a mortgage to expedite the property’s sale. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=aQED_96QBBkk
-4 Big Mortgage Backers Swim in Ocean of Debt. Even as the biggest banks repay their government debt in what is being heralded as a successful rescue program, four troubled giants of the financial world remain on government life support.
These companies, the American International Group, Fannie Mae, Freddie Mac and GMAC, are not only unable to repay the government, they are in need of continuing infusions that make them look increasingly like long-term wards of the state.
And the total risk they pose to the taxpayer far exceeds that of the big banks. Fannie and Freddie, in the final days of the year, are even said to be negotiating with the Treasury about greatly expanding the money available to them. Read more here-http://www.nytimes.com/2009/12/17/business/17wards.html?_r=1&partner;=rss&emc;=rss
-U.K. Property Gains to Stall in 2010, Rightmove Says. The U.K. housing market recovery will peter out in 2010 as the supply of homes increases because of forced sales, Rightmove Plc said.
Average asking prices will stagnate next year after rising about 2 percent in 2009, the operator of the U.K.’s biggest property Web site said in a statement today.
Prices fell 2.2 percent this month to an average of 221,463 pounds ($359,600), and may drop again next month, the group said. Banks may show “less forbearance” to consumers who are late on mortgage payments after the general election, which Prime Minister Gordon Brown must call by June 2010, Rightmove said.
A shortage of properties available helped stoke prices this year and erased some losses in values caused during the slump, which shaved as much as 12% off asking prices. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=a28echQXD9CM
FLU PANDEMIC
-Too Soon to Say H1N1 Pandemic Over, WHO’s Fukuda Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6DOXn8l1oxM
-Sanofi Recalls 800,000 Swine Flu Shots on Potency. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=azlsIBRuqG0Q
-Swine Flu May Mean Seasonal Strain Won’t Emerge in U.S. Winter. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=azdXB_63sShc&pos;=8
GEOPOLITICAL NEWS
-Iran tests upgraded long-range missile. Read more here-http://www.cnn.com/2009/WORLD/meast/12/16/iran.missile/index.html or http://apnews.myway.com/article/20091216/D9CKDCJ80.html
-Iran Missile Test May Increase Sanctions, Brown Says. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aUyv1dDWALfY
-Iran’s Missile Test Undermines Peaceful Claims, Obama Aide Says. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ayzz9AzLmC7I
-Secret document exposes Iran’s nuclear trigger. Confidential intelligence documents obtained by The Times show that Iran is working on testing a key final component of a nuclear bomb. The notes, from Iran’s most sensitive military nuclear project, describe a four-year plan to test a neutron initiator, the component of a nuclear bomb that triggers an explosion.
Foreign intelligence agencies date them to early 2007, four years after Iran was thought to have suspended its weapons programme. Read more here-
http://www.timesonline.co.uk/tol/news/world/middle_east/article6955351.ece
-US to drill Iranian attack scenario. Read more here-http://www.jpost.com/servlet/Satellite?cid=1260447443823&pagename;=JPost%2FJPArticle%2FShowFull
-A year on, Iran, North Korea threats worsen. Analysis: Both countries press ahead with nuke programs despite sanctions. Read more here-
http://www.msnbc.msn.com/id/34404196/ns/world_news
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – December 22, 2009
Posted by Worldwide Precious Metals on Tuesday, December 22, 2009
The Goldbugg Report – December 15, 2009
December 15, 2009
“Seasonal Sale” on Precious Metals. Contact your Broker at Worldwide Precious Metals for information on the Special Seasonal Offerings.
GOLD-SILVER
-Gold’s performance over the past month has truly been epic. Since late October, it has soared 18.2% higher. Over a 21-trading-day span, no fewer than 16 days achieved closes at new nominal all-time-record highs! Even the perpetual gold disdain from Wall Street and the financial media is fading.
With gold surging so rapidly and relentlessly, growing numbers of investors and speculators are wondering if we are now entering the long-awaited Stage Three gold bull. Over 5 years ago, when gold was trading at $400, I wrote an essay describing the evolution of a secular gold bull through 3 distinct stages.
Stage One stealthily emerges out of a secular-bear low when everyone loathes gold. In response to a devaluation in the dominant currency, this metal starts quietly creeping higher. Stage One in today’s bull began in April 2001 and ran for over 4 years. It was marked by modest yet consistent gains in gold.
Once global investors figure out that gold is moving up on its own supply-and-demand-driven fundamental merits, Stage Two dawns. More and more investors “discover” gold and deploy increasing amounts of capital in it. Today’s bull transitioned into Stage Two shortly after euro gold broke decisively above €350 in June 2005. Read more here-http://www.zealllc.com/2009/goldpara.htm
-Whenever the real interest rates have been negative, gold has proved to be a very good investment. Real interest rates (interest on a risk free government bond minus the inflation rate) were negative in the US between 1973 and 1980 and gold returned 32% per annum! Similarly, the median rate of interest has been negative since 2002 and today, a period where gold has returned nearly 19% on a compounded basis.
Also, stocks turn out to be a bad investment if gold soars and vice versa. Any idea what will gold do in 2010? Well, it looks highly unlikely that US Fed will raise interest rates significantly. In other words, real interest rates are likely to remain in the negative zone, thus clearing the field for gold to go even higher. Read more here-
http://www.equitymaster.com/5MinWrapUp/detail.asp?date=12/8/2009&story;=2
-’Gold price marching steadily higher to $1,500/oz’. Read more here-http://www.commodityonline.com/news/Gold-price-marching-steadily-higher-to-$1-500-oz-23580-3-1.html
-Newmont Mining chief executive Richard O’Brien says gold may rise to $US1350 an ounce next year and reach as high as $US1500 within two years because of the declining dollar and new investment demand. Read more here-http://www.theaustralian.com.au/gold-prices-will-keep-rising-says-newmont-boss-richard-obrien/story-e6frg8zx-1225806754072
-Gold’s Next Leg Up is $1,350 an Ounce. The recent sell-off is a consequence of too many investors getting too bullish at once. Once the excesses are cleared, the metal can hit new highs. Read more here-http://online.barrons.com/article/SB126016430551179699.html?mod=BOL_hpp_popview
-Gold prices could trade as high as $1,300 an ounce next year if the US dollar’s decline accelerates and doubts about its status as the world’s principal reserve currency continue to increase, says James Steel, chief commodities analyst at HSBC. Mr Steel has just raised HSBC’s average 2010 gold price forecast from $950 an ounce to $1,150 an ounce. Read more here-
http://money.ninemsn.com.au/article.aspx?id=981442
-Pretend and Extend: The Reason Gold Will Reach $1650 And Beyond. Jim Sinclair-Read more here-
http://jsmineset.com/2009/12/09/pretend-and-extend-the-reason-gold-will-reach-1650-and-beyond/
-Over for gold? Not so fast. Bullion’s bull market remains intact. Read more here-http://www.marketwatch.com/story/story/print?guid=099C86D9-F951-4E15-9CAC-AE37CDE72014
-China Needs to Buy Gold in Long-Term, Industry Executive Says. Read more here-http://www.gata.org/node/8116
-China should increase the proportion of gold in its foreign exchange reserves to ensure the safety of its overall portfolio, an official Chinese newspaper said on Tuesday. The commentary, which was written by an academic and appeared in the overseas edition of the People’s Daily, also said that a bigger holding of gold was a crucial building block for the yuan to become an international currency. Read more here-http://in.reuters.com/article/bankingfinancial-SP/idINTOE5B702F20091208?pageNumber=1&virtualBrandChannel;=0
-John Hathaway: Gold is now a contrarian’s dilemma. Tocqueville Gold Fund manager John Hathaway, perhaps the most deliberate thinker on gold’s side, has just published an essay evaluating the metal’s contrarian success of the last decade and its prospects now that it’s in the spotlight.
While Hathaway is not comfortable with that spotlight, he still concludes that gold remains “under-owned and misunderstood by most” and that “as long as deflationary forces prevail, world governments will remain addicted to currency debasement” which means the market’s increasing restoration of gold as a currency. Read more here-
-Gold’s new rise compared, contrasted with that of ’70s. While Parallels Exist, New Factors Could Make High Prices More Sustainable Now and Limit Falls When They Come. Read more here-
-Egon von Greyerz: Gold is not going up; paper money is going down. With great detail and helpful charts, Egon von Greyerz of Matterhorn Asset Management in Zurich explains today how and why all paper currencies are depreciating against gold. Von Greyerz’s analysis is as comprehensive a case for gold as has been made this year. It’s headlined “Gold Is Not Going Up; Paper Money is Going Down. Read more here-http://www.gata.org/node/8130
-Rick Ackerman’s commentary at GoldSeek quotes most interesting remarks from a friend who is a London gold trader and claims to have been offered a premium of 125 percent not to take delivery of September gold contracts because the LBMA’s supply of real metal is so tight. Even if the trader meant a premium of 25 percent, the situation would be extraordinary and would support similar things reported anonymously lately. Read more here-http://www.gata.org/node/8134
-Gartman: A Gold Correction Won’t Derail The Long-Term Bull Market. Read more here-http://wallstreetpit.com/12797-gartman-a-gold-correction-wont-derail-the-long-term-bull-market
-Gold rally is not a bubble, mania stage ahead of us. Doug Casey-Read more here-http://www.commodityonline.com/news/Gold-rally-is-not-a-bubble-mania-stage-ahead-of-us-23584-3-1.html
-Ned Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/dec072009.html
-All U.S. Mint gold offerings are sold out, suspended, or limited. Read more here-http://www.gata.org/node/8122
-Patrick A. Heller: Gold coin premiums soar. Read more here-http://www.gata.org/node/8135
-Barrick details why it closed its gold hedge book. Read more here-http://www.businessinsider.com/barric-heres-why-we-eliminated-our-gold-hedges-just-as-the-metal-started-to-peak-2009-12
-GoldMoney’s James Turk interviewed by King World News. Listen here-http://www.gata.org/node/8126
-The Coming Collapse Of The Global Gold Mining Industry. Read more here-http://www.businessinsider.com/the-coming-collapse-of-the-global-gold-mining-industry-2009-12?utm_source=feedburner&utm;_medium=feed&utm;_campaign=Feed%3A+businessinsider+%28The+Business+Insider%29
-World Gold Council’s new chairman seeks ‘lasting prominence’ for gold. Read more here-http://www.gata.org/node/8140
-South Korean central banker disparages gold. But North Koreans probably would have preferred it when their own national currency was grossly devalued last week. Read more here-
-Bloomberg does its best to make gold look bad when it’s shining. Read more here-http://www.gata.org/node/8127 or http://www.bloomberg.com/apps/news?pid=20601039&sid;=aF1zfwwrcA2w
-Reuters can’t figure gold out, so it must be a bubble. Read more here-http://www.gata.org/node/8115
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
-Barry Allan: Stage Is Set for Stellar Silver Performance. Read more here-http://news.silverseek.com/SilverSeek/1259961194.php
-Silver held up well Friday, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8123
-Outlook for silver looks bright this winter. Silver has a period of seasonal strength from the end of October to the end of May. Silver has gained in nine of the past 10 periods for an average gain per period of 21.4%. Although silver is responsive to changes in the price of gold, it tends to have a greater correlation with base metal prices that also have a period of seasonal strength from the end of November to May.
Silver is considered as “gold’s poorer cousin” and usually lags the performance of gold in times when speculators are focusing on gold as a monetary commodity. The silver/gold ratio has been in an intermediate uptrend since last October.
However, the focus of gold as a monetary commodity briefly reversed this trend in September and October. The ratio bottomed at the beginning of November and is showing early technical signs of resuming its upward intermediate trend.
Technical action by silver remains positive. The intermediate trend remains up. Short-term momentum indicators are overbought, but continue to trend higher. Read more here-
http://www.financialpost.com/story.html?id=2314459
-Investors in oil, metals and grains shouldn’t worry too much about selloffs in these markets as the vast sums of money being printed around the world will take prices higher, commodities bull Jim Rogers said. Read more here-http://www.reuters.com/article/idUSTRE5B85E020091210
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: Shock Backslide In Goods Shipped To The US. Global trade declined last month, with total shipments dropping 9% from October. This bad news could undermine the notion that we are in the midst of an economic recovery. In fact, the number is higher than it was at the depth of the crisis last year when shipments to the US dropped 7% from October to November.
The news jibes with data from JPMorgan, released last week, that global economic activity stalled out again in November. Read more here-
http://www.businessinsider.com/chart-of-the-day-global-manufacturing-shipping-us-2009-12
-Our government continues to do its best to suppress gold and silver and commodity prices. Their ham-fisted presence was quite evident this past week and it was only marginally successful. All they accomplished was to make an unnatural correction in a market that could have needed a natural correction. The underlying fundamental factors are still very bullish.
The technicals and the long-term charts as well as pro-gold and silver psychology are still in place. The reality is that gold, silver and commodities are still in bull markets and intervention by the President’s “Working Group on Financial Markets” cannot and are not capable of stopping what are going to be the biggest bull markets in history. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1260384196.php or http://news.goldseek.com/InternationalForecaster/1260142645.php
-The question that has to be answered is how we are in a durable recovery when we can see developments in the real world take place, such as the fact that McDonald’s sales have fallen now in each of the last two months? This is despite the array of deflation strategies like “Why Pay More” and other “value” offerings. David Rosenberg-Gluskin/Sheff
-LaVonna Gottschall paid $260,000 for her Merced, California, home in September 2007. She put down more than half the price and financed the rest with a 30-year fixed loan. Today, houses in her neighborhood are worth 59 percent less, according to Zillow.
“I almost wiped out all my savings,” Gottschall, 64, a retired insurance-company clerical worker, said yesterday in an interview. “I did the right thing. I didn’t get in over my head. Now I’m living month-to-month.” Bloomberg
-Bernanke Sees ‘Formidable Headwinds’ for U.S. Economy. Federal Reserve Chairman Ben S. Bernanke said the U.S. economy faces “formidable headwinds,” including a weak labor market and tight credit that are likely to produce a “moderate” pace of expansion. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=alVKXec_boNE&pos;=1
-Adams Says 2010 to Be ‘Year of Volatility’ Amid Bubble Risk. Former U.S. Treasury Undersecretary Timothy Adams said financial markets will be unstable next year as nations seek to withdraw emergency policies undertaken during the global recession.
My biggest concern is that “we are simply creating new bubbles,” Adams said in an interview in Tokyo today. “2010 is a year of volatility, as capital sloshes around the global markets in the search of yield as exit strategies are put in place at different times and at different magnitudes.” Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=a_NJGQXQh108
-Slow growth and high unemployment for U.S. in 2010: report. Low interest rates will prevail through most of next year as the U.S. economy expands modestly and the unemployment rate remains stuck in double digits, the UCLA Anderson Forecast group said on Wednesday. Read more here-http://www.reuters.com/article/idUSTRE5B813Q20091209
-Bernanke Low Rates ‘Poison’ to U.S. Economy, Xie Says. Federal Reserve Chairman Ben S. Bernanke is prescribing “poison” to the U.S. economy by keeping interest rates near zero and fueling a wave of speculative capital that may cause the next global crisis, former Morgan Stanley chief Asian economist Andy Xie said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=athNs65A8rew
-Canada Keeps Key Rate at 0.25%, Dollar to Slow Growth. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aTSZfY8Qv2tE
-The Bank of England kept its benchmark interest rate unchanged on Thursday and decided to stick to its program of buying government bonds, tacit acknowledgement that signs of a recovery remained faint.
The central bank kept the interest rate at 0.5 percent, a record low. The bank has already spent about £185 billion to buy debt in order to stimulate the credit market and can spend an additional £15 billion (for a total of $325 billion) as part of the program. Read more here-http://www.nytimes.com/2009/12/11/business/global/11pound.html
-John Williams of shadowstats.com interview: Hyperinflaton Special Report Update 2010. Listen here-http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/12/4_John_Williams.html
-How to Inflation-Proof Your Portfolio-Part 2. Read more here-http://news.goldseek.com/GoldSeek/1259200800.php
-Obama urges major new stimulus, jobs spending. President Barack Obama called for a major new burst of federal spending Tuesday, perhaps $150 billion or more, aiming to jolt the wobbly economy into a stronger recovery and reduce painfully persistent double-digit unemployment. Read more here-
http://www.google.com/hostednews/ap/article/ALeqM5jy6s4th2AWz2wvrF9UGpJs3t_WxgD9CFFRJG0
-Cash for Caulkers could seal $12,000 a home. Under President’s proposal, homeowners would be reimbursed for energy-efficient appliances and insulation. Read more here-
http://money.cnn.com/2009/12/08/news/economy/president_energy/index.htm
-Obama administration predicts $30B loss on auto bailout. Read more here-http://www.detnews.com/article/20091208/AUTO01/912080414/Obama-administration-predicts-$30B-loss-on-auto-bailout
-Geithner Says Treasury Faces Losses From Autos, AIG. Treasury Secretary Timothy Geithner said the government is unlikely to recoup its investments in insurer American International Group Inc. or the automakers General Motors Co. and Chrysler Group LLC. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=an_cFnRTEPZI
-2009 Retail Store Closings: Complete List of Retailers Going Out of Business. Read more here-http://wallstcheatsheet.com/breaking-news/economy/2009-retail-store-closings-complete-list-of-retailers-going-out-of-business/?p=3970/
-Americans Grow More Pessimistic on Economy, Nation’s Direction. Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery.
Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows. Those concerns have put consumers in a miserly mood as they head to the mall for holiday shopping, with half the country planning to spend less on gifts than last year and few buyers willing to run up credit-card debt for Christmas. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ag35PRefGeIc
-‘Vultures’ in Ireland Grab Champagne, Mercs in Recession Sales. The worst recession in Ireland’s modern history has turned the country into a bargain basement with cut-price champagne, country houses and Mercedes cars.
The liquidator of Dublin wine importer Parbind is selling boxes of six bottles of Bernard Remy rosé champagne for 132 euros ($199), down from the original tag of 205 euros. Elsewhere, prices of empty homes have been slashed by as much as two-thirds as property developers are forced to wind up.
“It’s a bit like old vultures over the carcass,” said Donall O’Murchu, a retired school teacher, avoiding shoppers with trolleys laden with cases of Parbind wine. “You see all sorts of places coming down. The recession seems to be biting.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aQw1pm.Qz9sg
-Food Stamps Go to a Record 37.2 Million, USDA Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aFbqGE.lEdi0
-Hunger, family homelessness on rise in U.S. cities. Read more here-http://www.reuters.com/article/idUSTRE5B72DS20091208
-Swine Flu Infects 50 Million in U.S., Kills 10,000. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=azX192_MtLFA
-Cognac From 1788 Fetches $37,000 at Tour d’Argent Wine Auction. Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=atDMtu8zib2g
-The Gambler Who Blew $127 Million. During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managed to lose nearly $127 million. The run is believed to be one of the biggest losing streaks by an individual in Las Vegas history.
It devoured much of Mr. Watanabe’s personal fortune, he says, which he built up over more than two decades running his family’s party-favor import business in Omaha, Neb. It also benefitted the two casinos’ parent company, Harrah’s Entertainment Inc., which derived about 5.6% of its Las Vegas gambling revenue from Mr. Watanabe that year. Read more here-
http://online.wsj.com/article/SB125996714714577317.html?mod=article-outset-box
-Branson Collects $42 Million From Would-Be Astronauts. U.K. billionaire Richard Branson’s Virgin Galactic Ltd. venture is riding out the recession, with would-be astronauts paying $42 million to book a trip to the edge of space, its chief executive officer said.
Virgin Galactic added $4 million in deposits in the past nine months, CEO Will Whitehorn said in an interview. Fees range from a minimum $20,000 to the full $200,000 fare, with singer Sarah Brightman, physicist Stephen Hawking and X-Men director Bryan Singer among more than 300 clients to sign up. Virgin aims to sell at least 700 tickets by the first commercial launch. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=afiHz5U5pxWk
-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
-Marwan Chatila, owner of Chatila, a leading London jeweller that regularly serves ultra-wealthy Middle Eastern customers, says “Some very sophisticated investors are buying important diamonds and keeping them aside as portable wealth.” Read more here-http://www.nationalpost.com/homes/story.html?id=2299864
-The rich are back buying Bentleys, Rembrandts and pink diamonds. Read more here-http://www.timesonline.co.uk/tol/news/uk/article6941728.ece
-Jewelry is “an international currency: you don’t have to take a position in dollars, pounds or euros when you hold diamonds,” he said. Aleks Paul, a Russian gem dealer at Essex Global Trading in New York-Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=aP9wcC1Cjk.0
-Diamonds are the new gold. Read more here-http://www.theglobeandmail.com/life/style/marilyn-was-right-diamonds-are-a-girls-best-friend/article1389569/
-Sotheby’s New York Sale of Magnificent Jewels held December 9 2009. Full results here-http://www.sothebys.com/app/live/lot/LotResultsDetailList.jsp?event_id=29347&sale;_number=N08601
-Lot 222-Rare and important fancy intense yellow diamond and emerald ring, Tiffany & Co., designed by Louis Comfort Tiffany, circa 1915-1920. The oval diamond of fancy intense yellow color weighing 11.05 carats, within a gold filigree mounting set with calibré-cut emeralds, foliate pattern engraved inside shank, size 8, signed Tiffany & Co, two emeralds missing.
Accompanied by the original silk floral box in the Japonesque style. These boxes were used only for the art jewelry designed by Louis Comfort Tiffany. Estimate 200,000-300,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 818,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=222
-Lot 218-Fancy light yellow diamond ring, Graff. The cushion-shaped diamond of fancy light yellow color weighing 7.29 carats, flanked by pear-shaped diamonds weighing 1.07 carats, mounted in 18 karat gold and platinum, size 5½, signed Graff. Estimate-45,000-55,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 146,500 USD. Read more here-
http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=218
-Lot 189-Fancy yellow diamond ring. The oval diamond of fancy yellow color weighing 7.05 carats, round diamonds of near colorless and yellow hue weighing approximately 4.00 carats, mounted in 18 karat gold and platinum, size 5¾. Estimate 50,000-70,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 62,500 USD. Read more here-
http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=189
-Lot 132-Pair of fancy vivid yellow diamond earclips, Van Cleef & Arpels New York. The oval diamonds of fancy vivid yellow color weighing 3.26 and 2.84 carats, framed by round diamonds weighing approximately 1.00 carat, mounted in 18 karat gold, signed Van Cleef & Arpels, numbered N.Y. 50850, maker’s marks. With signed pouch. Estimate-80,000-120,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 170,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=132
-Lot 119-Fancy grayish blue and pink diamond ring. The emerald-cut diamond of fancy grayish blue color weighing 1.67 carats, framed by round diamonds of pink hue weighing approximately 1.60 carats, mounted in platinum, size 6½. Estimate 175,000-225,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 194,500 USD. Read more here-
http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=119
-Lot 118-Fancy light pink diamond ring. The oval diamond of fancy light pink color weighing 1.82 carats, framed by round diamonds of pink hue and near colorless hue weighing approximately 1.00 carat, mounted in platinum and 18 karat pink gold, size 5¾. Estimate 65,000-75,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 74,500 USD. Read more here-
http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=118
-Lot 70-Fancy intense yellow diamond ring. The cut-cornered rectangular modified brilliant-cut diamond of fancy intense yellow color weighing 5.53 carats, flanked by trapeze-cut diamonds weighing approximately 1.40 carats, mounted in 18 karat gold and platinum, size 5¾. Estimate 70,000-90,000 USD. Lot Sold. Hammer Price with Buyer’s Premium: 110,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08601&live;_lot_id=70
-Christie’s New York Jewels sale December 10 2009.
-Lot 171-A colored diamond ring set with a cut-cornered modified rectangular-cut fancy intense blue diamond, weighing approximately 7.02 carats, to the circular-cut pink diamond gallery and bifurcated shoulders, with an 18k rose gold hoop. Estimate $2,000,000-$3,000,000. Price Realized $3,890,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5277557&sid;=bb4728e3-30d6-47ec-84ae-ac38175768e7
-Lot 166-A colored diamond ring set with a modified cushion-cut light yellow diamond, weighing approximately 9.09 carats, flanked on either side by a half-moon diamond, mounted in platinum and 18k gold. Estimate $35,000-$50,000. Price Realized $56,250. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5277552&sid;=bb4728e3-30d6-47ec-84ae-ac38175768e7
-Lot 114-An impressive colored diamond ring. Set with a modified cushion-cut fancy intense yellow diamond, weighing approximately 40.92 carats, to the circular-cut yellow diamond prongs, gallery and sculpted “figure-8″ hoop, mounted in 18k gold, ring size 6. Estimate $550,000-$650,000. Price Realized $1,106,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5277500&sid;=bb4728e3-30d6-47ec-84ae-ac38175768e7
GREEK TRAGEDY?-SOVEREIGN DEBT CRISIS COMING
-Former BOE Official Buiter Says Greece May Be First EU Default. Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.
“It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today. “We could see our first EU 15 sovereign default since Germany had it in 1948.”
The EU’s economic affairs commissioner said late yesterday that officials are ready to help Greece with its budget deficit after concerns about its public finances sparked a rout in Greek government bonds. Fitch Ratings cut its rating on the nation’s debt yesterday to BBB+ and two other major ratings companies are threatening to follow. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=aDMQfsXXnSqw
-Greece Finance Minister Says No Risk of Default. Greek Finance Minister George Papaconstantinou said there is “absolutely” no risk the country will default on its debt or seek a European Union bailout after a credit rating cut caused its bonds to plunge. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aeqip67GkWSY
-Greek Bonds Slide as Fitch Says Government Doesn’t Grasp Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.K7PWalJ8tM
-If you’re looking for one global risk to really worry about, look no further than the mountain of debt accumulated by governments in their efforts to support domestic economies. Moody’s Investors Service says there’s $49.5 trillion of sovereign debt outstanding and this week, ratings firms, and some jumpy bond traders, have shone a glaring light on it. The raters are worried that governments’ massive deficit-spending campaigns to pull their economies out of last year’s crisis won’t produce enough economic growth to pay for itself.
But none of this is new. A month ago, the International Monetary Fund projected that the average debt-to-gross domestic product ratio of the 10 advanced country members of the Group of 20 developing and developed nations would mushroom to 118% by 2014. Such numbers have led some pundits to warn of a debt crisis, especially regarding the U.S.’s dependence on foreign creditors.
What’s key now is that the recent market jitters could be self-fulfilling. Falling bond prices mean higher yields, which makes it harder for governments to refinance future obligations. That will hurt the currencies of those nations and will challenge fixed exchange rate regimes especially in the euro zone and for currencies pegged to the dollar.
Spain became the latest flashpoint Wednesday when Standard Poor’s changed the outlook on its AA+ rating to negative. As it did when it downgraded Portugal’s outlook Monday, S&P; emphasized a weak growth outlook. And with their bonds hammered for different reasons, Greece and Dubai’s and Abu Dhabi’s government-controlled entities have similarly seen ratings or outlook downgrades this week.
Also on Tuesday, Moody’s acknowledged two elephants in the room. Although it referred to worst-case scenarios, the agency said the U.S. and the U.K. whose public debt runs to $12.1 trillion and $1.3 trillion, respectively could potentially lose their triple-A ratings. Meanwhile, analysts are worried about Japan, where deflation makes it ever-more expensive for the government to repay a debt that’s projected to hit 220% of GDP in 2014.
Sovereign borrowers aren’t supposed to default, at least not on local-currency debt, because their central banks can always print money. But Russia’s ruble default in 1998 blew that theory away. And in any case, printing money to pay down the debt means robbing Peter to pay Paul: too often, we pay for it with inflation. Read more here-http://online.wsj.com/article/SB10001424052748704240504574586312453815896.html
-Sovereign Debt Defaults Likely Over Next Several Years, Says Ken Rogoff professor of economics and public policy at Harvard University. Read more here-
-Moody’s Investors Service said the top debt ratings on the U.S. and the U.K. may “test the Aaa boundaries” because public finances are worsening in the wake of the global financial crisis. “The deterioration has been pretty severe,” said Pierre Cailleteau, managing director of sovereign risk at Moody’s, in a Bloomberg Television interview in London.
“We expect a pretty strong policy response in the next couple of years in order to keep the debt in the Aaa range. We expect them to bend but not to break.” The U.S. and U.K. have “resilient” Aaa ratings, as opposed to the “resistant” top ratings of Canada, Germany and France, Moody’s analysts led by Cailleteau said in a report today.
None of the top-rated countries is “vulnerable,” or have public finances that are “stretched beyond the point of ‘no return’ to the Aaa category,” New York-based Moody’s said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=av16pDNNrMig
GLOBAL BANKING CRISIS
-Geithner Extends $700 Billion Bank-Bailout Program. The Obama administration extended the $700 billion financial-rescue program until October, arguing that the U.S. must hold on to the money in case of new financial shocks. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aRPPFxSkXnOY
-Baroness Vadera: ‘I still have nightmares about the financial crisis’. Baroness Vadera, the adviser to the G20 Presidency, has warned that some of Europe’s biggest banks have yet to “come clean” on the extent of their losses and could still provide shocks to the financial system. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6763411/Baroness-Vadera-I-still-have-nightmares-about-the-financial-crisis.html
-U.K. Banks Must Add $47 Billion in Trade Capital, FSA Says. U.K. banks must find as much as 29 billion pounds ($47.3 billion) of additional capital by 2011 to put against their trading books under proposals published by Britain’s financial regulator.
Today’s proposals by the Financial Services Authority to strengthen balance sheets would also limit the amount U.K. banks and building societies can lend to any single borrower, and tighten up rules on what counts as capital. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aRjAZg_rPbKI
-Geithner Rejects Goldman Sachs Assertion It Didn’t Need U.S. Help. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aWBnxBZDUtZo
-Geithner: “none…would have survived”. Secretary Geithner acknowledges what most doomsdayers were saying last fall, that without the government’s extraordinary rescue measures, the entire financial system was on the verge of collapse. Read more here-http://blogs.reuters.com/rolfe-winkler/2009/12/06/geithner-none-would-have-survived/
-U.S. Banks Take Losses on Short Sales as Foreclosures Soar. Drew Schlosser tried for two years to sell his three-bedroom Punta Gorda, Florida, waterfront condominium for less than he owed on its two mortgages. The deal only went through last month when Wells Fargo & Co. agreed to take a $165,000 loss on the loans. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a_NoPFp0r8Y4
U.S. BANK FAILURES HIT 130
-AmTrust Bank, a Cleveland-based lender with $12 billion in assets, joined five other U.S. banks in being seized by regulators as companies buckle under the weight of commercial real estate losses.
Closely held AmTrust collapsed alongside three banks in Georgia and one each in Virginia and Illinois, according to statements issued yesterday by the Federal Deposit Insurance Corp., which was named receiver. The failures will cost the FDIC’s deposit fund $2.38 billion, the agency said.
“The commercial real estate market is the big problem,” said James Barth, a former chief economist at the Office of Thrift Supervision. Office vacancy rates climbed to 13.3 percent nationally in the second quarter from 12.3 percent in the prior period, according to a CB Richard Ellis index.
With the closings, 130 U.S. lenders have collapsed this year. Banks are failing at the fastest pace in 17 years even as the U.S. economy shows signs of pulling out of the recession. The unemployment rate fell to 10 percent from 10.2 percent in October, according to figures from the Labor Department. The number of failed banks reached 179 in 1992.
“The unemployment rate is quite high, so unless there is a turnaround in sales you will see commercial real estate continue to suffer,” Barth said. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=adRrN41CGEDk or http://money.cnn.com/2009/12/04/news/economy/bank_failure/index.htm
-Saga of shutting down banks in America. Read more here-http://www.commodityonline.com/futures-trading/currency/Saga-of-shutting-down-banks-in-America-1835-1.html
U.S. UNEMPLOYMENT
-Last Friday, the Labor Department reported that nonfarm payrolls (jobs) decreased by 11,000 in November the smallest decline since the recession began at the close of 2007. Today’s chart puts that decline into perspective by comparing job losses during the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-2006 (dashed blue line).
As today’s chart illustrates, the current job market has suffered losses that are more than triple as much as what occurs at the lows of the average recession/job loss cycle. Read more here-
http://www.chartoftheday.com/20091204.htm?T
-A deeper look behind the jobless numbers. Despite the upbeat report, long-term unemployment worsens. Within the vast pool of 15.4 million unemployed workers, a split is emerging: The number of long-term jobless those out of work six months or longer is growing, while the number of short-term unemployed is declining.
The trend highlights a considerable challenge for the economy and policymakers: finding a way for the millions of Americans laid off last fall and early this year to get back to work.
The data, buried in Friday’s unemployment report, are stark: The number of Americans out of work for 27 weeks or more reached 5.9 million last month, the most on records dating from 1948. That’s 18 percent more than just three months ago, when the total was just below 5 million. Read more here-
http://www.msnbc.msn.com/id/34280589/ns/business-stocks_and_economy/
-Economy 101: Long-Term Unemployment Worsens. Read more here-http://www.nytimes.com/aponline/2009/12/04/us/AP-US-Economy-101-Unemployment-by-the-Numbers.html
-Now See The REAL State Of The US Labor Market. Nathan A. Martin at Nathan’s Economic Edge has gone through all of the employment data, most of it out of the St. Louis Fed, and it paints a grim picture about how bad the employment situation really is. The scope of the problem which has now become an obsession in Washington truly remains enormous. Read more here-
http://www.businessinsider.com/the-real-state-of-the-us-labor-market-2009-12
-Jobs Lost in Great Recession May Be Gone Forever. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid;=afDdQ4LBwBHg
-Chart of the week: Depressed Americans Quit The Labor Force. One caveat in last Fridays jobs report is the fact that Americans continue to leave the work force, and that these people aren’t included in the headline rate. Said the BLS: About 2.3 million persons were marginally attached to the labor force in November, an increase of 376,000 from a year earlier.
(The data are not sea-sonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. As you can see, that number remains at a record high, and eventually they’ll be coming back. Read more here-http://www.businessinsider.com/chart-of-the-day-persons-not-in-the-labor-force-2009-12
U.S. DEBT CRISIS
-Dems to lift debt ceiling by $1.8 trillion, fear 2010 backlash. In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.
“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year. Read more here-
http://www.politico.com/news/stories/1209/30417.html
-U.S. already $292 bln in the red this year-CBO. The U.S. government racked up a gaping shortfall in the first two months of this fiscal year after posting a record budget deficit last year, congressional analysts said on Friday.
In October and November, the government spent $292 billion more than it took in, the nonpartisan Congressional Budget Office said. That was even worse than the same period last year, when the government was on its way to posting a record $1.4 trillion deficit for the fiscal year that ended Sept. 30. Read more here-
http://www.reuters.com/article/idUSN0418093920091204
-State Revenue ‘Nightmare’ Seen in New Budget Gaps, Report Says. New budget gaps totaling $28 billion have opened in 36 U.S. states since July 1 as recession-battered tax collections declined and health-care spending increased, the National Conference of State Legislatures said.
The chasm marks the second consecutive year states will be forced to change course in mid-stream, and will drive spending to decade-low levels, the conference said in a report titled “Nightmare Before Christmas.”
“Even if the recession is over, state budgets are in appalling conditions and are going to be that way for quite a while,” Corina Eckl, the conference’s fiscal director, said at a meeting in San Diego today. “For many states, revenue recovery is not even in the forecast.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aruNXiyTcgjA
-U.S. State Revenue Fell 16% in Fiscal 2008, Census Bureau Says. U.S. state government collections fell 16 percent to almost $1.7 trillion in fiscal 2008 from a year earlier, while spending increased 6.2 percent, according to the U.S. Census Bureau. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=alurdK3Uf7Ac
U.S. DOLLAR-GLOBAL CURRENCY
-Dollar Faces ‘Crosswinds’ as Risk Appetite Returns, BIS Says. The dollar faces “crosswinds” as rising stocks stoke demand for higher-yielding assets, reducing the allure of the U.S. currency as a haven, according to the Bank for International Settlements. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aRrVGWfsp8Xw&pos;=7
-Another bounce in the U.S. dollar. The US Dollar Index jumped 1.7% on Friday, from 74.63 to 75.91. It was the largest one day gain for this index since February 9th, when it jumped 1.8%. That in turn was the biggest one day rally since the month before. On January 20th the Dollar Index jumped 2.4%, so this year there have been three rallies greater than 1.7%.
In 2008 the Dollar Index rallied more than 1.7% four times. Interestingly, looking back to the peak of the Dollar Index in July 2001, the Dollar Index has rallied 1.7% on only two other occasions. So clearly these large one-day rallies are rare, but they are now happening more frequently. Why the greater volatility?
It could be that the dollar is approaching its death throes, and these huge erratic swings are like the wobbles of a spinning top just before running out of energy and toppling over. Given all the ‘hot money’ being moved around the globe at the speed of light, these tidal waves of paper wealth no doubt also move into and out of the dollar.
But the occasional bounce does not by itself improve the outlook for the dollar. That would require a change in policy, and there is no indication any corrective change is happening at all. Consequently, we can expect the dollar to remain within the long-term downtrend clearly seen on the following chart.
The dollar began this long-term downtrend against the basket of currencies comprising the US Dollar Index over eight years ago, but the above chart is telling only half the story. While the dollar has been sinking against the euro and most other currencies, these currencies are themselves sinking with the dollar against gold. The following chart presents a Base-100 analysis from the beginning of this decade of the dollar and the euro against gold. For comparison, it also includes the US Dollar Index.
When viewed against gold, the time-tested numéraire of all national currencies, we can see that the euro is collapsing almost as fast as the dollar, which is not too surprising. The dollar and the euro have both caught the fatal disease that inevitably inflicts and eventually kills all fiat currencies central bank mismanagement. In this regard, I recommend reading Senator Bunning’s critique of Ben Bernanke’s first term at the Federal Reserve. Read here-http://bunning.senate.gov/public/index.cfm?FuseAction=NewsCenter.NewsReleases&ContentRecord;_id=556a0e84-feaa-d20f-2867-6793698d6974
So does this latest bounce in the Dollar Index mean anything? Not in my view. The dollar is still on the same road headed to the fiat currency graveyard. So unless policymakers do an about-face and start heading in the right direction, continue to accumulate gold and silver. James Turk-Read more here-http://goldmoney.com/commentary-another-bounce-in-the-dollar.html
-James Grant: Requiem for the dollar. Read more here-http://www.gata.org/node/8120
-Pimco Says ‘Fear Not,’ Weak Dollar Will Spur Growth. Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar is poised to fall and the decline may help spur the U.S. economy.
“Fear not the falling dollar,” Scott Mather, head of global portfolio management at Pimco, wrote in an article on the company’s Web site. “A gradually weakening dollar may help heal the U.S. economy” by encouraging demand for the nation’s exports, he wrote.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, has declined 6.3 percent this year. The currency is sliding as the Federal Reserve keeps U.S. interest rates at a record low, encouraging investors to seek higher yields outside the U.S. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a4ny.J5sdqak
-North Korean Money Shift Sparks Violence. New reports emerged Tuesday of protests and deadly violence in North Korea as the country’s authoritarian regime over the past week seized most of its citizens’ money and savings via a new-currency issue.
Open Radio for North Korea, a Seoul-based shortwave radio station that broadcasts news to the North, said police killed two men in Pyongsong, a market center outside of Pyongyang, on Friday after they divided their savings among a large group of people and urged them to exchange the money for them, attempting to get around the government’s limit. Read more here-
http://online.wsj.com/article/SB126029137357982133.html
STOCK BEAR TO LAST UNTIL 2018
-U.S. stocks are in a bear market that may last until 2018 and benchmark indexes may set new lows, said Alan R. Shaw, the technical analyst who retired from Citigroup Inc. after 45 years with the bank and its predecessors.
“I don’t think the bear market that started in 2000 has run its course yet,” Shaw said in an interview in New York. In the last report he authored for Citigroup in 2004, Shaw said the Dow Jones Industrial Average might struggle to remain above 10,000 for up to 20 years, “and I see no reason to change it five years later. My mindset continues to be very cautious.”
Shaw’s forecast, co-authored with Louise Yamada, who succeeded him as Citigroup’s head of technical analysis, was based on how long it took the Dow average to sustain advances above the 100 level from 1902 to 1927, and its struggle to exceed 1,000 from 1960 to 1985.
“It’s too early for another big bull market, period,” said Shaw, who from 1993 through 1999 was the top-ranked technical analyst in Institutional Investor magazine’s annual poll. Technical analysts base predictions on price and volume chart patterns.
Stock benchmarks are likely to fall below this year’s lows before the bear market is over, Shaw said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=apymPUamAG7o
DAVID ROSENBERG WEEKLY REVIEW
-VIX May Double in ’10 as Stock Gain Slows, David Rosenberg Says. The benchmark index for U.S. stock options may almost double in 2010 on investors’ concern that the Standard & Poor’s 500 Index’s rally outpaced prospects for economic and earnings growth, according to David Rosenberg. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aV9Kkv8HFyC4
-Is the credit crunch over? In a nutshell, toxic assets have basically been swept under the rug in the hopes that we will outgrow the problem. Leverage ratios across every level of society are still reaching unprecedented levels as the public sector sacrifices the sanctity of its balance sheet in its quest to stabilize the dubious financial position of the household and banking sectors in many parts of the world.
Whatever bad assets have been resolved have almost entirely been placed on the books of governments and central banks, which now have their own particular set of risks, as we have witnessed very recently in places like Dubai, Mexico, Spain, Greece, U.K., the Baltic states, not to mention at the state and local government level in the United States.
-All of a sudden, the world doesn’t feel that much of a safer place. Dubai and Greece as prime examples that risk did not go away and that no amount of global liquidity can disguise unsound leveraged financial decisions indefinitely (Greek 10-year bond yields are trading 250bps north of German bunds after being downgraded to BBB+; Dubai’s entire stock market rally for 2009 just evaporated in the last three sessions).
The question for Europe is just how much more solvent are places like Italy, Portugal and Spain (we know about Ireland). Could it be that these are the regions where the next financial shoe is going to drop? Does the continent have the balance sheet that the US does to absorb the losses and guarantee the liabilities?
-We long maintained that this 60%+ rally from the lows was a bear market rally, and unlike secular bull markets, these are to be rented and not owned. Japan had about a half a dozen of these since its credit collapse began nearly two decades ago.
The short-covering was massive and continuous since the government stepped in to effectively draw a line in the sand for big banks, coupled with hedge funds leveraging up again after getting their credit lines re-established and mutual fund managers taking their cash ratios back down to where they were in late 2007.
This buying power seems to now be subsiding; at the same time, insiders have been sellers, the general public have been sellers (the retail investor would never have believed back in March that they would ever have this opportunity to shed their portfolio at a 60% premium, at least this quickly the rally from the March lows must have felt like winning the lottery or like a religious experience at the very least) and pension funds have been rebalancing towards the fixed-income market of late. It does beg the question, who is the marginal buyer going to be going forward?
-Consumer credit in October fell less than consensus expectations, falling $3.5bln (or -1.7% at an annual rate) versus market estimates of a steep $9.4bln decline. September was revised to now show an $8.7bln decline compared to earlier estimates of -$14.8bln. However, we are now in a phase of frugality and households are not willing to take on more debt this is the ninth consecutive monthly of decline in consumer credit, a streak never before seen in the data’s 66-year history at a time when wages are still falling and the unemployment rate is still at lofty levels.
-The sweet spot for stocks is over, 10 reasons why.
1. For the time being, the equity market is going to have to contend with more chatter of the Fed’s exit strategy.
2. The market also faces a new reality. While employment stabilizing (maybe) is a good thing, it means the era of declining unit labour costs and margin expansion is behind us.
3. Market leadership is beginning to fade as seen by the receding advance-decline line on the big board.
4. Market complacency is a worry with the VIX index back down to 21.25. The good news is that insurance against a correction is priced about as low as it can go. Protection is cheap.
5. The WSJ (page C1) reports that not only have individual investors been selling into this last leg of the rally (then again, the S&P; 500 has really done nothing for over six weeks), but pension funds have been rebalancing too.
6. Volume has declined markedly and has surpassed 4.7 billion shares on the NYSE just once in the past three weeks.
7. With the correlation between a weak greenback and a positive stock market above 90% over the past eight months (versus zero over the past 30 years), a countertrend rally in the U.S. dollar would likely coincide with sputtering equity prices.
8. The Dow transports/utilities ratio has turned in a classic triple-top and this is a signpost to get defensive.
9. The latest Investors Intelligence poll shows the bull camp at 50%; the bear share at a mere 16.7%. In other words, there are three bulls for every bear. This is negative from a contrary perspective (another sign of complacency).
10. Corporate bond yields have stopped narrowing over the past three months and have actually recently shown modest signs of an upward bias.
-Was the drop in the U.S. unemployment rate a big deal? In our opinion, the answer is no. This was the eighth time we have seen the unemployment rate go down in a month since it bottomed back in October 2006. Nothing moves in a straight line. The peak still lies ahead of us.
In the prior cycle, the unemployment rate bottomed on April 2000, at 3.8% and peaked at 6.3% on June 2003. During that time, we saw the jobless rate fall five times. In the early 1990s cycle, the unemployment rate actually fell no fewer than six times. Declaring victory because of a one-month wiggle can be dangerous. Especially since a key reason why the jobless rate dipped was because the ranks of discouraged workers who exited the labour force due to grim job prospects jumped 60,000 to 357,000 last month.
As for the -11k print on Friday’s headline payroll report, unadjusted, the number was +80k, which therefore goes down as the third softest November reading in the past 18 years. November is normally a month where between 300k and 500k workers find a job before the seasonal adjustment kicks in. Something to keep in mind.
REAL ESTATE
-U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak. U.S. homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.
Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said today in a statement.
“A phenomenal amount of wealth has been erased since the housing bust,” Stan Humphries, chief economist for Seattle- based Zillow, said yesterday in an interview. “For many households, most of their wealth is tied up in real estate.”
The net worth of U.S. households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=af9OWXW1MJ6k
-U.S. Foreclosures to Reach 3.9 Million in Second Record Year. Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.
This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said. “We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.”
Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a6aLuu9zxbcM
-South Florida Foreclosures Up 15% In November. Read more here-http://www.businessinsider.com/south-florida-foreclosures-up-15-in-november-2009-12
-Quarter in U.S. foreclosure plan late on payments. More than one-quarter of homeowners receiving help under a U.S. government foreclosure prevention plan are behind on their new mortgage payments, a Treasury Department survey has found. Read more here-http://www.reuters.com/article/idUSN0517257820091205
-Homeowner bailout plan may not stop US housing market crash. The meltdown in the American housing market is not over yet, with experts warning that a rise in home foreclosures next year and in 2011 could undermine the chances of a sustained economic recovery in the United States. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6946619.ece
-For the second time in two months, property in Ginn-developed communities were sold at a Flagler County tax deed sale. A lot in The Conservatory and a Hammock Beach Club one-bedroom condo were sold at yesterday’s sale. In each case, there was more than one bidder; forcing the final selling price above the minimum opening bid.
The minimum opening bid is equal to the accumulated back taxes, interest, penalties, and administrative costs. The starting bid for the Conservatory lot was $17,039.53. One hundred dollars at a time, bidders arrived at the final price of $20,100 totally furnished. The lot at 403 Bourganville Drive overlooks a lake and the ninth hole of the Tom Watson-designed golf course. It sold in 2005 for $439,900. Read more here-http://www.gotoby.com/news/ginn_tax_deed_sale.htm
-Calpers Real-Estate Holdings Decline 30% During First Quarter. Read more here-http://guanteik.blogspot.com/2009/12/calpers-real-estate-holdings-decline-30.html
-Paradise Lost for Wealthy Resort Novice. Robert Sillerman amassed a billion-dollar fortune buying and selling media and entertainment companies. Among his most successful deals: the purchase of television franchise “American Idol.” Mr. Sillerman’s winning streak ended on an alluring stretch of beach on this tiny Caribbean island.
His luxury hotel, condominium and golf resort here, Temenos, languishes half-built and out of money. “American Idol” creator Simon Fuller and novelist Dan Brown, among others, have put down deposits on million-dollar villas. It’s not clear when or if their vacation homes will be completed. Read more here-
http://online.wsj.com/article/SB126014120205579167.html
-Chart of the week: The Amazing Spiralling Mortgage Delinquencies. The Mortgage Bankers Assocation (via Rolfe Winkler) is out with its latest look at loan delinquencies across a variety of investor groups. The one trend: up. CMBS has now crossed the 4% delinquency rate, though at least there are some signs of a turn, rather than just a pure straight line. Read more here-
GEOPOLITICAL NEWS
-Bin Laden ’seen in Afghanistan in early 2009′. A Taliban detainee in Pakistan claims to have information about Osama Bin Laden’s whereabouts in January or February of this year. His claims cannot be verified, but a leading American expert says his account should be investigated.
The detainee claims to have met Osama Bin Laden numerous times before 9/11. He claims that in January or February he met a trusted contact who had seen Bin Laden about 15 to 20 days earlier in Afghanistan. Read more here-http://news.bbc.co.uk/2/hi/south_asia/8394470.stm
-No Bin Laden information in years, says Gates. The US has had no reliable information on the whereabouts of al-Qaeda leader Osama Bin Laden in years, US Defence Secretary Robert Gates has admitted. Mr Gates told ABC News in remarks broadcast on Sunday: “Well, we don’t know for a fact where Osama Bin Laden is. If we did, we’d go get him.”
A Taliban detainee in Pakistan told the BBC last week that he had information Bin Laden was in Afghanistan this year. However, Mr Gates said he could not confirm that information. When asked by ABC’s This Week programme when the US last had any good intelligence on the whereabouts of the al-Qaeda leader, Mr Gates said: “I think it’s been years.” Read more here-
http://news.bbc.co.uk/2/hi/south_asia/8397684.stm
-Petraeus Says Afghan War Likely to Be Tougher Than Iraq Fight. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=agTXn0.SJHD0&pos;=9
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – December 15, 2009
Posted by Worldwide Precious Metals on Tuesday, December 15, 2009
The Goldbugg Report – December 9, 2009
December 9, 2009
-China Should Boost Gold Reserve Holdings
-Roger Wiegand: $2,960 Gold on the Horizon?
-4 Reasons Why Silver Will Outperform Gold.
GOLD
-China Should Boost Gold Reserve Holdings, Youth Daily Reports. China should increase the amount of gold it holds in reserves to reduce potential losses from a depreciating dollar, the China Youth Daily said today, citing Ji Xiaonan, head of the supervisory committee at the state-owned Assets Supervision and Administration Commission.
“We recommend China increase its gold reserves to 6,000 metric tons within three-to-five years and possibly to 10,000 tons in eight to 10 years,” the paper quoted Ji as saying. China increased its gold reserves by 76 percent to 1,054 tons since 2003, the official Xinhua News Agency reported in April.
The dollar has fallen about 20 percent against the euro since Feb. 18. Dubai World’s possible default may give China an opportunity to invest its foreign currency reserves in the metal and oil, Ji said in a separate report by the Economic Information Daily.
“Given the size of their reserves compared with the size of the gold market, there’s a limit on how much they can add,” David Barclay, commodity strategist with Standard Chartered Bank in Hong Kong, said today. “But it certainly seems that there’s scope for further addition.” Ji said that the recommendation to buy gold was made by an unidentified group of experts who had convened since last year to discuss the issue, the Youth Daily reported. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aMnUukhsa.hM
-Dubai’s debt crisis could be China’s opportunity to snap up gold and oil assets, a senior Chinese official said in remarks published on Monday. While the impact of the Dubai crisis on the global economy and on China was not known yet, it would last a while at the very least, Ji Xiaonan, who chairs the supervisory board for big state-owned companies under the State Council’s state assets commission, told the Economic Information Daily.
“That could give China a buying opportunity to put some forex reserves into gold or oil reserves,” Ji was quoted as saying by the paper, which is widely read by Chinese officials. Read more here-
http://www.gata.org/node/8108 or http://abcnews.go.com/Business/wireStory?id=9202792
-China 2009 Gold Demand, Output May Gain to Records. China, the world’s largest gold producer, may break records for both demand and output this year as jewelry consumption soars and miners expand production after prices reached all-time highs, the China Gold Association said.
Gold demand may be more than 450 metric tons compared with 395.6 tons in 2008, and output may climb to 310 tons, compared with 282 tons a year earlier, Zhang Yongtao, deputy secretary- general of the association, said at a conference in Kunming yesterday. China’s gold production increased by an average 9.5 percent in the past eight years, he said.
China overtook South Africa to become the world’s largest producer in 2007 and the World Gold Council said in July that the nation may pass India as the biggest consumer. Bullion touched a record of $1,195.13 an ounce Nov. 26 as a weaker dollar drove demand for precious metals as an alternative asset.
“China is likely to become the number-one supplier and consumer of gold this year,” said Rozanna Wozniak, investment research manager at the World Gold Council. Global jewelry demand remained weak in the third quarter, with China being the exception, according to slides provided by the council.
Bullion, up 33 percent this year, is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect their assets from potential currency debasement and inflation. Gold may climb to $1,500 an ounce as the dollar falls amid low interest rates, Kenneth Tropin, chairman of Graham Capital Management, told Barron’s in its Nov. 30 issue. Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a6NPaKwHGXnc
-Chinese to become world’s biggest gold consumers. Read more here-http://business.timesonline.co.uk/tol/business/markets/china/article6936926.ece
-China, gold, and the civilization shift. Read more here-http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002252/china-gold-and-the-civilization-shift/
-China’s appetite for high-flying gold to dominate. Read more here-http://www.reuters.com/article/marketsNews/idAFT887020091202?rpc=44
-As you read this, the Chinese government is doing an extraordinary thing something nearly unheard of in the modern world. It is encouraging citizens to put at least 5% of their savings into precious metals. The Chinese government is telling people gold and silver are good investments that will safeguard their wealth. After last year’s meltdown in the stock market, people believe it. After all, Chinese citizens don’t receive government retirement money and they don’t have company pension plans like people in many other countries do.
This is why folks in China are lining up outside of banks, post offices, and the new official mint stores to buy gold and silver (they especially like silver because it’s cheaper per ounce). The Chinese attitude toward gold and silver is a striking contrast to the American attitude right now. I don’t recall a TV or radio ad from my congressman or President Obama encouraging me to buy gold or silver. Does your bank sell silver bars? Are gold mints popping up in your neighborhood? Are any of your friends, family, or coworkers scrambling to buy precious metals?
In spite of a few ads on television and satellite radio, buying gold and silver in the U.S. is still largely seen as a fringe-group activity. That’s not the case in China. And in the big picture, there are three distinct trends occurring in China today that many in the Occidental world are not paying attention to. Read more here-http://news.goldseek.com/GoldSeek/1259177083.php
-Chinese central bank wary of gold bubble. Gold prices are currently high and markets should be careful of a potential asset bubble forming, a senior official at China’s central bank said on Wednesday, as prices for the precious metal hit a record high.
“We must keep in mind the long-term effects when considering what to use as our reserves,” Hu Xiaolian, a vice-governor at the People’s Bank of China, told reporters in Taipei, when asked if China had plans to increase its gold holding in its foreign exchange reserves. “We must watch out for bubbles forming on certain assets, and be careful in those areas.” Read more here-http://www.financialpost.com/news-sectors/story.html?id=2293716
-Germany will buy gold soon, Max Keiser tells Russia Today. Read more here-http://www.youtube.com/watch?v=cSWSwhn-AWc&feature;=player_embedded#
-James Turk interview, gold is going to meet the DOW at 8,000. Watch more here-http://link.brightcove.com/services/player/bcpid1079049304?bctid=53376757001
-In my last commentary about gold on October 25, I noted that “gold is a much different market over $1000 because of all the new players being attracted to gold.” Since then we have seen a good example of what I meant. Gold has rocketed higher, as is clear on the following chart.
Despite gold’s big gains in recent weeks, it is not yet time to take profits. The above chart remains very bullish, so it is reasonable to forecast higher gold prices in the weeks ahead.
Gold has clearly broken out from the huge base it formed over the past two years. This base is a ‘rocket pad’ that has launched gold, which I expect has the capacity over the next few weeks to climb into the $1200 to $1400 range I forecast for year-end, but it could be volatile. The $50+ trading range in gold this past Friday may be an indication that more volatility is coming.
In any case, gold is doing what I have been expecting. Namely, gold hurdled above $1000 with real power and follow-through. This powerful action is a point I made often made in my media interviews this past summer, namely, that gold would keep climbing once $1000 was hurdled.
What’s next for gold? I still think $1200-$1400 is a reasonable target for the end of this year, so I am staying with that forecast. Read more here-
http://www.fgmr.com/gold-november-25-2009-usd1200-usd1400-yearend-forecast.html
-The incoming chairman of the World Gold Council, Goldcorp Chairman Ian Telfer, was interviewed by Liz Clayman of Fox Business News for a little less than five minutes last week and predicted that the gold price could reach $2,000 in 2010. Read more here-http://www.youtube.com/watch?v=Bmi4PD97Ito
-New gold rush may soon see the yellow metal test US$1,300 Scotiabank. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=93804&sn;=Detail
-Gold May Peak at $1,300 an Ounce in 2010, UBS AG Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid;=ag3qTtdCBK_I
-Roger Wiegand: $2,960 Gold on the Horizon? Read more here-http://news.goldseek.com/GoldSeek/1259517797.php
-All the fundamental elements are in favor of gold, says Francois Moute, chairman of Neuflize Private Asset, speaking with CNBC’s Lisa Oake & Karen Tso. And Brandon Wendell, master instructor at Online Trading Academy, tells them where gold prices are headed. Watch more here-http://www.cnbc.com//id/15840232?video=1346927569&play;=1
-Second phase of the gold bull, or parabolic blow off top? Read more here-http://www.321gold.com/editorials/chan/chan112609.html
-Gold will Reach Mind-boggling Levels for Good Reason! Read more here-http://www.kitco.com/ind/Wilson/nov262009.html
-Gold’s still looking good. I have a target price of somewhere around $1,400 by next spring. I have arrived at this target based on the repeating pattern that gold has displayed over the last decade. It tends to make a large, 50% plus move up, which lasts about six to nine months, and then consolidate for a year to eighteen months before setting off on the next move. The moves tend to start in the summer and peter out the following spring. Read more here-
http://www.moneyweek.com/investments/precious-metals-and-gems/golds-still-looking-good-94905.aspx
-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1259564700.php
-Gold Buyers Nip at Ultimate Emotional Experience. At today’s prices, the Federal Reserve holds about $300 billion in gold. The Fed’s balance sheet values the holding at just $11 billion, but this is based on a price of about $42 a troy ounce, the so-called official U.S. government price established in 1973.
Gold long ago was used by nations to balance their trade books. When the U.S. bought more abroad than it sold, it paid the difference in gold. It’s comical to think of that today. Once the U.S. economy gurgles again, the Fed’s $300 billion in gold would only cover about six months of the nation’s trade deficit. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a7J4poVoONig
-Is The Sheikh Right To Sell As Gold Tops $1,200? Read more here-http://news.goldseek.com/PeterCooper/1259772281.php
-Is gold a ‘real’ investment? Read more here-http://www.cbc.ca/money/story/2009/12/01/f-vp-pittis-gold-price-spike.html
-‘Go for the gold’ may mean going for a loss. Read more here-http://www.theglobeandmail.com/report-on-business/go-for-the-gold-may-mean-going-for-a-loss/article1383592/
-Australia ousts US as second-biggest gold producer, SA slips to fourth. Australia has surpassed the US as the world’s second-biggest gold-producing country in the first half of 2009, and is on track to maintain that ranking for the full year, Melbourne-based mining consultants Surbiton Associates said at the weekend.
China is the world’s number-one producer of the precious metal, with South Africa which was the top gold-producing country for more than 100 years slipping to fourth place. Read more here-
-Gold de-hedging rises to 3.18 mln oz in Q3 report. Read more here-http://www.reuters.com/article/marketsNews/idAFN0151719520091201?rpc=44
-Gold acquires new investment aura. When HSBC closes its vaults to hundreds of American gold bugs (investors) next July, it will be shutting the door on one of the fastest growing trends in the investment community. Read more here-
http://www.telegraph.co.uk/finance/businesslatestnews/6685093/Gold-acquires-new-investment-aura.html
-The rush by retail investors into gold has forced the US government to suspend sales of the world’s most popular bullion coin, the American Eagle, after running out of inventories. The shortage, the second since the start of the financial crisis in August 2008, is the latest sign of investors seeking a safe haven into bullion amid the US dollar woes. Safe-haven buying spurred by concerns about the health of Wall Street and a spike in inflation due to a lax monetary policy have also benefited gold sales. Read more here-http://www.gata.org/node/8098
-More Evidence Gold is Being Hoarded as Comex Fulfills Gold Contracts With Paper. Read more here-http://wallstreetpit.com/12586-more-evidence-gold-is-being-hoarded-as-comex-fulfills-gold-contracts-with-paper
-Beware! More simulated gold products on the way. Read more here-http://www.gata.org/node/8114
-Holiday shopping have you in a quandary? Having trouble deciding on that perfect gift? Think gold. Read more here-http://www.marketwatch.com/story/story/print?guid=B626CB2B-964E-4402-9744-F646EEE171E9
-Canadian mint blames accounting errors for missing gold. Read more here-http://www.gata.org/node/8099
-Worth its weight in gold: World’s largest coin goes on display. Read more here-http://www.dailymail.co.uk/news/article-1022519/Worth-weight-gold-Worlds-largest-coin-goes-display.html#ixzz0Yac7OHWx
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
-Peter Grandich: Silver’s Turn to Shine. As silver approaches $20 an ounce again, Peter Grandich reckons it is a sector which could well shine, but thinks America’s underlying economic problems will result in prolonged sagging trading performance elsewhere and advises investors “to remove their bullish hats if they’re still wearing them.” Interview with The Gold Report. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=93880&sn;=Detail
-4 Reasons Why Silver Will Outperform Gold. Read more here-http://news.silverseek.com/SilverSeek/1259780758.php
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1259561040.php
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/8101
-Gene Arensberg: Comex commercials position for gold, silver correction. Read more here-http://www.gata.org/node/8113
-Don’t ignore silver. Take the Jim Rogers route. Read more here-http://www.commodityonline.com/news/Don%E2%80%99t-ignore-silver-Take-the-Jim-Rogers-route-23487-3-1.html
-Is This Your Last Chance to Buy Precious Metals Cheaply? Read more here-http://news.goldseek.com/GoldSeek/1259776800.php
-Silver news for the first three quarters of 2009. Read more here-Q1 http://www.silverinstitute.org/images/pdfs/1q09.pdf Q2 http://www.silverinstitute.org/images/pdfs/2q09.pdf Q3 http://www.silverinstitute.org/images/pdfs/3q09.pdf
U.S. DEBT-TOO BIG TO FAIL?
-Chart of the day: The Rest Of The World Owns Us. As this chart shows, foreign appetite for the debt of the Federal government has not been diminished by our recession. Pessimists might say that we’re increasingly reliant on international investors to fund our government. But we can just about squint our eyes up and see this as a vast improvement from the old “we owe it to ourselves” reassurance about government debt. We owe it to them and we’re too big to fail. Read more here-http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-foreigner-investors-2009-12
CHART OF THE WEEK-QUOTES-QUICK HITS
-Holiday Shopping Loses Meaning for U.S. Economy: Chart of Day. Read more and see chart here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a9Fn79fABBGE
-Chart of the week: Americans Are More Broke, And More Desperate For Deals. Why were shoppers wrestling with each other on the floor or Wal-Mart for a cheap price on a new videogame? Really, why do they put up with such horridness?
The answer: Americans are broke. As a survey from the National Retail Federation revealed, more Americans than ever intended to brave the Black Friday mess, and they intended to spend far less than in recent years. More people and more demand for bargains gets you total chaos. Read more here-http://www.businessinsider.com/chart-of-the-day-black-friday-shopping-pattern-2009-11
Chart of the week: Online Retail Sales Growth Remains Weak. Online holiday sales are set to grow a modest 8% this year according to research from Forrester, by way of Read Write Web. It’s an improvement over last year’s anemic 5% growth, but it’s a long way away from the boom times just three years earlier. Read more here-http://www.businessinsider.com/chart-of-the-day-online-retail-holiday-sales-2009-11
-History strongly supports the proposition that major financial crises are followed by major fiscal crises. Niall Ferguson, Newsweek, 28 November 2009
-Remember to keep your debt low, save all you can and invest carefully in these markets. Most importantly, do not to forget your precious metals as this is your financial lifeboat. Always pray that you will never need your lifeboat, however, always make sure you have the best most seaworthy one you can afford close at hand. Buy some today and sleep better tonight. Larry LaBorde-Read more here-
http://www.321gold.com/editorials/laborde/laborde113009.html
-The holders of Dubai’s real estate assets and sovereign debt are the major Western financial institutions already weakened by their escapades at home. Though the government of Dubai has distanced itself from the mess, the bursting of the ‘Dubai bubble’ will mean even more write-downs for Anglo-American investment banks.
This may prove to be the first of a new wave of defaults as the commercial mortgage markets begin to buckle. Worse still, any new series of major defaults could spread rapidly to and within the derivatives market. If that were to happen, a sudden cascade of settlement defaults could cause a devastating implosion of international financial markets one that central banks may be powerless to contain.
In such a world, wealth will retreat into the historic havens of safety gold and silver. Today, with gold at $1,215 and silver at $19.25, this process seems well underway. John Browne-Read more here-
http://www.321gold.com/editorials/browne/browne120309.html
-There is no recovery and there won’t be any recovery no matter how much money is poured into the system. There still isn’t adequate capital and there never will be. The system has to be purged and the Illuminists won’t allow it until their power is taken away from them. This Fed, this lender of last resort, is a criminal enterprise.
Do not expect any help or any admission relating to what they have done. Bank loans are off 16.2% yoy, and Citigroup is hoarding $244.2 billion and JP Morgan Chase $453.6 billion. While this goes on our currency continually is debased. It won’t take long for the roof to fall in. Just be patient and own gold and silver related assets. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1259776619.php http://news.goldseek.com/InternationalForecaster/1259564880.php
-We also see in today’s FT that even after the latest surge in gold, the fund holdings in ETFs ballooned to a record 1,766 tons (up 48% for the year). We have been gold bulls for about 90% of the time over the past decade (we skipped the 2007 bubble period) but like many other risk assets, bullion is a crowded trade for now. Don’t mistake this for a bearish call, but more like a near-term tactical view: we still see gold approaching $3,000/oz before the secular bull market runs its course. David Rosenberg-Gluskin/Sheff
-The DOW is back in a bear market. That is correct. While the market did make a new high in ‘deflated dollar’ terms just a short two-days ago, in gold terms, the Dow actually peaked on August 27 and is down 13.5% since then. As an aside just to show that the gold story is not JUST a weak U.S. dollar, bullion prices rose a further 1.6% yesterday to yet another new high even in the face of a 19bps recovery in the greenback. David Rosenberg-Gluskin/Sheff
-Gold just capped off its best month in a year up 14% in November and 34% so far in 2009. Not even the S&P; 500 can compete with that. Helping drive the latest gains was the news out of the China Gold Association that the country’s gold demand is on pace this year to exceed 450 metric tonnes, a 14% increase over the 395.6 tonnes in 2008. (In contrast to India, jewelry sales are up double-digits in China so far this year.) By way of comparison, China, which recently surpassed South Africa as the world’s largest producer, is on its way to 310 tons of newly mined output this year, or more than 30% below its level of demand.
It’s not just the middle-class in China that is starting to buy gold, but the central bank, which has very deep pockets, is going to do likewise. We just came across a Bloomberg News article quoting an official from the state-owned Assets Supervision and Administration Commission (Ji Xiaonan, the Chief) as saying “we recommend China increase its gold reserves to 6,000 metric tons within three-to-five years and possibly to 10,000 tons in eight to 10 years.” China’s reserves, after a 76% buildup since 2003, currently stand at 1,054 tons, so we are talking here about the prospect of some pretty heaving buying in coming years.
If China were to lift their gold reserves to 5,000 tonnes, which is equivalent to about two years of global production, that shift in demand would boost the gold price by $800/oz to around $2,000 ($1,978) based on our models. If China moves towards 10,000 tonnes, well, that would end up taking the gold price to $2,623/ounce if our calculations are in the ball-park.
Make no mistake, we are gold bulls. Central banks have deep pockets and production of gold is stagnant so the demand-supply backdrop for bullion is bullish. At the same time, we have to pay respect for market positioning over the near-term. The market for precious metals is overextended right now after the parabolic move of the past two months. The net speculative long position has swelled to a record 273,552 contracts (100 ounces each) on the COMEX. Open interest has never been higher, at 693,661 contracts. So this is one crowded trade as is the short-trade on the USD against all the major currencies, especially the commodity-based units.
So, we could get a meaningful gold correction at any time, and we are talking about a correction in what is still a secular bull market the 200-day moving average is $970/oz, which means we could get as much as a 20% pullback and no fundamental trendline would be violated. We remain long-term gold bulls, and our commentary remains fundamentally bullish, but anything that could spark a countertrend rally in the U.S. dollar, which is our principal near-term concern, would put gold at a much better price point for investors than the peak we are at today. David Rosenberg-Gluskin/Sheff
-This year’s amazing bear market rally has boiled down to three sources:
Hedge funds having their margin lines re-established and they leveraged this year to make up for last year’s disaster. They may now be in a position to simply lock-in.
Institutional PMs are running down their cash ratios from 6.0% to around 3.0%. The cash ratio is back to where it was in late 2007.
Massive short-covering, but for how much longer. In fact, the latest short-interest data show that the bears are growling again.
These are not sustainable sources of buying power. Ultimately, and this is what provided the sustained leg to the 1980s bull run, the individual investor has to participate, and he/she seems to have turned off the TV and cancelled his/her subscription for Wall Street research. This is a change in behaviour that may indeed be secular in nature because the fabled capitulation trade really should have happened by now.
Yet the general public has not participated and can you blame them after being burned badly by two failed new paradigms seven years apart. The median boomer is 52 going on 53, will likely live to 82, and has seen his/her net worth implode by 30%. Income is now king. The cult of equities that began with the replacement of the trusted pension plan with the participant-directed 401k in the late 1980s and early 1990s is losing disciples. David Rosenberg-Gluskin/Sheff
-In a recession, we do not typically see:
•15.7 million American households, or a third of those with a mortgage, have negative net equity (see page A16 Housing Weighs on the Economy of the Saturday NYT).
•17.5%, or 1 in 6 Americans, are either unemployed or underemployed.
•A mere 3.2% of respondents to the latest Conference Board’s Consumer Confidence Survey believe jobs are plentiful this is amazing considering that we have a 0% funds rate, a $1.4 trillion budget deficit, a super-weak exchange rate, and a $2.2 trillion Fed balance sheet. What should be done for an encore?
•1 in 7 Americans with a mortgage are now either in arrears or in the foreclosure process. In a recession, you don’t see, already two years after the recession began, articles like this make it to the front page of the Sunday NYT U.S. to Pressure Mortgage Firms For Loan Relief: Official Faults Banks Karl Marx would be proud.
•Small business failures are up 44% year-over-year as was the case in Q3 this far into a Fed easing cycle.
•1 in 8 Americans are now on food stamps and there are 239 counties where at least 25% of the population is on the program (again, see the front page of the Sunday NYT).
•A 35% slide in home prices; a 50% plunge in commercial real estate values; and a 20% mall vacancy rate nationwide (see page M6 of Barron’s) between 250 and 300 million square feet of retail space has to vanish just to bring the vacancy rate down to 12%. Some food for thought for those that think we are about to embark on anything close to a normal economic recovery. David Rosenberg-Gluskin/Sheff
-Hedge funds are shoveling money into stocks as individuals exit at the fastest rate in a year, a sign to professional investors that the Standard & Poor’s 500 Index is poised to extend its gains. About $37.3 billion has been pulled from U.S. mutual funds since August, according to the Investment Company Institute.
Hedge funds which lost half as much on average as the S&P; 500 since stocks peaked in October 2007 boosted bets to the highest level since the end of that year in the third quarter and have kept buying, according to data compiled by Goldman Sachs Group Inc., industry consultants and Bloomberg. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aidQnqm1KPik
-Eric Sprott’s and David Franklin’s monthly Markets at a Glance commentary posted over at Sprott Asset Management in Toronto. This month’s offering is entitled “Don’t Bank on the Banks”. Read more here-
http://www.sprott.com/Docs/MarketsataGlance/11_09%20Dont%20Bank%20on%20the%20Banks.pdf
-In U.S. history, there may have been no better time to own a junk car, a rattling old fridge and a leaking dishwasher. On the heels of its ballyhooed “Cash for Clunkers” program for cars, the federal government is expected to finalize details in the coming weeks of another tax-supported shopping extravaganza, known as “Cash for Appliances.” Supported by $300 million from the economic stimulus, the program will offer rebates to consumers who buy energy-efficient refrigerators, dishwashers, air conditioners and other appliances to replace their older models.
And like the $3 billion cars program that gave consumers money for swapping their clunkers for more fuel-efficient rides, the appliance initiative seems destined to inspire shoppers, drive up sales for a while and profoundly divide economists over how much lasting good this chunk of government spending will do for the economy. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/11/26/AR2009112602420_pf.html
-Dollar: not dead, just smells funny. BCA Research expects the trade weighted greenback to fall to fresh lows. Rising dollar commodity prices, generally from low points in the early stages of this year, are now seen by some commentators as possibly running into bubble territory, as, effectively, a one-way bet against the dollar. Dollar gold bullion, for one, has made fresh all time records within the past 24 hours, at more than US$1,200 an ounce. Commodities enjoy broader support, as reflected in the majority of world stocks exchanges trading at or close to the highest levels this year.
For speculators on the dollar commodity price train, the ceiling is yet to be reached, according to analysts at the Bank Credit Analyst, which reckon that “the dollar is not technically oversold and fundamental factors for a bottom are still not in place”. Seen over the longer term, the dollar index recorded a bull market from 1995 through 2001. It has been in a protracted bear market since, but at current levels, is above multi year lows seen in April 2008, when it measured 70.70 points, the lowest since inception in 1973.
“First, there is still no indication that the dollar is oversold. Intermediate term price momentum has just edged below zero and can move much lower before flashing an oversold warning. Meanwhile, speculators are only modestly short the dollar (the size of the short position is considerably smaller than either early 2005 or late 2007) and while there are certainly more news articles discussing a ‘dollar crisis’, the number of stories remains well below previous spikes.
“Second, fundamental conditions for a long term dollar bottom are also not in place. Since the breakdown of Bretton Woods in the early 1970s and the move to floating exchange rates, there have only been two major bottoms in the dollar: the late 1970s and the early 1990s. These bottoms shared two common features: the dollar had fallen to deep undervalued levels and the US current account balance had improved markedly, moving to a small surplus position. Neither has occurred yet. “Bottom line: Continued US policy reflation should see the trade weighted dollar index fall to fresh lows”. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=93901&sn;=Detail
-Since the late 1980s I have believed that a strong dollar was in the US and world interest. Now, however, the context has fundamentally changed. The issue is no longer whether the dollar is in long-term decline but which of two options will be taken. Should Washington and other capitals calmly and deliberately manage the transition to a new era, or, by default, should they let the market do it, with the risk of massive financial disturbances. Today, governments have a choice. Soon they may not. Juan Trippe professor of international trade and finance at the Yale School of Management-Read more here-http://www.ft.com/cms/s/0/d7c5b756-dd14-11de-ad60-00144feabdc0.html
-Benign neglect may transform dollar from safe to danger. Read more here-http://www.gata.org/node/8104
-Bank of Israel Governor Stanley Fischer said on Thursday the world has to accept a weaker U.S. dollar in order to ensure the global economy recovers soundly. “We also have to realize, what is hard to get across, there has to be a global rebalancing. Either the U.S. runs a very long period of recession, which is a really bad idea, or the dollar has to weaken so that balance of payments can be straightened out,” Fischer said in response to a question during a business breakfast in New York. Read more here-http://www.reuters.com/article/marketsNews/idAFN0337620091203?rpc=44
-Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country’s currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings. The revaluation and exchange limits triggered panic and anger, particularly among market traders with substantial hoards of old North Korean won much of which has apparently become worthless, according to news agency reports from South Korea and China and from groups with contacts in North Korea.
The currency move appeared to be part of a continuing government crackdown on private markets, which have become an essential part of the food-supply system in the chronically hungry North. In recent years, some market traders have stashed away substantial amounts of cash, while establishing themselves in profitable businesses that the government struggles to control.
But under the rules of the new currency system, the wealth of these traders has largely disappeared, unless it is held in euros, dollars or Chinese yuan. The revaluation replaces 1,000-won notes with 10-won notes but strictly limits the amount of old currency that can be exchanged, news reports said. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/12/01/AR2009120101841_pf.html
-North Koreans dare to protest as devaluation wipes out savings. Rush for dollars and Chinese yuan after Kim Jong-il’s surprise move to reassert control over economy. Read more here-
-In Wake of Dubai, Trying to Predict the Next Crisis. Like overstretched American homeowners, governments and companies across the globe are groaning under the weight of debts that, some fear, might never be fully paid back. As Dubai, that one-time wonderland in the desert, struggles to pay its bills, a troubling question hangs over the financial world: Is this latest financial crisis an isolated event, or a harbinger of still more debt shocks? Read more here-
-An Empire at Risk. We won the cold war and weathered 9/11. But now economic weakness is endangering our global power. Niall Ferguson-Read more here-http://www.newsweek.com/id/224694/output/print
-Niall Ferguson: Even Krugman Admits the Deficit Is Unsustainable. Read more here-http://finance.yahoo.com/tech-ticker/article/380621/Niall-Ferguson-Even-Krugman-Admits-the-Deficit-Is-Unsustainable
-Is Britain on the brink of financial Armageddon? He’s one of our top entrepreneurs who recently put all his investments into cash. The reason: He believes Britain faces bankruptcy. You may disagree with his bleak analysis but you can’t afford NOT to read it. Read more here-http://www.dailymail.co.uk/news/article-1231563/Is-Britain-brink-financial-armageddon.html
-Morgan Stanley fears UK sovereign debt crisis in 2010. Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley. Read more here-http://www.telegraph.co.uk/finance/economics/6693162/Morgan-Stanley-fears-UK-sovereign-debt-crisis-in-2010.html
-The new Iceland? Greece fights to rein in debt. Fears of default grow as years of profligacy come home to roost. Read more here-http://www.guardian.co.uk/business/2009/nov/30/greece-iceland-debt
-Obama’s ‘predictably irrational’ economic policies. 14 reasons Obama’s love of Wall Street will trigger the Great Depression 2. First: Kiss the rally good-bye, says Jeremy Grantham, legendary CEO of the $101 billion GMO money-management firm. Why? The market is overvalued 25%. A minimum 15% correction is coming in 2010, putting the Dow in the 8,000-9,000 range. The S&P; 500? Not at 666 like last spring; maybe 800. Why a top? Black Friday? Dubai? Tiger Woods? All the dark films? The “2012″ end of civilization? The post-apocalyptic “The Road?” Stop guessing, timing market turns is irrational.
Grantham’s shift from bull to bear appears rational. Remember, earlier this year the Dow was near 6,000, banks near bankrupt, and we were praying for the new untested president to change America. In his latest editorial Grantham reminds us why his prediction made sense in the spring: “Regardless of the fundamentals, there would be a sharp rally. After a very large decline and a period of somewhat blind panic, it is simply the nature of the beast.” Get it? A rally was predictable, based on the history of cycles.
Trust Grantham? 100%. Back in early 2007, he warned: “The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it’s bubble time. Everyone, everywhere is reinforcing one another. The bursting of the bubble will be across all countries and all assets no similar global event has occurred before.” Paul Farrell-Read more here-
http://www.marketwatch.com/story/story/print?guid=0AB82970-4BEF-451A-A965-08510DE0E68E
-Hussman Sees 80% Chance That Stock Market Will Plunge in 2010. U.S. stocks are likely to plunge again next year as more debt delinquencies cause the equity market to reverse the steepest rally since the Great Depression, investor John P. Hussman said.
“There is still close to an 80 percent probability that a second market plunge and economic downturn will unfold during the coming year,” Hussman wrote on his Web site in a posting dated yesterday. Bank earnings and capital ratios “have enjoyed a reprieve in the past couple of quarters, but delinquencies have not, and all evidence points to an acceleration as we move into 2010.” Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aPLctfeL7ptA
-El Centro, Calif., maintains 30% jobless rate. Southern California agriculture area continues to suffer higher metropolitan area rate. More urban areas face severe unemployment. Read more here-
http://money.cnn.com/2009/12/02/news/economy/metro_unemployment/index.htm
-Iran Announces Nuclear Program Expansion, Defies UN. Iran’s plans to expand its nuclear program in defiance of United Nations demands were condemned by the Obama administration, while France called the move by the government in Tehran “infantile.”
“It’s dangerous, but above all it’s dangerous for Iran,” French Foreign Minister Bernard Kouchner said in an interview with RTL radio today. U.K. Foreign Secretary David Miliband said the Iranian administration had chosen to “provoke” the international community. Germany warned that Iran may face further sanctions if it pursues the plans.
President Mahmoud Ahmadinejad’s Cabinet ordered the Atomic Energy Organization of Iran to begin building 10 uranium-enrichment sites within two months, the state-run Islamic Republic News Agency reported yesterday. All would be on the same scale as the Natanz enrichment site in central Iran, IRNA said. The U.S. and several major allies say the Iranian program is cover for weapons development, while Iran insists the work is for peaceful purposes including the generation of electricity. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5z59zEsSFts&pos;=8
-Iran can enrich the uranium it needs for a medical reactor, President Mahmoud Ahmadinejad said, spurning an offer from UN Security Council members to produce the fuel abroad to make sure it isn’t boosted to bomb grade.
“The nuclear issue has come to an end and our nation will not negotiate,” Ahmadinejad said today in a speech in the Iranian city of Isfahan, according to the state-run Islamic Republic News Agency. “Thank God” Iran is capable of enriching uranium to the 20 percent level required for the reactor in Tehran that makes medical isotopes, he said.
The five permanent members of the United Nations Security Council and Germany, who have tried to convince Iran to scale back its nuclear program, offered in October to enrich the uranium that Iran needs for the reactor. The U.S. and its main allies allege Iran is using a civilian nuclear program to disguise weapons development. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aWVUXflVKP70
-Iran Atomic Plans Make Sanctions Push ‘More Likely,’ U.S. Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a06BzKdNJWAw
-’US warned China that Israel could bomb Iran’. Two senior officials from the White House, Dennis Ross and Jeffrey Bader, made a trip to China on a “special mission” to garner support in Beijing over the Iranian nuclear program, according to a Thursday report in The Washington Post.
The officials visited China two weeks before US President Barack Obama arrived in Beijing. The officials reportedly carried the message that if China would not support the US on the issue, Israel would be likely to bomb Iranian nuclear facilities. The paper quoted the officials as saying that Israel saw the issue as “an existential issue,” and that “countries that have an existential issue don’t listen to other countries.” Read more here-
http://www.jpost.com/servlet/Satellite?cid=1259010987363&pagename;=JPost%2FJPArticle%2FPrinter
-Obama Joins Johnson in Escalating Unpopular War He Inherited. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=akdZCMCkLKRE&pos;=9
-Food Stamp Usage Across the U.S. See chart here-http://www.nytimes.com/interactive/2009/11/28/us/20091128-foodstamps.html?hp
-Gold Coin Dropped Into Salvation Army Kettle. Read more here-http://www.wgal.com/news/21761149/detail.html
-’12 days of Christmas’ get pricier. The Christmas Price Index climbed an anemic 0.9% this year as plunging bird prices offset an increase in the cost of five gold rings. Read more here-http://money.cnn.com/2009/11/30/news/economy/Christmas_price_index/index.htm or http://www.google.com/hostednews/afp/article/ALeqM5j7ParIRW6Tx-r7eSHVifpu6RWlqQ
-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html
-Pink Diamond Fetches Record $10.8 Million at Hong Kong Auction. A ring with a pink diamond the size of a chickpea sold last night for a record HK$83.5 million ($10.8 million) at a Hong Kong auction of art, gems and antiques that was fuelled by Chinese buying.
The 5-carat gem was set by London-based jeweler Graff Diamonds and given the second-highest rating of potentially flawless. The so-called fancy-vivid stone broke the per-carat record for a diamond established in May with Hong Kong property tycoon Joseph Lau’s purchase of a 7.03-carat blue diamond in Geneva for 10.5 million Swiss francs ($10.5 million). A carat is a fifth of a gram.
The Graff jewel went to a phone buyer who wrested it from the Chinese millionaire stock-investor tycoon Liu Yiqian and his wife Wang Wei. They were bidding in the room and stopped at around HK$70 million. Host Christie’s International wouldn’t confirm if the lot was bought by another mainland Chinese. The jewelry sale tallied HK$372 million, with 89 percent of the 255 lots sold.
“Some prices were crazy, way above what one would pay even at a jewelry store,” said Donald May, a Hong Kong-based ruby and sapphire dealer who attended the auction. “There’s a lot of mainland Chinese buying; either they didn’t know what the items are worth or they wanted them so badly that price didn’t matter.” Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=awCQTXePG1Os or http://www.reuters.com/article/lifestyleMolt/idUSTRE5B02P620091201
-Rare pink diamond sells for $10m. Watch video here-http://news.bbc.co.uk/2/hi/asia-pacific/8389415.stm
-Jewels: The Hong Kong Sale 1 December 2009 Hong Kong. Lot Description. A superb colored diamond and diamond ring by Graff. Set with an oval-shaped fancy vivid yellow diamond weighing 9.03 carats, flanked on either side by a pear-shaped diamond, mounted in platinum and yellow gold. Graff Accompanied by report no. 11386714 dated 20 July 2009 from the Gemological Institute of America stating that the 9.03 carat diamond is fancy vivid yellow, natural color, VVS1 clarity. Price Realized HK$11,860,000, ($1,537,615). Estimate HK$7,200,000-HK$9,000,000 ($933,301-$1,166,627).
-Jewels: The Hong Kong Sale 1 December 2009 Hong Kong. Lot Description. An important colored diamond and diamond ring by Tiffany & CO. Set with a rectangular-shaped fancy intense blue diamond weighing 3.02 carats, to the square-shaped diamond quarter-hoop, mounted in platinum, ring size 8. Signed Tiffany & Co. No. 23624184 Accompanied by report no. 6107994843 dated 10 August 2009 from the Gemological Institute of America stating that the 3.02 carat diamond is a fancy intense blue, natural colour, VS1 clarity. Price Realized HK$9,020,000 ($1,169,417) Estimate HK$7,500,000-HK$10,000,000 ($972,189-$1,296,252).
-Jewels: The Hong Kong Sale 1 December 2009 Hong Kong. Lot Description. A rare colored diamond and diamond ring. Set with a rectangular-shaped fancy red diamond weighing 0.84 carat, within a pear-shaped diamond surround, to the pavé-set diamond fluted three-quarter hoop, mounted in 18k white and rose gold, ring size 5½. Accompanied by report no. 1102729888 dated 14 May 2009 from the Gemological Institute of America stating that the 0.84 carat diamond is fancy red, natural color. Price Realized HK$2,420,000 ($313,746) Estimate HK$2,000,000-HK$3,000,000 ($259,250-$388,876).
-Petra’s Chicken-Egg-Sized Gem May Fetch $31 Million, BMO Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601116&sid;=aNpckUFQQwdk
-Petra nets $6.28million in giant white diamond sale. Read more here-http://www.dailymail.co.uk/money/article-1231410/Petra-nets-6-28million-white-diamond-sale.html#ixzz0YZJWHQDS
-Rough Diamond Prices Rise 40%, Investors Secretly Cash In. As gold prices make the headlines on an almost daily basis recently, the 40% surge in uncut diamond prices has been almost a secret, until now and investors are cashing in, reports Nasdaq.com. Although diamond retail sales have fallen from $74 billion last year to $65 billion this year, prices for rough diamonds have risen more than 40% since February. Read more here-http://www.israelidiamond.co.il/english/News.aspx?boneId=918&objid;=6215
REAL ESTATE
-Chart of the week: Dubai Shows What A Property Plunge Really Looks Like. Here’s essentially what caused Dubai’s debt extravaganza to finally come to an end. Far too much easy money flowed into Dubai during previous years, fueling a massive construction boom financed with debt. For awhile this debt looked sustainable to those involved because it was ostensibly backed by valuable property.
Yet when the global financial crisis hit, property prices fell in many parts of the world. Dubai property prices were hit especially hard. As shown below by the skiing Emirati, Dubai property rates per square foot fell 45% from Q3 2008 to Q3 2009 according to Colliers International.
Thus just as many American’s went underwater on their mortgages due to the American property crisis, owing more to the bank than their house was worth, the same thing basically happened to the Nakheel property business of the Dubai state-owned conglomerate Dubai World.
Combined with near-term cash flow constraints, this finally forced Dubai World to admit to its creditors that it would not be able to meet all of its debt obligations. Read more here-
http://www.businessinsider.com/chart-of-the-day-dubais-average-property-prices-2009-12
-The meltdown of the U.S. housing market is not over yet, and home prices will soon start trekking downward again as a flood of foreclosures looms, a well-known economist said on Wednesday. Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said in an interview with Reuters home prices will resume their decline by early next year as foreclosure sales pick up again. “The housing crash is not over,” he said. Read more here-
http://www.reuters.com/article/newsOne/idUSTRE5B14TY20091202?ref=patrick.net
-Las Vegas Home Prices Fall 34% on Foreclosure Sales. Las Vegas home prices fell 34 percent in October from a year-earlier as foreclosed properties accounted for two-thirds of sales, reducing the value of single- family houses and condominiums, MDA DataQuick said today.
The median price paid for all new and re-sold houses and condos in the Las Vegas metropolitan area fell to $130,000 in October from $196,000 a year earlier, the San Diego-based real estate research company said today in a statement. The price has been at or close to $130,000 since July and hasn’t fallen below that level since April 1999, when it was $129,000. Read more here-
http://www.bloomberg.com/apps/news?pid=20601103&sid;=amKdvZxx0AXk&ref;=patrick.net
-Pending Sales of U.S. Existing Homes Rose in October. The number of contracts to buy U.S. previously owned homes unexpectedly rose in October as consumers rushed to take advantage of a tax credit that was due to expire. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aCpsPN33fa1E
-One in Four Borrowers Is Underwater. Read more here-http://online.wsj.com/article/SB125903489722661849.html?mod=WSJ_hps_LEADNewsCollection
-Professor advises underwater homeowners to walk away from mortgages. Brent T. White, a University of Arizona law school professor, says that it’s in the homeowners’ best financial interest to stiff their lenders and that it’s not immoral to do so. Read more here-http://www.latimes.com/classified/realestate/news/la-fi-harney29-2009nov29,0,1484610,print.story
-Commercial Mortgage Defaults at U.S. Banks Reach 3.4%. Read more here-http://www.bloomberg.com/apps/news?pid=20601083&sid;=aaeiIiFNgSj0 or
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN3043256420091201
-Like many home owners, hotels are starting to drown in debt. They have been enticing travelers all year with sweet deals: credits for in-house spas and restaurants, up to 50 percent off five-star rooms, even free nights. But all that discounting hasn’t stopped occupancy from dropping an average of 10 percent. The result? Hotel loans have begun falling into delinquency faster than any other kind of commercial real estate debt. Read more here-
http://finance.yahoo.com/news/Hotel-owners-like-home-owners-apf-1306733990.html?x=0
-World’s Most Expensive Office Markets Get Cheaper. The world’s most expensive office markets got a little cheaper this year. More than 130 cities worldwide had declines in rent expenses in the year ended Sept. 30, CB Richard Ellis Group Inc. said in a report today. Almost 50 cities reported declines of more than 10 percent. Rental costs fell about 30 percent in Midtown Manhattan, 53 percent in Singapore and 41 percent in central Hong Kong. Overall, rents fell an average 7.7 percent across 179 markets worldwide. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSqhTjhF2IO4
© 2009, Worldwide Precious Metals.
www.wwpmc.com
The Goldbugg Report – December 9, 2009
Posted by Worldwide Precious Metals on Wednesday, December 9, 2009
The Goldbugg Report – December 1, 2009
December 1, 2009
-New gold bugs making gold investments mainstream.
-Gold is soaring, hitting new record highs almost daily.
-Silver price soars on heavy demand, high hopes for gains.
GOLD
-Up $800 million on its IMF gold, India may buy the rest. India is open to buying more gold from the International Monetary Fund (IMF). It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy the IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation.
A government official said that the additional purchase would depend on the “successful pitching by RBI.” “RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered,” said the official.
RBI did not respond to Financial Chronicle questions if it was bidding for the remaining IMF gold. The purchase of the first lot of 200 tonnes, RBI had said at the time, was a part of its foreign exchange reserves management operations.
Responding to query from FC, an IMF spokesperson said the gold sale process was still under way and “there is no fixed timetable for completing the sale.” Its spokesperson further said that “the fund does not wish to comment on discussions with individual members.” Read more here-http://www.gata.org/node/8088
-IMF sells 10 tonnes of gold to Sri Lanka. Read more here-http://uk.news.yahoo.com/18/20091125/tbs-imf-sells-10-tonnes-of-gold-to-sri-l-5268574.html
-Russia central bank buys 0.5 mln oz gold in October. Read more here-http://in.reuters.com/article/fundsNews/idINGEE5AM1A020091123
-Have Central Banks lost their desire to cut gold reserves? With India leading the charge a desire not just to be conservative but also to been seen as conservative will see central banks helping bolster the gold price. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93536&sn;=Detail
-New gold bugs making gold investments mainstream. Read more here-http://www.marketwatch.com/story/story/print?guid=08A47646-A6C5-4293-9595-1A37A564D70A
-Gold to hit $1650 by late 2010, early 2011, but estimate could be low Jim Sinclair. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=93428&sn;=Detail
or listen here-http://www.moneyweb.co.za/mw/view/mw/en/page295799?oid=331136&sn;=2009%20Detail&pid;=295683 or http://www.gata.org/node/8072
-Gold is soaring, hitting new record highs almost daily. This C rise is going strong. Our initial $1200 target level for this year’s rise has nearly been reached, but gold could go higher.
This is good news for all of us who have been invested in gold for the past eight years. But even for those of you who invested in more recent times, gold has been a good and profitable investment.
We feel strongly that this will continue in the months and years ahead. And there are many valid reasons why. Most important, the unprecedented monetary policy currently in force is inflationary. The same is true of the weak U.S. dollar, negative interest rates, rising oil and commodities. Gold buying by central banks is also boosting the gold price higher.
Even though gold is still relatively unknown in mainstream investment circles, it’s starting to attract some attention. As this interest grows, momentum buying will pick up and the exchange traded funds are another big positive, simply because they make it easy to buy gold. The improving economy is another positive factor. Aden Sisters-Read more here-
http://www.kitco.com/ind/Aden/aden_nov232009.html
-Miners say they’re running out of gold. Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive, say miners. In terms of production, “2009 is the outlier as far as the trend,” Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told AFP.
Overall, “It’s a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year,” said Vincent Borg, spokesman for No. 1 producer Barrick Gold. “It sort of goes down about 1 million ounces every year and our forecast is that it will continue to decline despite the higher price” for gold nowadays, he said.
Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain. Read more here-
-James Turk: Welcome to Stage 2 of gold’s bull market. Read more here-http://www.kitco.com/ind/Turk/turk_oct232009.html
-Central banks of emerging markets have substantial scope to expand their gold reserves given their underweight position in the metal relative to developed market central banks, Stephen Jen, managing director of macroeconomics and forex at BlueGold Capital Management, said in a report dated Monday. According to the report, the average gold holding ratio, or gold holdings as a percentage of total foreign exchange and gold reserves, of the U.S., Japan, ECB, UK, Germany, Italy, France and Switzerland is 37.9% on average.
This compares with an average of 2.2% for a group that includes China, Russia, India, Taiwan, South Korea, Hong Kong, Brazil and Singapore. “The obvious implication is that the scope for emerging market central banks to buy more gold is substantial, if they decide to diversify into gold,” said Jen.
Jen also said the top eight emerging market forex reserve holders have $4.1 trillion in foreign reserves, meaning every 1% reallocation in reserves towards gold would correspond to $41 billion in gold purchases. “If these banks raise their gold holdings from the current 2.2% to a conservative 5%, this would correspond to $115 billion in gold purchases,” he said.
The Reserve Bank of India’s purchase of 200 metric tons of gold from the IMF, first reported Nov. 3, which cost it around $7 billion, has been one of the factors widely cited as driving gold to new record highs. Read more here-http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8970ea5d-3ab9-4ad2-87a8-f76cca63c961
-Thanks in part to mounting US deficits and a weak US economy, the US dollar continues to trend lower. After all, a virtual collapse of the banking sector does have its consequences. For some perspective, today’s chart illustrates the current trend in the US dollar (blue line) as well as that other world currency, gold (gray line).
As today’s chart illustrates, the performance of the US dollar has varied inversely to that of gold since the latter stages of the credit bubble. It is worth noting that the US dollar is currently testing resistance of its downtrend (red line) while gold makes record highs. Read more here-http://www.chartoftheday.com/20091125.htm?T
-Long-term readers know that gold moves inversely to the dollar, meaning if the dollar drops, gold tends to rise (and vice versa). This happens with about 80% regularity. But what many gold writers haven’t acknowledged is the leveraged movement our favourite metal has demonstrated this year to the world’s reserve currency.
The U.S. dollar index, a six-currency gauge of the greenback’s value, has dropped 7.1% so far this year. Meanwhile, gold is up 34% year-to-date. In other words, for every 1% drop in the dollar index, gold has risen 4.7%. If that approximate percentage holds over time, one can begin to estimate what the gold price might be if you know what the dollar might do.
While the dollar is likely to bounce at some point, making gold correct, the long-term fate of the dollar has already dried in cement. If the dollar were simply to return to its March 2008 low of 71.30 next year a 5% drop from current levels this would imply a rise in gold of 23.5% and a price of about $1,437 an ounce.
The long-term scenario is more dramatic. If you believe the dollar will lose half its value from current levels, this would imply a gold price around $2,735. If you believe it will lose 75% of its value, gold would reach about $4,103. Doug Casey has called for a $5,000 gold price; if he’s right, guess what that implies for the dollar?
And think about this: these calculations ignore what else might “show up,” such as when price inflation shows up in the economy, the greater public shows up to buy gold, or the Chinese don’t show up at an auction. Could $5,000 gold be too low? Unless you think the dollar’s problems are solved, its eventual demise is gold’s eventual glory. Prepare, and invest, accordingly.
Jeff Clark, Casey’s Gold & Resource Report
-BNN discusses targets for gold, and the danger of hyperinflation for the U.S. with Charles Oliver, senior portfolio manager, Sprott Asset Management. Watch video here-
http://watch.bnn.ca/#clip239610
-U.S. House Fed audit proposal gives gold another boost. While such an event is unlikely in the current form proposed, as is the Fed losing its independence the fact that such proposals have got as far as the senate has given the yellow metal a lift. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93501&sn;=Detail or
-An interview with James Turk: Gold isn’t an investment but money itself. Read more here-http://www.mmnews.de/index.php/Englisch-News/Gold-is-not-an-investment.-It-is-money.html
-Gold worry mounting, but some bulls charging on. Some gold bugs aren’t worried about the metal’s rapid bid-up. Read more here-
http://www.marketwatch.com/story/story/print?guid=9EC4C7E3-DBAD-45D4-84EE-FC53C263F70E
-Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/nov242009.html
-Peter Grandich: Gold is rising on more than dollar weakness. Read more here-http://www.gata.org/node/8082
-GATA Chairman Bill Murphy appeared on Bloomberg TV during the week. Watch and read more here-http://www.gata.org/node/8057 or http://www.gata.org/node/8054
and http://www.gata.org/node/8063
-Gold and Fed Face-Off: Peter Schiff Goes Toe-to-Toe With Alan Blinder, Jim Bullard. Read more here-http://finance.yahoo.com/tech-ticker/article/378046/Fed-Face-Off-Peter-Schiff-Goes-Toe-to-Toe-With-Alan-Blinder-Jim-Bullard
-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1259161260.php
-Still time to buy into gold rally Even central banks have become buyers not sellers. Read more here-http://www2.canada.com/edmontonjournal/news/business/story.html?id=9ed746c0-7edd-437c-a85e-6d49e64c1163
-Dump the dollar! Buy gold! Chris Pia, a master trader and Moore Capital alumnus, explains the market. Read more here-
http://money.cnn.com/2009/11/23/pf/dollar_gold.fortune/index.htm
-Gold price strength not a bubble Nichols. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93588&sn;=Detail and
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93247&sn;=Detail and http://news.goldseek.com/LewRockwell/1258959960.php
-Jordan Roy-Byrne: Gold isn’t even close to being a bubble. Read more here-http://www.gata.org/node/8056
-Could gold really go as high as $6,000? It’s possible. Read more here-http://www.moneyweek.com/investments/precious-metals-and-gems/could-gold-price-reach-usd6000-an-ounce-94807.aspx
-Gold at $10,000 an ounce? 10 reasons it could happen within the next 12 months. Read more here-http://commoditytradealert.com/blog/?p=3956
-JP Morgan targets gold at $1300. Read more here-http://www.miningmx.com/news/gold_and_silver/jp-morgan-targets-gold-at-$1300.htm
-How much longer can gold rise? Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/how-much-longer-can-gold-rise.aspx
-Central banks net gold buyers for the second quarter in succession WGC. Negative numbers abounded with respect to gold demand in the third quarter of this year, and the fourth quarter outlook is “mixed”. It is arguable that the demand in the market is now past the worst. India has regained its position as the largest jewellery consumer. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93324&sn;=Detail or http://www.bloomberg.com/apps/news?pid=20601082&sid;=a1VXnBV5EXxA
-Three ways to tell when gold’s bull market is over. Read more here-http://www.moneyweek.com/investments/precious-metals-and-gems/how-to-tell-when-golds-bull-market-is-nearly-over-94802.aspx?utm_source=newsletter&utm;_medium=email&utm;_campaign=Money%2BMorning
-CNBC’s Santelli blurts it out: Central banks suppress gold. Read more here-http://www.gata.org/node/8074
-US Mint to suspend American Eagle gold 1-oz coins. The U.S. Mint said on Wednesday it will suspend sales of the popular American Eagle one-ounce bullion coins as strong demand depleted its inventory. Read more here-http://uk.reuters.com/article/idUKN2552271120091125?rpc=401&feedType;=RSS&feedName;=asianCurrencyNews&rpc;=401 or
http://www.gata.org/node/8098 or http://www.gata.org/node/8091
-Gold Krugerrands Run Out. Read more here-http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId;=8590
-Fleets of armored trucks piled with gold bars and coins have been streaming out of midtown Manhattan in one unexpected consequence of the gold craze. Amid gold’s rise it has gained 32% this year and reached a record on Monday investors have been loading up on bullion and coins. One big problem now is where to store it. The solution from HSBC, owner of one of the biggest vaults in the U.S.: somewhere else.
HSBC has told retail clients to remove their small holdings from its fortress beneath its tower on New York City’s Fifth Avenue. The bank has decided retail customers aren’t profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers.
An HSBC spokeswoman said the firm doesn’t comment on its vault due to “security concerns.” HSBC’s decision has created a logistical nightmare for both the investors and the security teams in charge of relocating the gold, silver and platinum to new vaults across the country. Many of those vaults are also feeling pressure from the surge in demand for space from clients that have stocked up on metal. Read more here-http://www.gata.org/node/8077
-Canadian Mint Says Police Report Shows Lost Gold Wasn’t Stolen. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aQVTwqF_8hbs or http://www.gata.org/node/8085 or http://www.gata.org/node/8069
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,300 the silver price would be $16.25
Gold to silver ratio at 70 to 1 with gold at $1,300 the silver price would be $18.57
Gold to silver ratio at 60 to 1 with gold at $1,300 the silver price would be $21.67
Gold to silver ratio at 50 to 1 with gold at $1,300 the silver price would be $26.00
Gold to silver ratio at 40 to 1 with gold at $1,300 the silver price would be $32.50
Gold to silver ratio at 30 to 1 with gold at $1,300 the silver price would be $43.33
Gold to silver ratio at 20 to 1 with gold at $1,300 the silver price would be $65.00
Gold to silver ratio at 15 to 1 with gold at $1,300 the silver price would be $86.67
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/8061
-Silver price soars on heavy demand, high hopes for gains. Read more here-http://www.usatoday.com/money/markets/2009-11-20-silver20_ST_N.htm
-Why Silver Will Outshine Stocks. Read more here-http://news.silverseek.com/SilverSeek/1259095068.php
-US Mint Silver Coin Sales: Eagles 7,000 Shy of 26 Million. Read more here-http://www.silvercoinstoday.com/us-mint-silver-coin-sales-eagles-7000-shy-of-26-million/101746/
-Silver and Gold as Currency. Read more here-http://news.silverseek.com/SilverSeek/1259129040.php
-Silver Goes Institutional. Read more here-http://seekingalpha.com/article/174513-silver-goes-institutional?source=feed
-S.Africa to launch platinum/silver product. Read more here-http://www.miningmx.com/news/platinum_group_metals/S.Africa-to-launch-platinum-silver-product.htm
-Fashion is turning away from gold jewellery; silver now looks far more exciting. Read more here-http://www.telegraph.co.uk/fashion/6645424/Fashion-is-turning-away-from-gold-jewellery-silver-suddenly-looks-far-more-exciting—Pret-a-rapporter.html
-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. 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. Read more here-http://www.321gold.com/editorials/davis/davis111609.html or http://news.silverseek.com/SilverSeek/1258382340.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. 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
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: The “Distressing” Gap Between New And Existing Home Sales. Monday morning’s existing home sales number showed that sales surged in October by a surprising 10.1%. But new home sales continue to remain quite weak. Today’s chart, showing the “distressing” gap between the two measures, comes courtesy of Calculated Risk, which explains:
The initial gap was caused by the flood of distressed sales. This kept existing home sales elevated, and depressed new home sales since builders couldn’t compete with the low prices of all the foreclosed properties.
The recent spike in existing home sales was due primarily to the first time homebuyer tax credit. But what matters for the economy and jobs is new home sales, and new home sales are still very low because of huge overhang of existing home inventory and rental properties. Read more here-http://www.businessinsider.com/chart-of-the-day-new-and-existing-home-sales-2009-11
-Chart of the week: We’re Still Generating Too Many Negative Equity Mortgages. In Washington, DC, the prevailing view these days is that unemployment is now the leading driver of mortgage defaults. This is one reason you can expect to see the next stage of the government’s attempt to rescue the housing market focus on saving jobs.
But a new study out of Amherst Securities indicates that negative equity is by far the best default predictor of defaults. If that view is correct, the fact that we are still producing mortgages that quickly slip into negative equity should be terrifying. And, in fact, much of the recovery in the housing market appears to be built on thinly capitalized mortgages subsidized by low loan-to-value FHA guaranteed mortgages and the home-buyer tax credit.
As the chart below shows, even home buyers who took out mortgages as late as this year are finding themselves with negative equity at historically high rates. We’ve come down from the worst levels of the housing boom but we are still well above healthy levels.
In short, we may be witnessing a policy mistake of stunning proportions as lawmakers and regulators focus on job creation while ignoring the still problematic loan-to-value ratios in the housing market. Read more here-http://www.businessinsider.com/chart-of-the-day-negative-equity-by-vintage-year-2009-11
-A successful man is one who can lay a firm foundation with the bricks others have thrown at him. David Brinkley
-I’ll try not to overstate how high I think the price will go in a true silver shortage, and how quickly it will occur, so that I don’t sound too extreme. But the price move will give new meaning to the words ‘high’ and ‘fast’. Ted Butler, November 16, 2009
-”Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man’s suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt, and today.” Peter A. Burshre
-Gold is a tad weaker Thursday but there is no mistaking the classic characteristics of a secular bull market it has risen consistently for the past nine years through periods of a weak and a strong U.S. dollar; phases of inflation and deflation fears; and it has rallied against all currencies, not just the formerly big U.S. dollar.
During this bull run in gold, production of global fiat currency has exploded by 130% while mined output of the yellow metal has declined fractionally. It’s about supply and demand. On the demand side, the folks with the deep pockets (otherwise known as central banks) and the ones who were largely responsible for driving the price down to the $250/oz a decade ago are the entities now driving the price to new heights.
Sri Lanka just bought 10 metric tons from the IMF yesterday following in the footsteps of India, Russia and Mauritius. Private demand, however, is waning India’s gold imports, as an example, is down 47% from year-ago levels (to about 18 tons). All that said, the chart patterns are so strong that gold could correct all the way down to $970/oz and it still wouldn’t break any critical technical level. David Rosenberg-Gluskin/Sheff
-Dubai Debt Delay Rattles Confidence in Gulf Borrowers. Dubai shook investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001.
The cost of protecting government notes from Abu Dhabi to Bahrain rose, extending the steepest increase since February as Dubai World, with $59 billion of liabilities, sought a “standstill” agreement from creditors. Its debt includes $3.52 billion of bonds due Dec. 14 from property unit Nakheel PJSC. Dubai credit-default swaps climbed 90 basis points to 530 after yesterday increasing the most since they began trading in January, CMA Datavision prices showed.
“There is nothing investors dislike more than this kind of event,” said Norval Loftus, the head of convertible bonds and Islamic debt at Matrix Group Ltd. in London, which manages $2.5 billion of assets including Dubai credits. “The worst-case scenario will of course be involuntary restructuring on the Nakheel security that brings into question the entire nature of the sovereign support for various borrowers in the region.”
Dubai World’s assets range from stakes in Las Vegas casino company MGM Mirage to London-traded bank Standard Chartered Plc and luxury retailer Barneys New York through asset-management firm Istithmar PJSC. The Dubai government’s attempt to reschedule debt triggered declines in stocks worldwide that had been rebounding from the worst financial crisis since the Great Depression. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aRsjlClzl500
-General Motors raised more than a few eyebrows last week by announcing plans to repay what it describes as $6.7 billion in outstanding loans to taxpayers. So provocative was this announcement that it all but overshadowed the real news of the day: G.M. had lost $1.2 billion since exiting bankruptcy in July, and its fourth-quarter results were expected to be worse.
Edward Niedermayer, the editor of The Web site The Truth About Cars, writes in an op-ed in The New York Times.
For starters, $6.7 billion doesn’t begin to scratch the surface of what G.M. actually owes us. Over the past 12 months, the Treasury has given it some $52 billion in the form of cash, loans and the purchase of that 60 percent of the company’s post-bankruptcy equity. And that number fails to take into account the two bailouts of G.M.’s former lending arm, GMAC, or the $3 billion spent on the “cash for clunkers” program, which doubtless kept the company from posting even deeper losses.
Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy. The rest of that account will be used to cover fourth-quarter losses (including $2.8 billion pledged for the rescue of G.M.’s major parts supplier, Delphi), repay loans from the Canadian government, and possibly prop up the automaker’s shaky European operations.
That escrow account is due to expire in June, at which time G.M. will repay what remains of the $6.7 billion from this week’s pledge and then pocket the estimated $5.6 billion remainder. Read more here-http://dealbook.blogs.nytimes.com/2009/11/23/gm-is-taking-taxpayers-for-a-ride/?scp=2&sq;=General%20Motors&st;=cse
-Obama Shatters Spending Record for First-Year Presidents. President Obama has shattered the budget record for first-year presidents spending nearly double what his predecessor did when he came into office and far exceeding the first-year tabs for any other U.S. president in history.
In fiscal 2009 the federal government spent $3.52 trillion $2.8 trillion in 2000 dollars, which sets a benchmark for comparison. That fiscal year covered the last three-and-a-half months of George W. Bush’s term and the first eight-and-a-half months of Obama’s.
That price tag came with a $1.4 trillion deficit, nearly $1 trillion more than last year. The overall budget was about a half-trillion more than Bush’s for 2008, his final full fiscal year in office. Read more here-http://www.foxnews.com/politics/2009/11/24/obama-shatters-spending-record-year-presidents/
-$4.8 trillion Interest on U.S. debt. Unless lawmakers make big changes, the interest Americans will have to pay to keep the country running over the next decade will reach unheard of levels. Read more here-http://money.cnn.com/2009/11/19/news/economy/debt_interest/index.htm
-Wave of Debt Payments Facing U.S. Government. The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan. The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.
The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.
Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.
The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.
“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.” Read more here-http://www.nytimes.com/2009/11/23/business/23rates.html
-U.S. Corporate Bond Sales Climb to Yearly Record. U.S. corporate bond sales reached an annual record of $1.171 trillion as borrowers took advantage of low interest rates and surging demand for debt securities following last year’s credit freeze.
Sales of investment-grade and high-yield, high-risk debt compare with the more than $1.167 trillion that companies sold in all of 2007, the previous record, according to data compiled by Bloomberg. Last year, the total was $874 billion. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aqE0w29Ls5Rw
-What If They Stop Buying U.S. Debt? Read more here-http://news.goldseek.com/GoldSeek/1258614480.php
-IMF warns second bailout would ‘threaten democracy’. The public will not bail out the financial services sector for a second time if another global crisis blows up in four or five years time, the managing-director of the International Monetary Fund warned this morning.
Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.
“Most advanced economies will not accept any more bailouts. The political reaction will be very strong, putting some democracies at risk,” he told delegates. Read more here-
http://business.timesonline.co.uk/tol/business/economics/article6928147.ece
-World Bank: Raising rates quickly may cause slump: report. Read more here-http://www.reuters.com/article/ousiv/idUSTRE5AO08N20091125
-Fed Officials Said Low Rates May Fuel Speculation, Minutes Say. Federal Reserve officials said record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to minutes of their meeting released today. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=a21OX2ZVK22I
-Dollar Slump Persisting as Top Analysts See No Bottom. The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Federal Reserve begins to raise interest rates, which policy makers say is an “extended period” away. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aUFExWDBKmew&pos;=3
-Strauss-Kahn Says Dollar Not at Risk, Asset Bubbles Pose Threat. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aq1tyLUQpWvI&pos;=10
-Russia to Buy Canadian Dollars, Mulls More Currencies. Russia’s central bank will add Canadian dollars to its reserves and may include more currencies as it seeks to reduce its dependence on the U.S dollar.
“Technical preparations for transactions in Canadian dollars are underway,” Sergei Shvetsov, the bank’s financial operations head, told lawmakers in Moscow today, in remarks confirmed by a Bank Rossii official. “Then there may be one, two other currencies and that’s it.”
Russia aims to diversify its reserves, increase gold holdings and promote regional currencies in trade and finance to reduce risks posed by the dollar’s dominance. President Dmitry Medvedev has blamed the global financial crisis on an over- reliance on the U.S. currency. Read more here-
http://www.bloomberg.com/apps/news?pid=20601082&sid;=at5XsdLU.68w
-U.S. Economy Expanded at a 2.8% Rate in Third Quarter. The U.S. economy expanded at a 2.8 percent annual rate in the third quarter, less than the government reported last month, reflecting a smaller gain in consumer spending and a bigger trade deficit.
The increase in gross domestic product from July through September reported today by the Commerce Department in Washington compares with a 3.5 percent gain previously estimated. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aVfai6l_4im0
-U.S. bankruptcies rise 33 percent in third quarter. U.S. bankruptcy filings rose 33 percent in the third quarter to the highest number since 2005, government data show, as rising unemployment and tight credit made it more difficult for consumers and businesses to stay current on their debts. Read more here-
http://www.reuters.com/article/GCA-Economy/idUSTRE5AO48A20091125
-Late Card Payments Rose in October, Moody’s Reports. U.S. credit-card delinquencies climbed last month to the highest level since February as five of the six biggest card lenders posted increases, Moody’s Investors Service said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=an1l4Yelc5lI
-The ‘Real’ Jobless Rate: 17.5% Of Workers Are Unemployed. As experts debate the potential speed of the US recovery, one figure looms large but is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.
According to the government’s broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994.
The number dwarfs the statistic most people pay attention to the U-3 rate which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983. Read more here-http://www.cnbc.com/id/34040009
-California Was Among States With Record Unemployment. California, Delaware, South Carolina and Florida registered record rates of unemployment in October as weakness in the labor market stretches from coast to coast and limits the economic recovery.
Joblessness rose in 29 U.S. states last month compared with 22 in September, the Labor Department said today in Washington. Michigan had the highest jobless rate at 15.1 percent, followed by Nevada at 13 percent and Rhode Island at 12.9 percent.
The national rate last month reached a 26-year high of 10.2 percent, weighing on consumer spending that accounts for about 70 percent of the economy. Federal Reserve Chairman Ben S. Bernanke said Nov. 17 that joblessness “likely will decline only slowly,” a reason policy makers will keep interest rates near zero to ensure growth is sustained. Read more here-
http://www.bloomberg.com/apps/news?pid=20601068&sid;=aQsHAD0w1egE
-World oil demand growth to outpace supply in 2010: poll. Read more here-http://www.reuters.com/article/ousiv/idUSTRE5AN26920091124
-Commodities to Get Record $60 Billion, Barclays Says. Commodities will likely attract a record $60 billion this year as investors seek to diversify their assets, Barclays Capital said.
Inflows so far this year are almost $55 billion, already more than the previous full-year record of $51 billion set in 2006, the bank said in a report. Total commodity assets under management will probably expand to $230 billion to $240 billion by the end of the year, Barclays said.
“Sharp falls in commodity prices earlier in the year created opportunities for long-term exposure, providing an opportunity for investors to act on their interest in commodities as a diversification tool,” analysts including London-based Gayle Berry and Suki Cooper said in the report. Read more here-
http://www.bloomberg.com/apps/news?pid=20601082&sid;=a5pObGmh0Ewk
-Roubini Sees Asset-Bubble as Money Chases Commodities. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=agzqkJ2EQR3M&pos;=4
-With a large majority of third-quarter earnings in the books (87% of S&P; 500 companies have reported for Q3 2009), today’s chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P; 500 earnings.
Today’s chart illustrates how earnings declined over 92% from its Q3 2007 peak to its Q3 2009 trough, which makes it easily the largest decline on record (the data goes back to 1936). On the positive side, S&P; 500 earnings bottomed and are moving up sharply. Read more here-http://www.chartoftheday.com/20091120.htm?T
-Iran’s central bank chief said on Monday that the country has gained five billion dollars by replacing the US dollar with the euro in its currency basket, state-owned English language Press TV reported. “Iran has considerably reduced the total of US dollars in its currency basket,” Mahmoud Bahmani said at a bankers’ seminar in Tehran.
Since October 2007, Iran has received 85 percent of its oil revenues in currencies other than the US dollar, the channel reported, adding it is seeking a substitute for the dollar for the remaining 15 percent. The Iranian government began preparing the ground for the dollar’s replacement by the euro and other foreign exchanges in 2005, it said.
The channel said the constant slide of the dollar coupled with the persisting economic crisis in the US has forced many countries to drop the currency in favour of a more stable and valuable one. Read more here-http://www.google.com/hostednews/afp/article/ALeqM5hZqxQv30jwoiPVpxQ-mQEncafeRA
-Scientist Repeats Swine Flu Lab-Escape Claim in Published Study. Adrian Gibbs, the virologist who said in May that swine flu may have escaped from a laboratory, published his findings today, renewing discussion about the origins of the pandemic virus.
The new H1N1 strain, which was discovered in Mexico and the U.S. in April, may be the product of three strains from three continents that swapped genes in a lab or a vaccine-making plant, Gibbs, and fellow Australian scientists wrote in Virology Journal. The authors analyzed the genetic makeup of the virus and found its origin could be more simply explained by human involvement than a coincidence of nature. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid;=ajw2AS.d1wK8
-Norway Flu Strain May Make Disease Worse; Wales Mutation Seen. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aEhvd7R2HL80
-China expert warns of pandemic flu mutation. Read more here-http://www.reuters.com/article/healthNews/idUSTRE5AO16220091125
-Iran Testing Air Defense System for Nuclear Plants. Iran is testing an air defense system in the country’s largest military exercises to assess the ability to protect its nuclear plants, the government said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aKjxQGa9jiG8 or
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/21/AR2009112100891_pf.html
-Secret Service Probes Gate Crashers at White House State Dinner. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a4RXGzkUPqPI&pos;=9
-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html
-Pink Diamond, Bordeaux Wine Boost HK$1 Billion Hong Kong Sale. A ring with a pink diamond the size of a chickpea will be the smallest and most-expensive item offered at a Hong Kong auction of paintings, antiques and gems that may tally HK$1 billion ($129 million).
The 5-carat, so-called fancy-vivid stone set by London- based jeweler Graff Diamonds and given the second-highest rating of potentially flawless is estimated to make as much as HK$55 million, said Christie’s International. The 2,000-lot, five-day sale starts tomorrow at the harbor-front convention center, with the diamond selling on Dec. 1. Read more here-
http://www.bloomberg.com/apps/news?pid=20601088&sid;=aCuG1manSgHs
-Who Would Buy An $8 Million Diamond? Christie’s is betting the market for high-end goods in Asia hasn’t lost its luster. On the block during upcoming sales in Hong Kong is a rare pink diamond the auction house estimates could fetch up to $8 million. “Vivid Pink,” as it’s called, is a five-carat stone flanked by two white diamonds and set in a ring by elite jeweler Graff. It hails from a private collection.
The glamorous rock toured Singapore, Bangkok, Geneva and Taipei before returning to Hong Kong, where it will be auctioned off Dec. 1 at the Convention and Exhibition Center alongside 250 other gemstones and pieces of jewelry from the likes of Cartier and Van Cleef and Arpels. Altogether, the jewelry sale’s lots are estimated to be worth more than $33 million.
The brilliant pink stone earned top marks from the Gemological Institute of America, which rates diamonds. The gem is unique because of its particular hue–a rich bubblegum rather than a more common lighter rose. It is also valuable because of its saturation, the depth the color extends into the stone.
“Stones like this–they’re not just jewelry, they’re artwork,” says Alan Bronstein, a New York-based trader and dealer of rare colored diamonds. “The simplest possible mounting is the best way to make that diamond shine. You don’t want to embellish it with motifs and designs.”
Colored diamonds mined naturally are often pockmarked with flecks of other hues, like purple, orange or gray. But this one is blemish-free, boasting an even tone throughout. Only one in 100,000 diamonds is as special.
In Geneva last week, Sotheby’s sold a diamond of similar size and shape, but a lighter shade, for $1.4 million. “It is not even close to as rare,” Bronstein says. “If a blush or pale pink can bring $200,000 per carat, it is not a stretch of the imagination for the five-carat vivid to bring $1 million per carat.” The highest price paid at auction for a pink diamond was $7.4 million; that was in 1994 for a 19-carat, rectangular-cut stone auctioned in Geneva. Read more here-http://www.forbes.com/2009/11/25/christies-diamond-auction-lifestyle-collecting-vivid-pink_print.html
-Color me dazzled. Record auction prices for rare colored diamonds. “If you have money to invest, there is no safer haven than something rare,” says Laurence Graff, the London-born “King of Diamonds”. If this is sales talk, he is his own best customer. In December 2008, during some of the bleakest days of the credit crisis, Mr. Graff paid $24.3m for the 35.56-carat, 17th-century Wittelsbach blue diamond at Christie’s in London.
He set the auction record for any jewel. But in his opinion, “it was the bargain of the century. In my life, it is the rarest of them all; it is the supreme colored diamond.” Rarity seems to be the greatest single factor influencing today’s auction prices for superb coloured diamonds. The blue “Star of Josephine” sold for $1.35m per carat more than five times what the colourless Annenberg fetched. Prescient investors now turn their eyes to Hong Kong.
On December 1st Christie’s is offering “The Vivid Pink”, described by one expert as the “finest and largest” of its type ever to be auctioned. Mr. Graff bought the ten-carat rough-cut stone from De Beers. (He somewhat playfully describes it as the irresistible sweetener to a particularly large deal.) He had it cut into a five-carat gem and set as a ring. The American client to whom he sold this exceptional pink is now offering it at auction. “He will make a lot more than I did,” says the King of Diamonds, who plans to leave a bid. Read more here-
http://www.economist.com/opinion/PrinterFriendly.cfm?story_id=14944566
-Diamonds: An Investor’s Best Friend? “If you want to buy diamonds for investment purposes, they should be big and fancy (colorful),” says Holly Midwinter-Porter, a gemologist at U.K. jeweler Boodles.
“Red and green are the rarest, and unlike white, man-made diamonds, are finite as they are only found in one or two areas in the world.” She says returns on rare diamonds can enjoy double digit growth a year, and their portability makes them more appealing than gold or art to some investors. Read more here-http://online.wsj.com/article/SB125866936692256433.html
-Investors wanting exposure to gold or other precious metals have an array of options, whether it is buying the physical items or purchasing mining stocks, commodity indices or exchange-traded funds. With diamonds the opportunities have been far more limited. But that may be changing. Read more here-http://gata.org/node/8058
HALF OF BANK LOSSES ARE UNDISCLOSED-BANKING CRISIS NOT OVER
-International Monetary Fund Managing Director Dominique Strauss-Kahn said that about half of bank losses from the global financial crisis have yet to be revealed. “It is our view we are still in the situation where a lot of losses haven’t been disclosed,” Strauss-Kahn said during questions at the Confederation of British Industry’s conference in London today. “How much is a difficult assessment, but let’s say something which is close to half of it.”
Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery. “Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”
The IMF cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion in September, citing improvements in credit markets and initial signs of economic growth. The IMF said then that U.S. banks have recognized about 60 percent of their expected losses, compared with 40 percent in both the euro area and in the U.K. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=ay2MiTrFzQYI or http://www.reuters.com/article/ousivMolt/idUSTRE5AN4QD20091124
-FDIC announces 124th bank failure. State regulators shutter Commerce Bank of Southwest Florida. Closure will cost the FDIC $23.6 million. Read more here-
http://money.cnn.com/2009/11/20/news/economy/bank_failure/index.htm
-‘Problem’ Banks at 16-Year High in Third Quarter. U.S. “problem” lenders climbed to the most in 16 years and the Federal Deposit Insurance Corp.’s fund protecting customers against bank failures slipped into a deficit in the third quarter, the agency said.
The FDIC had 552 banks with $345.9 billion in assets on the confidential problem list as of Sept. 30, a 33 percent increase from 416 lenders with $299.8 billion in assets at the end of the second quarter, the agency said today. The insurance fund had a $8.2 billion deficit, its first negative balance since 1992.
“Today’s report shows that while bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance,” FDIC Chairman Sheila Bair said at a Washington news conference.
Regulators are closing banks at the fastest pace in 17 years, seizing 124 so far this year amid loan losses stemming from the collapse of the mortgage market in 2007. Fifty banks failed in the third quarter, double the full-year total of 25 that collapsed during 2008.
FDIC-insured banks reported net income of $2.8 billion in the third quarter compared with a $4.3 billion loss in the second quarter. “Earnings remain weak,” Bair said. “Eroding loan quality continues to have the greatest impact on industry earnings compared to a year ago.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a_Y3J5KD0Deg&pos;=4 or http://www.reuters.com/article/ousiv/idUSTRE5AN36P20091124
-Fed Said to Ask Stress-Tested Banks to Submit Plans on TARP. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aD00dAKNxIfo
-Most global banks are still unsafe, warns S&P.; Standard & Poor’s has given warning that nearly all of the world’s big banks lack sufficient capital to cover trading and investment exposure, risking further downgrades over the next 18 months unless they move swiftly to beef up their defences. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6638922/Most-global-banks-are-still-unsafe-warns-SandP.html
-Bank of England tells of secret £62bn loan to save RBS and HBOS. The Bank of England secretly lent £61.6bn to Royal Bank of Scotland and HBOS at the height of the financial crisis to prevent their immediate implosion, it said on Tuesday. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6646923/Bank-of-England-tells-of-secret-62bn-loan-to-save-RBS-and-HBOS.html
ECONOMY IS FORCING YOUNG ADULTS BACK HOME IN BIG NUMBERS
-For more young adults, there is no place like home for the holidays, and for the rest of the year, too. Ten percent of adults younger than 35 told the Pew Research Center that they had moved back in with their parents because of the recession.
They also blamed the economy for other lifestyle decisions. Twelve percent had gotten a roommate to share expenses. Fifteen percent said they had postponed getting married, and 14 percent said they had delayed having a baby.
In the Pew study, 13 percent of parents with grown children said one of their adult sons or daughters had moved back home in the past year. According to Pew, of all grown children who lived with their parents, 2 in 10 were full-time students, one-quarter were unemployed and about one-third said they had lived on their own before returning home.
According to the census, 56 percent of men 18 to 24 years old and 48 percent of women were either still under the same roof as their parents or had moved back home. A smaller share of 16-to-24-year-olds 46 percent is currently employed than at any time since the government began collecting that data in 1948.
Meanwhile, the portion of adults 18 to 29 who lived alone declined to 7.3 percent in 2009 from 7.9 percent in 2007, according to the Current Population Survey. A decline that big was recorded only twice before over three decades, in the early 1980s and the early 1990s during or after recessions. Read more here-
http://www.nytimes.com/2009/11/24/us/24boomerang.html?_r=1&pagewanted;=print
REAL ESTATE
-Option ARMs: Housing recovery killer? An explosion of foreclosures will result from option ARMs set to reset to higher payments. Option-ARMs: File under, “It sounded good at the time.” These exotic mortgages allowed homebuyers to come to closing with little cash and choose, monthly, how much to pay: interest and principal, interest only, or a minimum amount less than the interest due.
Of course, the last option is the one 93% of option-ARM buyers selected, according to a new report released this week by Standard & Poors. But eventually, everyone has to pay the piper.
Nearly all of the 350,000 option-ARM borrowers owe more than when they first bought their homes thanks to unpaid interest accumulating. And many loans written during the first big wave, which started in 2004, are getting ready for their five-year reset, when they become standard, amortizing loans. Additionally, some newer loans, where accumulated interest has pushed the loan-to-value ratio above 110% to 125%, will also reset.
That means borrowers are about to start paying very hefty prices for their homes. In one scenario outlined in the S&P; report, the payment on a $400,000 mortgage jumps from $1,287 to $2,593. Read more here-http://money.cnn.com/2009/11/24/real_estate/option_ARM_defaults/index.htm
-A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales. About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.” There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why. Read more here-http://www.usatoday.com/money/economy/housing/2009-11-19-shadow19_ST_N.htm
-The number of U.S. homes worth less than the debt owed on them reached almost 10.7 million, or 23 percent of all mortgaged properties, at the end of the third quarter, according to a report from First American CoreLogic. An additional 2.3 million mortgages are approaching “negative equity” as loan defaults mount nationwide, the Santa Ana, California-based real estate research company said today.
“We don’t expect prices to grow dramatically,” First American Chief Economist Mark Fleming said in a telephone interview from Washington. “It’ll be a problem for years. It reduces mobility and puts more mortgages at risk if and when you lose a job.”
Unemployment and declining property values have increased mortgage defaults during the past three years. Freddie Mac, the mortgage-finance company under government control, said today that defaults among its loans rose to a record 3.54 percent last month, while its portfolio of residential assets fell at an annualized rate of 21.6 percent. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=aV_BL.4Dmi_A or http://money.cnn.com/2009/11/24/real_estate/mortgages_underwater/index.htm
-The Case-Shiller Index pegs the peak in national home prices in the summer of 2006, followed by a 34-month, 32% slide in prices. With the help of an $8,000 tax credit, the housing decline appears to have stabilized that’s if you consider reliance on government subsidies a sign of stability.
Commercial property prices, on the other hand, didn’t peak until October of 2007. Prices have since fallen further and faster than residential, suffering a 34% haircut just in the last eleven months. But the foundation of commercial real estate is just beginning to crumble:
According to Deutsche Bank, $2 trillion in commercial mortgages will mature between now and 2013 in CMBS, banks and life insurance company portfolios, of which they estimate 64-72% ($400-$450 billion) of loans wouldn’t qualify to refinance were they to survive to maturity.
The total delinquency rate was 4.1% at the end of Q2 2009, a 120% increase from March 2009 and a 450% rise since October 2008.
Transaction volume is down from a peak of $133.2 billion in Q2 2007 to $4.8 billion Q2 2009.
According to a Wall Street Journal analysis of regulatory filings, more than 2,600 banks and thrifts have commercial real estate loan portfolios that exceed 300% of total risk-based capital, the capital used as a cushion to cover losses. Regulators consider the 300% level a red flag for the banks’ health. Read more here- http://caseyresearch.com/displayCcs.php?e=true
-Home Prices in 20 U.S. Cities Rise for Fourth Month. Home prices in 20 U.S. cities rose for a fourth straight month in September, pointing to improvement in real estate that’s helping the economy emerge from recession.
The S&P;/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year-over-year decline since the end of 2007. Read more here-
http://www.bloomberg.com/apps/news?pid=20603037&sid;=a_g_UIGaiSJE
-Home Prices Declined 3.8% in Third Quarter on Foreclosures. U.S. home prices fell 3.8 percent in the third quarter from a year earlier, the smallest decline since the first quarter of 2008, as a tax credit for first-time homebuyers boosted demand and slowed foreclosure-driven price drops.
Prices were little changed in September from August, according to a report today from the Federal Housing Finance Agency in Washington. Prices were 0.2 percent higher in the third quarter than in the second quarter.
Prices fell in all nine U.S. regions in the three months ended in September from a year earlier as banks seized real estate from delinquent borrowers. Even as the $8,000 tax credit fueled housing demand among first-time buyers, a 26-year high in unemployment boosted defaults by prime borrowers, according to a Nov. 19 report from the Mortgage Bankers Association in Washington.
“Any recovery in housing won’t be on firm ground until the job market comes back,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a3wkdsd.xKu4
-U.S. Existing Home Sales Rise 10%, More Than Forecast. Sales of existing U.S. homes increased more than forecast in October to the highest level since February 2007, spurred in part by a tax credit that lured first-time buyers.
Purchases rose 10.1 percent to a 6.1 million annual rate from a 5.54 million pace in September, the National Association of Realtors said today in Washington. The median sales price decreased 7.1 percent from October 2008, the smallest decline in more than a year. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=at8txtF7KVaA&pos;=2
-Sales of New Homes in U.S. Rise to Highest Since 2008. Purchases of new homes in the U.S. rebounded more than anticipated in October as buyers rushed to take advantage of a government tax credit before it expired.
Sales rose 6.2 percent to an annual pace of 430,000, the highest level since September 2008, the Commerce Department said today in Washington. The median sales price fell 0.5 percent and the number of unsold homes reached a four-decade low.
Rising demand shows the administration’s incentive for first-time buyers, which earlier this month was extended into next year and expanded to include current owners, may help housing recover from the worst slump since the Great Depression. Home values may remain under pressure as builders are forced to compete with mounting foreclosures as unemployment climbs. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aEd91lkIePdg&pos;=2
-U.S. Housing Recovery Delayed to 2010 as Market Wanes. A recovery in U.S. housing will have to wait at least until next year. The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.
“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s Economy.com, said in a telephone interview. “I think we’re going to see another leg down.” Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aqxm_UFsIdMI
-San Francisco Home Prices Rise, First Time Since ’07. San Francisco Bay Area home prices rose for the first time since November 2007 as fewer foreclosures were sold, MDA DataQuick said.
The median price for houses and condominiums increased 4 percent in October from a year earlier to $390,000, the San Diego-based research company said today in a statement. The number of homes sold rose 4.2 percent to 7,933 for the nine- county region. Prices gained 6.8 percent from September.
Sales of homes priced over $500,000 made up 36 percent of transactions, up from a low this year of 23 percent in January. Foreclosure sales were 32 percent of the total, the lowest since June 2008, according to MDA DataQuick. Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid;=awj4NJKfhfRY
-California Housing Market Turns Corner, Realtors Say. California, one-time hub of subprime mortgage lending and the nation’s leader in home foreclosures, has turned the corner toward a housing recovery, according to the state Association of Realtors.
Single-family home prices in California rose for the eighth consecutive month in October. The median cost of an existing, detached house gained 0.3 percent from the previous month to $297,500. Prices dropped about 3.2 percent from a year earlier, compared with annual declines of 7.3 percent in September and 17 percent in August.
“California has hit and passed the bottom of this real estate cycle,” Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based Realtors group, said in a statement today. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aYrBU.MJHwKU
-Toronto Office Vacancies May Top Boston, Manhattan. A surge in office construction in Toronto’s downtown may push the city’s vacancy rate higher than New York and Boston after developers added space during the first recession in 17 years.
The proportion of empty space in Toronto’s office market, lower than the 12 largest U.S. business districts last year, will more than triple by 2011 to 13.6 percent, according to Cushman & Wakefield Inc. Brookfield Properties Corp., Cadillac Fairview Corp. and Menkes Developments Ltd. each added a glass skyscraper to the downtown of Canada’s most populous city in the last five months.
“We’re going to have a little bumpy ride for the next couple of years,” said Paul Morse, Cushman & Wakefield’s senior managing director of office leasing in Toronto. “We’re not going to see too many buildings after this because the economics aren’t really there to support it.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aUFwsvo5.DVI
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The Goldbugg Report – December 1, 2009
Posted by Worldwide Precious Metals on Tuesday, December 1, 2009
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