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The Week in Review – May 28, 2010

May 28, 2010

The Week in Review

Another dramatic week comes to a close. The Dow spent most of the week heading downward, closing below 10,000 Wednesday before rebounding on the opening Thursday. Even though the stock market managed to close higher Thursday, it appears that it may take another triple digit loss today and is therefore on track to produce the worst May since 1962.

New applications for unemployment edged lower, but the job market is still failing to take off as much as analysts are hoping. Congress is still debating a bill that would extend jobless benefits to the unemployed. The current incarnation of the bill would add another $90 billion to the steadily ballooning deficit.

Consumer spending in April was the worst since September 2009 despite a gain in disposable income. Analysts, expecting a modest increase in spending, regrouped and predicted that the increase in disposable income may lead to higher spending in the second quarter.

The poor showing in consumer spending was also paralleled in the business sector. The US economy grew at a much more modest pace than expected in the first quarter due to cuts in spending by state and local governments and a cutback in business spending.

Greek labor unions are planning to strike in June to protest austerity measures and are hoping to get other workers across Europe to do the same. It may not be that hard for them to convince workers in the Eurozone to join in the protests; workers across Europe have been calling for such a move as Spain, Italy and Portugal plan and begin to implement their own austerity measures.

As furor over the ongoing oil disaster in the Gulf of Mexico continued, president Obama announced a 6 month slowdown on new drilling in the US. BP has finally admitted what everyone suspected all along, the flow of oil has most likely been up to as much as 25,000 barrels a day. The spill has now become the worst oil spill in US history and it looks like it will have far-reaching consequences for years. Oil prices have been tumbling since shortly after the accident, and the stocks of those companies involved in the oil industry have taken a severe beating. Crude did manage to rally back above $75 a barrel by Friday.

The Euro had another bumpy ride, but overall continued its downward trend against the US dollar and other currencies. The Japanese Yen has been taking the opposite track, climbing against the dollar in opposition to the Euro.

A new survey by the TABB Group showed that the traders on Wall Street themselves have lost confidence in the structure of the US equities markets since the “flash crash” episode.

Friday to Friday Close

	May. 21^th	May. 28st	Net Change
Gold	$1176.00	$1216.00	40.00 + 3.40%
Silver	$17.65	$18.41	0.76 + 4.31%
Platinum	$1511.00	$1511.00	(205.00) – 11.95%
Palladium	$526.00	$435.00	(91.00) – 17.30%

Here are your Short Term Support and Resistance Levels for the upcoming week.

	Gold	Silver
Support	1200/1170/1150	18.20/18.00/17.75
Resistance	1220/1240/1250	18.70/19.00/19.50

	Platinum	Palladium
Support	1540/1520/1500	450/425/400
Resistance	1575/1600/1650	475/500/550

Volatility should be expected to continue. As the Euro continues to spiral down towards parity with the US dollar, every comment out of the Eurozone seems to move the equities markets. More and more analysts are declaring that gold is headed higher as fiat currencies continue to devalue as the financial meltdown goes on. China managed to buoy up the Euro, at least temporarily, by declaring its support for the currency and stating that it was not looking for ways to divest its Euro holdings as everyone has been speculating. As the crisis in Europe continues, however, more and more investors appear to be fleeing the euro and many of them seem to be seeking safety in precious metals. Geo-political tensions continue to flair between North and South Korea, and the US is already involved, sending ships to do joint maneuvers with the South Korean navy as well as 24 stealth fighters to Japan and Guam. Predictably, the US Air Force declared that the deployment of those fighters was “already scheduled and is not a response to any specific situation in the region.” Ben Davies, CEO of Hinde Capital said: “Gold should be viewed not as a commodity, but as a cash supplement. There’s been such proliferation of currency, as a consequence gold is very undervalued.” Dennis Gartman, who has long been telling everyone that he is not a “gold bug” and was in fact advising investors to get out of their gold last week, has now declared that the “sell off” is over and that he believes gold will be going higher. Those of you who, as we mentioned in our May 21 memo, took advantage of the price dips brought on by the ongoing panic in the marketplace to add additional precious metals to your portfolio may well be pleased with that decision soon. On Friday, Fitch downgraded Spain’s credit rating to AA+ from AAA, which sent another wave of panicked selloffs through the Euro. Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – May 28, 2010
Posted by Worldwide Precious Metals on Friday, May 28, 2010

The Goldbugg Report – May 25, 2010

May 25, 2010

-Gold has been rising in all currencies, against bonds and against other commodities. All investors should own bullion in their portfolio. David Chapman

-Silver too has risen on average against all the currencies in double digit annual percentage increases, but with rather more volatility, as proof of this Turk points out the sharp fall silver experienced in 2008 and its subsequent strong recovery in 2009.

-”Silver has more uses than gold and is much more fundamentally bullish than gold”. However, gold has a safe haven appeal which silver does not have. Still, “silver is a highly undervalued commodity and whenever the valuation catches up with fundamentals, silver prices will zoom”. Karnani/Insignia Consultants

-Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region.

GOLD

-Watch World Wide Precious Metals power point presentation on investing in precious metals. Watch video here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be

-World Wide Precious Metals Live Metals Quotes. See quotes here-http://www.wwpmc.com/quotes.aspx

-Read Testimonial letters from World Wide Precious Metals clients. Read letters here-http://www.wwpmc.com/testimonials.html

-Follow Lucas Bugg from World Wide Precious Metals on Twitter. Follow Lucas here-http://twitter.com/TheGoldbugg

-Gold has been rising in all currencies, against bonds and against other commodities. All investors should own bullion in their portfolio. David Chapman-Read more here-

http://news.goldseek.com/UnionSecurities/1273852800.php

-The table below illustrates the total destruction of paper money against gold in the last 100 years and shows how many ounces of gold that $1,000 bought at various times. In 1910, $1,000 bought 40 oz of gold at $25 per oz. Today in 2010, $1,000 buys 0.80 oz of gold at $1,230 per oz. This is a massive decline of 98% in the value of the dollar measured in real terms in the last 100 years.

The next significant year is 1971 when Nixon abolished the convertibility of dollars to gold. It was this disastrous decision that opened the floodgates for the credit and money creation that we are experiencing currently.

The dollar is down 97% since then. But even if we take more recent years, the purchasing power of the dollar measured in gold has declined catastrophically. Since the 1999 gold low, the dollar has declined by 80% against gold and since 2002 by 76%. Read more here-http://matterhornassetmanagement.com/2010/05/18/alea-iacta-est/

-$1800-$2000 gold this year and $30 silver James Turk. With a prediction of a $1,800 to $2,000 gold price this year, and $8,000 by 2015, James Turk sticks to his earlier forecasts in presentation at London conference.

In the closing keynote on the first full day of the 2010 World Mining Investment Conference in London yesterday, James Turk, founder of Gold Money, opened by reaffirming his prediction made at the end of last year that gold could reach $8,000 an ounce by 2015, based on past patterns of surges in the gold price.

What may be even more encouraging for the general investor is that his forecast also suggests that the Dow Jones Index would rise to similar levels as the world finally pulls out of recession, with the gold price matching the Dow index number.

When asked at the end of his talk where he felt the gold price would be at the end of the current year, he reckoned around $1,800 to $2,000 and also predicted that the more volatile silver price would achieve a level of $30 this year.

Turk bases his forecasts very much on past performance but even as the prediction may seem extreme, to some, the sting in the tail is that he does not see these levels in the gold price, or Dow, as suggesting real increases in wealth.

Rather, such an increase would serve only as wealth preservation as the purchasing power of most currencies is devalued in a hyper-inflationary environment due to the huge volumes of fiat money being pumped into the market by governments in an attempt to stave off global recession. He affirmed that he felt it was folly for governments to think they could spend their way out of trouble.

Turk pointed out that over the past years gold has been rising at double digit percentage levels against all major currencies – or perhaps rather that all major currencies have been devaluing against gold which he feels represents the only real money.

Silver too has risen on average against all the currencies in double digit annual percentage increases, but with rather more volatility, as proof of this Turk points out the sharp fall silver experienced in 2008 and its subsequent strong recovery in 2009.

He calls gold the ‘canary in the monetary coal mine’ and he agrees with GATA that governments and Central Banks have been trying to limit gold price increases over the years, in the same way that they try to control currency fluctuations.

Turk illustrated his talk with charts and tables illustrating his key points and makes an impressive, but overall worrying, case for gold and silver given that despite the big increases he sees ahead, all he feels this will do is protect asset values, rather than increase them in real terms, which is really bad news for savers!

In other points during the presentation, Turk pointed out that there may be gains to be made in gold stocks as his charts show that the gold stock XAU index looks cheap, but cautions that gold mining stocks are not gold, but investments which brings both upside and downside risk into play in relation to the metal itself.

He also showed that over 60 years, the oil price which has risen sharply in all major currencies, has effectively been absolutely flat in terms of both gold and silver, apart from very minor short term fluctuations, as an indicator of the precious metals’ wealth preservation characteristics. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=105069&sn=Detail&pid=102055

-Gold still glitters. Here’s the deal on gold. When we had the post-Lehman collapse, gold fell from $900 to $720 an ounce but it still managed to outperform other commodities and rise in many other currencies, outside the U.S. dollar.

That post-Lehman collapse phase was a giant margin call where investors sold their winners, like precious metals, and on top that, there was insatiable appetite for dollars from the global banking system caught short of greenbacks. What is happening today is truly fascinating. Gold has broken out to the upside even as the U.S. dollar has done likewise on the back of a renewed flight-to-safety bid.

What this means, of course, is that gold has managed to hit new highs even as, (i) the U.S. dollar has risen, which means gold is breaking out against all major currencies; and, (ii) other industrial commodities, such as oil and copper, have slumped from their recent highs. So what this all means is that gold is no longer being considered as part of a resource complex that is outperforming the segment but is increasingly being viewed as a currency of its own.

Moreover, with the growth rate of fiat currencies globally being met with a skeptical eye by investors, especially now that we know that if the ECB, of all central banks, can engage in debt monetization (those clinging to the belief that this was modeled after the Bundesbank have been clearly duped), the one thing we do know about gold is that most of it is already above ground and that production peaked a decade ago.

In other words, investors have more faith in what the shape and direction of the supply curve for bullion looks like relative to individual country money supply growth. This is why deflation is good for gold the reflationary efforts provide a big boost. Even without the interventionist efforts to monetize the debts, as long as policy rates are near-zero, gold leasing rates will do likewise.

While FDR fixed the dollar price of gold in the 1930s, we know that bullion doubled in Sterling terms during that deflationary cycle. Gold is a hedge against instability of all kinds don’t think for a second that deflation does not engender instability whether it be financial, economic or political. To be sure, gold is also a hedge against inflation but that is going to come much, much later and will be the icing on the cake.

While I am concerned near-term that gold is overbought and could be ripe for a setback; however, unlike the equity market, bullion is in a secular bull market, which means dips, when they occur, are to be bought. Gold can trade down to $1,130 an ounce and none of the trendlines would be broken.

More to the point, secular bull markets usually end in parabolic blowoffs and we are nowhere near that point see the chart below for what long-term trough/peak moves across different asset classes looked like in the past and tell us that gold is now in a bubble.

Not a chance. And, as we have said in the past, if central banks were to ever be compelled to hold the same share of gold in reserves to back up their respective monetary aggregates, the gold price would rise to $3,000 an ounce.

Believe it or not, $3000 an ounce on gold may yet prove to be a conservative forecast. If the gold price to world GDP ratio were to ever scale up to the peak three decades ago, it would imply an ultimate peak of $5,300 an ounce. Even better if the relationship between gold and the M3 money measure where to revert to the 1990 high, gold would move to $5,700 an ounce.

A more cautious projection would merely put gold on the same footing as the CPI, and heading back to the previous peaks in this ratio would suggest $2,300 as the peak in gold only a double from here. Or perhaps the gold price-M1 ratio is one that should be considered and even here gold would go to $3,100 per ounce under the proviso that prior highs get re-established.

For more on this fun-with-figures analysis of how far gold can go, see Why We May See Gold Hit $5,000 on page B2 of the NYT. David Rosenberg-Read more here-http://www.zerohedge.com/article/david-rosenberg-part-2-gold-increasingly-being-viewed-currency-its-own

-Hedge Funds Bet Europe’s $1 Trillion Bailout Won’t Solve Crisis. Kyle Bass, who made $500 million in 2007 on the U.S. subprime collapse, is betting Europe’s debt crisis won’t be solved by the $1 trillion loan package the International Monetary Fund and European Union agreed on last week.

“The EU and the IMF effectively went all-in with a bad hand in the highest stakes game of financial poker ever played with the world,” wrote Bass, head of Dallas-based Hayman Advisors LP, in a letter to clients sent after the bailout was announced.

Bass bought gold last week and took other steps to position the fund for hyperinflation and a “competitive devaluation” by Europe, Japan and the U.S. that he is forecasting, according to the letter. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a6z32SoJF1RM&pos=3

-Gold to Hit $2,000? Robert McEwen, chairman of U.S. Gold, a gold exploration company, tells CNBC he expects the precious metal to hit $2,000. Watch video here-

http://www.cnbc.com/id/15840232?video=1496256570&play=1 and http://www.cnbc.com/id/37189836?__source=yahoo|headline|quote|text|&par=yahoo

-With Local Gold Inventories Depleted, Panicking German Dealers Stage Run On Krugerrands. Read more here-http://www.zerohedge.com/article/local-gold-inventories-depleted-panicking-german-dealers-stage-run-krugerrands

-China loves gold. Watch video here-http://www.youtube.com/watch?v=SbUvvfJakfI and http://www.youtube.com/watch?v=XCs6QJMoqI4

-Goodman’s Cohen Says Gold May Rise for `Several Decades’. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Goodman%27s%20Cohen%20Says%20Gold%20May%20Rise%20for%20%60Several%20Decades%27&clipSRC=mms://media2.bloomberg.com/cache/vd.g.m.uKpc4.asf

-Just how high could gold go? Read more here-http://www.moneyweek.com/blog/just-how-high-could-gold-go-00183.aspx

-Jim Cramer: Six Reasons to Buy Gold Right Now. Watch video here-http://www.cnbc.com//id/37192473

-John Paulson still owns gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=105127&sn=Detail&pid=102055

-Ron Paul is bullish on gold. Watch Part 1 here-http://www.youtube.com/watch?v=PnGI9s2xyo0 Part 2 here-http://www.youtube.com/watch?v=AEZfyPHP47c

-Central banks have lost their battle against gold, Sprott tells King World News. Listen here-http://www.gata.org/node/8655

-You Better Read This, Gold & Greece: Not What You Think. Read more here-http://www.321gold.com/editorials/gerbino/gerbino052010.html

-Doubts about gold ETFs broadcast today on two major networks. Read more here-http://www.gata.org/node/8649

-Rick Santelli:: “There’s not enough physical gold.” Watch video here-http://www.youtube.com/watch?v=b6d3Oy6YMCI

-Jeff Nielson: The great debate, Part I. Read more here-http://www.gata.org/node/8660 Part 2 here-http://www.gata.org/node/8662 and http://www.gata.org/node/8659

-NIA believes Meltup is the most important economic documentary ever produced in world history. The Second American Revolution has begun! Please share this documentary with all of your friends and family members immediately! Watch here-http://www.youtube.com/watch?v=eb1n1X0Oqdw

-Gold sales for Indian festival rise 11 per cent. Read more here-http://www.business24-7.ae/companies-markets/commodities/gold-sales-for-indian-festival-rise-11-per-cent-2010-05-19-1.245978

-Wealthy Store Gold, Art Inside Singapore’s Tax-Free ‘Fort Knox’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aTk6rDD7xmA8

-Gulf Glitz: Gold-Dispensing Machine. Abu Dhabi’s top hotel is upping the ante in the race for Gulf glitz by adding a gold-dispensing machine. The ATM-style kiosk in the Emirates Palace monitors the daily gold price and offers small bars up to 10 grams or coins with customised designs. Watch video here-http://news.sky.com/skynews/Home/video/Gulf-Glitz-Gold-Dispensing-Machine-Abu-Dhabis-Top-Hotel/Video/201005215630790?lid=VIDEO_08290_Gulf+Glitz%3A+Gold-Dispensing+Machine&lpos=World+News_3&videoCategory=World+News

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,400 the silver price would be $17.50

Gold to silver ratio at 70 to 1 with gold at $1,400 the silver price would be $20.00

Gold to silver ratio at 60 to 1 with gold at $1,400 the silver price would be $23.33

Gold to silver ratio at 50 to 1 with gold at $1,400 the silver price would be $28.00

Gold to silver ratio at 40 to 1 with gold at $1,400 the silver price would be $35.00

Gold to silver ratio at 30 to 1 with gold at $1,400 the silver price would be $46.67

Gold to silver ratio at 20 to 1 with gold at $1,400 the silver price would be $70.00

Gold to silver ratio at 15 to 1 with gold at $1,400 the silver price would be $93.33

-A new factor in the silver market to be considered is the Indian sub continents increasing appetite for silver. The price sensitive Indians are buying poor man’s gold as they realise it is cheaper than gold. This could potentially lead to a new source of very significant supply which contribute to higher prices and may even result in a floor being put under silver prices above $18 per ounce. Goldcore.com

-Gold’s ‘ugly sister’ gets a second look. Silver sparkles as gold plays fairy godmother. Investors are finally giving gold’s “ugly sister” a second look. Silver’s gains in recent months have significantly outpaced gold’s, with silver climbing around 30% since early February, compared with gold’s nearly 17% price gain.

And some analysts say silver hasn’t yet caught the attention it deserves. Investors “are not taking notice yet it looks like the world is far more focusing on gold,” said Gijsbert Groenewegen, a managing partner at Silver Arrow Capital Management.

That’s fair to say given that silver’s more than two-year high above $19 pales in comparison to gold’s highest-ever settlement price of more than $1,243 an ounce in New York for its most-active futures contract.

Groenewegen pointed out that the average gold-silver ratio is 52, but the ratio is currently around 63, “so silver has some catching up to do.” “While silver has outperformed gold in recent months, it has massively underperformed gold over the long term,” said Mark O’Byrne, a director at GoldCore, an international bullion dealer.

Gold’s nearly 50% above its nominal high in 1980 of $850, while silver remains at less than 60% of its 1980 high of around $50, he said. “Investors continue to view silver as gold’s ugly sister,” he said.

There has been no talk of pension funds, high net worth individuals, or large hedge funds investing in silver as of yet, O’Byrne said. “This will change in the coming months, and this is when silver is likely to really move up in price.”

For now, in the world of precious metals, gold remains the king. “Silver is ‘poor man’s gold’ and will ride on the coattails of gold, but gold is the true hedge against the demise of fiat currency,” said Mark Leibovit, chief market strategist for VRTrader.com.

Even so, it’s silver that’s poised to garner the attention in the months and years to come. “Silver will continue to follow gold moves in the short term and medium term but in the long term, silver will move on its own,” said Chintan Karnani, chief analyst at Insignia Consultants in New Delhi.

Silver’s “quality as money” is already starting to move into the picture as investment demand in the iShares Silver Trust exchange-traded fund (CONSOLIDATED:SLV) alone jumped 200 metric tons over the last seven days, said Julian Phillips, an editor at SilverForecaster.com.

As of Thursday, silver in the trust totaled 9,191.37 metric tons and the trust’s average one-year total returns, as of March 31, stands at 32.81%. “Silver’s price will be driven by physical demand, not by the futures market, so ETFs like the Silver Trust will be good indicators of that demand,” Phillips said.

Demand itself is certainly looking up. “The U.S. Mint and Canadian Mint continue to experience very high demand for silver eagles and silver maple leafs and premiums for these coins are beginning to move up again,” said O’Byrne.

And “even though silver production is rising, investment demand, alongside industrial demand, is growing quickly, eliminating what remains of lack of demand from photography,” Phillips said. He also pointed out that silver is consumed and not recovered from these sources.

So “until newly-mined silver grows in large volumes, we believe that silver demand will outpace production, thus pointing to a better future for silver than for gold,” said Phillips. Many analysts also agree that silver’s run is built to last. Phillips said it’s possible for silver to hit $29 “on this run alone.” There’s also potential feedstock for the rally on the horizon.

Prosecutors’ criminal investigation into J.P. Morgan Chase & Co. includes the company’s activities in the silver market, “where commentators have for years been accusing them of market manipulation,” said Phillips. J.P. Morgan has said that it hasn’t received any notice of a criminal probe.

“If these commentators are right, then J.P. Morgan has a massive short position which will have to be closed,” he said. “If that has to be done with physical silver, the silver price will leap to our target level if not higher and quickly.”

Against that backdrop, the upside for silver could “ultimately be to $100, though short-term I would be grateful to see it above its $22 2008 high,” said VRTrader.com’s Leibovit. Either way, “the waiting may be over and silver’s strength is likely to last for two or three years,” O’Byrne said.

But silver investors need to have patience because when silver prices fall, “it takes a few months to start a big and speedy bull run,” said Insignia Consultants’ Karnani, noting that whenever gold and silver prices fall together, silver has a tendency of falling more than gold.

“Silver has more uses than gold and is much more fundamentally bullish than gold,” he said. However, gold has a safe haven appeal which silver does not have, he said. Still, “silver is a highly undervalued commodity and whenever the valuation catches up with fundamentals, silver prices will zoom,” he said.

Karnani voiced confidence that silver will test $24 in 2010 and $30 in 2011. “For a long-term investor (3-4 years), silver is an attractive investment even at the current prices,” he said. Read more here-http://www.marketwatch.com/story/story/print?guid=14DE85B4-C99B-4E69-B5DC-9B4E5FFA7EF0

-Silver Price Projection: $1000 per Ounce This Decade. Read more here-http://www.shtfplan.com/precious-metals/silver-price-projection-1000-per-ounce-this-decade_05152010

-Silver About To Break $20 and Looking Better Than Gold. Read more here-http://news.silverseek.com/SilverSeek/1273936656.php

-Silver Investors Should Diversify, Too. Read more here-http://news.silverseek.com/SilverSeek/1274207186.php

-Sell in Early May and Lose On Average $1 per Ounce of Silver Each Year. Read more here-http://www.kitco.com/ind/Radomski/may142010.html

-Big commercial shorts cut silver positions, Butler tells King World News. Listen here-http://www.gata.org/node/8651

-Ted Butler: An impressive result. Read more here-http://www.gata.org/node/8647

-Gene Arensberg: Comex large commercials break ranks. Read more here-http://www.gata.org/node/8653

-Paper currencies ‘on last legs,’ Tocqueville’s Hathaway tells King World News. Listen here-http://www.gata.org/node/8656

-GGR: Large commercials backing off from shorting precious metals? Read more here-http://www.gata.org/node/8648

-CFTC whistleblower believes crash was attempted murder. Read more here-http://www.gata.org/node/8657

-Sears, Kmart to offer customers cash for their gold, silver jewellery. Read more here-http://www.financialpost.com/news-sectors/mining/story.html?id=3040110

-What may be America’s oldest silver dollar has become the world’s most expensive coin, with its owner saying it changed hands in a private transaction between coin collectors for nearly $8 million.

Steven L. Contursi, who has owned the mint-condition 1794 Liberty dollar for the past seven years, confirmed Thursday that he sold it to the Cardinal Collection Educational Foundation of Sunnyvale for $7.85 million.

The previous record price paid for a coin was $7.59 million for a U.S.-minted 1933 $20 gold piece, according to the American Numismatic Association. The U.S. began producing silver dollars in 1794, and this particular one remains in near-perfect condition 216 years later. Read more here-http://southflorida.sun-sentinel.com/news/custom/fringe/sns-ap-us-odd-pricey-dollar,0,2210306.story

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: Why The Gold Bull Market Is Just Getting Started. In his latest note, David Rosenberg makes the case that the bull run can continue in part by comparing it to other bull runs.

As you can see below, gold’s huge rally isn’t anything compared to what other markets have seen. If you think there’s a “bubble” now, you’re not even in the right ballpark, he argues.

His call is for $3,000 and argues that if gold were to reach its old “price to world GDP peak” it could go to $5300. Read more here-http://www.businessinsider.com/chart-of-the-day-putting-the-gold-rally-in-context-with-prior-secular-bull-markets-2010-5

Source: chartoftheday.com

-Chart of the week: The table below shows debt as a percentage of GDP for various OECD countries. The official debts (in red) are massive and unlikely to ever be repaid in real money. Total debts (grey bars) include unfunded liabilities such as pensions and health care. Spain has the lowest total debt to GDP of 250%.

Germany and the UK have around 400%, the US over 500% and Greece over 800% debt to GDP. These figures are absolutely astronomical and prove that most governments in the world will be totally incapable of repaying their debts or funding the pensions or medical care which they have committed to.

It doesn’t matter however much governments cut expenditure or raise taxes, all these countries are insolvent and nothing can save them. Read more here-http://matterhornassetmanagement.com/2010/05/18/alea-iacta-est/

-Chart of the week: Why Getting Out Of Debt Won’t Be So Easy This Time Around. Sovereign debt concerns are ripping apart the eurozone at the moment, but member states may be able to take inspiration from the previous success stories of the U.S. and UK, according to this chart from Niall Ferguson’s presentation on Sovereign debt.

Both the U.S. and UK were able to face up to their debt challenges and grow out of their debt crisis through the last century. But they also could take advantage of a period of global stability and high private and public growth.

Unless you envision a major global boom doubtful given demographic differences since then the only way out is austerity. Read more here-http://www.businessinsider.com/chart-of-the-day-uk-and-us-debt–2010-5

Source: chartoftheday.com

-Chart of the week: Why the depression is ongoing. There are classic signs indeed that the recession in the U.S. ended last summer output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged.

In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression, as the chart below attests that is the trendline for real household incomes, until the government comes in to top them off with handouts, subsidies and extended jobless benefits.

The share of U.S. personal income being derived from Uncle Sam’s generosity has risen above 18% for the first time ever. David Rosenberg-Gluskin/Sheff-Read more here-http://www.zerohedge.com/article/david-rosenberg-part-1-why-depression-ongoing

-Technicals run the short term, Fundamentals run the long term. Insurance (Gold) is not a day to day item. Jim Sinclair-Jsmineset.com

-Main Street is in the hands of a roulette wheel and it is not going to stop. The Western world is toast and there is no way out of the clutches of financiers that own Washington. China is the shining example of how to stop white collar crime make it a capital offense. Jim Sinclair-Jsmineset.com

-Richard Russell said, in a depression nobody really wins the winners are those who lose the least. I’m starting to think more of capital survival than capital gains, so when things do hit bottom, we’ll have the resources to buy great assets cheap and start accumulating a real fortune in a sound, sustainable recovery. Because there will be one. At some point. Doug Casey-Read more here-

http://news.goldseek.com/GoldSeek/1273817340.php and http://www.caseyresearch.com/editorial/3395?ppref=GLD178ED0510A

-The Dow is at the same level it was 10 years ago. View chart here-http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1273867200000&chddm=997050&chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0

-World markets are dysfunctional and stability doesn’t exist. Man set distortions and economic imbalances – a system that functions without regulation, derivatives and unbridled and unfettered speculation, surrounds us.

Leveraged speculation dominates the markets, particularly debt instruments. Unfortunately, this speculation is fostered by government and central banks perpetual willingness to bail out everyone in banking and finance just to keep the system afloat. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1274280672.php

-”China is going to blow up. The amount of currency the Chinese government has created to keep going is a potential time bomb. And they’re sitting on a potential US$2 trillion in worthless paper.” Doug Casey

-While I am concerned near-term that gold is overbought and could be ripe for a setback; however, unlike the equity market, bullion is in a secular bull market, which means dips, when they occur, are to be bought. David Rosenberg-Gluskin/Sheff

-Shiller P/E ratio pointing to a big correction. In the past 130 years, whenever the Graham/Dodd/Shiller normalized P/E ratio goes above 20.6x (it is 21x today), the market experiences a significant correction a correction of 31% on average over the next 16 months. It never fails. David Rosenberg-Gluskin/Sheff

-The S&P 500 is no higher today than it was on November 16. If you managed to get out at last month’s nearby high then God bless you. But through the interim peaks and valleys, the stock market has done nothing for six months (and mostly everyone still seems to believe we are in the throes of a new bull market!).

In Canada, the S&P/TSX index is actually practically unchanged since September 16 contemplate that for a second. This has been a meat grinder now for a good eight months north of the border.

You would have been better off just being long volatility, bonds and gold (a strategy, by the way, that has also worked for the past dozen years, since Alan Greenspan took the U.S. along the boom-bust path that typically follows periods of excessive policy ease and recurring financial bailouts). David Rosenberg-Gluskin/Sheff

-Stocks to Tumble Another 20%, Cash the Safest Place: Roubini. Read more here-http://www.cnbc.com/id/37259541

-U.S. Mutual Fund Investors Pull $14 Billion After Flash Crash. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=acD0zbECWu.s

-Martin Armstrong: The “Flash Crash” Was A Waterfall Event Like The One That Preceded The Fall Of Rome. Read more here-http://www.businessinsider.com/martin-armstrong-the-flash-crash-was-a-waterfall-event-like-the-one-that-preceeded-the-fall-of-rome-2010-5 and http://www.businessinsider.com/martin-armstrong-the-flash-crash-was-a-waterfall-event-like-the-one-that-preceeded-the-fall-of-rome-2010-5#this-is-what-a-market-waterfall-looks-like-1

-Big fiscal restraint coming. We had thought that 2011 was going to be a watershed year with the end of the Bush tax cuts and the onset of the Obama tax hikes draining at least two percentage points from GDP growth next year. But based on what a slate of cash-strapped State governments are about to do to close their huge fiscal gaps, we may not have to wait that long.

According to the USA Today, Arizona is on the precipice of hiking its sales rate from 5.6% to 6.6%; Kansas is set to raise its sales tax a full point too on July 1, to 6.3%; Alabama, the same move and a half dozen states as well. David Rosenberg-Gluskin/Sheff

-Scary Math from David Rosenberg-Gluskin/Sheff

1 in every 10 American homeowners missed a mortgage payment in Q1 (a record)

1 in 6 Americans are either unemployed or underemployed

Over 4 in 10 unemployed Americans have been out of work for at least six months.

1 in 4 Americans with a mortgage have negative equity in their homes.

1 in 10 Americans believe their income will rise in the next six months.

1 in 5 Americans see business conditions improving in the next six months.

1 in 50 Americans plan to buy a home in the next six months.

1 in 8 Americans believe that current government policy is actually helping the economy.

1 in 10 American small businesses have a job opening.

1 in 10 American’s credit card usage is being written off (a record).

There are 5 unemployed workers competing for every job opening (hence downward pressure on wage growth).

-CFO Thomas W. Schoewe, went on the record and said “more than ever, our customers are living paycheck to paycheck. They’re very concerned about their own personal finances.” David Rosenberg-Gluskin/Sheff

-Why Wal-Mart’s sales should have everyone worried. When Wal-Mart, an economic bellwether, notes that customers can’t afford the gas to get to the stores and that they’re increasingly using food stamps when they get there, things are bad. Read more here-http://money.cnn.com/2010/05/20/news/economy/consumer_retail_walmart.fortune/index.htm

-Why state pension funds may need a $1 trillion bailout. Read more here-http://money.cnn.com/2010/05/20/news/economy/state_pension_fund_crisis/index.htm

-Shockingly, Arnold Schwarzenegger Compares California To Greece, Ireland, And Spain. Read more here-http://www.businessinsider.com/arnold-schwarzenegger-compares-california-to-greece-2010-5

-Calif pension fund asks state for additional $600M. California pension fund, facing large losses, tells struggling state it needs an extra $600M. Read more here-http://finance.yahoo.com/news/Calif-pension-fund-asks-state-apf-4082852351.html?x=0&sec=topStories&pos=3&asset=e82f9073363b73a971493bb04ecdda60&ccode=mp

-Gates’s Dad Says Rich ‘Aren’t Paying Enough’ in Taxes. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a4YNFBDAXnKI

-Companies Dodge $60 Billion in Taxes Even Tea Party Condemns. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a7td7E8_4EeI

-Morgan Stanley’s Doomed Baldwin CDOs Thwarted ‘Natural Process’. In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanley created a cluster of investments doomed to fail even if default rates stayed low then bet against its concoction. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=ayj.MPUrLLE8

-Conspiracy of Banks Rigging States Came With Crash. A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water and sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=axH24KWxjVDE

-College Grads Flood U.S. Labor Market With Diminished Prospects. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a8f9A4GYLECE

-Pimco’s Gross Raises $1.6 Million for Doctor Fund in Stamp Sale. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ardc3JO_PEBI

-Mobile Phones, Cancer Not Firmly Linked in Study. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ai4bnSIkWHFg

-Apple’s iPhone replaces BlackBerry for some bankers. Read more here-http://www.reuters.com/article/idUSTRE64G0SI20100517

-Google rolls out ‘the future of television’. Read more here-http://scitech.blogs.cnn.com/2010/05/20/google-rolls-out-the-future-of-television/?hpt=T2

-Found: genes that let you live to 100. Read more here-http://www.timesonline.co.uk/tol/news/science/biology_evolution/article7127753.ece

-Research on Light Brightens Outlook for Sleep Disorder Therapy. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid=aCQNEQsMgoow and http://www.cnn.com/2010/TECH/05/13/sleep.gadgets.ipad/index.html?hpt=C1

-Dads Get Postpartum Depression Just Like Moms, Study Finds. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aTmIqo2sdLks

-Movie depicts seamy life of Facebook boss. Read more here-http://www.timesonline.co.uk/tol/news/uk/article7127721.ece

-Greed is going to be good at the box office! Wall Street: Money Never Sleeps wows at Cannes. Read more here-http://www.dailymail.co.uk/tvshowbiz/reviews/article-1278374/Cannes-2010-Wall-Street-Money-Never-Sleeps-review.html and http://www.bloomberg.com/apps/news?pid=20601088&sid=az5ZlVRflXEE

WWW.RARECOLOREDDIAMONDS.COM

-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html

-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html and http://www.b-tv.com/features/watch-now.html?id=326

-The Sciens Coloured Diamond Fund formed this month. A London hedge fund that invests in coloured diamonds has formed a joint venture with U.S. giant Sciens Capital Management and aims to tap into China’s potentially huge luxury market.

Sciens Capital is one of the largest U.S. alternative hedge funds those that invest in assets other than stocks and bonds and it has more than $6 billion under management. It bought the hedge fund business of Swiss-based Partners Group earlier this year.

“For us, a small fund, to attract institutional investors, we looked to Sciens Capital to help create a strong platform for us to develop and grow,” Philip Baldwin, managing director of the newly formed Sciens Coloured Diamond Fund, told Reuters in an interview.

Its first target will be to have $25 million under management and to grow to $150 million, he said. Baldwin and co-managing director Mahyar Makhzani, who previously worked for jewellery house Bulgari, set up their Codiam Fund, which has now become the new venture, four days before the collapse of Lehman Brothers in 2008.

Makhzani and Baldwin expect diamonds to be used as a hedge against potential inflation, seeing an opportunity from the depreciation of the euro due to Greece’s sovereign debt crisis. He said there was liquidity in the market that was “always looking for alternatives, something which is not traditional, to invest to hedge against the inflation,” Makhzani said.

The fund invests in physical diamonds, of more than one carat, in colours such as red, purple, green, pink, blue, orange and yellow, which are sourced through the Kimberley Process to certify the stones have not come from conflict zones.

It uses short term arbitrage trading and buy-and-hold strategies for long term appreciation. Another strategy is to improve the value of stones by such means as finding a rare matching pair in the same colour, size and shape. The stones are eventually sold to buyers, such as jewellers and individual collectors. The fund’s sales channels include luxury goods retailer Asprey.

There is no price index or exchange for coloured diamond and each stone carries a unique price depending on shade, cut and carat size. The most transparent prices emerge at auctions. The fund takes advantage of arbitrage opportunities that arise from the opacity and inefficiency in pricing.

White diamond supply is relatively ample and many end up in engagement rings in the mass market. About 40 percent of rough diamond supply is controlled by the largest producer, De Beers. Rarity makes coloured diamonds distinct from white diamonds and they often have a big price tag.

The most expensive stone Makhzani and Baldwin have sold was a $3.4 million green diamond. “We cannot be specific about the carat or the client but it is where our business is coming from. Everybody today talks about the Chinese market. The Chinese market is growing,” Makhzani said.

The United States, however, remains the largest jewellery market in the world. The fund’s market will include Europe, the Middle East, Russia and other areas as coloured diamonds have global value, Makhzani and Baldwin said. Read more here-http://www.forexyard.com/en/news/London-funds-join-in-coloured-diamond-venture-2010-05-19T163809Z-INTERVIEW-US

-Mining Profit Tax ‘Contagion’ Set to Spread From Australia. Australia’s planned 40 percent tax on mining profits has set a benchmark for other countries weighing higher levies, reducing earnings forecasts for BHP Billiton Ltd. and Rio Tinto Group and the attraction of mining stocks.

“It could create what the miners are now describing at a global level as a type of tax contagion,” said Tom Price, commodities analyst with UBS AG in Sydney, in an interview. The Australian tax plan is “global financial markets suicide,” according to Charlie Aitken, the executive director of Southern Cross Equities Ltd.

Mining companies’ earnings may be cut by almost a third when the tax starts in 2012, Moody’s Investors Services said this week. The tax would be broadly credit negative for the sector and raise uncertainty for some companies over the short to-medium term, Moody’s said this month. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEVmLz1wyaGw

RICHARD RUSSELL-STOCK MARKET AT RISK OF A MAJOR CRASH

-‘Major Crash’ Likely If Stocks Break May 7 Lows, Russell Says. Investors should sell U.S. stocks because the market is at risk of a “major crash,” Richard Russell, editor of the Dow Theory Letters newsletter, said in a note to subscribers today.

The decline would follow should the Dow Jones Industrial Average and Dow Jones Transportation Average fall below their May 7 levels, he said. “If I read the stock market correctly, it’s telling me that there is a surprise ahead,” Russell wrote. “And that surprise will be a reversal to the downside for the economy, plus a collection of other troubles ahead.”

The market started showing signs of deterioration in early April, including a shrinking number of stocks reaching 52-week highs and falling stocks outnumbering rising ones, he said. Russell, 85, has published Dow Theory Letters every three weeks since 1958 and posts daily market commentaries on his website.

Dow Theory, which stems from observations made by Wall Street Journal founder Charles Dow during the late 1800s, holds that moves by the transportation average must be “confirmed” by the industrial measure, and vice versa, to be sustained.

The Dow Jones Industrial Average fell 6.9 percent during the four days that ended May 7, sinking to 10,380.43, the lowest level since Feb. 26. The transportation gauge closed at 4,298.12, down 11 percent in four days. Downgrades of Greece, Spain and Portugal helped trigger the decline as the prospect of a sovereign default in Europe undermined investor confidence.

“If the two averages violate their May 7 lows, I see a major crash as the outcome,” Russell wrote. With the exception of gold companies, Russell advised readers to “get out of stocks now, and I don’t give a damn whether you have paper losses or paper profits.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aQgsgpaKhdJ0

-Dow Theorist Richard Russell: Sell Everything, You Won’t Recognize America By The End Of The Year. Read more here-http://www.businessinsider.com/dow-theorist-richard-russell-sell-everything-liquid-you-wont-recognize-america-by-the-end-of-the-year-2010-5 and http://www.321gold.com/editorials/russell/russell051810.html

U.S. DEFICIT-DEBT CRISIS

-Ferguson: Debt Has Taken Down Empires Before, There Is No Reason Why It Won’t Happen Again. Read more here-http://www.businessinsider.com/niall-ferguson-empire-2010-5

-Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woes. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a0.gpCNp2z8w

-US faces one of biggest budget crunches in world IMF. Read more here-http://blogs.telegraph.co.uk/finance/edmundconway/100005702/us-faces-one-of-biggest-budget-crunches-in-western-world-imf/

-IMF Says Rising Public Debt Risk ‘Cannot Be Ignored’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a89PYcKILsM8

-US faces inflation or default. There are only two solutions to the sovereign debt crisis raise taxes or cut spending but the political gridlock may prevent either from happening. Read more here-

http://gulfnews.com/business/opinion/us-faces-inflation-or-default-1.622397

-Roubini Says U.S. May Face Bond ‘Vigilantes’ Within Three Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aXv.FAdyLJDs

-The second debt storm. Who will bail out the countries that bailed out the world’s corporations? Read more here-http://www.marketwatch.com/story/story/print?guid=9DB111D2-956A-4690-878C-23198DC08634

PROBLEM BANK LIST JUMPS TO 775-FOUR MORE U.S. BANKS FAIL 72 FOR THE YEAR

-The government’s list of troubled banks climbed to its highest level since 1992 in the first quarter, although the pace of growth moderated, according to a government report published Thursday.

The numbers, published as part of a broader survey on the nation’s banking system by the Federal Deposit Insurance Corporation, revealed that the number of banks at risk of failing climbed to 775 during the first quarter. Read more here-http://money.cnn.com/2010/05/20/news/companies/fdic_list/index.htm

-Regulators on Friday shut down Midwest Bank and Trust Company in Elmwood Park, Ill., as well as three smaller banks in Georgia, Michigan and Missouri to bring the number of U.S. bank failures this year to 72. Read more here-http://www.google.com/hostednews/ap/article/ALeqM5gg9RS-ZvzlfzrcnujKaEDMXrYyYgD9FMUC0G0

-Midwest Banc’s Lender in Illinois Shut After Taking TARP Funds. Midwest Banc Holdings Inc., recipient of $84.8 million in bailout funds from the Troubled Asset Relief Program, had its Illinois lender seized by regulators as the count of failed U.S. banks this year rose to 72.

Midwest Bank and Trust, with $3.17 billion in assets and 23 retail branches, was closed yesterday by a state regulator, according to a statement on the Federal Deposit Insurance Corp. website. Firstmerit Bank of Akron, Ohio, assumed all the $2.42 billion in deposits. The U.S. Treasury Department’s stake is made up of convertible preferred shares, Midwest said in a statement on March 2.

Three other banks were seized yesterday, in Georgia, Michigan and Missouri. The closings cost the FDIC’s deposit- insurance fund a total of $301.7 million, the agency said. U.S. banks are collapsing amid losses on residential and commercial real estate loans, and the FDIC’s list of “problem” lenders is the longest since 1992, at 702.

FDIC Chairman Sheila Bair has said she expects failures to slow, yet still exceed last year’s total of 140. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=arbGcjwghr20

EUROPE IN CRISIS

-Trichet: economy in deepest crisis since WWII. The President of the European Central Bank was quoted Saturday as saying that he still sees Europe’s economy in its deepest crisis since World War II, or even World War I. Read more here-http://finance.yahoo.com/news/Trichet-economy-in-deepest-apf-220968396.html?x=0&sec=topStories&pos=3&asset=&ccode

-Behind the drama in Europe lies a global crisis. The euro is under threat along with our entire free-market system, warns Edmund Conway. Read more here-http://www.telegraph.co.uk/finance/comment/edmundconway/7742164/Behind-the-drama-in-Europe-lies-a-global-crisis.html

-Sovereign Crisis Spurs ‘Lehman II’ Concern in Europe. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a61zOhEiesmk

-Greek Crisis Is ‘Tip of Iceberg’ in Euro Region, Roubini Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aC7W4JwWdbkM&pos=4

-Greece Considering Legal Action Against U.S. Banks for Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxF1YfeViEc

-‘Mummy’ Merkel battered as Germans lose faith in EU. After bailing out Greece and now the euro, Germany is fed up with being Europe’s paymaster. Read more here-http://www.timesonline.co.uk/tol/news/world/europe/article7127621.ece

-Euro rescue package ‘just buys time’: Merkel. Read more here-http://www.breitbart.com/article.php?id=CNG.cdc149211d17e9292605abc47c6a574f.721&show_article=1

-German Finance Minister: Markets Out of Control. Read more here-http://www.cnbc.com/id/37250960

-German Households Are More Indebted Than Greeks: Chart of Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=awnKMEx2eVqE

-‘There’s No Money Left,’ U.K. Minister Learns. Arriving for work at the U.K. Treasury last week, the incoming chief secretary, David Laws, found a note from his predecessor, Liam Byrne, offering advice on the job. “Dear Chief Secretary, I’m afraid to tell you there’s no money left,” Laws cited it as saying.

“Which was honest,” Laws, whose position is the No. 2 in the Treasury after the chancellor of the exchequer, told a press conference in London today. “But slightly less than I was expecting.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1cANRtpiiHw

GOLDMAN SACHS HANDS CLIENTS LOSSES

-Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday.

Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.

The struggles for analysts at Goldman Sachs, which is fighting a fraud lawsuit from U.S. regulators who accuse the company of misleading investors in a mortgage-linked security, show the difficulty of predicting market movements as widening budget deficits, a fragile global economic recovery and tighter financial regulations increase volatility.

Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aF5tV7uvY0FU&pos=4

REAL ESTATE

-One in 7 US homeowners paying late or in foreclosure. Read more here-http://www.reuters.com/article/idUSN1923337220100519?source=patrick.net

-Mortgage Foreclosures Hit Record as Job Losses Strain Budgets. A record share of U.S. mortgages were in foreclosure in the first quarter as job losses caused homebuyers to fall behind on monthly payments, thwarting government efforts to stem property seizures.

The inventory of homes in foreclosure rose to 4.63 percent from 4.58 percent in the fourth quarter, the Mortgage Bankers Association said in a report today. The combined share of foreclosures and mortgage delinquencies was 14 percent, or about one in every seven U.S. mortgages.

Job losses have strained budgets, making it difficult for households to pay monthly bills, said Jay Brinkmann, the Washington-based trade group’s chief economist. U.S. unemployment in the second half of 2009 when people now in foreclosure would have first fallen behind on their payments reached the highest levels since 1983, according to the Bureau of Labor Statistics.

The unemployment rate declined to 9.7 percent in the first quarter of this year from 10 percent in the last three months of 2009. “The unemployment rate is the major factor driving the numbers,” Brinkmann said today in an interview. “We’re seeing the states with the biggest unemployment problem, like Ohio, Illinois and Michigan, showing the biggest increases.”

Ten percent of U.S. mortgage holders had payments 30 days or more overdue, on a seasonally adjusted basis, up from 9.47 percent in the previous quarter, Brinkmann said. On a non- adjusted basis, the rate fell to 9.38 percent from 10 percent, possibly an early sign of improvement as job losses abated, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahBIgAgVMwdg&pos=6 and http://money.cnn.com/2010/05/19/real_estate/quarterly_delinquency_report/index.htm

-”Strategic defaults” are on the rise as more borrowers who are underwater on their home loans decide it’s not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.

Strategic defaults are when borrowers who owe more on their homes than they’re currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic

In other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans. The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.

Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

For one, there’s a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information.

The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan. “If you know someone who has defaulted strategically, you’re more likely to declare you’re willing to do it,” said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago’s Booth School of Business.

In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets “where strategic default becomes the norm, versus the exception,” Zingales said. But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.

“If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future,” said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. “The lenders would have to build this into their risk models with either larger down payments or higher interest rates.” Read more here-

http://www.marketwatch.com/story/story/print?guid=7A6F64F7-7350-46A8-8C61-19135A514CF4&source=patrick.net

-Detroit Shrinks Itself, Historic Homes and All. Wrecking crews are preparing to tear down a landmark 5,000-square-foot house in the posh neighborhood of Palmer Woods in the coming weeks, a sign that Detroit is finally getting serious about razing thousands of vacant and abandoned structures across the city.

In leveling 1860 Balmoral Drive, the boyhood home of one-time presidential candidate and former Massachusetts Gov. Mitt Romney, Detroit is losing a small piece of its history. But the project is part of a demolition effort that is just now gaining momentum and could help define the city’s future.

Detroit is finally chipping away at a glut of abandoned homes that has been piling up for decades, and intends to take advantage of warm weather and new federal funding to demolish some 3,000 buildings by the end of September. Read more here-http://online.wsj.com/article/SB10001424052748703950804575242433435338728.html?mod=rss_US_News

-Why The ‘Second Housing Boom’ Is Nothing But Huckster Hype. Read more here-http://www.businessinsider.com/the-second-housing-boom-is-nothing-but-huckster-hype-2010-5?source=patrick.net

-Building Is Booming in a City of Empty Houses. In a plastic tent under a glorious desert sky, Richard Lee preached the gospel of the second chance. The chance to make money on the next housing boom “is like it’s never been,” Mr. Lee, a real estate promoter, assured a crowd of agents, investors and bankers. “We’re going to come back like you’ve never seen us before.”

Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.

Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more. Las Vegas is trying to recover by building what it does not need. It is an unlikely pattern being repeated in many of the areas where the housing crash was most severe. Read more here-http://www.nytimes.com/2010/05/16/business/16builder.html?hp=&pagewanted=print

-China Home Sales Down 50% In A Month. Read more here-http://www.zerohedge.com/article/guest-post-china-home-sales-down-50-month

-China’s property moves leave buyers in limbo. Read more here-http://www.breitbart.com/article.php?id=CNG.a29ca7c2ce6d834357d52147d21f41ee.2a1&show_article=1

GEOPOLITICAL NEWS

-US Begins Massive Military Build Up Around Iran, Sending Up To 4 New Carrier Groups In Region. Read more here-http://www.zerohedge.com/article/us-begins-massive-military-build-around-iran-sending-4-new-carrier-groups-region

-Clinton Says UN Powers Agree on Iran Sanctions Draft. Secretary of State Hillary Clinton said Russia, China, the U.S. and the other permanent members of the United Nations Security Council have reached a draft accord on sanctions designed to pressure Iran over its nuclear program.

The measure would bolster an arms embargo, enhance authority to seize Iranian cargo suspected of ties to nuclear or missile programs, restrict financial transactions and impose travel bans and asset freezes on Iran’s Revolutionary Guard Corps, said two UN diplomats who asked not to be identified. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYSKsbHfA06o&pos=8

-Iran says can destroy Israel in week. Ahmadinejad’s chief of staff says if Israel attacks, ‘Zionists will have no longer than week to live.’ Read more here-http://www.ynetnews.com/articles/0,7340,L-3891781,00.html

-Israel plays wargame assuming Iran has nuclear bomb. Read more here-http://www.alertnet.org/thenews/newsdesk/LDE64G0BQ.htm

-South Korea Demands ‘Stern’ Reply to North’s Attack. South Korea demanded a “stern” global response to the findings of an international panel that North Korea torpedoed one of its warships, killing 46 sailors. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=awNKOFirOfxk

-NKorea warns of war if punished for ship sinking. Read more here-http://apnews.myway.com/article/20100520/D9FQGC2G0.html and http://www.cnn.com/2010/WORLD/asiapcf/05/20/south.korea.sunken.ship/index.html?hpt=T2

The Goldbugg Report – May 25, 2010
Posted by Worldwide Precious Metals on Tuesday, May 25, 2010

The Week In Review – May 21, 2010

May 21, 2010

What a week! Markets were down across the board as the situation in Europe still continues to roil on. Germany seems to be the leading cause of concern this week. On Tuesday, Germany’s government decided to ban some forms of short-selling of stocks, bonds and derivatives. This move caught everyone in the European Union by surprise and helped send the markets even lower the rest of the week as investors speculated that other EU members may follow suit. On Friday, Germany’s Parliament voted to approve a law allowing the country to contribute about 148 billion euros to Greece’s 740 billion euro bailout package, a move which appeared to ease investor fears.

The number of new applications for unemployment insurance rose unexpectedly last week, the first time it has done so since early in April. The fear is that the trouble in Europe will slow down the fledgling economic recovery in the US, a fear quite possibly being born out based on other economic data that showed a slowdown in factory activity in the US Mid-Atlantic region. The US Leading Index, which is supposed to gauge the future strength of the US economy, according to the private industry group The Conference Board, declined for the first time since March 2009.

The US Senate voted on Thursday in favor of ending debate on the much discussed financial reforms package that President Obama demanded and wants to sign into law by Memorial Day weekend. This opens the door for a full vote to approve the bill in the Senate, which is expected to pass. Even if the current bill does pass the Senate, it will be highly unlikely Obama will be able to sign it into law by Memorial Day, as the House will have to merge it with their own version of the bill to create a compromise version of the bill that would be approved by both the House and the Senate. One amendment, proposed by Senator Richard Durbin and tacked onto the financial reform bill, would allow retails such as Wal-Mart and Target to pass on the fees they currently pay for accepting debit cards straight through to customers.

Unions in Spain, as expected, have vowed to fight pay cuts and other austerity measures which the Socialist government managed to pass by royal decree, bypassing parliament and fanning the flames of public anger.

As if there weren’t already enough geo-political tensions in the world, on Friday North Korea said the Korean peninsula was heading towards war and that the North was ready to tear up all agreements with the South after being accused of torpedoing a South Korea navy ship near the border. The flare up between the two appeared to be just one more factor making markets jittery this week.

Crude oil dropped below $65 a barrel this week before rebounding back above $70. The drop appeared to be triggered by the expiration of June contracts, continued fear over European debt and the unsolved and ongoing disaster in the Gulf of Mexico weighed on investor’s minds.

The Euro continued its tumble for most of the week as the fear and uncertainty in Europe continued. At one point it was down so much, in fact, that many analysts began to discuss when it will actually reach parity with the dollar. Friday, after Germany approved the Greece bailout, the Euro actually managed to move up some against the dollar.

Friday to Friday Close

	May. 14^th	May. 21st	Net Change
Gold	$1230.00	$1176.00	(54.00) – 4.39%
Silver	$19.19	$17.65	(1.54) – 8.03%
Platinum	$1716.00	$1511.00	(205.00) – 11.95%
Palladium	$526.00	$435.00	(91.00) – 17.30%

Here are your Short Term Support and Resistance Levels for the upcoming week.

	Gold	Silver
Support	1160/1150/1125	17.40/17.00/16.50
Resistance	1190/1200/1225	18.00/18.30/18.60

	Platinum	Palladium
Support	1450/1425/1400	400/390/375
Resistance	1550/1575/1600	450/475/500

Volatility should be expected to continue. Those investors who were wise enough not to over-extend themselves are holding on to the precious metals in their portfolios as a protection against the coming market insanity. Those investors who unwisely over-extended themselves appear, in a scramble to find cash, to be selling the precious metals in their portfolios to cover short positions in other markets. This may well provide a perfect opportunity for acquiring additional precious metals products for your own portfolio on the dip in prices being brought on by the panic. Geo-political turmoil on the Korean Peninsula is heating up injecting additional fears into an already spooked market. The US Congress, in a bid to show that they are “on the ball” is attempting to pass a tax on oil companies to fund an “oil spill cleanup” fund, sending oil stocks lower. There is another bill in the works that would extend unemployment benefits, which are slated to run out on June 2, up to 99 weeks. The overall cost of that bill will be between $150 and $200 billion, most of which gets tacked straight on to the ballooning deficit. These ballooning deficits, which seem to be happening globally, must eventually lead to further devaluation of fiat currencies if they are not reigned in. Astute investors, who have not overextended their ability to stay in this volatile market, would look at the current price dips as an opportunity to increase the share of precious metals in their portfolio. The European situation rolls on, and is far from being resolved, further market turmoil should be expected as fears of contagion continue. Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week In Review – May 21, 2010
Posted by Worldwide Precious Metals on Friday, May 21, 2010

The Goldbugg Report – May 18, 2010

May 18, 2010

-Silver Price Manipulation Investigation Focused On JPMorgan Chase. Read more…

-$5,000 an Ounce in Sight as Gold Hits New All-Time High. Why buy precious metals now? So why are investors buying gold and silver now? Risk diversification in the face of mounting government debt levels around the world is the simple reason. Read more…

-Investor interest in silver to remain strong over several years, CPM, New York metals consultants.

GOLD

-Yet another reason why you should deal with Worldwide Precious Metals. After gold exchange’s collapse, attorneys hunt for missing $29.5 million. Read more here-http://www.bellinghamherald.com/2010/05/13/1429143/after-gold-exchanges-collapse.html

-Watch Worldwide Precious Metals power point presentation on investing in precious metals. Watch video here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be

-Worldwide Precious Metals Live Metals Quotes. See quotes here-http://www.wwpmc.com/quotes.aspx

-Read Testimonial letters from happy Worldwide Precious Metals clients. Read letters here-http://www.wwpmc.com/testimonials.html

-Follow Lucas Bugg from Worldwide Precious Metals on Twitter. Follow Lucas here-http://twitter.com/TheGoldbugg

-Chart of the week: The Ultimate Rejection Of The Euro. Gold is making new highs in dollars, but its performance in Euros is just breathtaking a straight line up in recent days. With its surge today and the euro’s continuous fall, we’re easily taking out all time highs, a clear symbol that with all the printing of Euros in days ahead, folks are flocking to the comfort of gold. Read more here-http://www.businessinsider.com/chart-of-the-day-gold-price-euro-2010-5

-Peter Schiff speaks about $10,000 gold on CNBC Fast Money May 11 2010. Watch video here-http://www.youtube.com/watch?v=ikF54jVGlwE

-JP Morgan: Gold Could Now Face ‘Unlimited’ Demand. JP Morgan’s John Bridges believes the latest breakout for gold was a huge positive sign for the metal. Euro weakness fears, coupled with dollar weakness fears, could lead to an enormous amount of demand.

JP Morgan: A German banker once told us that gold normally trades like a commodity. However, when investors lose confidence in currencies, because the pool of gold is so much smaller than the pool of currencies, demand for gold can effectively become unlimited.

We believe the European version of “QE” is generating serious currency worries and led today to the breakout of the gold price above the previous intraday high at $1,226/oz. We see this breakout as significant: The market might have welcomed the European’s latest solution to the Greek crisis with a weaker gold price.

If the gold price had fallen, bears could have pointed to a “double top” in the chart, and this could have contributed to a period of weakness for the metal. They’re recommending exposure both through gold and gold-related stocks, as insurance, since despite the fact that gold is a record price levels, they believe that it could feasibly go far higher.

Guessing just how wild investors will get for an asset is still a horribly tricky game nonetheless. Read more here-http://www.businessinsider.com/jp-morgan-gold-now-could-face-unlimited-demand-2010-5?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

-Panic Buying Of Physical Gold In Europe Threatens Depletion Of Austrian Mint. Read more here-http://www.zerohedge.com/article/panic-buying-physical-gold-europe-threatens-depletion-austrian-mint and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=104788&sn=Detail&pid=34

-U.S. gold coin sales surge as investors flee risk. Read more here-http://www.gata.org/node/8614 and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=104565&sn=Detail&pid=34

-Investor demand for small gold bars and minted products has jumped tenfold since the start of this year, the Swiss refinery Argor-Heraeus said on Wednesday. Read more here-

http://www.busrep.co.za/index.php?fArticleId=5467265&fSectionId=630&fSetId=662

-Gold glitters. In the aftermath of the Lehman collapse, gold faltered as there was a huge margin call everywhere and investors seeking liquidity sold off their winners. The secular bull market for bullion did not end at the time, no long-term trendline was violated, and gold did rise in non-U.S. dollars and far outperformed other currencies.

But what happened during this recent round of intense European-led volatility and financial market weakness was that gold rallied even in U.S. dollar terms, which is significant seeing as there were large-scale safe-haven inflows into greenbacks.

So this time, gold has managed to hit new highs in all currencies, and gold rallied even with the overall commodity complex slipping noticeably over the past few weeks. This is a sign. Of what, you may ask? That gold is no longer trading just as part of the resource sector but is now taking on the characteristics of a currency.

While the U.S. dollar has gained ground since late last year, there is no doubt that an Administration that has a stated policy of doubling exports in the next five years to “support” two million jobs absolutely craves a depreciating greenback. Meanwhile, a new socialist government in Japan wants a weaker yen.

Sterling has only one way to go in an environment of heightened political uncertainty and a balance sheet that is at least as extended as Greece. And the ECB just gave notice with its agreement to buy sovereign and corporate debt that it is willing to distort the pricing of risk in the bond market for the greater good of helping profligate countries to avoid either defaulting or certainly help them finance their obligations at a subsidized cost.

The Bundesbank, this is not. So gold is no government’s liability and the shape and shift in its supply curve is the shape would seem to be a little easier to make out than fiat currency. We may end up being overly conservative on our peak gold price forecast of $3,000 an ounce. David Rosenberg-Gluskin/Sheff

-$5,000 an Ounce in Sight As Gold Hits New All-Time High. Why buy precious metals now? So why are investors buying gold and silver now? Risk diversification in the face of mounting government debt levels around the world is the simple reason.

Normally a flight to safety would mean buying government bonds but as government debt is at the heart of the economic problems of the world then logically buying government debt is a bad idea. You also do not need to be a hedge fund rocket scientist to understand the position in the bond market.

Governments around the world have forced interest rates to artificially and unsustainably low levels to combat the global financial crisis. Low interest rates mean high bond prices. Ergo as soon as interest rates go up as they will have to sooner or later bond prices will fall.

Hence if you want to keep your money out of bonds and when bond markets correct it can be sudden, without warning and the fall dramatic then precious metals and, or cash are your best option.

The real kicker for gold, and even more for silver, is in the supply and demand position.

Precious metals are in limited supply that indeed is their great strength as a store of wealth so once the shift out of bonds accelerates so will the price of gold and silver. Now government bond markets are far bigger than global stock markets while precious metals are amongst the smallest of major asset classes.

Pouring this quantity of money into a very narrow precious metals market will send gold and silver prices through the roof. $5,000 an ounce for gold is a very conservative forecast under these circumstances. Peter Cooper-Read more here-http://news.goldseek.com/PeterCooper/1273672978.php and http://news.goldseek.com/PeterCooper/1273498423.php

-Louise Yamada-Gold 1,350-1,500 on the way to 2,000. Watch more here-http://www.cnbc.com/id/15840232?video=1487900029&play=1 and http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/5/8_Louise_Yamada__Gold_%241%2C350-%241%2C500_On_The_Way_to_%242%2C000.html

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1273474800.php

-Gold investment still has a long way to run Murenbeeld. Even as the yellow metal hits new highs, the outlook looks good. Martin Murenbeeld, Chief economist at Dundee Wealth Economics, said, however that he believes investment demand for gold, “investment demand for commodities generally is in early days. This is only just starting to develop.”

He adds, anecdotally, that while travelling around America he notes that more and more people are beginning to question the current financial situation. “Americans and Canadians by and large never thought about currency debasement. This was something that maybe an old German would think about or Asians and Latin Americans.

But not North Americans but that has changed. So that’s number one that there is a concern among investors that not all is right with the financial world and they don’t fully understand it. They think central bankers might be debasing their currencies and so there is an interest developing in gold.”

The second reason for his belief that gold investment is in its infancy is that while in recent times we have gotten used to the idea that jewellery demand was what drove the market, when you go back into a little bit further history, that is not the case.

“Before the Bretton Woods collapse in 1968 or thereabouts, central bankers were big buyers of gold. In fact jewellery offtake that is as a percent of mine supply jewellery offtake was less than 50% because after the Bretton Woods system broke down, there was no immediate offtake by central banks and by default jewellery demand took over.

“I think we’re going back to an earlier period in the gold market where both the emerging central banks are looking at gold and buying gold for investment purposes or portfolio diversification purposes and now, also the private sector is looking at gold for portfolio diversification reasons and precautionary reasons, and that is the role that gold always served – mostly at the central bank level but of course also at the private level.”

On top of this structural shift, he says, everything that’s happened in Europe over the last while is very positive for the gold price.” “The key here is that the European Central Bank is expected to end up having to print money.

One of our fundamental gold factors is world liquidity. For us that’s one of the most important factors in the gold market even more important than for example what the value of the US Dollar is. So when we see central bankers standing ready to “print” that is buy paper in the market, we think gold prices will go higher.

That’s really how the gold market reacted all last week to the developments that were more specifically related to Greece. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=104730&sn=Detail&pid=33

-Has Gold Become A New Reserve Currency? Read more here-http://theeconomiccollapseblog.com/archives/has-gold-become-a-new-reserve-currency

-The gold standard: The case for another look. Read more here-http://www.gata.org/node/8632

-Gold has bugs gasping, gloating but still bullish. Read more here-http://www.marketwatch.com/story/story/print?guid=B29E3FEC-67D2-41F2-BF40-CF6DA59AD06F

-The S&P is now down 8% year to date when expressed in ounces of gold. Read more here-http://www.zerohedge.com/article/it-getting-ugly-quick-fiat-land-sp-now-down-8-ytd-non-dilutable-terms

-James Turk: An interesting perspective on house prices in relation to gold. Read more here-http://goldmoney.com/an-interesting-perspective-on-house-prices.html

-IMF plots world money issuance without accountability, Rickards tells King. Rickards expects gold to rise to $2,000 in the near term and $5,000 in the long term. Listen here-

http://www.gata.org/node/8641

-Gold bulls in the ascendant in New York. The New York Hard Assets investment conference ended on an upbeat note with gold hitting new highs while speakers were unanimously bullish on gold’s prospects. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=104747&sn=Detail&pid=33

-IMF sells more gold but is it selling into a rising market? The IMF Sold 18.5 tonnes of gold in March. When the IMF sold gold back in the second half of the ‘70s the price rose and rose. Will history repeat itself? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=104076&sn=Detail&pid=33

-In a hugely volatile week gold retains its hedge characteristics. Over the week, the price of gold breach of the key resistance of US$1160 and it’s jump to US$1200 indicates a possible move to US$1260 in the short-term. David Levenstein-Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=104601&sn=Detail&pid=33

-Ron Paul: Is there any gold in Fort Knox? Listen here-http://www.gata.org/node/8629

-Jeff Christian’s CPM Group explains how they make paper gold. Read more here-http://www.gata.org/node/8627

-Manipulation of precious-metals market under fire. Read more here-http://www.gata.org/node/8609

-Metals market manipulation complaints gain credibility, Wealth Daily says. Read more here-http://www.gata.org/node/8628

-Michael Snyder: People are realizing that LBMA system has little gold. Read more here-http://www.gata.org/node/8618

-On CNBC, GLD is dissed for not investing in physical gold. Watch more here-http://www.gata.org/node/8639

-Abu Dhabi hotel installs gold vending machine. There’s no mistaking what’s in this vending machine. The well-heeled in the Gulf can now grab “gold to go” from a hotel lobby in the United Arab Emirates, when the need for a quick ingot strikes. Read more here-http://news.yahoo.com/s/afp/20100513/od_afp/uaegoldoffbeat_20100513120103

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

-First Gold, Now Europe Running Out Of Silver. Earlier we noted that the Austrian mint was on its way to depleting its gold reserves following “panicked buying” from Europeans, who now openly fear the demise of their currency.

Now, courtesy of Slim Beleggen, we understand that the situation in the silver market is just as bad and has also spilled over to Germany: the contagion is no longer one of sovereign debt, but of precious metal physical inventory.

The primarily silver focused (but holding gold as well) Kronwitter precious metal online retailer is not only not accepting any orders, but has entirely taken down its website. Read more here-

http://www.zerohedge.com/article/first-gold-now-europe-running-out-silver

-Silver, in particular, holds explosive potential right now. On Friday May 7, the metal shot up 73 cents (4.13 percent) for no apparent reason. But the cause may have surfaced over the weekend, with a news story in the New York Post that the Commodity Futures Trading Commission and the Justice Department were opening civil and criminal investigations into possible manipulation of the silver market by JPMorgan Chase.

This was blockbuster news, with huge implications. Short-term, it may have prompted a short-covering rally in silver last Friday. Longer-term, it may force JPM and other major silver shorts into covering their positions which could very quickly force silver far higher. Brien Lundin-Read more here-http://www.gata.org/node/8636

-Feds probing JPMorgan trades in silver pit. Read more here-http://www.gata.org/node/8617

-Silver Price Manipulation Investigation Focused On JPMorgan Chase. Read more here-http://www.thestreet.com/print/story/10753883.html

-In Treasury report, shocking evidence of silver price suppression. Read more here-http://www.gata.org/node/8611 and http://news.silverseek.com/SilverSeek/1273257866.php

-Investor interest in silver to remain strong over several years CPM. New York metals consultants CPM Group says investors remain concerned about financial market and economic conditions and continue to hoard large amounts of silver.

New York metals consultants, CPM Group, forecasts that investment demand for silver will remain firm this year and may even surpass last year, when investors bought an estimated 209.7 million ounces of bullion. In its annual Silver Yearbook 2010 which was made public today, CPM projects that investors will purchase another 213.9 million ounces in 2010.

“Given the severity of today’s financial imbalances, and the fact that major governments have allowed them to compound over the ensuing three decades, it seems fair to assume that investors will remain concerned about their financial futures for years to come, and consequently remain interested in buying more silver to add to their portfolio,” CPM’s analysts said.

“Thus it is reasonable to assume that investors will continue to add large volumes of silver to their inventories in 2010 and for the next several years.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=104696&sn=Detail&pid=102055

-Investor Demand for Silver Is Projected to Remain Strong CPM Silver Yearbook 2010. Read more here-http://www.kitco.com/reports/CPM_May112010_A.html

-Slim to dig deep for silver miner. Money is no object for Carlos Slim. The Mexican telecoms and cement tycoon is one of the world’s richest individual and worth around £35bn. He wants to diversify into mining and so his team of top financial advisers have been busy running the slide rule over Fresnillo, the world’s largest primary silver and gold producer. Read more here-

http://www.dailymail.co.uk/money/article-1273418/Carlos-Slim-dig-deep-Fresnillo.html#

-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1273468402.php

-Ted Butler weekly interview with King World News. Listen here-http://www.gata.org/node/8616

-While silver has outperformed gold in recent months, it has massively underperformed gold over the long term. Gold is now nearly 50% above its nominal high in 1980 (1235/850) while silver remains less than 60% (19.4/50) off its nominal high in 1980. In the historic financial and economic times we are living through, it is prudent to have a historic perspective and not get caught up solely in the noise of daily and weekly figures.

Investors continue to view silver as gold’s ugly sister and it is rarely covered in the media. There has been no talk of retail investors, pension funds, or large hedge funds investing in silver as of yet. This will change in the coming months and this is when silver is likely to really move up in price. Goldcore.com

-Silver remains under the radar of investors despite its sterling performance in recent years and strong fundamentals. Silver remains undervalued versus gold and could rise to over $25 per ounce in the coming months. A close above resistance near the high of March 18th, 2008 at $21/oz could see silver go parabolic as it did in the 1970s when conditions were far more benign than they are today. Goldcore.com

-Silver remains very undervalued on a historical basis vis-à-vis commodities, gold and other precious metals. The gold/silver ratio remains favourable to silver at 63.5 and the ratio is falling. The “poor man’s gold” remains far from recent record highs and long term record (nominal) highs near $50/oz in 1980.

Silver could be the surprise outperformer in 2010 as it was in 2009. Silver’s industrial uses should mean that the gold/silver ratio will likely gradually regress to the average in the last 100 hundred years around 45:1. If the tiny silver market was to see real funds enter it, the ratio could return closer to the historical average of 15:1.

This occurred as recently as in 1968 and in 1980 and this time around could result in silver surpassing its 1980 nominal high at $50/oz. Silver reached $50/oz briefly in 1980 when just one billionaire Bunker Hunt (one of a handful of billionaires in the 1970s) attempted to corner the silver market causing the price to surge (in conjunction with many investors seeking to hedge themselves from the stagflation of the 1970s).

Today there are hundreds of billionaires throughout the world. A lot of technically orientated analysts, investors and hedge funds are looking at this figure and as nearly all other asset classes and commodities are at, or have recently reached, all time record highs, there is every reason to believe that silver may do likewise in the coming years.

Silver is priced at some $19.50/oz today. The average nominal price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today’s dollars and adjusted for inflation (government historically adjusted CPI) that would equate to an inflation adjusted average price of some $60/os and $44/os. It is for this reason that we believe silver will be valued at well over $50/oz in the next 2 to 3 years.

Silver remains very undervalued vis-à-vis gold and remains a contrarian play with little or no media coverage and little or no retail investors having any allocation to silver whatsoever. A close above $21/oz could see silver quickly rise to $25 or $30 per ounce. Goldcore.com

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: In early April, Credit Market Analysis (CMA), a credit information specialist part of the CME Group, released its quarterly Global Sovereign Credit Risk Report. The ranking and probabilities of the report’s top contenders have changed slightly since the report’s release, but we want to focus on Greece.

On April 3, the Greek prime minister declared that the worst was behind the country after the EU and the IMF patched together a €12 billion support package. Just four weeks later Greece was facing imminent default, the rescue package had ballooned 10-fold, and credit spreads on Greek government debt exploded higher.

Today CMA rates Greece’s five-year default probability at 40%, right behind Argentina don’t cry for Greece. Read more here-http://www.caseyresearch.com/displayCcs.php?e=true

-Chart of the week: Leading Indicators Around The World Rolling Over. Something interesting to watch here. New data out from the OECD indicates that around the world, leading indicators are showing a big time deceleration.

These numbers include OECD (major developed countries), as well as the largest developing countries as well, so it’s a comprehensive look at what’s going on around the world. We’re still in growth, but there’s a danger that the red hot “v” may come to look more like a square root. Read more here-http://www.businessinsider.com/chart-of-the-day-oecd-cli-for-oecd-plus-six-2010-5

-Chart of the week: The Overhang That Will Smother Any Housing Recovery. Housing continues to be a serious problem for the U.S. economy with a tremendous amount of unsold overhang remaining in the system.

This means that more than 7 million homes remain weighing down the market, due to bank’s having repossessed them or the loans being in delinquency. It’s interesting to note, per this chart from Whitney Tilson’s T2 Partners, this does not include new defaults, which are around 300,000 per month. Read more here-http://www.businessinsider.com/chart-of-the-day-housing-crisis-2010-5

and http://www.businessinsider.com/t2-partners-housing-market-2010-5#-1

-Chart of the week: They call themselves the 99ers, and they are growing into a large, desperate, and angry group of Americans. The number of unemployed who have exhausted state benefits and receive Extended Benefits (EB) or Emergency Unemployment Compensation (EUC) stands at 5.4 million. Their 99 weeks of combined state and federal coverage begins running out June 2nd unless Congress passes another extension.

The average EB/EUC benefit paid is about $300/wk. As the 99ers lose benefit eligibility over the coming year, $1.6 billion in weekly benefit income will incrementally disappear. With over 5 unemployed per job opening, their employment prospects look dim. Read more here-http://www.caseyresearch.com/displayCcs.php?id=95

-“We now see herd behaviour in the markets that are really pack behaviour, wolfpack behaviour.” Anders Borg Swedish Finance Minister

-”Main Street is in the hands of a Roulette Wheel.” Jim Sinclair-JSMineset.com

-The regulatory authorities and those running the exchanges have still do not have a handle on this problem. Little wonder the small investor is so cynical, jaded & mistrustful. Paul Vermilya

-This phase of the panic may be over, but the results of the panic are not over. Bob Hoye-Read more here-http://www.321gold.com/editorials/hoye/hoye051110a.html

-Invest in Inflation. Strictly seen as an investment, as the dollar shrinks in value, gold will be worth thousands of dollars an ounce and silver will be worth hundreds of dollars an ounce. Howard Ruff-Read more here-http://www.kitco.com/ind/Ruff/ruff_apr292010.html

-Stock markets will eventually plunge through the March 2009 lows because the financial crisis that reared its head in 2008 and recently again with the Greek debt crisis is clearly not over. “We pretended we solved the problem but we didn’t”.

“As you look six months forward, I think markets will sell off quite a bit, and in fact I would even say we will probably break the old lows of March, 2009. That could be in a year. That is how grim it is.” The financial crisis got papered over, but did not disappear. “We just essentially took it off the books of private enterprise or the banking system and gave it to governments.

And of course the governments are being questioned because they have all these liabilities and own all this toxic waste so now people now won’t buy their bonds. The markets all of a sudden have come to appreciate that we have a problem out there, but we have always thought that there was a problem.” Eric Sprott, hedge fund manager and chief executive officer of Sprott Inc.

-Once we begin to see gold close above the 1200 level, then we should start to see the Phase Transition type move that will carry it upward to about $2,500. It is still entirely possible for gold to even reach $5,000.

That is the extreme projection that would signal serious decline in public confidence in government as a whole. Reaching $2.500, is a normal stage of market development. This is still not the end of the world. Martin Armstrong

-“Gold has now consistently shown that it does not have to follow the so-called traditional inverse relationship with the dollar. It is front and centre assuming its role as the currency of choice.”

Bill O’Neill-Logic Advisors.

-“The whole bailout is quantitative easing across all of Europe,” said Michael Guido, the director of hedge-fund sales at Macquarie Bank Ltd. in New York, who expects gold to rise to $1,500 by the end of the year. “You’re seeing this big rush into gold ETFs, physical bars and coins out of Europe that’s supporting the thesis that gold is the default currency.” Bloomberg

-“All we can do is to put our money into real assets, because paper money everywhere is being debased.” Jim Rogers, the chairman of Rogers Holdings in Singapore, said in an interview on Bloomberg Television. Read and watch more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aM9oaLqVXTuQ

-Gold may reach $1,500 by the end of the year as concern spreads that other nations will struggle with debt. James Dailey of TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. Bloomberg

“A bubble is forming with sovereign debt,” said Peter Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati, adding that gold may soar to $1,800 an ounce within three years. “We want to hold gold as a reserve of wealth, because there’s a big devaluation of G-7 currencies ahead.” Bloomberg

-Gold analysts polled by Bloomberg believe that gold could reach $1500 per ounce in the coming months. Gold may extend gains to a record $1,500 an ounce this year as investors seek an alternative to currencies amid the European sovereign-debt crisis, according to a Bloomberg News survey of traders, analysts and investors. Bloomberg

-A nuclear solution to Europe’s debt problems is simply another way of saying “Quantitative Easing to Infinity.” All national debt will be bailed out. All states of the USA will be bailed out. Paper currencies are headed to dust.

Regardless of the first knee jerk market reaction, gold is going to $1650 and beyond due to nuclear suggestions of adding more debt to entities failing because of debt. This is the EU Helicopter Drop coming up.

Credit default swaps are herein called the “Wolfpack.” About that they are totally correct. Now that they have challenged the “Wolfpack,” whatever additional funds might be required will have to be provided or the “Wolfpack” will slaughter the EU. Jim Sinclair-JSMineset.com

-In my opinion, Greece is the same canary in the coal mine that Thailand was for emerging Asia in 1997, which ultimately led to the Russian debt default and demise of LTCM; the same canary in the coal mine that New Century Financial in early 2007 proved to be in terms of being a leading indicator for the likes of Bear Stearns and Lehman.

So, the most dangerous thing to do now is to view Greece as a one-off crisis that will be contained. Even with this new and aggressive EU-IMF financing arrangement that has managed to trigger a wild short covering rally, the risks are still high that the contagion spreads to countries like Portugal, Spain, Italy and even the U.K., which has already received some warnings from the major rating agencies and is gripped with political gridlock in the aftermath of last week’s uncertain election results.

The problem of there being far too much debt on balance sheets globally has not gone away and in many cases has become worse, and the ability to service these debts especially in countries that have weak economic structures like Greece, Portugal and Spain has become seriously impaired.

It remains to be seen how Greece and the other problem countries in the euro area will manage to cut their deficits without, at the same time, controlling their monetary policy and their currency, which of course we were able to do here in Canada during the 1990s but with the help of a 30% currency devaluation. David Rosenberg-Gluskin/Sheff

-Greece has its immediate financing. Now the question is can they follow the prescription? In all likelihood the answer is no. the bond markets are reflecting that via a lack of confidence. In fact, some bond markets are falling apart and there is no end in sight.

We have bond rating firms lowering ratings, as the rating services themselves are under serious fire and we do not believe they will be around long. The big question is why did it take two years and 10 months to react? Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1273677764.php and http://news.goldseek.com/InternationalForecaster/1273424400.php

-Roach Says Debt Crisis Raises Risk of ‘Double Dip’ Recession. The fallout from the European debt crisis raises the risk of a “double dip” recession for the global economy, said Stephen Roach, chairman of Morgan Stanley Asia Ltd. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ag29h7Czezxw

-Meet the Economist Who Says the Government’s Economic Numbers Are Lies. Establishment economists think John Williams’ numbers are off. But then, most of them also thought the economy was healthy. Read more here-http://www.alternet.org/economy/146784/meet_the_economist_who_says_the_government%27s_economic_numbers_are_lies/

-PIMCO’s El-Erian says U.S. inflation may accelerate. Read more here-http://news.yahoo.com/s/nm/20100513/bs_nm/us_usa_inflation_outlook_pimco

-Broader U-6 Unemployment Rate Increases to 17.1% in April. Read more here-http://blogs.wsj.com/economics/2010/05/07/broader-u-6-unemployment-rate-increases-to-171-in-april/

-Many of the jobs lost during the recession are not coming back. Read more here-http://www.nytimes.com/2010/05/13/business/economy/13obsolete.html?hp=&pagewanted=print

-16 Reasons Why California Is The Next Greece. Read more here-http://www.businessinsider.com/why-california-is-the-next-greece-2010-05#california-has-a-20-billion-budget-gap-despite-last-years-ravaging-cutbacks-1

-Schwarzenegger Preps ‘Terrible Cuts’ to Close Deficit. California Governor Arnold Schwarzenegger will seek “terrible cuts” to eliminate an $18.6 billion budget deficit facing the most-populous U.S. state through June 2011, his spokesman said. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=aMHZOCQK9hC4

-LA will consider repealing a 1974 ordinance that made the city responsible for sidewalk repairs. Read more here-http://www.nbclosangeles.com/news/local-beat/The-Budget-Crisis-Could-Hit-Your-Wallet-and-Twist-Your-Ankle–93229639.html

-Illinois Budget Woes Come to a Boil. Read more here-http://online.wsj.com/article/SB10001424052748703686304575228582377071698.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird

-Major Wall Street firms face criminal probe: source. Federal prosecutors in New York are conducting a broad criminal investigation into whether major Wall Street financial firms misled investors, a person familiar with the matter said on Thursday. Read more here-http://www.reuters.com/article/idUSTRE64C27Z20100513

-Banks, Ratings Agencies Said to Be Subpoenaed by N.Y.’s Cuomo. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aEBewweC6VB0

-Bankers jailed, sued as Iceland seeks culprits for crisis. Read more here-http://www.breitbart.com/article.php?id=CNG.4090f16a5abf84c5a5adff0665cbc792.3a1&show_article=1

-Loonie Will Return to Parity, Citi Says: Technical Analysis. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aNMsqhIfL2fU

-Investors Should Expect Higher Commodity Prices, JPMorgan Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=adLqcri08p_8

-World Health Organization Moving Ahead on Billions in Internet and Other Taxes. The World Health Organization is moving full speed ahead with a controversial plan to impose billions of dollars in global consumer taxes on such things as Internet activity and everyday financial transactions like paying bills online while its spending soars and its own financial house is in disarray. Read more here-http://www.foxnews.com/world/2010/05/10/world-health-organization-moving-ahead-billion-dollar-internet-tax/

-Italy’s roads are choked with government-owned cars. Renato Brunetta, Italy’s minister for public administration. He reckons that the country runs a fleet of 629,000 official cars, ten times the number in similar European countries and 50,000 more than just a couple of years ago.

The official fleet includes top-of-the-range Maseratis to ferry senior officials around Rome. Italy’s domestic carmakers, which are starting to recover after a tough time, will be hoping that this particular government-efficiency drive goes no further. Read more here-http://www.economist.com/daily/news/displaystory.cfm?story_id=16102798&fsrc=nwl

-James Bond Aston Martin May Sell for $74,670. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aJXSpcWf3S4E

-Gold watch fetches nearly $6 million at auction. Read more here-http://www.reuters.com/article/idUSLDE64A0XJ20100511?loomia_ow=t0:s0:a49:g43:r3:c0.333333:b33899768:z0

-Want to Buy a Bridge? N.Y.-N.J. Port Authority Seeks Investors. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a2N57GFy5sic

-China Subsidy for Rat-Proof Refrigerators Feeds Appliance Boom. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=ad9H.w7xD3MU

-It costs the federal government up to nine cents to mint a nickel and almost two cents to make a penny. So, in addition to overhauling Big Finance, President Barack Obama wants to tinker with America’s small change.

The president’s plan to save money by making coins from cheaper stuff seems simple on its face. But history shows it would rekindle an emotional debate among Americans who fear changing the composition of their currency will hurt its value. Read more here-http://www.gata.org/node/8637

-Food-stamp tally nears 40 million, sets record. Read more here-http://www.reuters.com/article/idUSTRE6465E220100507

-Working 10 Hours or More a Day Raises Heart Risk, Study Finds. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid=aK3Z5C06iaMQ and http://www.reuters.com/article/idUSTRE64A2SR20100511

WWW.RARECOLOREDDIAMONDS.COM

-Sotheby’s Magnificent Jewels and Noble Jewels, May 11 2010, Beau Rivage Hotel Geneva Switzerland. Read more here-http://www.sothebys.com/app/live/lot/LotResultsDetailList.jsp?action=J&event_id=30000&sale_number=GE1002&lots_per_page=100&page_number=1&show_lot_name=Y

-LOT 425-HIGHLY IMPORTANT AND EXCEPTIONALLY RARE DIAMOND RING, ALEXANDRE REZA. Description-Of cross over design, set with a fancy vivid blue pear-shaped diamond weighing 5.02 carats and a pear-shaped diamond weighing 5.42 carats, to a platinum mount, size 52, signed A. Reza, French assay and maker’s marks. Estimate-4,250,000-7,400,000 CHF. Lot Sold. Hammer Price with Buyer’s Premium: 7,026,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=425

-LOT 410-FANCY INTENSE YELLOW DIAMOND RING, CARTIER. Description-Claw-set with a fancy intense yellow round-cornered square modified brilliant-cut diamond weighing 15.85 carats, flanked by triangular diamonds, mounted in yellow gold, size 54, signed Cartier and numbered, French assay and maker’s marks. Estimate-195,000-295,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 458,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=410

-LOT 406-VERY RARE FANCY INTENSE BLUE DIAMOND RING. Description-Claw-set with a fancy intense blue cushion-shaped diamond weighing 7.64 carats, mounted in yellow gold and platinum, size 51. Estimate-4,320,000-6,300,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 8,930,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=406

-LOT 398-FANCY INTENSE YELLOW DIAMOND AND DIAMOND RING. Description-Centring on a fancy intense yellow cut cornered rectangular step-cut diamond weighing 7.30 carats, to an abstract surround set with circular- and brilliant-cut diamonds, mounted in platinum, French assay marks, size 51½, case. Estimate-90,000-130,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 158,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=398

-LOT 278-FANCY YELLOW DIAMOND RING. Description-Claw-set with a fancy yellow circular-cut diamond weighing 11.68 carats, the shoulders set with pear-shaped stones, the mount with single-cut diamonds, mounted in yellow gold and platinum, size 52. Estimate-140,000-200,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 194,500 CHF. Read more here-

http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=278

-LOT 277-PAIR OF FANCY YELLOW DIAMOND EARRINGS. Description-Each set with a fancy yellow brilliant-cut diamond weighing respectively 9.17 and 9.92 carats, to a diamond set border. Estimate-235,000-335,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 290,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=277

-LOT 271-FANCY INTENSE YELLOW DIAMOND RING, M. GÉRARD. Description-The square bezel centring on a fancy intense yellow brilliant-cut diamond weighing 9.35 carats, to a diamond set yellow gold mount, size 50, with ring sizer, signed M. Gérard, French assay and maker’s marks. Estimate-150,000-210,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 224,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=271

-LOT 242-FANCY YELLOW DIAMOND AND DIAMOND RING, CARTIER. Description-The fancy yellow cushion-shaped modified brilliant-cut diamond weighing 5.04 carats, flanked by trapeze stones, mounted in yellow gold and platinum, size 51½, signed Cartier. Estimate-43,000-63,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 56,250 CHF. Read more here-

http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=242

-LOT 199-FANCY INTENSE YELLOW DIAMOND RING. Description-The fancy intense yellow oval modified brilliant-cut diamond weighing 8.14 carats, bordered by brilliant-cut stones, the shoulders set with similar diamonds, mounted in platinum and yellow gold, size 52. Estimate-130,000-185,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 158,500 CHF. Read more here-

http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=199

-LOT 131-PAIR OF FANCY YELLOW DIAMOND EARRINGS. Description-Each suspending a collet-set fancy yellow round-cornered rectangular modified brilliant-cut diamond weighing respectively 3.07 and 3.44 carats, to a circular-cut diamond set surmount. Estimate-32,000-48,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 38,750 CHF. Read more here-

http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=131

-LOT 83-FANCY BROWNISH ORANGY PINK DIAMOND RING. Description-The fancy brownish orangy pink heart-shaped diamond weighing 3.35 carats, to a mount and border set with brilliant-cut stones, mounted in gold and platinum, size 52. Estimate-90,000-130,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 104,500 CHF. Read more here-

http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=83

-LOT 61-FANCY YELLOW DIAMOND RING. Description-Set with a cut-cornered rectangular modified brilliant-cut fancy yellow diamond weighing 5.24 carats, mounted in yellow gold, size 52.

Estimate-38,000-48,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 57,500 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=61

-LOT 60-PAIR OF FANCY INTENSE AND FANCY VIVID YELLOW DIAMOND AND DIAMOND PENDENT EARRINGS. Description- Each surmount set with a pear-shaped fancy intense yellow diamond weighing respectively 0.54 and 0.65 carat, bordered by brilliant-cut stones, to a pear-shaped fancy vivid yellow diamond weighing 0.47 carat and a similarly-shaped fancy intense yellow stone weighing 0.42 carat, suspending a pear-shaped fancy intense yellow diamond weighing respectively 1.55 and 1.71 carats, bordered by brilliant-cut stones, mounted in yellow gold and platinum. Estimate-38,000-48,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 50,000 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=60

-LOT 49-FANCY LIGHT YELLOW DIAMOND RING, BULGARI. Description-The fancy light yellow cut-cornered rectangular modified brilliant-cut diamond weighing 4.03 carats inset to a plain yellow gold mount, size 51, signed Bulgari. Estimate-16,000-22,000 CHF. Lot Sold-Hammer Price with Buyer’s Premium: 25,000 CHF. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=GE1002&live_lot_id=49

-Seeking refuge in diamonds. Currencies and gold for investors seeking a refuge this week suddenly paled Tuesday night, when it comes to investments, compared to diamonds the cut and polished variety you put on a girl’s finger.

Sotheby’s latest fine jewels auction saw its top “Very rare Fancy Intense Blue diamond ring” go for nearly double the low end of its estimated price (CHF4.32m) when the gavel came down on CHF8.9 million ($8.03m) and two other lovely diamond rings went for prices nearly as high. The sale netted a total of CHF59,995,700.

The record for the per carat price for diamonds was broken: it had been set at Sotheby’s in Geneva in November 2009: $796,178 per carat for a 3.17 carat round brilliant cut stone at the time. The new top sale at Sotheby’s put the 7.64 carat fancy blue’s per carat price at over $1,050,636. Read more here-http://genevalunch.com/blog/2010/05/11/seeking-refuge-in-diamonds-for-a-cool-chf8-9-million-update/

-Sotheby’s Geneva Jewels Sale Generates $54M. Sotheby’s Magnificent Jewels and Noble Jewels sales garnered a total $54 million (CHF 60 million) in Geneva on Tuesday claiming a new record for a fancy intense blue diamond. The auction house reported that the auction sold 87.9 percent by lot and 96.6 percent by value.

“Today’s outstanding results once again demonstrate the vibrancy and depth of the international jewellery market and the enormous appetite throughout the world for jewels and gemstones of the very best quality,” said David Bennett, chairman of Sotheby’s international jewellery department, Europe and the Middle East.

The highlight of the sale was a cushion-shaped, 7.64-carat fancy intense blue diamond ring which fetched $8 million (CHF 8.9 million), or $1.1 million per carat from an anonymous buyer. Sotheby’s said the ring saw competition from at least three potential buyers before closing.

The second highest lot saw an emerald cut, 52.82-carat, white diamond go to a U.S. dealer for $7.9 million, which Sotheby’s stressed proved “the strength of the market for exceptional white diamonds.” Another blue diamond, a rare toi et moi ring by French jeweller Alexandre Reza, a 5.02 carat, fancy vivid blue diamond set with a 5.42 carat white diamond in a ring sold for $6.3 million (CHF 7 million).

Bennett said prices achieved for these three pieces, each well above the pre-sale estimate, were “well deserved” given their rarity and quality. “Our pre-sale viewing in Geneva was among the busiest that we’ve staged in recent years, and, the general interest and enthusiasm that we saw in all the worldwide locations where we exhibited highlights from the sale were extraordinary,” he reported.

So far this year, Sotheby’s jewellery sales have generated $52.4 million in Hong Kong, $39.6 million in New York, and $1.7 million in London. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=30943

-Jewel prices soar to twice estimates at gem auction. Huge flawless diamonds and pieces by Cartier, Bulgari and other big-name jewellers sold for several times estimated prices at a Sotheby’s sale on Tuesday night, the auctioneer said.

The semi-annual sale in Geneva, Europe’s capital for jewels at auction, netted 60 million Swiss francs ($54.10 million), nearly double the low end of its pre-sale estimate. “There were very, very strong prices for high-quality jewels.

A mix of period pieces, jewels of royal provenance and spectacular gems all found new owners, many times exceeding the estimate,” David Bennett, chairman of Sotheby’s Europe and Middle East jewellery department, told Reuters. Some 50 percent of lots sold for above their estimate, he said. “It’s a tremendous result.”

Top lot was a blue cushion-shaped diamond weighing 7.64 carats, mounted in a yellow gold and platinum ring, which went for a whopping 8.93 million francs to an anonymous buyer who paid double the pre-sale estimate. “This is a world record per carat for a fancy, intense blue diamond at auction,” Bennett told a packed salesroom as he brought down the hammer to applause.

A white emerald-cut diamond weighing 52.82 carats, which he called “one of the most beautiful stones to come to auction for several years”, fetched 8.8 million francs after hectic bidding. It went to a U.S. jewellery dealer, according to Sotheby’s, whose pre-sale estimate was just over 7 million francs for the flawless stone with top grading for polish and symmetry.

A stunning ring by Alexandre Reza mounted with a vivid blue diamond of 5.02 carats alongside a white diamond of the same pear-shape of 5.42 carats sold for 7.026 million francs to a private collector. Bennett said it was a world record at auction for a piece designed by the French jeweller. Sotheby’s pre-sale estimate was $4 million to $7 million.

“It is a sublime ring, the two stones are complementary and perfectly proportional. It’s extraordinarily chic,” he said. Several pieces belonging to Brazilian socialite Lily Marinho found new owners, including an emerald and diamond necklace and matching ear clips and ring which fetched 1.2 million francs, tripling its pre-sale estimate.

“Lily has often been photographed wearing it, to those living in Brazil it is very familiar,” Bennett said. Raju Kothari, a Hong Kong-based jewellery dealer, told Reuters after the sale: “I got four or five items. Prices are high but if you want to own rare things you have to pay.” Read more here-http://www.reuters.com/article/idUSLDE64A2J920100511

-Diamonds, signed jewels soar at Christie’s sales. Christie’s says international market back to full strength. Read more here-http://www.reuters.com/article/idUSLDE64C0CY20100513

EUROPEAN BAILOUT

-EU Crafts $962 Billion Show of Force to Halt Crisis. European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ap50DW8IqhBo&pos=1

-European Banks Now Feverishly Betting Against Euro, As Bailout Fails, Gold Surges. Read more here-http://www.zerohedge.com/article/european-banks-now-feverishly-betting-against-euro-bailout-fails-gold-surges

-Bailout Is ‘Nail in the Coffin’ for Euro, Rogers Says. Investor Jim Rogers said Europe’s bailout of indebted nations to overcome the sovereign-debt crisis is just “another nail in the coffin” for the euro as higher spending increases the region’s debt.

“I was stunned,” Rogers, chairman of Rogers Holdings, said in a Bloomberg Television interview in Singapore. “This means that they’ve given up on the euro, they don’t particularly care if they have a sound currency, you have all these countries spending money they don’t have and it’s now going to continue.” Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=auuRue7wyMWM Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Rogers%20Says%20EU%20Bailout%20Another%20%60Nail%20in%20Coffin%27%20for%20Euro&clipSRC=mms://media2.bloomberg.com/cache/v4TUpyq1Jxjw.asf

-Volcker Says Crisis Threatens Euro ‘Disintegration’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ahe4DfQK7ozQ

-Greek Contagion Myth Masks Real Europe Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aIgcJWk1zcjY

-Murray Pollitt: The hypocrisy of the Greek ‘rescue’. Read more here-http://www.gata.org/node/8634

-Roubini Says European Resolution an ‘Open Question’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aHwLirAaqp60

-Roubini Says Greece May Lead Euro Exodus, China Faces Slowdown. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=aWx2RrHBu90A

-Faber Says Greece a `Write Off,’ ECB Bailing Out Banks. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Says%20Greece%20a%20%60Write%20Off,%27%20ECB%20Bailing%20Out%20Banks&clipSRC=mms://media2.bloomberg.com/cache/vVMWsluHACxA.asf

-Germany, France May Hurt AAA Ratings in ‘Ponzi Game.’ Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=aIFxBow.FVKU

-IMF Signals Spain, Portugal Must Step Up Budget Cuts. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afBYbGuJd_WQ&pos=6

-Bank Swaps, Libor Show Doubts on Europe Bailout: Credit Markets. Money markets and the cost of protecting bank bonds from losses show investors are concerned Europe’s almost $1 trillion rescue plan may not be enough to contain the region’s sovereign debt crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid=a.qZEloHDh7g

-Jim Rickards: “Goldman Can Create Shorts Faster Than Europe Can Print Money.” Read and watch more here-http://www.gata.org/node/8633

-Bernanke Said to Tell Senators Euro Aid No Panacea. Federal Reserve Chairman Ben S. Bernanke told U.S. senators today that the euro region’s almost $1 trillion aid package to stem its debt crisis isn’t a cure- all, according to a participant.

“He said, ‘This is basically not a panacea,’” and that the measures are “temporary,” Alabama Senator Richard Shelby, the senior Republican on the Banking Committee, told reporters in Washington after a closed-door briefing Bernanke held with the panel.

“There’s got to be fundamental underlying changes in their economies, not just Greece, but a lot of other countries,” Shelby cited Bernanke as saying. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aHKewxscnhg4

GLOBAL DEBT-DEFICIT CRISIS

-The Mother of All Bubbles. Huge National Debts Could Push Euro Zone into Bankruptcy. Greece is only the beginning. The world’s leading economies have long lived beyond their means, and the financial crisis caused government debt to swell dramatically. Now the bill is coming due, but not all countries will be able to pay it. Read more here-http://www.spiegel.de/international/europe/0,1518,druck-692666,00.html

-US faces same problems as Greece, says Bank of England. Mervyn King, Governor of the Bank of England, fears that America shares many of the same fiscal problems currently haunting Europe.

He also believes that European Union must become a federalised fiscal union (in other words with central power to tax and spend) if it is to survive. Just two of the nuggets from one of the most extraordinary press conferences I have been to at the Bank. Read more here-http://blogs.telegraph.co.uk/finance/edmundconway/100005657/us-faces-same-problems-as-greece-says-bank-of-england/

-U.S. posts April deficit for 3rd time in 30 years. Read more here-http://money.cnn.com/2010/05/12/news/economy/US_budget_deficit/index.htm

-Budget Deficit in U.S. Widened to $82.7 Billion. The U.S. posted its largest April budget deficit on record as receipts declined in a month that typically sees an increase in individual income tax payments.

The excess of spending over revenue rose to $82.7 billion last month compared with a $20.9 billion gap in April 2009, the Treasury Department said today in Washington. It was the second April deficit since 1983. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aS8ycnpZqsM8

-U.S. posts 19th straight monthly budget deficit. The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday. Read more here-http://www.reuters.com/article/idUSTRE64B53W20100512

-US More Bankrupt Than Ever $83 Billion April Deficit Is Record For The Month, $30 Billion Worse Than Expected As Tax Receipts Plunge. Read more here-http://www.zerohedge.com/article/us-more-bankrupt-ever-83-billion-april-deficit-record-month-30-billion-worse-expected-tax-re

-U.S. Debt Shock May Hit In 2018, Maybe As Soon As 2013: Moody’s. Read more here-http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532490

-The U.S. Government Is About To Get Hit With ‘The Perfect Storm’ Of Debt. Read more here-http://www.caseyresearch.com/editorial/3391?ppref=DLC168ED0510A and

http://www.businessinsider.com/us-debt-casey-report-2010-5

-The Western world keeps spending its way to disaster. The Swiss-based Bank of International Settlements (BIS), the oldest international financial institution in the world, has functioned as the central bank of central bankers for 80 years.

In a working paper written by three senior staff economists (“The future of public debt: prospects and implications”), released in March, BIS warns that Greece isn’t the only Western economy with hazard lights flashing.

Indeed, it names 11 more: Austria, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Britain – and the United States. Without “drastic measures,” BIS says, all of these countries will hit a wall of debt. Read more here-http://www.theglobeandmail.com/report-on-business/commentary/the-western-world-keeps-spending-its-way-to-disaster/article1565375/

-Has the deficit picture gotten any better? According to data from the Treasury, not so much. Check out the following table comparing federal receipts and outlays over the first six months of this fiscal year to the first six months from last year.

Even though receipts are down through the first six months of fiscal 2010 compared to last year, outlays are down slightly more so. The overall deficit at this point in 2010, at about $717 billion, is marginally better than it was at this time last year.

But keep in mind that we’re still talking about a projected deficit north of $1.3 trillion this year and that Obama’s $3.83 trillion budget for fiscal 2011, nearly a 9% increase in spending over the 2009 level, ensures a near record deficit in that year as well. Read more here-http://www.caseyresearch.com/displayCdd.php?id=425

FOUR U.S. BANKS FAILURES BRING 2010 TALLY TO 68

-FDIC shuts banks in Fla., Minn., Ariz., Calif. Regulators on Friday shut down banks in Florida, Minnesota, Arizona and California, bringing the number of U.S. bank failures to 68 this year. The Federal Deposit Insurance Corp. took over The Bank of Bonifay, based in Bonifay, Fla., which had $242.9 million in assets and $230.2 million in deposits; and Access Bank, in Champlin, Minn., with $32 million in assets and $32 million in deposits.

The agency also seized Towne Bank of Arizona in Mesa, Ariz., with $120.2 million in assets and $113.2 million in deposits; and 1st Pacific Bank of California in San Diego, with $335.8 million in assets and $291.2 million in deposits. Read more here-http://finance.yahoo.com/news/FDIC-shuts-banks-in-Fla-Minn-apf-2475780035.html?x=0

STOCK MARKET PLUNGE STILL NO ANSWERS

-Wall Street crash exposes world of stock market electronic trading. Regulators picking through the rubble of last week’s dramatic Wall Street crash have exposed a Byzantine system of electronic trading in the stock market that may have propelled the sell-off. Read more here-http://www.telegraph.co.uk/expat/expatnews/7709832/Wall-Street-crash-exposes-world-of-stock-market-electronic-trading.html

-CEOs of Biggest Exchanges Called to SEC to on Plunge. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=and.BFidKbYE

-Nasdaq’s Noll Says Trading in E-Mini Helped Spur Drop. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a9UfkaP0mlBE&pos=4

-Dick Grasso Says Halts Could Have Stopped May 6 Drop. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a0FYir4fnTE8

-Did a Big Bet Help Trigger ‘Black Swan’ Stock Swoon? Read more here-http://online.wsj.com/article/SB10001424052748704879704575236771699461084.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

-Taleb Says Focus on Single Trades in Crash Misguided. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=asIfMkujHP5k

-Dylan Ratigan’s Explanation For The Crash. Read more here-http://www.zerohedge.com/article/dylan-ratigans-explanation-crash

-Stocks ‘Tornado’ May Prompt Electronic Trading Rules. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aEldB2Is5YUM

-Why the champion of circuit breakers wants humans back in control. Read more here-http://money.cnn.com/2010/05/11/markets/brady_circuit_breakers.fortune/index.htm

JONATHAN WEIL-RIGGED MARKET THEORY SCORES A PERFECT QUARTER

-Score another triumph for the rigged market theory. In a feat that would seem to defy the odds, Goldman Sachs, JPMorgan Chase and Bank of America this week each said its trading desk made money every day of the first quarter.

Goldman said its daily net trading revenue topped $100 million 35 times last quarter out of 63 trading days. JPMorgan and Bank of America disclosed similar eye-popping stats. Citigroup, too, recorded a profit on each trading day, Bloomberg News reported, citing unnamed people who knew the results.

The intrigue is high. If a too-big-to-fail bank’s traders were able to make money every day of a quarter, were they really trading in any normal sense of the word? Or would vacuuming be a more accurate term? What kinds of risks do such incredible profits entail, for the banks and the rest of us taxpayers? And are results such as these too good to be true?

There seems to be no satisfying way to answer those questions, or even the more basic inquiry: How exactly do these banks’ trading divisions make money? Reading the companies’ impenetrable financial reports is of little help. However they did it, the data suggest it was as easy last quarter as hitting the side of a barn with a baseball from three feet away.

This isn’t the way “trading” works in the real world. A simple exercise in measuring probabilities is instructive here. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid=ax0kTsl0dBXw

THE NEW NORMAL

-Pacific Investment Management Co. said the debt crisis in Europe shows its outlook for an extended period of below-average economic growth remains valid, even after global markets rebounded from the financial crisis.

“What is happening in Europe is a vivid illustration of an underlying theme of the new normal,” Mohamed El-Erian, the chief executive officer of Pimco, said in an interview. There are “structural forces overwhelming traditional cyclical ones.”

European policy makers this week unveiled an unprecedented loan package of almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis that threatened to shatter confidence in financial markets and the euro. El-Erian has said Europe’s problems may spread across the globe because of investor concern that governments have borrowed too much to revive their economies.

Pimco, which coined the phrase “new normal” a year ago to describe a world characterized by high unemployment rates, more regulation, and a shrinking importance of the U.S. in the global economy, reiterated the view at its annual investment meeting last week in Newport Beach, California, the firm said today on its website. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Q7VMe4bTdM&pos=4

MORE MASSIVE FREDDIE-FANNIE LOSSES

-Fannie Mae Seeks $8.4 Billion in New Aid After Loss. Fannie Mae, the mortgage-finance company operating under federal conservatorship, said it will seek $8.4 billion in aid from the U.S. Treasury Department after reporting an 11th-straight quarterly loss.

The company lost $11.5 billion in the first three months of this year, it said today in a Securities and Exchange Commission filing. Fannie Mae had posted $136.8 billion in losses in the preceding 10 quarters, and the new aid request would bring its total draw from the Treasury to $84.6 billion since April 2009.

Fannie Mae said the quarterly loss was largely attributable to new accounting rules that required the company to move $1.5 trillion in mortgage guarantees to its balance sheet. The company and Freddie Mac, its McLean, Virginia-based rival, have been under U.S. conservatorship since September 2008, when they were seized after losses on subprime mortgages pushed them to the brink of collapse.

The so-called government sponsored enterprises, which own or guarantee more than $5 trillion in U.S. residential debt, financed or backed more than 70 percent of single-family mortgage loans in 2009. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=abcRVUIeOVS0&pos=6

-Freddie Finances Scarier Than Bad Slasher Flick. Freddie Mac’s disclosure that it lost $6.7 billion of taxpayer dollars in the first quarter of 2010, and that bigger losses may follow, suggests the Congressional Budget Office may have been kind in estimating that Freddie and Fannie Mae could gobble up $389 billion in U.S. aid by 2019.

The carnage of America’s government-sponsored housing agencies continues. It’s a remake of “A Nightmare on Elm Street,” only Freddy Krueger now goes by Freddie. The hapless victims are played by taxpayers. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aJc8svVLQCVk

-Ignoring the Elephant in the Bailout. Read more here-http://finance.yahoo.com/news/Ignoring-the-Elephant-in-the-nytimes-3670078648.html?x=0&sec=topStories&pos=9&asset=&ccode

REAL ESTATE

-Strategic Default: Walking Away from Mortgages. A Million Have Walked Away; Trend Could Undermine the Fragile Economic Recovery. Read and watch more here-

http://www.cbsnews.com/stories/2010/05/06/60minutes/main6466484.shtml?tag=currentVideoInfo;segmentTitle

-U.S. Home Seizures Reach Record as Recovery Delayed. U.S. home foreclosures climbed to a record in April, a sign that government mortgage relief efforts have yet to turn the tide of property seizures, according to a report by RealtyTrac Inc.

“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”

Bank repossessions rose to 92,432 in April, up 45 percent from a year earlier, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, fell 2 percent to 333,837. One out of every 387 households received a filing.

Unemployment of 9.9 percent and a rising percentage of homes worth less than the mortgages on them are combining to thwart a housing recovery, according to RealtyTrac. About 5 million delinquent loans will probably end up in the foreclosure process in addition to the 1.2 million homes already taken back by lenders, Sharga said.

Defaults may not peak until 2011 depending on how lenders process them, Sharga said. “The underlying conditions mostly unemployment and millions of ‘underwater’ loans haven’t improved,” he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=akVDiuetiH5I

-Mortgage Holders Owing More Than Homes Are Worth Rise to 23%. More than a fifth of U.S. mortgage holders owed more than their homes were worth in the first quarter as repossessions climbed to a record, according to Zillow.com.

Twenty-three percent of owners of mortgaged homes were underwater during the period, up from 21 percent in the previous three months, the Seattle-based property data provider said today in a report. More than one in 1,000 homes were repossessed by lenders in March, the highest rate in Zillow data dating back to 2000. Read more here-

http://www.bloomberg.com/apps/news?pid=20603037&sid=allDMOrP8m3M

-High-End Homeowners Falling Into Foreclosure Trap. Read more here-http://www.usatoday.com/money/economy/housing/2010-05-10-milliondollarhomes10_ST_N.htm?csp=patrick.net

-Home prices at risk. I had the pleasure of debating Jim Paulsen yesterday at a Club X conference in Montreal. During his presentation, I found a snippet in one of his slides needed to be updated U.S. home prices are up eight months in a row.

Indeed, this is what most investors want to believe, like how they wanted to believe in the tech bubble and how they wanted to believe in the credit bubble. Illusions are one thing, reality is another, and it’s the latter that bites in the end. Home prices WERE up eight months in a row, until the Case-Shiller 20-city index decided to take a 0.1% MoM (seasonally adjusted) dip in March.

And, on a raw basis, prices were down 0.9% on the month and have actually been deflating now each of the past five months (raw as in not seasonally adjusted and the CS officials have confirmed that the seasonal factors did give an upward skew to the data in prior months). The LoanPerformance national home price index is also down now for three months running.

The FHFA home prices series is also down three months in a row. And, the total unsold housing inventory, when accurately calculated, is running between 16 and 21 months’ supply, and it is this imbalance that is still exerting downward pressure on residential real estate valuation in the U.S.

If we end up truly reverting to the mean this cycle, in classic Bob Farrell Rule #1 fashion, then there is 20% downside potential to home prices from here. We had said that the two biggest risks to Mr. Market’s nirvana view of the world was a reversal in both the unemployment rate and home values and the latest data do suggest that this is on track. David Rosenberg-Gluskin/Sheff

-U.S. home prices still overvalued. If you haven’t already done so, you should check out Robert Shiller’s website where he provides the underlying data for the charts in his book “Irrational Exuberance” (for free!). We often quote the Shiller P/E (which goes back to the 1880s).

In addition to long-term stock prices, Professor Shiller also provides data on long-term home prices going back to 1890 (which he painstakingly cobbled together from various data series and real estate listings from newspapers).

The chart below shows this index of home prices, adjusted for inflation. Relative to long-term trends, it shows just how overvalued the U.S. housing market was at its peak in 2006 prices were 3.5 standard deviations above the long-term average.

Currently, prices are nearly one standard deviation above historical norms, which suggests in ordet to mean-revert to the long-term average, home prices need to fall by another 20%. David Rosenberg-Gluskin/Sheff

-Grim outlook for the housing sector. Even though housing starts have been cut all the way down to around 600,000 units at an annual rate, historic lows indeed, the lingering problem is that we still have too much supply. There are over 19 million empty residential housing units in the U.S., which is 5 million higher than the pre-bubble norm.

Moreover, based on months’ supply, we are talking about anywhere from 16 to 21 months when the foreclosed pipeline ‘shadow inventory’ is included 4-to-5 times larger than a typical balanced market.

Meanwhile, even with great affordability conditions and government programs aimed at promoting homeownership, the house-buying intentions segments of the various consumer confidence surveys, are still flirting with record lows.

The demographics are also awful with net household formation running at 900,000, or less than half what we were seeing during the boom times just five years ago as one would expect with a declining labour force population.

Plus, one of the aftershocks of the “Great Recession” has been a return to a higher average family size the “bundling up” effect for the first time in a century (see In Shift, More Fill the Same Home: Occupancy Trend Seen as Harm to Housing Demand on the front page of the USA Today).

Even counting in obsolescence of the housing stock, absorbing the vacant housing inventory under the current demographic profile could take at least a decade. You heard that right, housing is in secular decline. David Rosenberg-Gluskin/Sheff

GEOPOLITICAL NEWS

-Taliban Ties to Times Square Plot May Spark Wider Pakistan War. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1LHHsl_LoB0

-Uncovering the Roots of Homegrown Terrorism. Steve Kroft Reports on Homegrown Terrorists and Why They Have Turned Against Their Country. Read and watch more here-

http://www.cbsnews.com/stories/2010/05/09/60minutes/main6470032.shtml?tag=currentVideoInfo;segmentTitle

-Iran could fire nuclear missile within two years, says think tank. Iran will be able to deploy a missile capable of carrying a one-tonne nuclear warhead within two years, according to a report from a leading security think tank. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/iran/7705953/Iran-could-fire-nuclear-missile-within-two-years-says-think-tank.html

-Russia warns U.S. against unilateral Iran sanctions. Read more here-http://news.yahoo.com/s/nm/20100513/ts_nm/us_russia_iran_us_1

-Israel says N.Korea shipping WMDs to Syria. Read more here-http://news.yahoo.com/s/afp/20100511/wl_mideast_afp/mideastconflictisraelsyriankoreajapan

-The Pentagon would consider a military response in the case of a cyber attack against the United States, a US defense official said on Wednesday. Asked about the possibility of using military force after a cyber assault, James Miller, undersecretary of defense for policy, said: “Yes, we need to think about the potential for responses that are not limited to the cyber domain.” Read more here-http://www.breitbart.com/article.php?id=CNG.7c80ff42024d3ea21b818758f7a7eb3a.bf1&show_article=1

-Almost three-quarters of Americans support a provision of a new Arizona immigration law that requires people to produce documents verifying they are in the U.S. legally, a survey said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aanEpu8OEdv0

The Goldbugg Report – May 18, 2010
Posted by Worldwide Precious Metals on Tuesday, May 18, 2010

The Goldbugg Report – May 11, 2010

May 11, 2010

-May 11, 2010 Gold settles at all time high of $1220.30!

-”Even though Gold has risen nine years in a row, it is nowhere near a bubble. Just take a look at this chart courtesy of Frank Holmes. It compares Gold’s current bull market with its bull market in the 1970s.” See chart in today’s report.

-Industry and investment will see silver do better than gold. It’s often called the “Poor Man’s Gold,” but according to silver expert David Morgan, silver is poised to outperform gold. See interview in SILVER section of this week’s report.

GOLD

“Even though Gold has risen nine years in a row, it is nowhere near a bubble. Just take a look at this chart courtesy of Frank Holmes. It compares Gold’s current bull market with its bull market in the 1970s.”

-James Turk-Gold: Needed Now More Than Ever. Greece’s debt troubles are well known. Less recognized is the worrying truth that Greece is just the tip of the iceberg. There have been plenty of warnings. These include, for example, the recent downgrades of the debts of Spain and Portugal. By highlighting the risks, the debt rating agencies have sent a signal with one certain outcome.

Heightened awareness over sovereign credit risk will grow, and rightly so. A report released just last month by the Bank for International Settlements, entitled “The future of public debt: prospects and implications” made some startlingly frank and sobering conclusions. The BIS report began earnestly:

“Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future.” After a through and well-researched analysis complete with detailed documentation, the BIS walked carefully through this political minefield, no doubt aware the slightest misstatement would leave it open to rebuke by its benefactors, the countries and central banks that fund its operation.

But hats-off to the BIS. It left no doubt as to where it stands on this matter by concluding with the following stark assessment. “First, fiscal problems confronting industrial economies are bigger than suggested by official debt figures. As frightening as it is to consider public debt increasing to more than 100% of GDP, an even greater danger arises from a rapidly ageing population.

The related unfunded liabilities are large and growing. In the aftermath of the financial crisis, the path of future output is likely to be permanently below where we thought it would be just several years ago. As a result, government revenues will be lower and expenditures higher, making consolidation even more difficult.

Second, large public debts have significant financial and real consequences. The recent sharp rise in risk premia on long-term bonds issued by several industrial countries suggests that markets no longer consider sovereign debt low-risk. Third, we note the risk that persistently high levels of public debt will drive down capital accumulation, productivity growth and long-term potential growth.

Finally, looming long-term fiscal imbalances pose significant risk to the prospects for future monetary stability, unstable debt dynamics could lead to higher inflation: direct debt monetisation, and the temptation to reduce the real value of government debt through higher inflation.”

Please read that last paragraph again about the significant risk to monetary stability. In other words, governments will not cut spending and bring their budget back into balance. They will simply lean on their central bank to print and print and print. Everyone holding sovereign paper will get their euros and dollars and pounds repaid to them, but those currencies will have only a fraction of their present purchasing power. The rest will have been inflated away.

I have always wondered why people after paying 40% or so of their income in taxes then put what they manage to save in government paper. Further, it always struck me as somewhat bizarre that they then call the paper they purchased “risk free”, even though nothing in our real and imperfect world comes without risk. It is a conundrum with only one explanation it is irrational. All of us have seen this behaviour before.

It is the behaviour that sent the unthinking crowds into Internet stocks. It is the behaviour of unthinking people who bought second and third homes and condos with debt in the expectation of flipping them with a huge profit to someone else. It is the behaviour of unthinking bankers who piled into mortgage-backed securities believing that the triple-A rating meant the paper came without risk.

The common characteristic of all these manic episodes is that they are the actions of people acting with a ‘bubble mentality’. They are not guided by rational thought, but unthinking and emotional knee-jerk reactions. And the same is true today with sovereign credit risk, but with a difference.

The other examples are past history. The so-called “risk-free” sovereign debt bubble has only recently begun to pop. The signs are all around us. Iceland, Dubai, Latvia, Greece with Portugal and Spain not far behind, and the UK and even the US and most every other country on the not-too-distant horizon. The sovereign debt crisis which is actually a latent bank crisis because banks are stuffed full with the worthless paper of over-indebted sovereigns is a powder keg, and the fuse has already been lit. So what should we do? What can we do?

The answer is simple. Own physical gold instead of someone’s promise. Its time-proven record built up over the centuries clearly illustrates that gold is the ultimate safe haven. Gold is the best way to avoid counterparty risk, which is essential today as the sovereign debt bubble continues to lay bare the stark reality that governments throughout the world are bankrupt, and more to the point, that the bubble has popped.

People holding sovereign paper are already heading for the exits. As a result, everyone needs gold now more than ever. Read more here-http://www.fgmr.com/gold-needed-now-more-than-ever.html and http://www.gata.org/node/8594

-James Turk: Is the IMF’s gold really there? Much has been made over the gold purportedly owned and controlled by the IMF. There are many unanswered questions about this gold’s true status, and more to the point, whether this gold is really nothing more than phantom bookkeeping entries. Read more here-http://www.fgmr.com/is-the-imf-gold-really-there.html

and http://www.gata.org/node/8604

-The Federal Reserve should be worried about deflation and has few weapons left in its arsenal to combat it, according to David Rosenberg, chief economist of Gluskin Sheff & Associates Inc. in Toronto. Excess capacity in manufacturing, labour and housing is pushing prices down, and interest rates at record lows leave the central bank with little means of countering deflation.

“What are the other options?” Rosenberg said. “Can they cut rates below zero? Well, unlikely. So what’s really going to be left? What is going to be the bullet left in the chamber to deal with the outright deflation?”

Fed Chairman Ben S. Bernanke and his colleagues aren’t in a hurry to withdraw stimulus with 15 million Americans unemployed, even as economic growth outpaces analysts’ forecasts. Slack labor markets have pushed inflation lower, allowing the Fed to keep its zero interest-rate policy in place to encourage businesses and households to borrow and spend.

The central bank will likely reintroduce quantitative easing measures because the other stops are already pulled, according to Rosenberg. “The Fed will be expanding its balance sheet even further,” he said.

The threat of deflation is global, Rosenberg said, pointing to the sovereign debt crisis shaking European bond markets. “Governments around the world have already probed the outer limits of their deficit finance capabilities,” Rosenberg said.

Deflation will push gold prices to record highs, Rosenberg said. He forecast the precious metal will reach $3,000 in the next several years. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=adSzBb_3bHkU

-Explosive Gold Catalyst. Eric King of King World News has called attention to a conference called for May 11th in Zurich by the International Monetary Fund and the Swiss National Bank to discuss the international monetary system. King speculates that the conference will have immensely favourable implications for gold. Read more here-

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/5/4_Explosive_Gold_Catalyst_.html and http://www.gata.org/node/8606

-In a recent report, the World Gold Council expects China (currently the second largest consumer of gold in the world at US$14bln) to double gold consumption over the next decade. The Chinese gold market has taken off since government regulation was eased in 2002 over the past five years, consumer demand for gold has averaged 10% per year.

In fact, even with strong growth over the past five years, on a per capita basis the Chinese still lag behind India, Hong Kong and Saudi Arabia in terms of gold consumption, so there is a lot of scope for catch up.

In 2009, which was a down year for jewellery demand overall, China bucked this trend with 9% growth. Early reports suggest that 2010 is already shaping up to be good year for jewellry demand both Indian and Chinese demand for gold jewellery were noted to have increased in the first quarter. David Rosenberg-Gluskin/Sheff

-Gold investment demand has ‘barely scratched the surface’. Growing investment demand for gold, combined with declining mine production levels in the longer term, will continue to support strong prices for the “foreseeable future”, Barrick Gold CEO Aaron Regent asserted on Wednesday.

Although demand for the metal has strengthened significantly, the gold market remains small, and is “dwarfed” by other asset classes, he said at the company’s shareholder meeting in Toronto. As a result, a small transfer of investment dollars to the gold market could have a “substantial” effect on valuations.

“We believe we have barely scratched the surface of further potential investment demand,” Regent said. “Gold has reasserted itself as an attractive financial asset, as a store of value, a safe-haven investment as an alternative to currencies, stocks and bonds.”

On the one hand, central banks, which have historically been net gold sellers, appear to be rethinking their portfolio strategies, and are diversifying their holdings into gold, Regent said.

Net official sales of gold are sharply lower, and net buying in the last few quarters “would seem to indicate a change in sentiment is clearly under way”, he said. Secondly, investment demand for the metal has grown significantly, as investors seek gold’s security as a hedge against future inflation or currency debasement.

Worries about unprecedented levels of government debt outstanding, ongoing global imbalances and the concerns countries have over excess US dollar reserves, combined with risk aversion over escalating sovereign credit worries in Europe, “position gold to benefit, as investors and central banks look for alternatives to the major currencies of the world”, Regent said. Read more here-http://www.miningweekly.com/article/investment-demand-for-gold-barely-scratched-the-surface-barrick-2010-04-28

-Jim Rickards, of Omnis, and George Dowd, of Newedge, weigh in on the markets. Jim Rickards late in the interview says frankly to CNBC’s Squawk Box host, Joe Kernen, that it’s easy 8th-grade math that gold should head to $5,000/oz. Watch video here-http://www.cnbc.com/id/15840232?video=1485831315&play=1 and http://www.gata.org/node/8605

-King World News Interviews Jim Rickards on gold. Listen here-http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/1_Jim_Rickards.html

-King World News Interviews Jim Sinclair-DOW Down 1,000 Intra-Day Thursday and Gold $1,210. Listen here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/5/6_Jim_Sinclair_-_DOW_Down_1%2C000_Intra-Day%2C_Gold_%241%2C210.html

-Why George Soros’ And John Paulson’s #1 Position Is Gold And Gold Stocks. Read more here-http://www.zerohedge.com/article/guest-post-why-george-soros-and-john-paulsons-1-position-gold-and-gold-stocks

-China the Gorilla in the 3rd gold war. Another analysis suggesting that China is the gorilla in the perennial battle of parties looking for advantage in the forces controlling the direction of the gold price. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=103871&sn=Detail&pid=102055 and http://www.gata.org/node/8603

-Richard Russell gold commentary. Read more here-Part 1-http://www.321gold.com/editorials/russell/russell050310.html Part 2-http://www.321gold.com/editorials/russell/russell050410.html

-Commercial banks buy gold to meet demands. Commercial banks are buying gold to meet the demand of clients who want their deposits saved in gold, commodity dealers said. With the currencies in the GCC pegged to the volatile US dollar, local banks have all the more reasons to buy gold, local gold dealers emphasised.

On the other hand, senior Dubai-based bankers affirmed they have been considering meeting the demands of their customers to back the deposits with gold. The dealers, however, declined to name the banks they have been supplying gold to. Read more here-http://www.business24-7.ae/banking-finance/banking/commercial-banks-buy-gold-to-meet-demand-2010-05-05-1.240551

-Jay Taylor tells BNN about loss of confidence in fiat currencies. Watch here-http://www.gata.org/node/8595

-Bill Clinton Praises the Gold Standard. File this under unexpected. Former President Bill Clinton blames the current financial crisis on the U.S. leaving the gold standard. During an interview conducted at the Peterson Institute by Bob Schaeffer, Clinton sounded like a hardcore gold bug as he said that the problems in the economy started when the U.S. went off the gold standard. Read and watch more here-http://www.lewrockwell.com/blog/lewrw/archives/56731.html

-Are leading precious metals ETFs based on undisclosed conflict of interest? Do financial houses HSBC and JPMorgan Chase & Co. have a conflict of interest in serving as custodians of the metal held by the major gold and silver exchange-traded funds, GLD and SLV, even as those financial houses are themselves holding major short positions in the precious metals?

And does the failure of the prospectuses of those ETFs to note the short positions of their metal custodians constitute a material omission in violation of U.S. securities law? Read more here-http://www.gata.org/node/8600

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,200 the silver price would be $15.00

Gold to silver ratio at 70 to 1 with gold at $1,200 the silver price would be $17.14

Gold to silver ratio at 60 to 1 with gold at $1,200 the silver price would be $20.00

Gold to silver ratio at 50 to 1 with gold at $1,200 the silver price would be $24.00

Gold to silver ratio at 40 to 1 with gold at $1,200 the silver price would be $30.00

Gold to silver ratio at 30 to 1 with gold at $1,200 the silver price would be $40.00

Gold to silver ratio at 20 to 1 with gold at $1,200 the silver price would be $60.00

Gold to silver ratio at 15 to 1 with gold at $1,200 the silver price would be $80.00

The Gold Report: You stated last June that silver is trending gold and will outperform gold by about 30%. What will be the catalyst?

David Morgan: Well, there’s several. Silver is the bipolar metal, as I refer to it occasionally, because it’s both an industrial metal and a monetary metal. If you look at the industrial side, it’s very bullish even in these recessionary times, meaning that silver needs to be used in all kinds of industrial applications.

There might not be as much manufacturing on a global basis as there was during the times when the economy was doing better from 2000 to 2007. However, a lot of manufacturing is still taking place. As it occurs, there’s a tradeoff, with less manufacturing in some sectors and more in others. The amount of cell phones in China and India continues to grow.

Another one would be solar energy, which is projected to increase rapidly over the next decade. There’s a big impetus by several governments, again on a global basis, to install more green energy. Solar is at the top of that list. Silver plays an important part in that story.

On top of that, you’ve got water purification, which is something I was talking about many years ago and continue to because silver is a very unique biocide. Due to that, the EPA has actually okayed silver’s use in bottled water, which very few people know about.

Then, of course, in food processing, the unique properties of silver are used in meatpacking plants where you’d have silver tip appliances like the saws and cutters, etc., because for sterilizing purposes they do not spread any bacteria. Some of the new packaging plastics have a bit of silver in them on a microscopic level.

Once the food is packaged and you have the silver in there, it’s going to prevent any kind of spoilage or bacteria growth. On top of that, you’ve got other applications like the radiofrequency identification tags, and on and on the list goes. The other side is investment demand.

Here is where I think there’s a little confusion on this subject, because a lot of the main studies in silver just emphasize investment demand as coin demand. It is talked about as being 5% of the market. If you look at 660 million ounces of silver being mined presently, and you take 5% of that, you’re looking at 33 million ounces.

An accurate number for coin demand is somewhere between 30 and 40 million ounces on an annual basis, but that’s coin demand only. What very few of these studies really emphasize, which is really a big part of the investment demand, is how much of the commercial bars are used for investment purposes.

Let’s look at the largest silver ETF (SLV). It holds roughly 300 million ounces of silver in commercial bar form. But it’s all for investment purposes. So, there’s more to the investment story on silver than most people realize.

TGR: Why aren’t we seeing the pressure in the market yet with all the industrial demand?

DM: I would say the pressures are there right now. Have they started to build up yet? Perhaps. They’re not as strong now as they will become over the next few years. As there is more and more silver demand on the industrial and on the investment side, the price is going to go up.

You’ve got to look at where silver is at right now. It’s certainly off the $21 nominal high that we saw many months ago. We’re still hanging around $18 compared to the $5 or less it was based at for almost 20 years. That’s quite a run, and even in inflation-adjusted terms, it’s a pretty good return on your money. Is it going higher? Yes. When is it going to start? I’m not sure. It’s going to be in this idling period for a while.

The dynamics are so strong that I don’t see it continuing all year. I believe strongly that the closing price in December 2010 in silver is going to be above the $21 level. In other words, silver will be making a new (nominal) high this year!

TGR: When is the best time to get into silver and in what capacity?

DM: From the standpoint of the actual metal itself, any time is the right time as far as I’m concerned. You don’t have to worry about market timing. I mean, $18 silver is obviously more than it was 10 years ago when you could probably get it at around $5. Again, I believe it’s going far higher.

It’s something tangible, something real and something outside the financial system. When you own silver coins or bars or both, you actually have real money that’s recognized worldwide. If you own the real thing, don’t worry too much about the price. Buy the real thing. That’s where you start your precious metals investing.

TGR: Why is there so much concern about the silver-to-gold ratio?

DM: I think that too much emphasis is put on the ratio. It’s a metric that many follow to value the silver price relative to gold. It’s useful in trading between the two metals, which I have taken advantage of a few times during this bull market. It’s something that can get overblown and no one knows what the correct ratio is.

When you get silver really moving and the euphoric panic part of the market engages, it tends to really move faster than gold because it’s a smaller market and you have a lot of money moving into the market. That’s where you see silver overtake gold on a percentage basis. So we could be 60-to-1, 50-to-1, 40-to-1 and stay 40-to-1 for a long time.

Then when then market goes into this panic buying mode we could go from 40-to-1 to 20-to-1 and then 10-to-1, as an example. That whole process from a 40-to-1 ratio to a 20-to-1 ratio might take two to three months. Again, is there an exact perfect ratio for silver to gold? No there isn’t. The ratio does suggest that silver is still undervalued relative to gold.

TGR: Do you have a timeline for when silver may overtake gold?

DM: I don’t have, but I’ll be consistent. I’ve been asked this before and the answer has been probably 2012-ish. If you look at some of the analysts work, they put timelines at sometime between 2011 and 2016. Basically, if you forecast, you should put a price and no timeline or time and no price.

That way you can’t get cornered. Who wants that? That’s no value to anybody. But a guess is a guess. I don’t think you’re going to see a really big move in the metals until 2012 or later. However, I do expect both gold and silver to make new nominal highs this year and silver to outperform gold by 30%. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=103835&sn=Detail&pid=32 and http://news.silverseek.com/SilverInvestor/1272949440.php

-If gold poised for take-off then silver should be an even better bet. The current gold: silver ratio of 68:1 suggests there could be some good catch up for silver ahead. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=103743&sn=Detail&pid=32

-Jeff Nielson: The Silver Price-spiral, Part I. Regular readers are familiar with my position on silver: supply/demand fundamentals make it inevitable that silver will rise to a triple-digit price almost certainly within this decade.

Thus, it may come as a surprise to some to hear me say that I think I have been “too conservative” in my outlook for The Metal of the Moon. Read more here- http://www.gold-eagle.com/editorials_08/nielson042910.html

-The Silver Price Spiral, Part II: paper “inventories”. Read more here-http://www.gold-eagle.com/editorials_08/nielson050110.html

-The Silver Price Spiral Part III: Tomorrow. Read more here-http://www.gold-eagle.com/editorials_08/nielson050310.html

-In his weekly interview with Eric King of King World News, silver market analyst Ted Butler announces that the Anti-Trust Division of the U.S. Justice Department has told a Butler newsletter subscriber that it is investigating a complaint of silver market manipulation against JPMorgan Chase & Co. Listen here-http://www.gata.org/node/8596

-Solari Special Report on GLD and SLV. This article was inspired by a conversation in January 2010 with fellow directors of the Gold Anti-Trust Action Committee: Chairman Bill Murphy, Secretary/Treasurer Chris Powell, and Directors Adrian Douglas and Ed Steer.

In speaking about the growing role of the exchange traded funds in the precious metals market, it was clear that the disclosure that the precious metals ETFs described below were providing to investors was inadequate. However, was there a material omission under securities law? I found the issues complex.

Understanding the commodities markets can seem daunting to someone like myself with a securities background. Meanwhile, the securities markets and related legal and regulatory issues can be unfamiliar to those with a background in commodities.

I decided to ask my attorney to help me gather the relevant information into one document to make it easier for GATA supporters and other interested parties whether from the commodities or securities markets to examine these issues and to better understand and price these securities. Read more here-http://solari.com/archive/Precious_Metals_Puzzle_Palace/

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: Europe’s Web of Debt. Banks and governments in these five shaky economies owe each other many billions of euros converted here to dollars and have even larger debts to Britain, France and Germany. Arrow widths are proportional to debt amounts. Read more here-http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html?ref=global and http://www.nytimes.com/2010/05/02/weekinreview/02schwartz.html

-Chart of the week: The collective conversation across the U.S. is currently parsing the topic of “recovery” in the economy; has it arrived and, if so, how strong will it be and can it survive? The dialogue presupposes that a recovery is defined as a return to hyper-consumerism enabled by a rising real estate market.

But what about a recovery in the fiscal health of government surely we want that too what would that look like? A recent paper by the Bank for International Settlements (BIS) examined that very question. Specifically, what will be required to bring the debt-to-GDP ratio in a sampling of Western countries back to a pre-crisis, 2007 level?

For the U.S., the paper calculated the annual budget surplus required to achieve that goal over three time horizons. Considering that the projected U.S. budget deficit for 2011 is -7.1%, the road to recovery for America is sure to be long and treacherous. Read more here-http://www.caseyresearch.com/displayCcs.php?e=true

-Chart of the week: Personal income has managed to rise 2% in the past year in the United States despite a near -10% jobless rate and the fact that employment, even with the nascent rebound, is still down nearly 2% over the last 12 months.

Fully 100% of the income gain in the household sector has been due to government transfer payments, which now account for almost one-fifth by far a record of household income. Private sector wages and salaries are still lower today than they were a year ago and real organic personal income is down nearly 2% as well.

This is why there is still debate as to when and whether the recession has actually come to a full stop, imagine a recovery devoid of organic income growth in the consumer sector. What is driving the income growth has been the surge in unemployment insurance benefits, which have ballooned to unprecedented levels and are up more than 50% from this time last year.

So, Uncle Sam’s generosity has been a key player and this is largely because no fewer than three times since the recession began in December 2007, Congress has extended jobless benefits from 53 weeks to 99 weeks (about double what you can get in “socialist” Canada).

But this assistance is about to term out and with it, an estimated one million folks receiving benefits are going to roll off in the next few months (there are now an amazing 11 million or 70% of the jobless tally receiving benefits).

Considering that this means the loss of $320 per week, on average, for these one million jobless who are about to see their benefits expire, we are talking about a $16 billion hit to their pocketbooks. So the biggest mistake anyone can make is to extrapolate today’s consumer-led GDP report into the future. David Rosenberg-Gluskin/Sheff

-Follow Lucas Bugg from World Wide Precious Metals on Twitter. Follow Lucas here-http://twitter.com/TheGoldbugg

-Watch World Wide Precious Metals power point presentation on investing in precious metals at Youtube.com. Watch here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be

-Greece Gets $146 Billion Rescue in EU, IMF Package. Euro-region ministers agreed to a 110 billion-euro ($146 billion) rescue package for Greece to prevent a default and stop the worst crisis in the currency’s 11-year history from spreading through the rest of the bloc. The first payment will be made before Greece’s next bond redemption on May 19, said Jean-Claude Juncker after chairing a meeting of euro-region finance ministers in Brussels yesterday.

The 16-nation bloc will pay 80 billion euros at a rate of around 5 percent and the International Monetary Fund contributes the rest. Greece agreed to budget measures worth 13 percent of gross domestic product. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aqUKEXajkSzk

-Headline from October 1929.

-“That is ridiculous.” “I mean this really sounds like market manipulation to me. This is outrageous.” Maria Bartiromo, reacting to Thursday’s sell-off-Read more here-

http://www.businessandmedia.org/articles/2010/20100506174136.aspx

-U.S. Stocks Plunge Most in Year as ’Panic Selling’ Grips Market. U.S. stocks tumbled Thursday the most in a year on concern Europe’s debt crisis will halt the global recovery. The selloff briefly erased more than $1 trillion in market value as the Dow Jones Industrial Average fell almost 1,000 points, its biggest intraday loss since 1987, before paring the drop.

“It’s panic selling,” said Burt White, chief investment officer at LPL Financial in Boston, which oversees $379 billion. “There’s concern that the European situation might cool down global growth and freeze the credit markets.”

New York Stock Exchange spokesman Rich Adamonis said “there were a number of erroneous trades” during the plunge. The NYSE told CNBC that there were no system errors as speculation of erroneous trades swirled through the market. The Nasdaq OMX Group Inc. said it is working with other markets to review the trades during the plunge.

Citigroup Inc. said it found “no evidence” of erroneous trades after CNBC said the bank made a potentially bad transaction that triggered the slide. CNBC cited “multiple sources.” Procter & Gamble Co. said it’s looking into electronic trading of its stock to determine whether it was made in error. Its shares sank as much as 37 percent and closed down 2.3 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aqFT.b8BNNFU

-Computerized trades sent to electronic networks turned an orderly stock market decline into a rout today, according to Larry Leibowitz, the chief operating officer of NYSE Euronext.

While the first half of the Dow Jones Industrial Average’s 998.5-point plunge probably reflected normal trading, the selloff snowballed because of orders sent to venues with no investors willing to match them, Leibowitz said in an interview on Bloomberg Television.

“If you look at the charts you can see fairly clearly where the trades came in,” he said from New York. “It’s that V-shaped drop where it came down and snapped right back up. You had some very high-cap stocks trading down 50 percent or large percentages in a split instant because there really was no liquidity in electronic markets.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aktCEVdfmfys&pos=1

-Nasdaq OMX Group Inc. said it will cancel all trades of stocks at prices that were 60 percent above or below the last price at 2:40 p.m. or immediately prior. The exchange operator said in a statement it will cancel all trades “greater than or less than 60 percent away from the consolidated last print in that security at 14:40:00 or immediately prior.”

Nasdaq said it coordinated the decision with all other exchanges. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ai9CehsZxjqA&pos=1

-The Day The Market Almost Died (Courtesy Of High Frequency Trading). A year ago, before anyone aside from a hundred or so people had ever heard the words High Frequency Trading, Flash orders, Predatory algorithms, Sigma X, Sonar, Market topology, Liquidity providers, Supplementary Liquidity Providers, and many variations on these, Zero Hedge embarked upon a path to warn and hopefully prevent a full-blown market meltdown.

On April 10, 2009, in a piece titled “The Incredibly Shrinking Market Liquidity, Or The Black Swan Of Black Swans” we cautioned “what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades.

When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility.” Read more here-http://www.zerohedge.com/article/day-market-almost-died-courtesy-high-frequency-trading

-“The annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit.” John Williams-Shadowstats.com

-Charlie Gasparino Says Goldman Settlement To Be Between $1 and $5 Billion. Read more here-http://www.zerohedge.com/article/charlie-gasparino-says-goldman-settlement-be-between-1-and-5-billion

-America and the world face a financial conflagration of immense proportions. The world of fiat money and massive credit is buckling under the pressure of unpayable debt. Each day the safe haven of gold and silver related assets become more attractive. We ask where else do you go for safety?

A conflagration is a fire out of control and that is exactly the conditions the world faces today. The inflationary depression has smoldered for 14 months and it will soon accelerate. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1272816000.php and http://news.goldseek.com/InternationalForecaster/1273069477.php

-Make no mistake, the problems in Greece are mirrored in places like Portugal and Spain, this is not about liquidity, like Bear Stearns and Lehman, it is a crisis in confidence. David Rosenberg-Gluskin/Sheff

-We have long been advocating that everyone read “The Great Depression: A Diary” the story of Benjamin Roth. It’s the only human account of the 1930’s depression and after reading it, you will see first-hand the vagaries of life after a credit collapse brief multi-month bouts of euphoria followed by despair; governments throwing money aimlessly at the economy to preserve social stability; and fleeting rallies in risk assets. David Rosenberg-Gluskin/Sheff

-Including Wednesday’s further up-move (+4.5% to 25), the VIX index is now up 50% on a 20-day basis. Ouch! This is symptomatic of the onset of a bear market phase, or at the least, the very late stage of a bull run.

But the key takeaway is that spasms like we just saw are not symbolic of the early or mid-stages of a bull market. The post-bailout/stimulus effects of the last 13 months were fun while they lasted, but the bull now looks to be rolling over, in my humble opinion. David Rosenberg-Gluskin/Sheff

-No doubt Greece continues to grab the headlines but as Bob Farrell stipulates, the news does not make the market; it’s the market that makes the news. It is difficult to extract the heightened risk premia from the real economic impact from the problems plaguing the Eurozone.

Roughly one-quarter of U.S. corporate revenues are derived from the region, and Europe is likely heading back into contraction mode, as well as the lagged impact of the strong U.S. dollar (up 14% versus the Euro in less than six months) is a big currency-translation headwind on U.S. large-cap profits.

Remember, this is a market where institutional investors are long the wazoo, sentiment near extreme bullish levels, and priced for earnings to return to peak levels by next year. And surely, a 20% slide in China’s Shanghai index may be giving us a clue that the hot Chinese economy is going to cool off too. David Rosenberg-Gluskin/Sheff

-Volcker Says U.S. Unemployment Will Be ‘Too High for Too Long’. Former Federal Reserve Chairman Paul Volcker said the U.S. economy faces a “long slog” as the nation struggles to reduce the jobless rate from close to a 26- year high. “I am afraid the level of unemployment will be too high for too long,” Volcker said in the prepared text of a speech yesterday in St. Louis. “My characterization of the outlook is a long slog.”

Volcker, chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. economy should shift from reliance on consumer and government spending to a greater emphasis on investments and exports as it recovers. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aWqCX7U0VxSo

-Matt Taibbi: The Feds vs. Goldman. The government’s case against Goldman Sachs barely begins to target the depths of Wall Street’s criminal sleaze. Read more here-

http://www.rollingstone.com/politics/news/;kw=[3351,136554]?RS_show_page=0 and http://www.gata.org/node/8591

-Bill Gross rips the rating agencies. Don’t let the enablers of the credit bubble off the hook, the bond manager urges. He says investors should ignore their ratings, because the agencies have shown little intelligence or common sense in recent years. Read more here-http://wallstreet.blogs.fortune.cnn.com/2010/05/05/gross-rips-the-rating-agencies/

-Freddie Mac Seeking $10.6 Billion After First-Quarter Loss. Freddie Mac and Fannie Mae have borrowed almost $137 billion from the Treasury since U.S. regulators seized the two government-sponsored enterprises in September 2008, after rising delinquencies and foreclosures pushed them to the brink of collapse. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aIxv5mE0Xcbo

-China May ‘Crash’ in Next 9 to 12 Months, Faber Says. Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China. China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month.

As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aMbfBKW.uKn4

-More American Expatriates Give Up Citizenship. Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.” Read more here-http://www.nytimes.com/2010/04/26/us/26expat.html

-Greek Riots Threaten to Scare Tourists Key to Economy. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aVtnPc6rLmw4

-CBS Overpaid Moonves $28 Million in Study of Chief Executives. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aR_5mZU34i0M

-Watch Wal-Mart grow. From a single store in Rogers, Ark., in 1962., to more than 4,300 Wal-Mart and Sam’s Club outlets today, see how the world’s No. 1 retailer has expanded across the U.S. Watch more here-http://money.cnn.com/magazines/fortune/storysupplement/walmart_spread/index.html

-The Pacific Ocean warming phenomenon known as El Nino that helps retard development of Atlantic hurricanes will disappear by June, the U.S. Climate Prediction Center forecast said today. One-third of weather models indicate a La Nina, or cooling, may develop in its place.

“These forecasts, in addition to various oceanic and atmospheric indicators, indicate a growing possibility of La Nina developing during the second half of 2010,” the center said on its website. El Nino is a warming that occurs every two to five years, on average, and lasts about 12 months.

It is credited with making the 2009 Atlantic hurricane season the least active in 12 years, forecasters said. It also drove weather patterns worldwide contributing to record snows in Washington and Dallas, drought in Venezuela and flooding from rain in Peru.

The phenomenon enhances high level winds in the Atlantic, called shear, that tear hurricanes apart as they are forming or intensifying. The hurricane season begins June 1 and runs through Nov. 30. Nine named storms formed in 2009, while the historical average is 11, according to the U.S. National Oceanic and Atmospheric Administration. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aDgEVPqlEyQk

WWW.RARECOLOREDDIAMONDS.COM

-If I told you I was going to give you a large steel box for your kids, and that box was not to be opened for fifty years, would you rather I put three million in cash in that box or three million in diamonds and gold and silver. Which one would you choose? Richard Russell. Read more here-http://www.321gold.com/editorials/russell/russell042610.html

-Diamonds are running out, says De Beers. The world’s supply of diamonds is running out says the world’s biggest miner of the gem. De Beers believes the supply of diamonds is running out over the long term, prompting the world’s biggest miner of the gems to reduce production in an attempt to extend the life of its mines.

Assuming the move moderated production, rough diamond prices could rise by at least 5 per cent per year for the next five years, said Des Kilalea, analyst at RBC Capital Markets. De Beers’ move, which will see production plateau at about 40m carats a year from 2011 compared with 2008 production of 48m carats, anticipates new Asian demand accelerating the depletion of the world’s existing diamond mines, said Gareth Penny, managing director.

For 20 years, the industry has found no new diamond deposit to match De Beers’ two biggest mines in Africa or the best Russian mines of Alrosa, the other big diamond producer. “Do we want to ramp production back up to 48m carats, given the lack of availability in the future?” Mr Penny asked. “Diamonds are a treasure of nature that should be properly protected, because there will be less to sell. The reality is that supply cannot keep up, and that will become very accentuated over the next 15 years.”

China’s affluent urbanites are buying diamonds in droves and the country’s share of the diamond jewellery market should double to 16 per cent by 2016, De Beers said. The company has emerged from the downturn with a halved cost base and a new strategy centring on protecting the value of diamonds. “We are not seeking to manipulate anything,” Mr Penny said. “But there is a natural supply-demand imbalance that is leading to certain realities.” Read more here-http://us.cnn.com/2010/BUSINESS/04/25/diamonds.debeers.cut.ft/index.html?hpt=Sbin

and http://www.ft.com/cms/s/0/35ae75c2-50cb-11df-bc86-00144feab49a.html

-Richard Russell-Wealthy Getting Out of Fiat Money. The wealthy are on a buying spree, their goal is to lessen their exposure to paper currencies. “I watch the jewellery auctions, and I subscribe to the Sotheby’s and Christie’s catalogues. Prices for top-grade gems are going through the roof.

I was talking to a jeweller friend yesterday who just returned from a Sotheby’s auction. He said he couldn’t believe the prices that some of the jewellery was going for. One diamond that he expected to be able to buy for $200,000 went for $950,000. He said he was staggered by the prices. Read and listen to more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/4/27_Richard_Russell_-_Wealthy_Getting_Out_of_Fiat_Money_.html

JOHN WILLIAMS-A HYPER INFLATIONARY GREAT DEPRESSION IS COMING

-ShadowStats’ John Williams has done his math and believes his numbers tell the truth. He explains why the U.S. is in a depression and why a “Hyper-Inflationary Great Depression” is now unavoidable. John also shares why he selects gold as a metal for asset conversion in this exclusive interview with The Gold Report.

The Gold Report: John, last December you stated, “The U.S. economic and systemic crisis of the past of the past two years are just precursors to a great collapse,” or what you call a “hyper-inflationary great depression.” Is this prediction unique to the U.S., or do you feel that other economies face the same fate?

John Williams: The hyper-inflationary portion largely will be unique to the U.S. If the U.S. falls into a great depression, there’s no way the rest of the world cannot have some negative economic impact.

TGR: You mentioned in a recent interview with CNN that you’re recommending individuals move into both cash and gold.

In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold. That’s worked over the millennia. I’m not per se a gold bug. It just happens to be a circumstance in which it’s the cleanest asset around for that. You don’t need to put all your assets into gold, but hold some.

Hold some silver. I’d look to get some assets out of the U.S. dollar and look to get some assets out of the U.S. When I say outside of the U.S. dollar, again, I look at the Canadian dollar, Australian dollar, Swiss franc in particular. I think they will tend to do particularly well, whereas the U.S. dollar is going to become effectively worthless.

TGR: From a personal investment point of view, you emphasized that this is a time to conserve assets, including gold and other currencies. How else can investors protect themselves?

JW: I like physical gold and silver. I look to gold as a primary hedge. If you can come out of this holding gold, you’ll be in a position where you’ll be able to take advantage of some extraordinary investment opportunities that will follow. With inflation, real estate is usually a pretty good bet. It tends to hold its value over time.

There may be periods of illiquidity, though, and it’s not portable. Neither of those limitations is an issue with gold. Maybe gold will become the black market to support U.S. economic activity. It certainly would be the area that people will try to transfer their assets to as time goes along.

You see people now as gold gets to a new high saying, “Oh my goodness, I bought at $200, and I can sell out at $1,100 making a good profit.” What people don’t realize is that they haven’t made a real profit. What they’ve done is retained the purchasing power of the dollars that they invested in gold, and they’ve lost proportionately the purchasing power of the amounts left in dollar-denominated paper assets over the same time.

Gold is a long-term wealth preserver. Again, where many people are used to an investment environment where they can buy a stock, make a quick profit and then sell, with gold you need to hold on for the long haul as an insurance policy, not as a quick investment. Read more here-http://www.theaureport.com/pub/na/6199 and http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=103698&sn=Detail&pid=32

7 MORE U.S. BANKS FAIL-64 FOR THE YEAR

-Regulators on Friday shut down three banks in Puerto Rico, two in Missouri, and one each in Michigan and Washington, bringing the number of U.S. bank failures this year to 64. The Federal Deposit Insurance Corp. took over the banks: Westernbank Puerto Rico, based in Mayaguez, with about $11.9 billion in assets; R-G Premier Bank of Puerto Rico, based in Hato Rey, with around $5.9 billion in assets; and San Juan-based Eurobank, with $2.5 billion in assets.

The FDIC also seized CF Bancorp, based in Port Huron, Mich., with about $1.6 billion in assets; Champion Bank, of Creve Coeur, Mo., with $187.3 million in assets; BC National Banks, of Butler, Mo., with $67.2 million in assets; and Frontier Bank, based in Everett, Wash., with $3.5 billion in assets. Read more here-http://finance.yahoo.com/news/Banks-closed-in-Puerto-Rico-apf-1507617949.html?x=0&sec=topStories&pos=main&asset=&ccode

REAL ESTATE

-Canadian home prices bubbly. Take a look at the two charts below, which benchmark resale home prices to income and rents in Canada. Both show home prices in overvalued territory (while resale home prices have slipped from record highs, they are still running at 17% YoY).

Relative to labour income, home prices are about 1.5 standard deviations above norm (data going back to 1980). The situation is even more dire when we look at resale home prices versus rental prices this metric is over 2.5 standard deviations above the average, which is very reminiscent of what we saw in the U.S. in 2004-2006.

Our statistical work implies that given current income and rent, we could see a price correction of around 15-35% if these ratios were to mean revert, which would certainly be a U.S.-style correction. David Rosenberg-Gluskin/Sheff

-CMBS Delinquencies Above $50 Billion. According to Horsham, Pennsylvania-based Realpoint LLC, the delinquent unpaid balance for commercial mortgage-backed securities (CMBS) rose 6.8% in March, up to a staggering $51.05 billion. The delinquent unpaid balance is now up 268% from a year ago and more than 23 times the low point of $2.21 billion in March 2007.

Furthermore, the March delinquency ratio of 6.4% is nearly four times the 1.66% reported in the same month last year and about 23 times the Realpoint recorded low point of 0.28% in June 2007. Here’s a chart showing monthly delinquencies since May of 2008. Read more here- http://www.zerohedge.com/article/cmbs-delinquencies-hit-fresh-record-now-51-billion-268-increase-prior-year

The Goldbugg Report – May 11, 2010
Posted by Worldwide Precious Metals on Tuesday, May 11, 2010

The Week in Review – May 7, 2010

May 7, 2010

The US Stock Market suffered its largest intraday loss ever on Thursday, at one point down 998.50 before rebounding to close, still down about 350 points. The trade is widely being blamed on either a “software glitch” or a “fat fingered trader”, but the damage is done. Jittery investors now see a potential for the market to be “gamed”. Markets around the world headed downward as they opened following the New York close Thursday afternoon.

Retail sales were weaker than expected in April. Battle weary consumers, still fearing for the stability of their employment are continuing to hold on to their cash. Thursday’s madness in the stock market could very well reinforce the desire to hoard cash.

Dick Bove, of Rochdale Securities, released research showing that US banks such as JPMorgan Chase, Morgan Stanley and Citigroup have massive exposure to the debt crisis escalating in Europe. Riots continued in Greece as their parliament voted to approve austerity measures that will be required for them to access the bailout package put together by the European Union. According to Bove, there is “a growing recognition that Greece has got to default.” He went on to say “the riots in the streets showed the decision to repay the debt was not going to be made by the people in Germany, France and Switzerland. It’s going to be made by the people in Greece and they’re not going to repay it.”

Jean-Claude Trichet said no less than three times on Thursday that “Greece would not default” on its debt. There is one problem with Mr. Trichet’s statement: Neither he, nor anyone else at the ECB has a say in whether Greece decides to take such a step. If Greece decides that the best or only course of action is to default on their debt, then they will.

Jobs data for April showed US employment grew at the fastest pace in four years, adding 290,000 jobs. Despite the news, unemployment rose to 9.9% presumably as discouraged individuals who had previously stopped searching for work, and therefore fallen out of the measurement criteria, once again began trying to find employment.

Rocked by the ongoing disaster in the Gulf of Mexico, crude oil dropped back under $80 a barrel. All offshore drilling permits have been suspended in the US until an investigation is complete, and states such as California that had been contemplating allowing drilling off their coasts have now changed their stance.

The Euro continued its fall against the dollar; in fact currencies across the board, with the exception of the yen, were down against the dollar following Thursday’s madness.

Lloyd Blankfein, CEO of Goldman Sachs Group is under fire with many calling for him to step down. This is just further evidence that Wall Street, and those who excel at making their firms profitable are being targeted and used as scapegoats by an ineffective US administration and an equally ineffective US Congress. The rhetoric spewing forth from Washington has been the same for months “Wall Street Is Evil and It Must Be Punished!” We expect the witch hunt to accelerate in the lead up to the November elections as the current crew in Washington tries to divert attention from the still increasing unemployment numbers.

Friday to Friday Close

	Apr. 30^th	May. 7^th	Net Change
Gold	$1180.00	$1210.00	30.00 + 2.54%
Silver	$18.60	$18.40	(0.20) – 1.08%
Platinum	$1740.00	$1660.00	(80.00) – 4.60%
Palladium	$553.00	$515.00	(38.00) – 6.87%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Platinum Palladium

	Gold	Silver
Support	1190/1175/1150	17.50/17.00/16.50
Resistance	1210/1225/1250	18.70/19.00/19.50

	Platinum	Palladium
Support	1650/1625/1600	490/480/450
Resistance	1670/1700/1750	510/530/560

Volatility should be expected to continue. If you were wise enough to have diversified your portfolio with precious metals prior to Thursday’s madness, congratulations. On Wednesday, silver started moving downward and when it reached about 17.05, several of our dealers queried us as to what actions they should take. Our response was: “you might want to have your customers buy as much as they can afford on this dip.” As the stock market spiraled downward Thursday, gold and silver held their own, and gold even moved upwards. In the aftermath on Friday, precious metals prices renewed their climb, with silver even rallying back to close at 18.40, as investors sought safe havens to store their hard-earned money. Many in the media even went so far as to say “the smart money was already in gold when the market dropped yesterday.” The situation in Europe, as we mentioned in our April 30 memo, is far from becoming stable. The UK elections have resulted in a “hung parliament” meaning it may be weeks or even months before they can effectively begin to govern. The Greek people are rioting in the streets over the austerity measures that their own parliament was basically forced to pass in order to receive aid from the IMF and the rest of the EU. Many are speculating that the Greek government is on the verge of being thrown out, and that there is a very real possibility that if that happens, the country will default on its debt. The contagion is spreading throughout the whole Euro Zone, and there is speculation that it will even spill over into the US and even Japan. As the chaos and contagion spreads, more and more analysts are still calling for precious metals to explode to the upside. If you have not yet begun your precious metals portfolio, or have not yet diversified your current portfolio with precious metals, you may be risking your hard-earned investment money if the stock market decides to plummet again and the media once again starts repeating “the smart money was already in precious metals.” Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – May 7, 2010
Posted by Worldwide Precious Metals on Friday, May 7, 2010

The Goldbugg Report – May 4, 2010

May 4, 2010

-Aden Sisters on Gold’s potential.

-Bullion Bulls Canada interviews Ted Butler.

-Buying Silver to Hedge Inflation and a Bond Crisis

GOLD

-Aden Sisters on Gold’s potential. For now, gold looks ready to spring forward. Considering that just six months ago, the $1000 level was a super break out point and today it’s a major support level illustrates how gold’s slow and steady rise has been gaining momentum.

The gold price has broken above all resistance and the last remaining one is the November closing high at $1218. Once $1218 is surpassed, gold could jump up to the $1300 level before this intermediate rise is over.

This means that the bull market remains very strong, even though gold’s already been rising for nine years. Chart 2 shows gold’s big picture since 1967 when it began to move in the free market.

Here you can see an interesting pattern that’s been going on since 1969. Note that each major eight year low was followed by a major peak 11 years later. The only exception was the 1993 low, but in that case the low was mild within an essentially quiet market (see asterisk).

If this 11 year pattern continues, we could see gold shoot up to the $2000-$3000 level within the next two years. But since today’s economic situation is historically extreme, we could see much higher prices for a longer period of time well beyond 2012, and more like 2017-2018.

This is precisely what we mean by staying with the major trend. It’s powerful right now and we’ll stay with it for as long as it lasts. Read more here- http://www.321gold.com/editorials/aden/aden042810.html

-Today’s chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home-gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes 153 ounces of gold to buy the median single-family home.

This is considerably less that the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 75% from its 2001 peak and remains well within the confines of its five-year accelerated downtrend. Read more here-http://www.chartoftheday.com/20100423.htm?T

Source: chartoftheday.com

-How to Turn $35 into $166,000+, from 1970 to 2009. Read more here-http://www.caseyresearch.com/displayCdd.php?id=413

Gold could hit $1,600/oz but silver, pgms will likely outperform. BMO Capital Markets Bart Melek says commodity prices are riding the global recovery wave with copper, platinum, silver met coal, and iron ore as his top picks. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103269&sn=Detail&pid=33

-Gold Is the ‘Only Currency’: Strategist. Gold is “the only currency” worth investing in as it is a good hedge against the eurozone’s fiscal troubles, said Mathew Kaleel, co-founder & portfolio manager, H3 Global Advisors.

“Gold, and every currency, is going up. It’s going up a lot more than (the) euro and sterling,” Kaleel said on CNBC Tuesday. He believes Europe’s fiscal issues have not ended as yet, saying the International Monetary Fund’s package for Greece is “literally a band-aid solution.”

“We’re going to see other countries (facing) the same kind of difficulties in Europe. That’s going to be negative for the euro,” Kaleel said. Gold is a very good form of insurance as there’s limited supply in terms of increased mine output, so that’s a really good way to hedge yourself against euro issues, he continued. Watch more here-http://www.cnbc.com/id/36792634

-Richard Russell, the venerable and highly respected newsletter writer wrote in his most recent newsletter about how he remains bullish on gold and particularly bullish on silver. “I firmly believe we’re witnessing a great primary bull market in gold. This bull market is opposing a long-term bear market in fiat or non-intrinsic currencies.

Since there is no discipline putting a limit on fiat-currency production, I believe in our lifetimes we will see the end of fiat currencies as acceptable substitutes for real money. When that happens, there will be no ceiling for gold. In their guts and in their hearts, every seasoned investor knows this, which is why the bull market in gold will continue.

How high will gold go? Wrong question, how low will fiat currencies go? The answer, as Bob Dylan might say, is “blowin’ in the wind.” I think gold is now under heavy accumulation. I note that gold is often knocked down in the thin after market. I’m beginning to think that this is done on purpose.

Large interests who want to accumulate gold have a reason to want to knock gold down, and thereby be able to accumulate it at “reasonable” prices. The last thing they want is for gold to run away on the upside before they have accumulated as much as they are able. I think this is particularly true of China and Russia and other Asian nations. Richard Russell

-Pro-gold investment attitude may run for years CPM. CPM Group’s latest Gold Yearbook suggests gold has “solidified its standing as a premier and exceptional financial asset to provide protection against a host of financial, economic and political problems.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103503&sn=Detail&pid=33

-Central Bank gold sales almost non-existent. Central Bank gold sales under the new sales agreement, CBGA3, remain extremely low and may help support gold price fundamentals along with rising jewellery demand and falling scrap sales. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103455&sn=Detail&pid=33

-The International Monetary Fund sold 5.6 tonnes of gold in February under the second phase of its gold sales programme, the World Gold Council said on Monday. The IMF’s sales are taking place under the umbrella of the third Central Bank Gold Agreement, which began in September 2009.

Signatories of the CBGA are largely euro zone central banks, the largest gold holder of which is Germany. Total sales under the pact, which limits signatories’ gold sales to 400 tonnes a year, were just 7.2 tonnes to April 20. The IMF began its planned sales of 403.3 tonnes of gold last year.

After the sales reported by the WGC, plus those of 200 tonnes to India and smaller amounts to Sri Lanka and Mauritius last year, it has a further 185.7 tonnes of gold to sell. “To date, 212 tonnes of gold have been sold by the IMF in off-market transactions and the April edition of the (IMF’s International Financial Statistics) reported a 5.62-tonne reduction in IMF holdings,” the WGC said in a report.

Separately, it said the remaining gold earmarked by the IMF for disposal would “be sold in a phased and transparent manner within the ceiling set by the CBGA, so as to avoid any disruption to the gold market.” Among signatories of the CGBA, Germany has sold 0.9 tonnes of gold so far under the third CBGA, Malta has sold 0.3 tonnes, and unknown countries a further 0.4 tonnes, the WGC said. Read more here-http://www.gata.org/node/8578

-Poll: 93% of Investors Believe That Gold Will Fall. At a time when gold prices reeled under pressure, for a sustained period after hitting their all-time high in December 2009, the perception towards the yellow metal seems to have reversed with investors hinting at weakening of gold prices in the near future and strengthening of other investment avenues.

In an online opinion poll conducted by Commodity Online, a majority of the respondents have hinted at a possible fall in gold prices in the near future, and better earning opportunities will come knocking on the door.

In an online poll of a sample size of 21,600 respondents selected from across the globe, 93% or 20,100 of the total sample size had opined that there would be a fall in gold prices due to a recent upbeat mood in the global equity markets, while only 1,400 respondents contradicted the stand, 0.46% did not comment on either side.

This showed that most of the respondents believed that there would be a fall in gold prices in the near future due to a recovery in global equity markets. Similarly, of the total respondents as many as 53.1% believed that the US dollar would replace gold from its status of ’safe haven.’

Looking at the recovery of the US economy from the nightmarish recession which had started from the US and hit the world economy in 2008, the dollar was found gathering steam once again. However, 46.8% of the respondents contradicted the view and maintained their scepticism towards the dollar and put gold to their preferred investment mode. Read more here-

http://www.commodityonline.com/news/93-investors-believe-Gold-will-fall-Poll-27563-3-1.html and http://www.caseyresearch.com/displayCdd.php?id=410

-Five Questions About Gold The IMF Refuses To Answer. Read more here-http://www.businessinsider.com/we-asked-the-imf-questions-from-eric-sprott-and-gata-and-got-no-response-2010-4#ixzz0mLdspRp9

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00

Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57

Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33

Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00

Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00

Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67

Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00

Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33

-Silver has been called poor man’s gold. Never mind, what I’m interested in is whether silver will remain in this ascending channel. A year ago silver was selling like something out of a compost heap. In early 2005 you could have bought all the silver you wanted in the six dollar range. Now silver will cost you around 18 dollars an ounce.

Today an ounce of gold will buy 64 ounces of silver. The historical ratio has been around 16-1, so silver compared with gold is cheap. Nobody knows whether silver will climb back to the old ratio, but we do know silver is cheap. Read more here-http://www.321gold.com/editorials/russell/russell042610.html

-Bullion Bulls Canada interviews Ted Butler. Q: Do you have any general advice today for precious metals investors or silver investors in particular?

I don’t think there is much I can add for existing silver investors, except buy more. So I’d like to address this to non-silver investors. Rarely has the average person been presented with the investment opportunity available in silver today.

The factors arguing for substantially higher silver prices are so clear and verifiable that only those who refuse to study the facts would bypass a silver investment at this time. Read more here-http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=10764:an-interview-with-ted-butler&catid=49:silver-commentary&Itemid=130

-Worst is over for gold and silver, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8573

-Buying Silver to Hedge Inflation and a Bond Crisis. Read more here-http://news.silverseek.com/SilverSeek/1272247985.php

-Digital Silver: Precious Components. Read more here-http://news.silverseek.com/SilverSeek/1272421518.php

-Hi-Ho, Silver, Aw-a-a-a-ay! Read more here-http://news.silverseek.com/RickAckerman/1272603840.php

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Charts of the week: 49 Out Of 50 State Economies Are Still Underwater. 49 out of 50 U.S. states are still showing less economic activity than a year ago, based on February 2010 coincident economic indicators from the Federal Reserve of Philadelphia. The chart below is organized from top to bottom, from the most growth in economic activity to the largest declines in economic activity.

States like West Virginia (WV), Maryland (MD), Idaho (ID), and Wyoming (WY) are the worst off year over year. Their February 2010 economic activity remained 13.5%, 6.3%, 6.3%, and 6.2% lower year over year. Thus their economies, along with those of another 45 states, all the red ones, are all underwater on an annual basis. North Dakota (ND) is the only state to currently have a higher level of economic activity year over year.

Its February 2010 economic activity was 1.1% higher than February 2009, as shown by the green dot in the chart below. Moreover, 28 out of 50 states even exhibited less economic activity in February 2010 than just three months earlier (not directly shown below). This means they have been deteriorating most recently as well. In fact, the chart below is organized from left to right by the change in economic activity in the last three months (February 2010 vs. November 2009).

Thus West Virginia (WV), Maryland (MD), Montana (MT), and Delaware (DE), have seen their economic activity fall since November 2009 the most, given that they are the left-most dots. For example, West Virginia’s economic activity fell 3.1% vs. November 2009 (percentage not shown).

In contrast, Michigan has done the best most recently, given that it is the right-most dot, rising 1.5% vs. November 2009 (percentage not shown). Net-net what this tells us is that 49 out of 50 state economies are still underwater on a one year basis, and 28 out of 50 are even still falling vs. November. Read more here-http://www.businessinsider.com/chart-of-the-day-economic-activity-for-us-states-2010-4

Source: chartoftheday.com

-Charts of the week: First comes the economic downturn, then the official “recession” moniker is bestowed, followed by endless debate on the alphabet soup of recovery possibilities: will it be “V” shaped or “W,” or “L,” or “U”?

Recently the idea of a square-root-shaped recovery was offered by an economist from a well-known brokerage firm. But this possibility seems remote, as it suggests that a U.S. economic recovery will eclipse the previous highs of the credit-bubble years.

We offer a different interpretation; it is the right shape applied to the wrong metric. Today’s chart supports the oxymoronic-dubbed “jobless recovery” theory garnering a lot of attention lately. But without job growth, and lots of it, there will be no recovery regardless of its shape. Welcome to the square-root-shaped job market. Read more here-http://www.caseyresearch.com/displayCcs.php?e=true

-Charts of the week: Last August the Congressional Budget Office (CBO) released a report projecting that Social Security outlays would not exceed revenues until 2017. A mere six months later, as the ink on the report was still drying, the CBO announced the Trust Fund would show a 2010 full-year deficit.

The report was the CBO’s 75-year forecast for the fund you gotta love the irony. And this year’s deficit comes before the long-awaited surge in baby boomers hitting the retirement age. Once the boom is lowered on Social Security, we can only expect many more surprises in the flawed CBO projections. Read more here-http://www.caseyresearch.com/displayCcs.php?id=91

-Follow Lucas Bugg from World Wide Precious Metals on Twitter. Follow Lucas here-http://twitter.com/TheGoldbugg

-Watch World Wide Precious Metals power point presentation on investing in precious metals at Youtube.com. Watch here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be

-”Never let yesterday use up too much of today.” Will Rogers

-”The great thing in the world is not so much where we stand, as in what direction we are moving.” Oliver Wendell Holmes Jr

-Two politicians are having lunch together. All of a sudden one stands up and shouts, “You’re lying.” The other replies, “I know, but just hear me out.” Casey Daily Dispatch

-”In the end, more than they wanted freedom, they wanted security. They wanted a comfortable life and they lost it all security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility then Athens ceased to be free.” Edward Gibbon-The Decline and Fall of the Roman Empire.

-When half of the people get the idea that they don’t have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that, my dear friend, is the beginning of the end of any nation. Author Unknown

-The game being played at Goldman Sachs is a smoke screen created by those who control the SEC to make sure the Dodd financial reform package is passed. The hedge funds; derivatives, naked shorts, and market manipulators with black boxes will remain relatively untouched. The public needs someone to blame and it will be lower level players at Goldman.

The Republican opposition will collapse and the worthless bill will pass worthless to the public, but full of new riches for the elitists. Bailouts like those you have just seen over the past 2-1/2 years will continue. They’ll be National Insurance, another name, and version of TARP and lots more GE’s, GM’s and AIG’s.

Nothing will be done about Geithner’s AIG bailout and his money laundering activities. Nor will there be any investigation of the gold and silver suppression and manipulation. The latter will eventually fall of its own weight as more and more investors worldwide take possession of these metals.

Needless to say the charade makes the president and the Democrats look good. It was Goldman that donated just under $1 million to the president’s campaign. As you can see the mosaic all fits together. Goldman makes $13 billion after paying out $16 billion in bonuses to its employees, while receiving taxpayer subsidies. You should get it by now. You are being screwed. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1272463424.php and http://news.goldseek.com/InternationalForecaster/1272265560.php

-We said before that what really stood out in this “Great Recession” was the permanency of the job decay. Of the eight million jobs lost, three-quarters were in positions that are not likely coming back. We just heard from the National Association of Manufacturers that fewer than 30% of the manufacturing jobs lost in the sector will be recouped in the next six years.

So here’s a bit of math: if this holds true for the economy as a whole, and assuming a normal cyclical upturn in the labour force participation rate, then the nationwide unemployment rate would be 15% in six years’ time. David Rosenberg-Gluskin/Sheff

-The time gap between recessions is shortening now we went 10 years from 1990 to 2000, then 5 years from 2002 to 2007 and the next recession, following this pattern, is likely going to occur within the next 2-3 years. And, unlike the start of the last recession when the government had so many arrows in its quiver, there are none today to help lift the economy again. David Rosenberg-Gluskin/Sheff

-The Shiller P/E ratio is currently more than 30% above historical norms, and the fact that interest rates are low does not account for much of that excessive valuation. The S&P 500 is basically priced for a return-to-peak earnings by next year and the VIX index, being where it is right now (at 16.3), is testament to the view that Mr. Market is attaching an extremely high probability of this happening.

With margins already massively expanded, unit labour costs being cut a record 4.7% YoY, the financial share of earnings surging to their highest level ever, and the fact we are past the peak rate of economic growth for the cycle, the widespread view of a sustained V-shaped recovery in corporate profits will be put to the test. David Rosenberg-Gluskin/Sheff

-David Rosenberg, chief economist of Gluskin Sheff & Associates Inc., says U.S. stocks are poised for losses because they’ve become too expensive. The S&P 500 is valued at 22 times annual earnings from the past 10 years, according to inflation- adjusted data since 1871 tracked by Yale University Professor Robert Shiller.

Economic growth will slow and stocks retreat as governments around the world reduce spending after supporting their economies through the worst recession since the 1930s, said Komal Sri-Kumar, who helps manage more than $100 billion as chief global strategist at TCW Group Inc. The U.S. budget shortfall may reach $1.6 trillion in the fiscal year ending Sept. 30, according to figures from the Washington-based Treasury Department.

“The correction is going to come,” Sri-Kumar said in an interview with Bloomberg Television in New York on April 21. “You now have a debt bubble growing in the sovereign side, and we’re slow to recognize how negative that could be.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ayxUdbONKGwo

-Investor sentiment is wildly bullish. The just-released Investors Intelligence survey is now up to 53.3% for the bulls (versus 51.1% last week) while the bear camp has dwindled further, to 17.4% (versus 18.9% a week ago). Bullish sentiment rose for the third consecutive week and bearish sentiment has not been this low since January 12.

As Bob Farrell’s Rule number 9 stipulates, when all the forecasts and experts agree, something else is bound to happen. The lesson from this meat-grinder of a market, from the depths of despair a year ago to the euphoria gripping Wall Street today, is that the emotions of fear and greed are still very much part of the investment landscape.

Rest assured that today’s bulls will not get out in time once this massive bear market rally turns over. David Rosenberg-Gluskin/Sheff

-We saw a reference in yesterday’s Financial Times indicating that at least six million American households are no longer paying their mortgage and are living for free in their home because the banks don’t want to evict them and become a reluctant landlord or have to bite the bullet and write down the value of the property on their books.

Right there we have a situation where at least $100 billion of consumer cash flow that has been freed up for fun and games in the name of strategic mortgage defaults. Again, this is hardly a sustainable underpinning and hardly a positive force for banking-sector interest income. But time has been bought, of that there is little doubt.

However, something tells me the day of reckoning lies ahead, both for an economy breathing fumes from a wide array of government stimulus measures and an equity market that is currently overpriced to the tune of a full standard deviation point relative to historic valuation norms and investor sentiment that is wildly bullish. David Rosenberg-Gluskin/Sheff

-Bernanke Says Budget Gap Might Raise Rates, Endanger Recovery. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ay7oW.wHxie4

-Fed Pledges to Keep Low Rates for ‘Extended Period’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ajSEyMocXuSA&pos=2

-Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy. Harrisburg, Pennsylvania, which has missed $6 million in debt payments since Jan. 1, should consider seeking Chapter 9 bankruptcy protection, City Controller Dan Miller told a three-hour special committee hearing. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=ab6OQc35weDI

-Local governments are laying off workers and cutting services while hoping for federal aid. Colorado Springs is planning to turn off a third of its streetlights, though residents can adopt one for $75. An Ohio judge told residents they might want to arm themselves after the county cut half its sheriff’s deputies. Ocean City, Md., is ending its curbside recycling program.

Even though the economy is showing signs of recovery, these remain tough times for cities and counties, and it’s likely to get tougher. So local governments want what Wall Street and carmakers got: federal money. Read more here-http://www.latimes.com/news/nationworld/nation/la-na-cities-20100425,0,3466570.story

-Hundreds Camp Out For Job Opps In Queens. Some Arrived As Early As Friday Armed With Blankets Hoping To Get 1 Of 750 Applications For Elevator Industry Job. Read more here-http://wcbstv.com/local/jobs.employment.queens.2.1657008.html and http://www.realclearpolitics.com/video/2010/04/26/obamaville_tent_city_in_new_york_set_up_in_hopes_for_elevator_job.html

-Hewitt Says 401(k) Balances Remain 11% Lower Than in 2007. Average account balances of 401(k) retirement plans remain 11 percent lower than 2007, according to Hewitt Associates, a human-resources consulting firm.

Participants in the employer-sponsored plans had account balances of $70,970 in 2009, down from $79,570 in 2007, according to a report released today that surveyed almost 3 million employees. Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid=ahuZNfhU1Lh0

-The Standard & Poor’s 500 Index is poised to fall as chronic unemployment rises to a record among jobless Americans, according to Mitsubishi UFJ Securities Co. the brokerage unit of Japan’s biggest bank by market value. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aisk6AgvjUqI

-Eric Sprott April commentary. The historian Niall Ferguson recently wrote that, “US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941. Read more here-

http://www.sprott.com/Docs/MarketsataGlance/04_10%20Weakness%20Begets%20Weakness.pdf

-Martin Armstrong’s financial commentary. Read more here-http://www.martinarmstrong.org/files/The-Paradox-of-Solution-4-18-10.pdf

-As U.S. President Obama makes the case for strong financial reform, Bill Moyers sits down with veteran regulator William K. Black, who says Wall Street is already been breaking current rules. Watch more here-http://www.pbs.org/moyers/journal/04232010/watch.html

-Honeybees in the U.S. died at a greater rate from October to April than a year earlier, with more beekeepers attributing the cause to an illness that has devastated hives in recent years, the government said.

Managed colonies lost to all causes reached 34 percent of all hives, up from 29 percent a year earlier and down 36 percent during the winter of 2007-2008, the U.S. Department of Agriculture said today. The portion of surveyed beekeepers reporting the presence of Colony Collapse Disorder increased from the previous year, while staying below the percentage citing it the year before that.

“It’s unsustainable,” said Dennis vanEngelsdorp, a past president of the Apiary Inspectors of America, which helped conduct the USDA survey. “It’s a pretty big loss for beekeepers to absorb, and they can’t keep doing that.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aq6Mm0nS4.S8

WWW.RARECOLOREDDIAMONDS.COM

A model holds a ‘De Beers Millennium Blue Diamond’ sold at Sotheby’s in Hong Kong on March 18 for 6.4 million. De Beers is cutting production to extend life of its mines.

and http://www.ft.com/cms/s/0/35ae75c2-50cb-11df-bc86-00144feab49a.html

SOVEREIGN DEBT CRISIS

-Roubini Says Rising Debt Leads to Inflation, Defaults. Nouriel Roubini, the New York University professor who predicted the U.S. recession more than a year before its start in December 2007, said rising sovereign debt from the U.S. to Japan and Greece will ultimately lead to higher inflation or government defaults.

“While today markets are worried about Greece, Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems,” Roubini, 52, said today during a discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. Increasing tax revenue won’t be enough “to save the day.”

Roubini’s remarks underscore statements by officials such as Dominique Strauss-Kahn, managing director of the International Monetary Fund, that the global economy still faces risks. Credit-rating cuts on Greece, Portugal and Spain in the past two days are spurring investors’ concern that the European deficit crisis is spreading and intensifying pressure on policy makers to widen a bailout package.

“The thing I worry about is the buildup of sovereign debt,” Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel. If the issue isn’t addressed, nations will either fail to meet obligations or experience higher inflation as officials “monetize” their debts, or print money to tackle the shortfalls. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8BNhcJXJZW0&pos=1 and

-Rogoff Says Greece May Not Be Europe’s Last Bailout. Greece is unlikely to be the last euro nation to need an International Monetary Fund bailout, with Ireland, Spain and Portugal “conspicuously vulnerable,” said Harvard Professor Kenneth Rogoff.

“It’s more likely than not that we’ll need an IMF program in at least one more country in the euro area over the next two to three years,” Rogoff, a former IMF chief economist who has co-authored studies of financial and sovereign debt crises, said in a telephone interview. “The budget cuts needed in Europe in many countries are profound.”

Greece on April 23 triggered a 45 billion-euro ($60 billion) rescue package from the IMF and the euro region after its soaring deficit sent borrowing costs surging and sparked concern about a default. At 14.3 percent of gross domestic product, Ireland had the euro region’s largest deficit last year. Greece’s was 13.6 percent, Spain’s was 11.2 percent and Portugal’s 9.4 percent.

The likelihood is “better than 50-50” that others in the 16-nation euro area will end up requiring help from the Washington-based lender, said Rogoff, 56. He expects the IMF will eventually dispatch more loans to Greece than the as-much- as 15 billion euro it’s currently offering. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aNRALsDsKiKc

-Feldstein Says Greece Will Default and Portugal May Be Next. Harvard University Professor Martin Feldstein said Greece will eventually default on its bonds and other euro-area nations may follow, most probably Portugal.

“Greece is going to default despite all the talk, despite the liquidity package,” Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said in an interview with Tom Keene on Bloomberg Radio. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=alFeQcBlaad4

-For Sake of Euro, Let Greece Go Bankrupt: Jim Rogers. Watch more here-http://www.cnbc.com/id/36730325

SANCTIONS ON IRAN’S GASOLINE IMPORTS COULD MEAN WAR

-Sanctions on Iran’s gasoline imports? That’s war talk. Congress is moving quickly to force Obama into blocking gasoline sales to Iran over its nuclear ambitions. A US naval blockade is the only real way to enforce that. And from Iran’s point of view, that means war.

In this post-9/11 age, the idea of preemptive war against a terrorist-prone country supposedly went out of favor after the 2003 US invasion of Iraq. Yet Congress is now pushing President Obama toward steps that could easily be interpreted as an act of war against Iran over its nuclear ambitions.

The House and Senate are moving quickly on a bill to force US sanctions on the sale of gasoline to the Islamic Republic of Iran. In theory, the measure would only punish US and foreign companies that export refined oil products to Iran which, despite being a major exporter of petroleum, lacks sufficient oil refineries.

But there’s a big problem: The only way to really enforce such a crippling sanction against the Iranian economy would be through an American-led naval blockade which, by international law, is an act of war. In recent days, Iran’s regime has made it pretty clear that it is preparing to fight such a blockade, if it comes to that.

Iran’s Revolutionary Guard Corps began a five-day sea, land, and air military exercise April 22 in the Persian Gulf and Gulf of Oman. The war games may even extend to the Strait of Hormuz, the watery chokepoint through which a fifth of the world’s oil flows on giant tankers, and which is guarded by the US Navy.

History is instructive here: It was a US ban on the export of oil to Imperial Japan for its invasion of China that triggered the 1941 attack on Pearl Harbor. And a US naval blockade of Cuba in 1962 almost led to nuclear war with the Soviet Union.

Also on April 22, the House of Representatives voted by a huge 403-11 margin to set a deadline of May 28 for an agreement with the Senate on the gasoline sanctions. In the Senate, too, patience with President Obama’s slow and often faltering approach to Iran is running thin.

“We have waited long enough for diplomacy to work,” says Senate majority leader Harry Reid. “Iran is a festering sore in the world.” Read more here-http://www.csmonitor.com/Commentary/the-monitors-view/2010/0423/Sanctions-on-Iran-s-gasoline-imports-That-s-war-talk

DAVID ROSENBERG-12 THINGS THAT COULD UPSET THE APPLE CART

1. Wildly bullish sentiment readings. The latest Investors Intelligence survey is now up to 53.3% for the bulls (versus 51.1% the prior reporting week) while the bear camp has dwindled further, to 17.4% (versus 18.9% a week ago).

Bullish sentiment rose for the third consecutive week and bearish sentiment has not been this low since January 12. As Bob Farrell’s Rule number 9 stipulates, when all the forecasts and experts agree, something else is bound to happen.

2. Uncertainty over the coming U.S. midterm elections in November.

3. A more hawkish Fed (futures pricing in 40% odds of a rate hike by the November meeting).

4. Tougher profit comparisons in coming quarters.

5. The fading of the fiscal and monetary stimulus. The tax credits expire on Friday, the Fed has already stopped buying mortgage bonds and the pace of new trial modifications under the Treasury’s Home Affordable Modification Program has begun to slow.

6. Fresh uncertainty surrounding banking industry regulation. Goldman is likely the thin edge of the wedge. A proposal is gaining ground on Capitol Hill to force banks to spin off their derivatives-trading operations, which would represent a severe blow to one of Wall Street’s most profitable businesses.

7. Higher tax rates to pay for the massive $1.4 trillion federal budget deficit. The Bush cuts that lowered taxes on high-wage earners and capital gains and dividends are set to expire at the end of 2010. The top marginal tax rate will jump to 39.6% from 35.0%, and the current 15% rate on capital gains and dividends will go back to 20.0% and 39.6%, respectively,

8. Huge overhang of unsold houses. As of March, banks and investment trusts had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

9. Sovereign debt problems in Greece and spillover to Portugal and possibly Spain.

10. Ongoing commercial real estate, which have resulted in 57 bank failures this year.

11. Underfunded state pension plans.

12. A property bubble in China the government is now considering introducing new or higher taxes on real estate, possibly a property tax, in order to cool down a booming property market now widely being described as a bubble (prices up well over 10% from a year ago).

FDIC SHUTS DOWN 7 ILLINOIS BANKS

-FDIC shuts down 7 banks in Illinois. Regulators on Friday shut down seven banks in Illinois, putting the number of U.S. bank failures this year at 57. The Federal Deposit Insurance Corp. took over four banks in Chicago: New Century Bank (CBAO), with $485.6 million in assets; Citizens Bank (CZMO)&Trust Company, with $77.3 million in assets; Broadway Bank, with $1.2 billion in assets; and Lincoln Park Savings Bank, with $199.9 million in assets.

The FDIC also took over Amcore Bank of Rockford, which had $3.8 billion in assets; Peotone Bank and Trust Company in Peotone, with $130.2 million in assets; and Wheatland Bank of Naperville, with $437.2 million in assets.

Broadway Bank was owned by the family of Illinois Treasurer Alexi Giannoulias, a Democrat who is running for President Barack Obama’s old Senate seat. The bank was heavy into real estate loans and lost $75 million last year.

There were 140 bank failures in the U.S. last year, the highest annual tally since 1992 at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and only three succumbed in 2007.

The number of bank failures likely will peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila Bair said recently. As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

The number of banks on the FDIC’s confidential “problem” list jumped to 702 in the fourth quarter from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years. The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.

Depositors’ money – insured up to $250,000 per account is not at risk, with the FDIC backed by the government. Apart from the fund, the FDIC has about $66 billion in cash and securities available in reserve to cover losses at failed banks. Read more here-http://apnews.myway.com/article/20100424/D9F93O900.html and http://www.bloomberg.com/apps/news?sid=adUQu7XAFc1A&pid=20601087

GOLDMAN SACHS UNDER FIRE-CRIMINAL CASE COMING

-Delay, Delay, Delay: Goldman Sachs’ Time-Wasting Strategy. Watch video here-http://www.youtube.com/watch?v=U-sikHElsoc

-WSJ: Feds Launch Criminal Probe Into Goldman. Federal prosecutors in New York have been examining transactions by Goldman Sachs Group Inc., accused of fraud by U.S. securities regulators, to determine whether to pursue a criminal case, according to two people familiar with the matter.

The federal review, which lawyers say is common in such a high-profile case, is being done by the U.S. attorney in Manhattan, said the people, who weren’t authorized to comment and spoke on condition of anonymity. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=azKt1pYdWUAU&pos=1 and http://money.cnn.com/2010/04/29/news/companies/SEC_goldman_prosecutors/index.htm

-Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag in E-Mail. Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e-mails released by Senate lawmakers.

The transaction was Timberwolf Ltd., a $1 billion collateralized debt obligation holding pieces of other CDOs, according to a statement from the Permanent Subcommittee on Investigations. The CDO also included optimistic side-bets on the performance of CDOs, derivatives in which the firm took the opposite pessimistic side in “many” cases, the panel said.

“Boy that timberwolf was one shi**y deal,” Montag, who is now Bank of America Corp.’s president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachs’s mortgage business at the time, according to the statement yesterday. Within five months of Timberwolf’s debut, the CDO had lost 80 percent of its value, and it was liquidated in 2008, according to the panel.

The CDO was among securities that Goldman Sachs sold to clients after deciding the New York-based firm needed to reduce its mortgage holdings. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=agq7CoygGLsc&pos=1

-Goldman Sachs Armed Salespeople to Dump Assets, E-mails Show. Goldman Sachs Group Inc., seeking to reduce assets tied to the declining U.S. housing market, urged its sales force in 2006 and 2007 to sell those products to clients, newly disclosed internal e-mails show.

The e-mails, including communications from Chief Executive Officer Lloyd Blankfein, show that employees discussed how to “arm” salespeople to shed bonds the firm found too risky to hold. The e-mails were released yesterday by Senator Carl Levin in connection with a hearing where current and former managers testified about the firm’s role in the financial crisis.

In one of the e-mails, Blankfein asked whether employees were doing enough to sell bonds backed by home loans including subprime mortgages. “Could/should we have cleaned up these books before and are we doing enough right now to sell off cats and dogs in other books throughout the division,” Blankfein, 55, wrote in an e- mail dated Feb. 11, 2007. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoT.IqoUZk14&pos=3

-Goldman execs cheered big profits as housing market crashed. Read more here-http://www.gata.org/node/8574

-Goldman Case Is Just ‘the Beginning’ for Banks, Malmgren Says. Goldman Sachs Group Inc.’s Senate grilling may be the start of a series of inquiries into banks in the wake of the global crisis, said Pippa Malmgren, George W. Bush’s former chief financial-markets adviser.

“Various U.S. investigators, from the Justice Department to the FBI to the Federal Reserve, bank examiners, have been crawling all over these institutions, not just Goldman but others, for now two years,” she said in an interview today with Bloomberg Television from Singapore.

“My guess is that we’re at the beginning of a process of uncovering all these sorts of stories. It’s not the end of it, it’s the beginning of it.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aG5wW0CL5.Os

-Bankers Said ‘Anything’ to Get High Rating, S&P Ex-Analyst Says. Just past midnight on May 3, 2005, Standard & Poor’s analyst Chui Ng e-mailed co-workers to broker a solution to demands by Goldman Sachs Group Inc. bankers that he said violated two or more of the ratings company’s internal guidelines.

Goldman Sachs was adding $200 million in debt at the “last minute” to a $1.5 billion bond pool called Adirondack Ltd., Ng wrote. That meant the New York investment bank would originate 13 percent of the pool itself, two-and-a-half times the 5 percent limit set by S&P.

Goldman Sachs also balked at Ng’s request to pay in advance for an insurance policy known as a credit default swap, which was being used to create the additional debt obligation. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=amAvyzN2iJww&pos=6

GM’S PHONY BAILOUT PAYBACK

-GM’s Phony Bailout Payback. The company is setting the stage for another taxpayer shakedown. GM CEO Ed Whitacre announced in a Wall Street Journal column last Wednesday that his company has paid back its government bailout loan “in full, with interest, years ahead of schedule.”

He is even running TV ads on all major networks to that effect a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press’ Mike Thompson, for example, advises bailout proponents to start “warming up their vocal chords” to jeer their opponents with chants of “I told you so.”

But before belting out their victory aria, GM-boosters ought to hear the whole story not just the fairytale version about Government Motors’ grand comeback that Whitacre is feeding them. Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn’t, the company, which couldn’t raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.)

So when Whitacre publishes a column with the headline, “The GM Bailout: Paid Back in Full,” most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7 percent interest rate a very sweet deal considering that GM bonds at that time were trading below junk level.)

The vast bulk of the bailout money was transferred to GM through the purchase of 60.8 percent equity stake in the company arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7 percent equity stake.

The U.S. and Canadian government together own 72.5 percent of the company.) But when Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion the loan and the equity. In fact, he avoids all mention of that figure in his column.

He means only the $6.7 billion loan amount. But wait! Even that’s not the full story given that GM, which has not yet broken even, much less turned a profit, can’t pay even this puny amount from its own earnings. Read more here-http://reason.com/archives/2010/04/27/gms-phony-bailout-payback/print

REAL ESTATE

-Home Prices in U.S. Cities Rise Less Than Forecast. Home prices in 20 U.S. cities rose less than forecast in February from a year earlier, a sign a housing recovery will take time to develop. The S&P/Case-Shiller home-price index of property values in 20 cities increased 0.6 percent from February 2009, the first gain since December 2006, the group said today in New York.

The median forecast of economists surveyed by Bloomberg News projected a 1.3 percent advance. Home prices in February were 30 percent below the peak reached in July 2006, indicating the industry that helped trigger the worst recession since the 1930s will take years to recover lost ground.

A pickup in employment is needed to help stem the damage from mounting foreclosures that are restraining further gains in property values. “The big plunge is over, but significant strength is unlikely,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York. “There is still a huge excess of vacant houses.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a.SB0ckB90cw

-Number of the Week: 103 Months to Clear Housing Inventory. 103: The number of months it would take to sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales.

How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern. As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics.

Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices and thus boost their losses. Read more here-

http://blogs.wsj.com/economics/2010/04/24/number-of-the-week-103-months-to-clear-housing-inventory/?source=patrick.net

-Foreclosures Mean ‘Big Leg Down’ for U.S. Housing, Ranieri Says. he U.S. housing market won’t recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri.

“There’s another big leg down and the question is how long does it stay,” Ranieri, chairman of Ranieri Partners LLC, said during a panel discussion today at the Milken Institute Global Conference in Beverly Hills, California. “You can’t have much of a rally when you’ve got this big overhang.”

Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc. Unemployment was 9.7 percent in March, unchanged for a third month, according to the Labor Department, and a fifth of mortgaged U.S. homes were worth less than their loans in the fourth quarter, Zillow.com reported. Read more here-http://www.businessweek.com/news/2010-04-28/housing-rebound-at-least-3-years-away-ranieri-says-update1-.html

-Foreclosure easing in big cities but still spreading. Read more here-http://money.cnn.com/2010/04/29/real_estate/worst_foreclosure_markets/index.htm

-Foreclosure map: See the worst hit metro areas. See more here-http://money.cnn.com/2010/04/29/real_estate/foreclosure_map/index.htm

-‘Strategic’ Mortgage Defaults Reach 12%, Morgan Stanley Says. Decisions by homeowners to walk away from mortgages they can afford are accounting for an increasing share of defaults, according to Morgan Stanley.

About 12 percent of all mortgage defaults in February were “strategic,” up from about 4 percent in the middle of 2007, New York-based Morgan Stanley analysts led by Vishwanath Tirupattur wrote in a report today. Borrowers are more likely to stop paying their mortgages the higher their credit scores and the larger their loans, they said.

Defaults by borrowers who owe more than their homes’ values are among the biggest risks for the housing market, according to analysts including Zelman & Associates’ Ivy Zelman and Amherst Securities Group LP’s Laurie Goodman.

Last month, the Obama administration said it would adjust its anti-foreclosure program to encourage reductions to borrowers’ principal amounts, instead of just the payments they make, to address the issue. That change “gives us hope that policy makers are serious about curbing future strategic defaults,” the Morgan Stanley mortgage-bond analysts wrote.

Strategic defaults also increase based on how much more borrowers owe in housing debt than their homes are worth, they said in the report, which made use of consumer credit data from Transunion LLC and Standard & Poor’s home-price indexes.

That finding concurred with reports by Goodman, a New York- based mortgage-bond analyst, who has said that there will be as many as 12 million foreclosures over the next few years unless lenders can effectively modify borrowers’ debt. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a7s4OSax0Y.0&pos=5

-Honey, I Lost the House. Now It’s Time to Party. “What a relief, Marge, not to have that huge mortgage payment hanging over our head anymore.” “You can say that again, Harry. Let’s celebrate. Maybe take a nice vacation. Or buy a new car.” “What if the bank forecloses on our house? We could be living on the street next year.”

“Exactly. Which is why we need a new car. Maybe something roomy like a Chevy Suburban.” By now you’ve probably seen the analysis, if you can call it that, on how mortgage defaults are driving consumer spending. Yes, you read that correctly. Those deadbeat homeowners, facing possible eviction and in some cases unemployed, are throwing caution to the wind — and money at retailers.

In an attempt to explain strong retail sales in the face of high unemployment, depressed consumer confidence and declining real incomes, Paul Jackson, publisher of HousingWire, alit on an idea that he conceded might sound far-fetched: “People are spending their mortgages,” he opined in an April 5 column.

Because the consequences of missing a mortgage payment are so far in the future, thanks to the multitude of government assistance programs, consumers are behaving as if they’ve just been handed a free lunch, he said.

Other economists jumped on the bandwagon. Mark Zandi, chief economist at Moody’s Economy.com, told the Wall Street Journal this week that 5 million households aren’t making payments on their mortgages, giving them “as much as $60 billion to spend.” Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid=aynsg_Ms7SK8

The Goldbugg Report – May 4, 2010
Posted by Worldwide Precious Metals on Tuesday, May 4, 2010

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The Goldbugg Report – May 4, 2010

May 4, 2010

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