Newsroom

The Goldbugg Report – June 29, 2010

June 29, 2010

-Saudis Hoard Twice as Much Gold as Thought.

-silver’s 200-day moving average is now at $17.51 the ounce as of Tuesday’s close. It’s been almost 30 years since it’s been that high. The day will come when we’ll find it hard to believe that it was ever that low. Ed Steer

-Jim Rogers says buy silver.

GOLD

-As long as Gold does not circulate as money, it is sometimes an excellent form of investment but always the ultimate form of financial protection against a system which has spurned its discipline. But Gold will only have performed its real job when it does once again become money not necessarily in the US but somewhere in the world.

The longer that day is delayed, the higher Gold will go in relation to the various pieces of paper, or plastic, which do circulate as money. It’s really as simple as that. Bill Buckler, Gold This Week, 19 June 2010

-Saudis Hoard Twice as Much Gold as Thought. Saudi Arabia, the world’s fourth-largest holder of foreign exchange reserves, is sitting on more than twice as much gold as previously thought, according to new estimates that point to the revival of bullion as part of emerging economies’ official reserves.

The changes in Riyadh’s reserves were revealed by the World Gold Council, the industry-backed body which regularly tracks official bullion holdings. According to the WGC, the Saudi Arabian Monetary Agency, the central bank, has gold reserves of 322.9 tones, more than double the 143 tones it had previously reported.

The central bank said in a footnote of its latest quarterly report that “gold data have been modified from first quarter 2008 as a result of the adjustment of the Sama’s gold accounts”. Read more here-http://www.cnbc.com/id/37818810 and http://www.gata.org/node/8751 and http://www.zerohedge.com/article/imf-sells-385-tonnes-gold-q2-saudi-holdings-higher-180-tonnes

-Jeffrey Nichols: Looking behind the Saudi gold holdings increase. Read more here-http://www.gata.org/node/8759

-Today’s chart provides some long-term perspective in regards to the gold market. As today’s chart illustrates, gold has been in a strong bull market since 2001. The pace of that upward trend increased beginning in mid-2005. Following the financial crisis of late 2008, gold surged once again.

While gold made another record high today, it still trades significantly below resistance (red line) of its upward sloping trend channel. In the end, with gold currently trading near $1,250 per ounce, gold has more than quadrupled in price during its nine-year bull market. Read more here-http://www.chartoftheday.com/20100618.htm?T

Source: chartoftheday.com

-James Turk: Gold Sets Another Record. Five weeks ago gold closed in London at a new record high against the British pound. That result is not surprising. The pound is generally considered to be the weakest of the world’s major currencies, so it is logical that it would fall first against the strength that gold has been displaying in recent weeks.

Surprisingly, the next currency to fall was the Swiss franc. Gold closed three weeks ago at a new record high against what used to be considered the world’s premier ’safe-haven’ currency. It no longer holds that title because the Swiss National Bank has been intervening to keep the Swiss franc from strengthening against the euro, which has been sinking because of its well-publicized problems. So the Swiss franc has been falling along with the euro, which itself has not been immune to gold’s strength. Last week gold set a new record against the euro.

Gold’s new record this week is against the US dollar. Gold closed in London at a new all-time high of $1245.40, and did even better later in the day by closing in New York at $1257.20. More records for gold are likely in the weeks ahead because central banks are destroying the purchasing power of national currencies.

The following charts also illustrate why more records are likely. Gold’s rising price trend is starting to accelerate. Note the hyperbolic pattern in each of these charts, which is normally a sign but of course, not a guarantee of higher prices.

The similarity of the pattern in the above charts is striking. Note how the pound chart doesn’t look much different from that of the euro chart or the dollar or franc. As I often say, in a world of floating currencies that bob up-and-down against each other depending on respective central bank policies, they are all sinking against gold, which leads to one last point.

As the sovereign debt crisis deepens and the debasement of national currencies at the hands of central bankers and politicians becomes increasingly recognized, more and more people are starting to understand the true nature of gold. It is not only money, but a better money than any national currency. Read more here-http://goldmoney.com/gold-sets-another-record.html

-Aden Sisters: Golden Times. Gold is amazing. It’s been very strong, hitting record highs last week. Its bullish price action means investors and governments know it’s time to be in safe assets. The result is, gold continues to benefit as the world’s #1 safe haven.

Gold is money-We’re also seeing first hand gold’s role in the monetary system. Few people understand gold’s importance over other forms of wealth but if there was ever a doubt, it’s been erased by gold’s reaction to ongoing financial developments. Gold is money. Most governments regard gold as a monetary instrument, and it has been the international currency for thousands of years.

Big picture gold is best-Considering the big picture, there’s no doubt gold is the best investment. The mega trend changed when the new century began. A clear shift away from paper assets (like stocks) and into tangibles (like gold) took place and a new era began.

It wasn’t obvious to the average investor because mega trends take lots of time for investor’s mentality to gradually change. Even though gold’s current rise is already in its tenth bullish year, the trends are still solidly in gold’s favor. These mega trends say stay the course stay with gold and gold related investments.

Mega bull markets also take time to run their course and this time will unlikely be an exception. Bull markets tend to end in euphoria, when everyone’s invested and they can’t get enough of it. Gold is far from this.

Comparing the current 10 year gold run to the 12 years leading up to the 2000 tech explosion in the stock market, and gold’s bull market in the 1970s, you can see that gold’s rise is still tame (see Chart 1). A bubble is still well into the future.

Demand growing around the world-Demand for gold and silver grew even more last month. Gold sales to Europe from the Perth Mint, for instance, soared as the Greek debt crisis triggered a flight to gold. The U.S. Mint also had a busy month, selling record amounts of gold and silver.

The Chinese and Indians were also buyers. China’s gold bar sales doubled, while India’s gold demand soared almost 700% in the first quarter. According to the World Gold Council, the outlook for gold remains strong for the rest of 2010, both from investment and jewelry demand.

Best certainty-We’ve been watching the markets and observing their behavior every day for 34 years. It has given us a good idea as to how they interact, what moves them and when it’s the best time to buy and sell. We’ve made mistakes, but overall our record has been pretty good.

During this time, we’ve of course seen that things change and the markets change in reaction. There are many examples we could provide, but one that comes to mind was gold in the 1970s. It soared due to rising inflation, rising interest rates and a falling dollar.

Also in the mix was economic and political uncertainty like Watergate, the oil embargo, geopolitical problems with Russia invading Afghanistan and the start of the Iraq-Iran war. That 10 year period was packed full of uncertainty.

And uncertainty is again at the forefront. The current global environment is more intense and serious, which is keeping gold up. Gold is the best certainty during times of uncertainty. And the way the world is going, uncertainty will be with us for a long time.

Timing the bull market-Gold hasn’t given us much of a chance to buy on weakness (see Chart 2). When you see that gold gained nearly 25% in 2009, and it’s up 12½% so far this year, it’s a good reason why buying new positions gradually by averaging in is a good strategy.

For now, gold has been in an intermediate rise we call “C” for about 13 months. It’s lasted longer than normal but by reaching a record high gold is telling us that the bull market is very strong and it’s headed higher.

Keep an eye on-We’ll see how far gold takes us this time around, probably to near $1300 or higher. Summer months, however, tend to be seasonally slow months for gold. On the downside, watch $1170 as gold will remain in a strong 2010 rise above this level. Read more here-http://news.goldseek.com/AdenResearch/1277227276.php

-Gold to Be Best Performer in Rest of Year, Poll Finds. Gold will be the best-performing asset for the rest of the year as investors seek to protect wealth from sovereign debt risks and economic turbulence, according to about 30 percent of respondents in a UBS AG survey.

The survey was conducted last week at a UBS seminar in Wolfsberg, Switzerland, of central bank reserve managers, multilateral institutions and sovereign wealth funds, the bank said in a report dated June 18. More than 25 percent said global equities would be the best performer, followed by U.S. Treasuries. Gold was the most popular response. Representatives of some 80 institutions attended. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a.RTWvTpoodI

-Charles Oliver: Gold Headed to $2,000 in Two Years. Read more here-http://sprott.com/docs/MediaCoverage/2010/06-04-2010%20The%20Streetwise_The%20Gold%20Report.pdf

-Why Many Analysts See Gold Going As High As $10,000. Read more here-http://news.goldseek.com/GoldSeek/1277272980.php

-Gold May Advance to $1,500 by End of Year: Technical Analysis. Gold will climb to a record $1,300 an ounce in the coming weeks as investors sell the dollar, and may advance to $1,500 by the end of 2010, according to a technical analysis by Credit Suisse Group AG.

Bullion may jump to $1,500 an ounce, 19 percent more than the record $1,262.50 set on June 18, before investors see gold as a “bubble,” said Michael Macdonald, technical analyst with Credit Suisse, citing momentum indicators. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aYJUlhHeTMew

-Merrill Lynch forecasts further upside for gold, silver prices for 2010-2012. Merrill Lynch metals analysts maintain gold will hit a US$1,500 per ounce target by the end of next year as investor demand pushes gold prices higher. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=106655&sn=Detail&pid=102055

-Mike Kosares: The true inflation-adjusted price of gold should be $7,500. Read more here-http://www.gata.org/node/8748

-Gold reclaims its currency status as the global system unravels. We already know that the eurozone money markets seized up violently in early May as incipient bank runs spread from Greece to Portugal and Spain, threatening the first big sovereign default of our era. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7841961/Gold-reclaims-its-currency-status-as-the-global-system-unravels.html

-Don Coxe: “The Oldest-Established Store of Value Moves to Center Stage”. Read more here-http://www.zerohedge.com/sites/default/files/BMO_NB_Basic_Points_June_2010.pdf and http://www.zerohedge.com/article/don-coxe-dissects-gold-oldest-established-store-value-moves-center-stage and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106596&sn=Detail&pid=102055

-Precious metal remains the No. 1 overall holding, as Mr. Soros has nearly 10 per cent of his assets invested in the SPDR Gold Trust ETF (GLD). He also owns call options, which could increase his ownership stake in the coming months.

Even though Mr. Soros has stated publicly that gold could fall prey to bubble mania, he remains invested because of his general lack of faith in the global economic recovery and efforts undertaken by the world’s largest economies to support currencies like the dollar and euro.

The large gold position is further evidence of Mr. Soros’ willingness to take a large bet in what could be a risky trade. He feels he will know when to get out, so why not make some profit on the mania before the bubble bursts? Read more here-http://www.theglobeandmail.com/globe-investor/investment-ideas/stocks-soros-is-holding/article1611956/

-Keiser Report: Gold grows on Armageddon. Watch video here-http://www.youtube.com/watch?v=HAUCpQJZQbw&feature=email

-U.S. debt hurricane ahead. Gold should provide some protection! Storms ahead for the stock markets and perhaps it is only gold which may provide some respite against major prospective wealth decline. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=106748&sn=Detail&pid=102055

-Sky-high public debt, monetization fear to sustain record gold trading BMO. As commodities ride the economic global recovery over a sometimes bumpy road, BMO’s Bart Melek predicts precious metals will do very well for several years. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=106705&sn=Detail&pid=102055

-Peter Grandich: The farce and the fact. Read more here-http://www.gata.org/node/8758

-Jim Richter: Central bankers care a lot about gold, their deadly enemy. Read more here-http://www.gata.org/node/8757

-Erste Group Bank gold report cites market manipulation. Next target price $1,600, long term price $2,300. Read more here-http://www.gata.org/node/8756

-Jim Rickards: How the world likely will get back to gold. Listen here-http://www.gata.org/node/8755

-Brien Lundin: Gold’s (almost) free at last. Read more here-http://www.gata.org/node/8742

-Central Banks not selling gold but some are buying. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=106534&sn=Detail&pid=34

-New monetary system may use gold at much higher price, Tocqueville’s Hathaway says. Listen here-http://www.gata.org/node/8749

-Gene Arensberg: Gold poised to make history. Read more here-http://www.gata.org/node/8752

-Schmidt’s Gold Thoughts. Gold prices in the future. Read more here-http://www.kitco.com/ind/Schmidt/jun212010.html

-Jeff Nielson: Collapse of official gold sales heralds much higher price. Read more here-http://www.gata.org/node/8747

-Marc Faber: “I Buy Gold, I Don’t Know What Else To Buy”. Read more here-http://www.zerohedge.com/article/marc-faber-i-buy-gold-i-dont-know-what-else-buy

-Brian Milner: The favourite ancient wealth preserver is also an excellent barometer for what’s going on the world. Read more here-http://www.theglobeandmail.com/report-on-business/golds-good-times/article1610918/

-Adam Hamilton: PM Summer Doldrums 2. Read more here-http://www.321gold.com/editorials/hamilton/hamilton061810.html

-Hugo Salinas Price: The gold standard is the generator and protector of jobs. Read more here-http://www.gata.org/node/8739

-GATA Chairman Bill Murphy is interviewed by blogger Christopher Barker at the Motley Fool. The story that’s GATA be told. Read more here-http://www.gata.org/node/8754

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,500 the silver price would be $18.75

Gold to silver ratio at 70 to 1 with gold at $1,500 the silver price would be $21.43

Gold to silver ratio at 60 to 1 with gold at $1,500 the silver price would be $25.00

Gold to silver ratio at 50 to 1 with gold at $1,500 the silver price would be $30.00

Gold to silver ratio at 40 to 1 with gold at $1,500 the silver price would be $37.50

Gold to silver ratio at 30 to 1 with gold at $1,500 the silver price would be $50.00

Gold to silver ratio at 20 to 1 with gold at $1,500 the silver price would be $75.00

Gold to silver ratio at 15 to 1 with gold at $1,500 the silver price would be $100.00

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

-I’d like to point out that silver’s 200-day moving average is now at $17.51 the ounce as of Tuesday’s close. It’s been almost 30 years since it’s been that high. The day will come when we’ll find it hard to believe that it was ever that low. Ed Steer-Read more here-http://www.caseyresearch.com/displayGsd.php?id=228

-Jim Cook: Opportunity Of A Lifetime. Last week I had to prepare a two page advertisement promoting silver for Forbes Magazine and U.S. News and World Report. I also spent an hour on Howard Ruff’s conference call to his subscribers talking about silver.

It caused me to review all the bullish aspects of silver. Consequently my enthusiasm for silver reached a new high. As I said on the Ruff interview, I’ve committed my personal assets to silver because I believe this is an opportunity like no other. I see it as a fortune builder. I think silver offers a way to get filthy rich.

I’ve been studying finance, reading economics, investing in stock, drilling for oil, digging for gold, putting money in start-up companies, buying krugerrands or silver coins and running a business for most of my life. My book on starting a business made it to the best seller list. My novel predicted and described the economic crisis we are going through.

My library at home is overflowing with books on how to succeed, how to invest and how to get rich. I’ve studied the lives of Carnegie, Ford, Edison, Sloan, Rockefeller, Giannini, Swift, Ogilvie, Penney, Woolworth, Wannamaker, DuPont, Templeton, Heinz and Hershey to name a few. I’ve learned how to succeed and how to make money.

I’ve persisted in the face of failure and adversity. I’ve hung on when nothing worked and fought back my fears a thousand nights. I’ve stood my ground when the government tried to crush me and outlasted them on faith alone. Napoleon Hill taught me, “Whatever the mind can conceive and believe it can achieve.”

Andrew Carnegie taught me the quality that distinguished him from all others was persistence. Emerson taught me the laws of compensation, “honest service cannot come to loss every stroke shall be repaid. The longer the payment is withheld the better for you; for compound interest on compound interest is the rate and usage of this bank.”

By most standards I have prospered. But that was not my bargain with life. I wanted more, not just to pile it up, but to do some good. Now I believe the opportunity I have waited for is here. The astute silver analyst Butler has laid it out for us in the clearest terms.

No one that I have known has ever mastered a subject or presented a money making opportunity as clearly as Ted Butler has with silver. According to Ted the price of silver has been artificially depressed for years. The price hasn’t reflected the true state of available supply or the reality of surging demand.

If large banking and investment firms had not built up an inordinately high paper short positions, the price of silver would have been much higher. It was held down while the big boys engineered sell offs that lined their pockets. The game was rigged. As a result of the low price a lot of silver was used up.

Billions of ounces that were once counted in the above ground supply were utilized by industry and are gone forever. The U.S. government once counted as much as five billion ounces in their hoard. Now they have none. In fact they have become one of the world’s biggest buyers of silver for use in their coin programs.

Because of Ted Butler’s relentless crusading the cat is out of the bag and the silver shenanigans are under the spotlight. Government regulators have held hearings about putting limits on how much silver one firm can be long or short. The impact of these position limits would be profound.

Not only would the big banks have to buy back silver to close out their short position they would have to refrain from taking the short side in the future. This would set the price free. Ted Butler has postulated that this single event would send the price much higher. He also claims that it doesn’t matter if the government clamps down on the short sellers.

A silver shortage will eventually drive up the price. Industrial demand along with soaring investment demand, have squeezed the supply to the point that delays are now being experienced by silver investment funds. One of Ted’s themes is that industrial users will begin to panic once they have trouble getting silver. This would send the price up in a hurry.

In the meantime more and more investors are pouring into silver as the story gets out. Other bullish factors include the numerous new industrial uses for silver, the difficulty in ramping up silver mining production, inscrutable Asian demand and the amount of silver that doesn’t exist in pool accounts that must be covered someday.

Then there’s the possibility of inflation, a dollar crisis or an economic panic that causes a stampede into precious metals. It seems clear to me. If silver does what Ted Butler says it will, then fortunes will be made by those who hold the metal. I’m a true believer and I’ve put my money into silver with the expectation of making a fortune. Now it’s a waiting game but I’m “all in.” Read more here-http://www.investmentrarities.com/best_of_jim_cook06-18-10.shtml

-Silver, ‘Gold’s Little Brother,’ May Advance to $23. Silver may surge to as much as $23 an ounce next year, the highest price since 1980, as investors seek a cheap alternative to gold and a global economic recovery boosts industrial demand, according to Commerzbank AG.

The metal may advance to as much as $21 an ounce by the end of this year, about 12 percent higher than yesterday’s close, Eugen Weinberg, head of commodity research, wrote in a report, dubbing the metal “gold’s little brother.” Compared with gold, silver may be considered low priced, Weinberg wrote.

Gold surged to a record $1,265.30 an ounce Monday as investors sought to preserve their wealth against declining currencies, and China’s decision to drop the yuan’s dollar peg boosted commodity prices. There’s rising demand for silver, or “poor man’s gold,” the Perth Mint said earlier this month.

“Gold is still a priority for investors” who are looking for shelter from growing economic uncertainty, Ng Cheng Thye, a Singapore-based director at Standard Merchant Bank Ltd., said by phone today. There’s also “a good chance for silver to rally higher,” possibly to $20 an ounce, Ng said.

“As with gold, silver is also considered to exhibit stabilizing characteristics when it comes to value,” Weinberg wrote in yesterday’s report. “Silver is reasonably priced compared to gold and constitutes a low-cost alternative.” The ratio between gold and silver had risen to about 65 compared with an average of 59 over the past “several years,” the report said.

“We expect this ratio to swing back, leading to potential for silver,” Weinberg said. An ounce of gold for immediate delivery bought about 65.81 ounces of silver today, compared with the 2008 low of 47.55 ounces and the decade average of 61.99 ounces, data compiled by Bloomberg show.

Silver sales would be boosted by an expected recovery of industrial demand, with the metal used in solar cells, mobile phone covers and photography, the report said. Global demand may increase by as much as 50 million ounces by 2011, it said.

Economic growth in China, already a net importer of silver, would also boost sales, Weinberg wrote. China’s import demands are likely to increase, “having a positive impact on the price,” the report said. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQKrKMADo9o8

-Jordan Roy-Byrne: Time to Focus on Silver. It is not exactly groundbreaking analysis to say that whats good for Gold is generally good for Silver. As observers of the precious metals know, Silver tends to lag Gold but eventually catch up quickly.

In the long-term sense, Silver is still a year or two behind Gold as Gold has broken above all resistance levels. Technically speaking, we do favor Gold over the next few months, but ultimately, Silver is poised to catch up with vengeance.

This long-term chart shows $15/oz as a critical level. Silver rebounded strongly from $15 earlier this year and is soon to attempt to break $20. A clean breakout and Silver should reach $25, which is its final long-term resistance. Read more here-http://www.321gold.com/editorials/roy_byrne/roy_byrne062110.html and http://news.silverseek.com/SilverSeek/1276888904.php

-Jim Rogers says buy silver. Watch video here-http://fortune.asia/video/news/2010/06/22/n_rogers_commodities.cnnmoney/index.html and http://money.cnn.com/video/news/2010/06/22/n_rogers_china_euro.cnnmoney/index.html

-New demand sources to bolster silver prices. Investment demand remains a big driver but, growing, new industrial uses are expected to eat away at the current supply surplus. Demand for silver from new sources like the solar energy, medical and water purification sectors is likely to quadruple in the next 10 years.

This is one of the forecasts made in the VM Group/Fortis Bank Nederland, Silver Book. According to the research, demand for such products is likely to rise to at least 230 Moz to account for roughly 25% of world silver demand.

And, coming on the back of significant, continued inflows into silver ETFs, means that the fundamentals over the medium to long term for the metal are “more convincingly bullish that they have been for some time”. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=106740&sn=Detail&pid=102055

-Read report here-http://www.virtualmetals.co.uk/pdf/FBNSB0610.pdf

-Metals more bullish than COT data, Butler tells King World News. Listen here-http://www.gata.org/node/8746

-Ted Butler silver commentary. There are still credible whispers of a pending major silver lawsuit. No one knows what market impact such a suit, if it is filed, may have. We have no experience with a lawsuit being filed in an active manipulation.

Given the unprecedented circumstances of the active silver manipulation, my sense is that the market impact of a silver lawsuit could be greater than many would expect. There’s no way of knowing exactly when or what will be the specific trigger that ends the manipulation and sets off the price of silver. Just know that the manipulation will be ended and the price will be set off. Read more here-http://news.silverseek.com/SilverSeek/1277129806.php

-Jeff Nielson: 50 years of silver price suppression make default inevitable. Read more here-http://www.gata.org/node/8740 and http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=106729&sn=Detail&pid=32

-Is Saudi Arabia Also Stocking Up On Silver As Well As Gold? Read more here-http://news.silverseek.com/SilverSeek/1277227996.php

GREENSPAN-U.S. MAY SOON REACH BORROWING LIMIT

-Former Federal Reserve Chairman Alan Greenspan said the U.S. may soon face higher borrowing costs on its swelling debt and called for a “tectonic shift” in fiscal policy to contain borrowing. “Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website.

“Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said. Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger, entering a debate among global policy makers about how quickly to exit from stimulus measures adopted during the financial crisis.

U.S. Treasury Secretary Timothy F. Geithner said this month that while fiscal tightening is needed over the “medium term,” governments must reinforce the recovery in private demand. “The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” said Greenspan, 84, who served at the Fed’s helm from 1987 to 2006. “Incremental change will not be adequate.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aga_wkgMEfDo and http://finance.yahoo.com/banking-budgeting/article/109852/us-debt-and-the-greece-analogy?321

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: This is the information contained in the chart; do what you like with it. Assuming inflation averages 2% annually and that 2016 marks the end of this secular bear episode (seeing as it began in 2000) then the historical pattern would suggest a test of 5,000 on the Dow as the ultimate trough (at that point, gold will likely be 5,000 too).

This does not preclude cyclical rallies along the way, but these will be “bear market rallies” such as we saw from March 2009 to April 2010 and investors should not be tempted into any other strategy than to rent these rallies and not own them. David Rosenberg-Gluskin/Sheff

-Chart of the week: We get it. The United States is not Greece. Nor is it any European country. It is the U.S.A. We get it. Best political system. Best economy. Most ingenuity. Reserve currency. We get it. And, the U.S. is never going to default on its obligations because it is, in fact, the world’s reserve currency and as such has full control of the printing press.

And, nothing above was meant to be facetious. As hedonistic as it is, the U.S. economy is the most flexible and adaptable economy, and for a whole host of reasons. At the same time, the national balance sheet is grim.

The national debt/GDP ratio is about to pierce 100% and that does not include the state/local government morass nor the wave of off balance sheet items and underfunded liabilities, which would then take that ratio north of 500% (also see Gillian Tett’s article in today’s FT Look at State Finances for the Real U.S. Budget Squeeze). That is the grim truth.

Even with low interest rates, the massive debt bulge has become so large that interest charges on the public debt are within three years of absorbing over 30% of the revenue base, which then makes it that much tougher to reverse course.

In other words, the fiscal problem is becoming increasingly structural and we are already at the stage where even if the economy were running flat out at full employment, the deficit would still be over 7% relative to GDP. At some point, this will begin to impede economic progress.

Look at the chart below when you add up the entitlement programs, you know the ones you can’t cut back on, and interest payments on the grotesque debt load, we have 65% of total government spending that can’t be touched. In the next decade, under status quo policies, this “mandatory” share of the spending pie goes to 72%.

Tack on the defense budget, my friends, and we are up to 88% of federal government outlays that are next to impossible to reverse. So tell me we are going to reverse this seemingly intractable runup in the public debt to GDP ratio by slicing 12% of the spending pie that is discretionary? It won’t be enough, even if all that 12% remainder ‘pork and barrel’ spending were eliminated altogether.

So guess what the future holds higher taxes: very likely a national sales tax. It works in Europe. It has also worked in Canada. Japan is planning to double its national sales tax from 5% to deal with its fiscal challenge (see page A11 of the WSJ).

It stands to reason that a federal consumption tax will have to be part and parcel of any U.S. strategy to solve what is increasingly becoming an intractable budgetary deficit. The only question is when, and which politician is going to have the kahoonas and face the nation with the fiscal realities of the present and future. David Rosenberg-Gluskin/Sheff

-Chart of the week: Even Without The Obama Splurge, Your Taxes Are Heading Much Higher. Even without recent spending, the growing cost of government benefits will result in four decades of rising taxes.Thanks to ten years of rising government costs, the taxation wake-up call will be even more painful.

The Heritage Foundation, a conservative think tank, estimates a $12,636 (inflation-adjusted) tax increase will be needed just to cover entitlement costs. Wealthy Americans should watch for the tax hikes to begin on January 1, when Obama lets tax cuts expire for people who earn more than 250,000. The rest may spend the rest of their life on the watch for value-added taxes, excise taxes, and more. Read more here-http://www.businessinsider.com/chart-of-the-day-tax-increase-2010-6

Source: chartoftheday.com

-Chart of the day: Here’s Why Politicians Are Falling Over Themselves To Skewer BP Right Now. Read more here-http://www.businessinsider.com/chart-of-the-day-news-coverage-june-2010-6?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_061810

Source: chartoftheday.com

-It is becoming clearer that housing in the U.S. is already double dipping. David Rosenberg-Gluskin/Sheff

-Double-dip risks in the U.S. have risen substantially in the past two months. While the “back end” of the economy is still performing well, as we saw in the May industrial production report, this lags the cycle. The “front end” leads the cycle and by that we mean the key guts of final sales the consumer and housing. David Rosenberg-Gluskin/Sheff

-The world is awash with debt. All levels of society, and across most countries in the industrialized world, have far too much debt and far too much debt-servicing costs in relation to income. David Rosenberg-Gluskin/Sheff

-We are at a critical juncture in the U.S. equity markets, and it could break any day. David Rosenberg-Gluskin/Sheff

-We often cite one of our favourite equity valuation metrics, the Shiller P/E ratio (we are fans of it as it uses a very long history, back to the 1880s and uses real-10-year earnings). At 20x, the Shiller P/E is pointing to a market that is 20% overvalued versus historical norms (our calculations).

A reader pointed us to two other metrics from Smithers & Co. They also use the cyclically-adjusted P/E (composed of Robert Shiller’s data) but by their interpretation of the data, the market is 46% overvalued. Another metric they calculate is the Tobin q (using historical data back to the 1900s and Flow of Funds data starting in the 1950s). Here this metric is saying that the market is 50% overvalued. David Rosenberg-Gluskin/Sheff

-The following is the summary of a client communication issued on June 8 by the analysts at BMO, a research team that we have found to be far more savvy about the nature of today’s crisis than most. It speaks for itself. Here’s the summary.

We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down.

There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity, and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital. Read more here-http://www.scribd.com/doc/32708043/Go-To-Cash and http://www.caseyresearch.com/displayCdd.php?id=461

-The big news over the weekend was the move by China to end the yuan peg to the U.S. dollar. We are not sure of the inflation effects after all, the currency was revalued by 20% from 2005 to 2008 and it is totally unclear what effect that had on anything except perhaps keeping the country’s export profile less robust than was already the case.

It certainly didn’t sustain any inflation pressure nor did it manage to have an influence on what turned out to be the bigger story at the time, which was the bursting of the U.S. housing and credit bubble. However, what the de-link will achieve is that it will allow the People’s Bank of China (PBOC) to pursue its own independent monetary policy.

The central bank will be able to use interest rates more effectively as a tool to cool off the property bubble and borrowing spree rather than the periodic reliance on an arcane set of administrative and regulatory measures to rein in overinvestment and real estate speculation. David Rosenberg-Gluskin/Sheff

-Euphoria cools over Chinese moves to weaken yuan. Oil prices and risky assets across the world have tumbled after China intervened to weaken the yuan, sending a clear signal to investors that the country’s shift to currency flexibility is a two-way street. Read more here-http://www.telegraph.co.uk/finance/currency/7846363/Euphoria-cools-over-Chinese-moves-to-weaken-yuan.html

-Fed Keeps Rate Pledge, Says Markets ‘Less Supportive’. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aH2eFJa3pAlw&pos=1

-Soros Says Europe’s Banks Haven’t Been ‘Cleansed’ After Crisis. Billionaire investor George Soros said continental European banks haven’t been “properly cleansed” after the credit crisis because they haven’t marked the value of their holdings to market prices.

“The current crisis is more a banking crisis than a fiscal one,” Soros, 79, said in remarks prepared for a speech in Berlin today. “Bad assets haven’t been marked to market, but are being held to maturity. When markets started to doubt the creditworthiness of sovereign debt it was really the solvency of the banking system that was brought into question because the banks were loaded with the bonds of the weaker countries and these are now selling below par.”

Banks are struggling to get short-term funding because the interbank lending and commercial paper markets have dried up, he said. Firms have instead turned to the European Central Bank for short-term financing and to deposit their excess cash, Soros said. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aQ7f9rC8MGwM

-Robert Kiyosaki: Think the Gulf Spill Is Bad? Wait Until the Next Disaster. Read more here-http://finance.yahoo.com/banking-budgetingk/article/109881/think-the-gulf-spill-is-bad-wait-until-the-next-disaster

-Profit-Margin Outlook for U.S. Is ‘Extremely Bad’: Chart of Day. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aVWkHdoaw8MQ

-Apple’s Surge May Make It ‘Too Big to Succeed’: Chart of Day. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aCrX10XUDKdY

-BP Oil Disaster Costs U.S. State Pensions $1.4 Billion in Value. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aCTrmb3sdPMc

-AccuWeather Boosts Hurricane Forecast to 18-21 Storms. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aoipH5G4HGn8

-California is weighing whether to allow advert-broadcasting digital number plates on vehicles, in a bid to raise revenue for the cash-strapped state. Read more here-http://news.bbc.co.uk/2/hi/world/us_and_canada/10368899.stm and http://money.cnn.com/2010/06/21/news/economy/california_budget_electronic_plates/index.htm

-Buffett Wins World Cup Bet as France Falters in Tournament. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aVdzTBS13j0U

-Wall Street Sign That Survived 1920 Bombing Fetches $116,500. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=a2vLezlxmIzo

-Now scientists read your mind better than you can. Read more here-http://www.reuters.com/article/idUSN2214937420100622

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

-Chinese diamond market catching up with US according to De Beers. Chinese diamond demand could reach the same level as the US, the biggest consumer, in the next decade, De Beers MD Gareth Penny said last week.

In a video interview with London’s Financial Times, he said at that stage China, including Hong Kong, would account for one-third of global demand for the precious stones as diamond engagement rings grow in popularity there.

“What we’re now seeing, with China growing as rapidly as it is, [is] annual double-digit growth compounded over a period of five years,” Penny told the Financial Times. “We think you’ll see greater China, including Hong Kong, at not dissimilar levels overall [to the US] about a third of world demand in about ten years time.”

Penny said 20 years ago, hardly any Chinese brides received diamond engagement rings, but now nearly half of the couples getting married in the eastern seaboard cities of Beijing, Shanghai, and Guangdong were buying them. In 2009, the US accounted for about 40% of global consumer diamond demand, with China at around 6% to 7%.

In April, De Beers forecast China would account for 16% of global diamond demand by 2016. Diamond prices last week vaulted to their highest levels since November 2008, according to Polished Prices figures. The index is now 9% above its starting level for the year, and is 11,4% higher, compared with the same time last year.

Penny, meanwhile, said diamond supply would decline in the future. “These great mines that were discovered ten, 20, 30 years ago are not being replaced today. According to the data that is out there, we’re going to see some significant declines in diamonds.” Read more here-http://www.miningweekly.com/article/chinese-diamond-market-catching-up-with-us-de-beers-2010-06-23

-Auction results for Christies New York Jewels Sale, June 15 2010 New York, Rockefeller Plaza. Read more here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22632#action=refine&intSaleID=22632&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6&selectedids=55215

-Lot 26-Lot description-A colored diamond ring set with a modified square-cut fancy yellow diamond, weighing approximately 6.88 carats, flanked on either side by a trapeze-cut diamond, mounted in platinum and gold with report 5111453256 dated 9 December 2009 from the Gemological Institute of America stating that the diamond is fancy yellow, natural color, VS2 clarity.

Estimate $50,000-$70,000. Price Realized $74,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330220&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 51-Lot description-A fine colored diamond ring set with a modified pear-shaped light pink diamond, weighing approximately 12.50 carats, within a circular-cut pink diamond surround, mounted in 18k rose gold with report 2115724753 dated 22 February 2010 from the Gemological Institute of America stating that the diamond is light pink, natural color, internally flawless clarity.

Estimate $800,000-$1,200,000. Price Realized $1,482,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330245&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 55-Lot description-A colored diamond ring set with a modified rectangular-cut fancy yellow diamond, weighing approximately 12.12 carats, flanked on either side by a modified bullet-cut diamond, mounted in platinum and 18k gold with report 2115074620 dated 27 August 2009 from the Gemological Institute of America stating that the diamond is fancy yellow, natural color, SI1 clarity. Estimate $90,000-$120,000. Price Realized $110,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330249&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 71-Lot description-An important colored diamond ring set with a cut-cornered modified square-cut fancy intense orangy pink diamond, weighing approximately 10.19 carats, flanked on either side by a shield-shaped diamond, to the circular-cut diamond prongs, gallery and hoop, mounted in platinum and 18k rose gold, ring size 6 with report 14887695 dated 21 March 2006 from the Gemological Institute of America stating that the diamond is fancy intense orangy pink, natural color, VS1 clarity. Estimate $1,000,000-$1,500,000. Price Realized $2,322,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330265&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 99-Lot description-A colored diamond ring set with a modified hexagonal fancy intense pink diamond, weighing approximately 3.01 carats, to the pavé-set pink diamond bifurcated knife-edge shoulders and hoop, mounted in 18k rose gold, ring size 6 with report 1102557652 dated 11 February 2009 from the Gemological Institute of America stating that the diamond is fancy intense pink, natural color, SI1 clarity. Estimate $550,000-$700,000. Price Realized $662,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330293&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 102-Lot description-A superb colored diamond ring set with a rectangular-cut fancy vivid yellow diamond, weighing approximately 6.36 carats, flanked on either side by a half moon diamond, mounted in gold and platinum with report 2115743948 dated 24 February 2010 from the Gemological Institute of America stating that the diamond is fancy vivid yellow, natural color, VS1 clarity. Estimate $250,000-$350,000. Price Realized $374,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330296&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 135-Lot description-A colored diamond ring set with a modified square-cut fancy yellow diamond, weighing approximately 7.02 carats, to the graduated circular-cut diamond shoulders, mounted in 18k gold and platinum with report 5111295516 dated 23 October 2009 from the Gemological Institute of America stating that the diamond is fancy yellow, natural color, VS2 clarity.

Estimate $30,000-$50,000. Price Realized $86,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330328&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 147-Lot description-A colored diamond ring set with a cut-cornered modified square-cut fancy dark greenish gray diamond, weighing approximately 4.06 carats, to the circular-cut pink diamond prongs, gallery and half hoop, mounted in 18k rose gold, ring size 6 with report 5111019067 dated 11 August 2009 from the Gemological Institute of America stating that the diamond is fancy dark greenish gray, natural color, SI2 clarity. Estimate $50,000-$70,000. Price Realized $62,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330340&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 153-Lot description-A colored diamond ring set with a cut-cornered rectangular-cut fancy greenish yellow diamond, weighing approximately 5.75 carats, within a pavé-set pink diamond surround, to the bifurcated pink diamond shoulders, mounted in 18k rose gold with report 10217537 dated 26 September 1997 from the Gemological Institute of America stating that the diamond is fancy greenish yellow, natural color, VS2 clarity. Estimate $40,000-$60,000. Price Realized $52,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330346&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

-Lot 174-Lot description-A colored diamond ring set with a light yellow old European-cut diamond, weighing approximately 14.26 carats, flanked on either side by two baguette-cut diamonds, mounted in platinum. Estimate $70,000-$100,000. Price Realized $158,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330367&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

U.S. BANKING CRISIS

-Regulators on Friday shut down a Nevada bank, raising to 83 the number of U.S. bank failures this year. The 83 closures so far this year is more than double the pace set in all of 2009, which was itself a brisk year for shutdowns. By this time last year, regulators had closed 40 banks. The pace has accelerated as banks’ losses mount on loans made for commercial property and development.

The Federal Deposit Insurance Corp. took over Nevada Security Bank, based in Reno, with $480.3 million in assets and $479.8 million in deposits. Umpqua Bank, based in Roseburg, Ore., agreed to assume the assets and deposits of the failed bank. Read more here-http://www.usatoday.com/money/industries/banking/2010-06-19-bank-failure-pace-tops-2009_N.htm and http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aAFn0Rs8pnrc

-Bank Failures Through 2014 Will Cost $60 Billion, FDIC Says. U.S. bank failures through 2014 will drain $60 billion from the Federal Deposit Insurance Corp. fund that protects customer accounts in the event of a collapse, the agency said today. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=a2P24ynonq8A&pos=4

-Fed Finds ‘Deficient’ Pay Practices at Large Banks. The Federal Reserve said a review of pay practices found many big banks to be “deficient” in curbing the excessive risk-taking that helped fuel the financial crisis. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aW0jAcjwC.h0

REAL ESTATE

-Sales of U.S. New Homes Plunged to Record Low in May. Purchases of U.S. new homes fell in May to the lowest level on record after a tax credit expired, showing the market remains dependent on government support.

Sales collapsed an unprecedented 33 percent from April to an annual pace of 300,000, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed today in Washington. Demand in prior months was revised down. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=a1YELQsDcXzs&pos=1 and http://money.cnn.com/2010/06/23/real_estate/new_home_sales/index.htm?hpt=T2

-Purchases of U.S. Existing Homes Fall. Sales of U.S. previously owned homes unexpectedly fell in May as demand began to slip even before a government tax credit expires. Purchases of existing houses, which are tabulated when a contract closes, decreased 2.2 percent to a 5.66 million annual rate, figures from the National Association of Realtors showed today in Washington.

To receive a government incentive worth as much as $8,000, buyers must have signed contracts by the end of April and need to complete deals by the end of this month. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aFrqvbZJB_Ag

-Whitney Says She Sees ‘Double Dip’ in Housing Market. The U.S. housing market will experience a second recession, forcing banks to post additional loan-loss reserves, analyst Meredith Whitney said. “Most investors are not baking in a double-dip in housing,” Whitney, founder of New York-based Meredith Whitney Advisory Group, said today in an interview on CNBC.

“You’re going to see banks post additional reserves associated with this double-dip in housing, and that means weak performance going forward.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aKSosM7S6EXc

-Why It’s Different This Time for Housing. Even with sharply lower home prices and mortgage rates, excess household debt will constrain new borrowing and spending. Read more here-http://online.barrons.com/article/SB127664370927906231.html

-Five states hit hard by the mortgage crisis will soon share $1.5 billion in federal funds to help the unemployed and the underwater who owe more than their homes are worth. The Treasury Department on Wednesday approved proposals by Arizona, California, Florida, Michigan and Nevada.

The states will use the money primarily to subsidize homeowners’ monthly mortgage payments and to reduce their principal. Some of the funds will also go to paying off second liens or facilitating short sales. Read more here-http://money.cnn.com/2010/06/23/news/economy/hardest_hit_fund_mortgages/index.htm

-IRS Blocks 10% of First-Time Homebuyer Tax Credits After Audits. The Internal Revenue Service blocked almost 10 percent of U.S. claims for the first-time homebuyer tax credit after receiving erroneous or fraudulent filings, according to a report today.

About $1.22 billion of the $12.6 billion in tax credits claimed through February were denied or frozen after audits, the report from the Treasury Department’s Inspector General for Tax Administration said. The IRS estimated that about 1.8 million taxpayers sought the benefit, which totals as much as $8,000, from the inception in April 2008.

The claims in question included about $9.1 million from 1,295 prison inmates, $18.8 million from people who bought homes before the law took effect and $134 million from situations where more than one filer said they bought the same house, the report said. Read more here-http://noir.bloomberg.com/apps/news?pid=20603037&sid=aTAnYvUhvCNA

-75% of modified home loans will re-default. Most borrowers who have had their mortgages modified through a government-sponsored program will re-default within 12 months, according to a report released Wednesday.

Between 65% and 75% of loans that are modified through the Home Affordable Modification Program but not backed by the federal government are likely to go bad, according to the report released by Fitch Ratings, a N.Y.-based credit-rating agency. Read more here-http://money.cnn.com/2010/06/16/real_estate/failing_HAMP_mods/index.htm

-Borrowers exit troubled Obama mortgage program. The Obama administration’s flagship effort to help people in danger of losing their homes is falling flat. More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out.

That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes. Last month alone,155,000 borrowers left the program bringing the total to 436,000 who have dropped out since it began in March 2009. About 340,000 homeowners have received permanent loan modifications and are making payments on time. Read more here-http://finance.yahoo.com/news/Borrowers-exit-troubled-Obama-apf-887634101.html?x=0&sec=topStories&pos=3&asset=&ccode

GEOPOLITICAL NEWS

-Al-Qaida warns of new attacks deadlier than before. Read more here-http://news.yahoo.com/s/ap/20100620/ap_on_re_mi_ea/ml_al_qaida_spokesman

-Former Israeli top spy calls for strike on Iran. Read more here-http://www.breitbart.com/article.php?id=CNG.55c404631db4c5730039a59e14575531.121&show_article=1

-A History of Iran’s Nuclear Ambitions. Read more here-http://www.spiegel.de/international/world/0,1518,701109,00.html

-Iran raises stakes by announcing four new nuclear reactors. Iran has raised the stakes in its confrontation with the West by declaring it intends to build four new nuclear reactors. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/iran/7833524/Iran-raises-stakes-by-announcing-four-new-nuclear-reactors.html

-Iran Says It Triples Stockpile of 20 Percent Uranium. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=asflOTVWthlE

-Iran bans two UN nuclear inspectors from country. Iran has banned two UN nuclear inspectors from entering the country risking further anger from the West over its nuclear programme. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/iran/7842876/Iran-bans-two-UN-nuclear-inspectors-from-country.html

-Iran to send blockade-busting ship to Gaza. Read more here-http://news.yahoo.com/s/ap/20100622/ap_on_re_mi_ea/gaza_blockade_13

-12 American Warships, Including One Aircraft Carrier, And One Israeli Corvette, Cross Suez Canal On Way To Red Sea And Beyond. Read more here-http://www.zerohedge.com/article/12-american-warships-including-one-aircraft-carrier-and-one-israeli-corvette-cross-suez-cana

-US, Israel Warships in Suez May Be Prelude to Faceoff with Iran. Read more here-http://www.israelnationalnews.com/News/News.aspx/138164

-Israel launches new spy satellite. Read more here-http://www.jpost.com/Israel/Article.aspx?id=179206

-President Barack Obama ousted U.S. Army General Stanley McChrystal for belittling remarks about administration officials just over a year after he was entrusted with salvaging a losing war in Afghanistan.

McChrystal will be replaced by General David Petraeus, the president said. Petraeus is commander of U.S. forces in the Middle East and Central Asia and the architect of the counterinsurgency strategy the U.S. is pursuing in Afghanistan. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=azWxIY6KrT7A&pos=8

The Goldbugg Report – June 29, 2010
Posted by Worldwide Precious Metals on Tuesday, June 29, 2010

The Week in Review – June 25, 2010

June 25, 2010

The Week in Review

It was another rollercoaster ride in the stock markets this week. Questions over what language is actually contained in the upcoming Financial Regulation Reform bill, a poor showing in the retail and housing sectors and a drop in durable goods orders all helped beat the stock market down.

There seems to be a growing sense that the wheels are about to come off the recovery train. Declining home sales data, stubbornly high unemployment, and an administration and Congress that seem as if they are becoming further and further detached from their constituents are causing consumers to once again begin hoarding their hard earned cash.

Initial claims for unemployment dropped last week by more than expected. On Thursday, a plan to provide additional aid to jobless workers whose benefits have expired was defeated in the Senate. The bill was defeated due to the fact that it would increase the already staggering budget deficit even further.

On Wednesday a report came out showing that new single-family home sales hit a record low in May after the homebuyer tax credit expired, dropping 32.7 percent to the lowest level in over forty years. April and March sales data were revised downward as well, showing that the homebuyer tax credit did not actually do as much to boost the housing industry as previously thought. Mortgage applications have also nosedived since the tax credit expired, despite record low interest rates on new mortgages.

The fed once again renewed its vow to hold interest rates “exceptionally low for an extended period” on Wednesday. They also revised their assessment of the recovery saying “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.”

A Wall Street Journal-NBC poll showed Obama’s approval rating has slipped to 45%. The embattled administration continues to fail to make headway against public opinion over the current status of the country. The continuing disaster in the Gulf of Mexico is beginning to have what may prove to be a far-reaching impact not only on the environment but also on the economies of every state whose coast touches the Gulf. At a time when the government is trying their best to stimulate consumers into spending, those in the affected areas are holding on to any cash they have left due to glitches in the claims process with BP.

In an annual poll of central banks performed by UBS, 22 percent of the officials polled said that the most important reserve asset in the next 25 years would be gold. Many of the 80 central bank managers polled also said that gold would be the best performing asset class in the next six months. Saudi Arabia’s central bank decided to disclose that they had nearly doubled their gold holdings, and that most of the purchasing had been done back in 2008. That they hid the fact for so long, and choose to disclose it now, leads one to wonder how many other countries are hiding their accumulation of gold. The only reason for such a move would be to allow accumulation of further gold reserves while keeping prices artificially low.

Crude oil managed to stay fairly stable for the week, hovering in the mid-$70 a barrel range despite setbacks in the Gulf of Mexico cleanup proceedings and another rise in inventory.

The euro managed to trade sideways for much of the week, but continuing dire news out of Europe is still weighing on the embattled currency. The latest news comes from the UK, where the austerity measures being proposed by the government are being called “courageous”.

Friday to Friday Close

	June. 18^th	June. 25^th	Net Change
Gold	$1258.00	$1255.00	(3.00) – 0.24%
Silver	$19.17	$19.10	(0.07) – 0.37%
Platinum	$1585.00	$1570.00	(15.00) – 0.95%
Palladium	$486.00	$477.00	(9.00) – 1.85%

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

	Gold	Silver
Support	1250/1220/1200	18.50/18.20/17.90
Resistance	1265/1280/1300	19.20/19.50/19.75

	Platinum	Palladium
Support	1550/1520/1500	460/450/425
Resistance	1600/1640/1660	480/500/525

Volatility should be expected to continue. How long have we heard interest rates would be “near zero for an extended period”? The most recent Fed meeting made it sound like we would be hearing that for the foreseeable future. The bottom line is that there are too many other factors involved now for the “easy money” approach to solve all of our problems. Over a trillion dollars in stimulus has been dumped into the economy, and many feel that the effort has been nearly pointless. The Obama administration and a Congress that is out of touch with the people most affected by the continuing economic woes are pondering higher taxes which will most likely crush any hope of job expansion for companies, or spending sprees by consumers. Ted Butler has been trying to expose manipulation of the silver market by JPMorgan and others for years and his accusations have been met with complete silence by those involved. Not even a denial or a demand that he retract his statements, in fact, after bringing the silver market down to a low of $18.08 on Thursday, “Da Boyz” (as Ed Steer refers to JPMorgan, et.al.), were unable to keep the market down. As of this writing, silver is up $1.04 from yesterday’s low. There must be some serious short covering taking place! Countries are hiding the fact that they are accumulating precious metals reserves as evidenced by the fact that Saudi Arabia did not announce the increase to their own gold reserves until two years after it took place. The “FinReg” bill debate came to an end in the early morning hours on Friday and it looks like the final result of all the new regulations is going to be higher costs for the consumer. Dick Bove, banking analyst at Rochdale Securities, had this to say “I talked to the CEO of one of the five largest banks in the country… I said ‘this bill is going to knock 33 percent of your customers out,’ he said ‘you’re crazy, Dick, it’s going to be 20 percent,’” Bove went on to say “The point is that the banks can get this money back, the consumer can’t.” Obama may get his wish and have his 1500+ page “FinReg” bill in the near future, with the end result that banks will tighten lending requirements and therefore tighten credit even further. Owning physical precious metals is looking more and more attractive to astute investors as banks, Wall Street, and the US government jockey for position over who owns the rights to take the consumer’s money away from them: banks in the form of higher fees, Wall Street in the form of obscure smoke and mirrors financial derivatives, and the government in the form of skyrocketing taxes. 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 – June 25, 2010
Posted by Worldwide Precious Metals on Friday, June 25, 2010

The Goldbugg Report – June 22, 2010

June 22, 2010

-Buying gold in June and July has been very profitable for years. See the charts.

-Comex may be losing influence over metal prices, Butler

-Gene Arensberg: Something unusual is afoot in gold and silver.

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 and http://www.youtube.com/user/thegoldbugg

-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

-Gold has been soaring for three weeks, having peaked at more than $1,250 per ounce. In Greece it is selling for over $1,700 an ounce as people are scared of the collapse of their currency and economy.

Gold and silver bought anywhere near today’s prices will give you a return over the next few years as much as two to three times. You should base your portfolio on the actual, physical metal. A portfolio based on inflation hedges will become stronger. At least 30% of your investments should be in gold or silver, preferably silver. Howard Ruff-Read more here-http://www.kitco.com/ind/Ruff/ruff_jun142010.html

-Every year as we approach the summer months we hear that markets will be dull and boring with little activity in either direction due to the summer vacation season. With all that is happening worldwide and the many surprises that will unfold in the months of July, August, and September we suggest to all those interested in acquiring physical precious metals and those who have been prudent enough to have already started their portfolios now is the time to get aggressive.

Forget about the summer doldrums. If you don’t, you will miss out on the current opportunity and find yourself playing catch up at much higher prices at a later date. Precious Metals International

-Buying gold in June and July has been very profitable for years. Jonathan Kosares and Randall Strauss of Centennial Precious Metals in Denver have updated Centennial’s annual analysis of the success of buying gold during its summer doldrums, in June and July, a practice that over the last 39 years has averaged a gain of 7.5 percent by the end of the year and over the last nine years has averaged a gain of more than 11 percent by the end of the year. Read more here-http://www.gata.org/node/8721 and http://news.goldseek.com/GoldSeek/1276201069.php

-Ongoing sovereign credit concerns and recurring rounds of currency depreciation: ensure the portfolio has a core holding in precious metals (gold and silver). These are effective hedges against lingering concerns over the stability of the global monetary system. David Rosenberg-Gluskin/Sheff

-The Dow-Gold relationship. That is what the chart below displays and if this ratio ends up retesting the two fundamental lows that it has achieved in the past; and if we are correct in our assertion that gold goes to $3,000/oz, then what we would be talking about here is a Dow 5,000 trough at some point down the road. David Rosenberg-Gluskin/Sheff

-Chart of the week: Gold: The Safest Of The Safe Havens. A report put out today by the BIS shows how various markets have reacted since the euro crisis began. As you know, risk assets have fallen, and conservative, “safe-haven” assets have surged. This has been good for the bonds of solid countries like the US and Germany, but it’s really been great for gold. Read more here-http://www.businessinsider.com/chart-of-the-day-prices-of-safe-haven-assets-2010-6

Source: chartoftheday.com

-”Gold For Beginners” All You Need To Know About The Precious Metal From UBS. Read more here-http://www.zerohedge.com/article/gold-beginners-all-you-need-know-about-precious-metal-ubs

-The Definitive Guide On Physical Gold. Read more here-http://www.zerohedge.com/article/definitive-guide-physical-gold

-Eric Sprott: Soon Someone’s Going To Try Buy A Gold Bar, And It Won’t Be There. Read more here-http://www.businessinsider.com/eric-sprott-get-ready-for-a-massive-shortage-of-physical-gold-2010-6

-John Embry: Own physical gold. I now believe that the chance of gold ever trading below $1,100 per oz. is becoming increasingly remote. While I admit this represents a very strong point of view, it is based on the vulnerability of the U.S. dollar which I anticipate will be debased beyond recognition. Gold will just remain what it has been through the past centuries, a safe store of value in a world of bogus fiat currency. Read more here- http://www.sprott.com/Docs/InvestorsDigest/2010/MPLID_052810_pg163Emb.pdf

-John Embry: 17 reasons to own gold. Read more here-http://www.sprott.com/docs/Reports/reasons_to_own_gold.pdf

-Central banks join gold rush. Read more here-http://money.cnn.com/2010/06/17/news/economy/gold_reserves/

-Gold close to boiling point McEwen. Rob McEwen hopes we manage to avoid the “darkest hour” describing fearsome parallels between the Weimar Republic to the United States of today. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106057&sn=Detail&pid=33 and http://www.gata.org/node/8733

-Uncertainty Restores Glitter to an Old Refuge, Gold. Read more here-http://www.nytimes.com/2010/06/13/business/13gold.html?pagewanted=print and http://www.gata.org/node/8729

and http://news.goldseek.com/RickAckerman/1276581660.php

-Unfortunately, gold could get to $3,000 in the next two years Ian McAvity. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106419&sn=Detail&pid=33

-Gold’s rise puzzles Bernanke but not this fund manager. Read more here-http://www.gata.org/node/8732

-Adrian Douglas: Financial system creaking under rising gold off take. Read more here-http://www.gata.org/node/8723

-More fantastic money creation, then gold backing, Rickards tells King World News. Listen here-http://www.gata.org/node/8734

-Ferdinand Lips Institute preserves gold advocate’s work on the Internet. Read more here-http://www.gata.org/node/8726

-Banks set new store on building gold vaults. Read more here-http://www.gata.org/node/8730

-Million dollar face value gold coin goes on sale by auction June 25th. One of the world’s most valuable solid gold coins a million dollar Maple Leaf – is being sold by auction in Austria in two weeks time and is expected to sell at a big premium to its face value. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=106248&sn=Detail&pid=34

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,800 the silver price would be $22.50

Gold to silver ratio at 70 to 1 with gold at $1,800 the silver price would be $25.71

Gold to silver ratio at 60 to 1 with gold at $1,800 the silver price would be $30.00

Gold to silver ratio at 50 to 1 with gold at $1,800 the silver price would be $36.00

Gold to silver ratio at 40 to 1 with gold at $1,800 the silver price would be $45.00

Gold to silver ratio at 30 to 1 with gold at $1,800 the silver price would be $60.00

Gold to silver ratio at 20 to 1 with gold at $1,800 the silver price would be $90.00

Gold to silver ratio at 15 to 1 with gold at $1,800 the silver price would be $120.00

-The 2010 Silver Buying Guide. Silver has been sizzling and causing lots of buzz in the industry. Investors are excited. Part of the hubbub is due to its current run. Since its February 8 low, silver has roared ahead 22.4% (through June 21) and has doubled from its November 2008 low.

This excitement has spilled over into greater investment demand especially so for coins. The U.S. Mint sold more Silver Eagles in the first quarter of this year just over nine million than any prior quarter in its history. The Royal Canadian Mint produced 9.7 million silver maple leafs in 2009, also a record. Take a look at the jump in U.S. Mint coin sales since 2007.

Silver bullion ETFs are growing, too, experiencing a five-fold increase in metal holdings since 2006. There’s plenty we could talk about with silver, but our goal is to make money. So let’s focus on answering just two questions: Is today’s price expensive or cheap? And, what are the best silver coins, ETFs, and stocks to own? We have all the answers straight ahead, including lots of actionable info, so let’s jump right in.

Why Should I Buy Silver? There are several reasons to own silver in addition to gold. First, it’s cheaper! Known as the poor man’s gold, those with limited budgets will find it easier to purchase. You might hesitate plunking down $1,200 for an ounce of gold, but you can pick up 32 ounces of silver for half that amount.

Second, silver has wide industrial use and this component can help or hinder its price. As its consumption increases across a growing number of industries, this should help place a floor under demand. And because of its unique properties, new uses continue to be discovered.

Third, silver is money and has served this role more than any other material on earth, save gold. Due to its historical role, silver will always have monetary value and offer similar protection as gold to the ongoing global currency devaluations, and will definitely benefit from the inflation hurricane we see as inevitable.

Silver is more practical as a currency used for everyday purchases. When the time comes, you can sell the requisite number of silver coins to cover a specific need, as opposed to being forced to liquidate a high-dollar-value gold holding. Silver is perfect when smaller amounts of cash are required.

Fourth and last, silver could possibly outperform gold before this bull market is over. The market capitalization of silver (and silver stocks) is much smaller, making its price more susceptible to demand spikes than gold.

In the latter part of the 1970s precious metals bull market, gold gained over 700% but silver soared over 1,400%. If you’ve got a bit of Gordon Gekko in you, we recommend investing a portion of your dollars in silver.

Caution Hot! Like all things, silver has its drawbacks, two in particular. First, the price is volatile. Over the past 12 months, silver has seen gains of 53.8% and 22.9% and drops of 21.9% and 19.6%, all within a period of months or even weeks.

If you’re going to own silver, you must be prepared for big price gyrations. The best way to do that: buy it and forget about it. And make price volatility your friend. Big price swings present the opportunity to snag silver at a big discount.

Is Now a Good Time to Buy? With the gains we’ve seen in silver, would we buy right now? Let’s first look at the big picture. The following chart shows how far silver is below its inflation-adjusted peak reached in 1980.

Another clue some investors watch is the gold/silver ratio (gold price divided by silver price) shown below.

Since our current bull market in precious metals began in 2001, the ratio, while fluctuating wildly, has never gone below 45. And yet look where it went during the precious metals peak in 1980: it bottomed at 17. Even though gold was soaring at the time, silver outran it.

The ratio might show relative strength between gold and silver, but it’s not a good buying indicator. A falling ratio could mean silver is rising faster than gold, like it is currently, or it could mean silver is falling slower. As a result, we’d use the ratio to determine silver’s upside potential but not necessarily when to place an order.

These big-picture signals tell us silver is undervalued and, at the moment, a better bargain than gold. And given the currency crisis we’re convinced is in the cards, we wouldn’t want to be caught without any. If you have a long-term mindset, silver is a buy today.

Would we wait for a better price? If you do not own any, and plan on holding what you buy until a mania develops, then we wouldn’t wait. The risk of buying silver at current prices is lower than owning none at all.

If you do own some but want to add to your holdings, we’d probably wait for a drop in price, in part because silver could more easily fall when the economy is found to be more fragile than what many believe. And with industrial uses comprising approximately half of silver’s demand, it would be more susceptible to sell-offs than gold if our research is correct about global economies.

Further, summer usually brings pullbacks in prices, and this can be especially true for silver stocks. This is the tendency, though we can’t be sure if this summer will follow past trends. Still, our best guess is to anticipate another leg down this year. If you already own silver, we’d look for a correction to add to your holdings.

In our opinion, owning no silver in this bull market would be a mistake. And your first (and biggest) investment in silver should be in a physical form. Read more here-http://www.caseyresearch.com/editorial/3467?ppref=ZHB178ED0610C and http://news.silverseek.com/SilverSeek/1276751903.php

-When gold hedge won’t do, consider investing in silver. Read more here-http://www.usatoday.com/money/perfi/columnist/waggon/2010-06-11-investing11_ST_N.htm

-Comex may be losing influence over metal prices, Butler tells King World News. Listen here-http://www.gata.org/node/8727

-Gene Arensberg: Something unusual is afoot in gold and silver. Read more here-http://www.gata.org/node/8731

-Recent Volatility in Metals Nothing to Fear. Read more here-http://news.silverseek.com/SilverSeek/1276668000.php

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: For the entire OECD countries, general government debt as a share of GDP alone has ballooned from 73% when the recession started in 2007 and will climb to a record 104% next year. It took 15 years for this ratio to go from 63% to 73% and just four years from 73% to 103%.

Total claims in the OECD at all levels of society just broke above 360% of GDP and that is clearly unstable. Suffice it to say that many of these debts will not be serviceable identifying where the defaults and haircuts take place, across countries and sectors, will require a tremendous level of skill. David Rosenberg-Gluskin/Sheff

-Forget The PIIGS, The U.S. Is The Weakest Sovereign Debtor Of Them All. Keen followers of sovereign debt markets are most concerned right now about the PIIGS, particularly Spain and Greece. But according to Scotia Capital, the real sovereign debt problem is lurking in two of the world’s biggest economies, the U.S. and Japan. In fact, they rank the U.S. the weakest sovereign for its current debt position. Read more here-http://www.businessinsider.com/scotia-capital-sovereign-debt-2010-6

-Here’s Niall Ferguson’s Complete And Definitive Guide To The Sovereign Debt Crisis. Read and watch more here-http://www.businessinsider.com/niall-ferguson-sovereign-debt-2010-5#-1

-Chart of the week: Food Prices Are About To Explode. May’s Consumer Price Index fell 0.2%, which was a slightly larger price drop than consensus expected. Deflation seems to be the greater challenge right now rather than inflation. But not everywhere.

A new report from the Food and Agriculture Organization of the United Nations (FAO) and the Organisation for Economic Co-operation and Development (OECD) forecasts soaring global food prices over the next decade.

While food production is forecast to increase, demand will increase even faster due to rising wealth levels in developing countries. Rising incomes lead to larger amounts of meat included in diets, and meat is far more intensive of a food source to produce than simple things such as rice or wheat.

You may have heard of this scenario years ago, before the crisis and when commodities were in a super-spike. Well, the thesis still holds, even after the crisis. Moreover, we won’t have to wait until 2020 to see the price hikes. The process is already kicking off. The report forecasts that global prices next year for many animal-related foods will be 10-20% higher than in 2009.

Parts of the economy could still be deflating by then, but many foods won’t be. Read more here-http://www.businessinsider.com/chart-of-the-day-world-food-prices-2010-6

Source: chartoftheday.com

-Chart of the week: Guess Who’s Still Less Popular Than The Gulf Polluting BP. Felix Salmon posted this look at just how much BP’s brand has tanked since the start of the Deepwater Horizon oil spill in April. But what Salmon points out about this shocking chart is that the company that is currently responsible for oil polluting the Gulf of Mexico is still more popular than Goldman Sachs.

Although it looks like BP might get there soon enough. Read more here-http://www.businessinsider.com/chart-of-the-day-bp-brand-index-2010-6

Source: chartoftheday.com

-Wall Street research houses still advocating the equity market even though the S&P 500 has generated no return but plenty of heartburn for 12 years now; the hallmark of a secular or primary bear market: rent the rallies, don’t own them. David Rosenberg-Gluskin/Sheff

-I strongly believe that escalating global economic imbalances have dramatically increased the vulnerability of the global recovery and so the chances of a growth relapse in the second half of the year are higher than the equity market, and to a lesser extent the credit market, have priced in. David Rosenberg-Gluskin/Sheff

-In the 1973-75 recession we saw inflation. That was followed by further stimulus provided again by the Fed, which culminated in the economic blow-off of 1981, which in turn was followed by high interest rates and a deflationary recession. These two events tell you recessions/depressions can be either inflationary or deflationary.

Compounding the problem is the accumulation of sovereign government debt, which has been and will continue to grow exponentially. That certainly is inflationary, but worse yet is it cannot be paid back no matter how high taxes are raised. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1276412400.php and http://news.goldseek.com/InternationalForecaster/1276702085.php

-Finally, in a sign of complete policy confusion, the White House is now pushing for an additional $50 billion of quick-fix stimulus at the same time that it is establishing a fiscal commission to readdress the intractable budgetary deficit. David Rosenberg-Gluskin/Sheff-Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2010/06/12/AR2010061204152_pf.html

-Japan’s new prime minister warned Friday that his country could face a financial mess like that of Greece if it did not deal urgently with its swelling national debt. Read more here-http://www.forbes.com/feeds/ap/2010/06/11/general-as-japan-politics_7679929.html and http://www.chinadaily.com.cn//world/2010-06/11/content_9966929.htm

-India to inject $1.32 billion to 5 state-run banks. Read more here-http://www.reuters.com/article/idUSSGE65B02020100612

-In this King World News interview Chris Whalen discusses the insolvent banking system, the derivatives market, CDO’s, horrific recovery rates on certain bank assets, the possibility that the German government may overturn the bailout in Europe, Goldman’s troubles and the fact that they are mishandling the current trouble they are encountering and much more. Listen here-http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/6/12_Chris_Whalen.html

-20 More Signs Of A Full-On Economic Collapse. Read more here-http://www.businessinsider.com/the-us-economic-collapse-top-20-countdown-2010-6 and http://www.businessinsider.com/the-us-economic-collapse-top-20-countdown-2010-6#gallups-measure-of-underemployment-hit-200-on-march-15th-that-was-up-from-197-two-weeks-earlier-and-195-at-the-start-of-the-year-1

-Lawmakers Seek to Prevent Americans Outliving Savings. Most American households at or near retirement “are consumed by fear,” said Anthony Webb, associate director of research at the research nonprofit. “Instead of walking on the beach hand-in-hand in retirement, the reality is that they’re sitting around the kitchen table cutting coupons.” Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid=a97_ct2kLpHM

-Bilderberg 2010: What we have learned. A huge agenda of global issues was crammed into four days of ’secret’ meetings by a mysterious group of power brokers. But who elected them and why are we paying for them? Read more here-http://www.guardian.co.uk/news/blog/2010/jun/14/charlie-skelton-bilderberg-2010

-Toyota Plunges to 21st in Auto-Quality Survey; Ford Makes Top 5. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aw6T5Zim3mG0

-Homeowner Insurance May Leave Art, Wine Collectors Empty-Handed. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid=aJ9fpA5oPWjs

-Glenfiddich Whisky Matured 64 Years Sells for $37,245. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a7SAkPedZaZM

-NASA warns solar flares from ‘huge space storm’ will cause devastation. Britain could face widespread power blackouts and be left without critical communication signals for long periods of time, after the earth is hit by a once-in-a-generation “space storm”, NASA has warned. Read more here-http://www.telegraph.co.uk/science/space/7819201/Nasa-warns-solar-flares-from-huge-space-storm-will-cause-devastation.html

WWW.RARECOLOREDDIAMONDS.COM

-Christie’s NY Jewels Sale Tops $15M. Christie’s New York Jewels sale held earlier today achieved a total of $15,226,275 and was 84 percent sold by lot. The top lot was a 27.03 carat, D, VVS1, type IIa diamond that sold for $131,500 per carat, or $3,554,500.

Christie’s New York also sold a 10.19 carat, square cut fancy intense orangy pink diamond for $2,322,500 and a 12.50 carat, pear-shaped diamond ring for $1,482,500. These top three diamonds sold above their presale estimates.

Rahul Kadakia, head of jewellery for Christie’s Americas, said, “As a sign of the resurgence of the market, a cushion-cut D VVS1 diamond of 27 carats achieved $131,500 per carat in this sale, versus $130,000 per carat for a 30-carat D color flawless diamond sold in New York at this time last year.

This represents a 45 percent per-carat increase in the value of top diamonds in just 12 months time. A fitting close to the spring jewellery season at Christie’s U.S., which achieved a grand total of $56 million in sales.” Diamonds.net

Estimate $50,000-$70,000. Price Realized $74,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330220&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

Estimate $30,000-$50,000. Price Realized $86,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5330328&sid=fc159319-30a5-45db-b9e5-49b3d1d095b6

HARRY SCHULTZ-HYPERINFLATION MAY HAPPEN SUDDENLY

-Harry Schultz’ of the International Harry Schultz Letter comments: “Red alert if the S&P500 breaks below 1,035.” On gold, he writes: “I said the next target will be $1,400. I’ll stay with that forecast.” Schultz says his eventual gold target is $6,000 the highest I’ve seen him mention.

One reason for Shultz’ skittishness: what he sees as the extraordinary precariousness of the world financial system. He writes: “We (collectively) are poised at a heart-stopping moment in economic times. On the one extreme side, the world is on the edge of massive deflation and depression. At the other extreme hyperinflation.

My view is: Both these extremes are possible. Certainly deflation is, on balance, in play today and gaining ground as money supply is actually declining! Hyperinflation seems impossible when there is not much inflation in most economies. But hyperinflation is a monetary event, not an economic one, and will happen on an overnight basis, not via a general uptrend in inflation data.”

Schultz added this late comment: “Meantime, as I write, gold is holding very near its high, as most stock markets are bungee jumping. This implies the unexpected hyper is pending, because if it were exclusively deflation ahead, gold action would be less buoyant.’

Schultz currently recommended asset allocation: 30-40% government notes/bills/bonds, 8-10% stocks (non-golds), 10-15% commodities, 40-50% gold stocks and bullion, 0-5% bear stock-market protection via inverse exchange-traded funds. Read more here-http://www.marketwatch.com/story/story/print?guid=67D6C4A9-53A2-4A96-B957-61ACF2FEFA30

JAMES TURK-HYPERINFLATION WATCH-A SIGNAL FROM THE STOCK MARKET

-James Turk: Hyperinflation watch. The latest financial results of the US government show that it continues to spend and borrow recklessly. As a consequence, there has been no improvement in the hyperinflationary outlook for the US dollar.

Hyperinflation results when a country’s central bank turns government debt into more currency than is demanded in economic activity. It is unfortunately impossible to measure precisely the demand for currency. Nevertheless, the rate at which the government is borrowing can be used as a general guideline to determine if too much currency is being created.

If government borrowing causes the debt to accumulate at rates of increase greater than the historical trend, clearly too much new debt is being added, which forces the central bank to ‘print’, i.e., turn that debt into currency. I have discussed this phenomenon before. “The [Federal Reserve] has one mission.

It is to make sure that the federal government obtains all the dollars it wants to spend. If the federal government cannot attract these dollars from the world’s savings pool, then there is only one other way to obtain them. The Fed must print them.” The following chart illustrates the worsening problem.

Federal revenue remains stagnant, indicating that the economic recovery is weak at best. At the same time, federal spending is not contracting. Therefore, the gap between income and outlays remains near record levels. New debt continues to be piled upon existing debt.

The once-almighty US dollar that only a few decades ago was considered to be ‘as good as gold’ continues down the road toward hyperinflation. All that is needed to ignite the hyperinflationary bonfire is a small spark. Read more here-http://www.fgmr.com/no-improvement-in-the-hyperinflationary-outlook.html

-James Turk: A signal from the stock market. The stock market is often acclaimed for its forecasting ability. Stock prices peak long before the downturn in economic activity that generally results in a recession and a prolonged decline in the stock market. Then after this lull in the economy, the bear market low in stock prices leads by several months the upturn in economic activity.

As a consequence, since making a low in March 2009 following the turmoil surrounding the Lehman Brothers collapse, many economists have been proclaiming that the rise in the S&P 500 Index, the Dow Jones Industrial Average and other stock indices is forecasting better economic conditions. So far, it hasn’t worked out that way.

The economy is fragile, with job creation being weak and unemployment therefore remaining menacingly high. Federal government revenue which is perhaps one of the more reliable indicators of strength in the economy is not improving after a long downtrend.

A number of economists have indicated that the economy has improved because of the federal stimulus money as well as other huge increases in spending by the federal government. If so, why is unemployment stubbornly high, and why aren’t federal tax receipts climbing?

In any case, the stock market has been weak of late, so it therefore seems reasonable to question whether the stock market’s rise from March 2009 is really forecasting better economic activity. Could it possibly be that something else caused the stock market to climb from that March 2009 low and therefore send a false signal about the potential for economic activity? The following chart says that there is indeed another factor at work.

There is a clear relationship between the rise in the S&P 500 Index from its March 2009 low and the Federal Reserve’s purchase of US government debt instruments, which it calls “quantitative easing” (QE). Another term for it is money ‘printing’. The Fed is simply turning US government debt into more dollar currency, which of course debases the dollar. It also explains the correlation in the above chart.

Note how the S&P Index started climbing with the commencement of QE. The S&P dropped early this year when the Fed announced QE would end. Interestingly, the stock market soon rallied thereafter, probably because few believed that the Fed would really take away the ‘punchbowl’. But it did, and the S&P has been in a downtrend ever since.

When more dollars are being created than demanded by economic activity, this surfeit of dollars must go somewhere. This observation is particularly true when real (i.e., inflation-adjusted) interest rates are so low that bank deposits become unattractive, as is presently the case. The above chart illustrates that one of the places where these newly created dollars ended up was the stock market.

Now that the Fed has stopped printing, the S&P 500 Index not only stopped rising, but began falling to reflect the true state of underlying economic conditions. Consequently, I expect that there will be new calls in Congress for another stimulus package, but more immediately, it seems likely that the Federal Reserve will recommence its purchases of US government paper.

Quantitative easing, I expect, is about to get a second chance at reviving the moribund US economy. It didn’t work the first time it was tried, and won’t work this time either. Policymakers continue to ignore the fundamental problem plaguing the US economy. There is simply too much debt. The only outcome we can expect from more QE is a debased dollar.

It is interesting to note that the dollar has been rising against the euro for several months. While the Fed has for now stopped QE, the ECB is actively pursuing QE. So the result is a ‘strong’ dollar relative to the euro.

Whether the dollar continues to climb against the euro is largely irrelevant in view of the more important observation to make here. In a world of floating currencies that bob up and down relative to each other depending on varying central bank policies, they are all sinking against gold.

Gold closed this past week at a new record high against the dollar. It made a new record against the euro the week before. Gold is rising against all of the world’s currencies, and its ascent will only be hastened if the Federal Reserve restarts QE. Read more here-http://www.fgmr.com/signal-from-the-stock-market.html

EU IN CRISIS

-European recession next year “almost inevitable” Soros. Europe faces almost inevitable recession next year and years of stagnation as policymakers’ response to the euro zone crisis causes a downward spiral, billionaire U.S. investor George Soros said on Tuesday.

Flaws built into the euro from the start had become acute, Soros told a seminar, warning that the euro crisis could have the potential to destroy the 27-nation European Union. The euro’s lack of a correction mechanism or of a provision for countries to leave it could be a fatal weakness, he said. Read more here-http://www.reuters.com/article/idUKTRE65E5JT20100615

-Euro Will Fall to Parity Before ‘Inevitable’ Breakup, CEBR Says. The euro will drop to parity with the U.S. dollar in 2011 before the “inevitable” breakup of the currency that is now used by 16 nations, the Centre for Economics and Business Research said. Read more here-http://www.businessweek.com/news/2010-06-12/euro-will-fall-to-parity-before-inevitable-breakup-cebr-says.html and http://www.breitbart.com/article.php?id=CNG.b0320c064d1eb19c9176b234a046992b.911&show_article=1

-AXA fears ‘fatal flaw’ will destroy eurozone. Analysts at the French financial group AXA see a serious likelihood that the eurozone will break in half or disintegrate, dismissing Europe’s €750bn (£623bn) rescue package for Club Med debtors as a stop-gap measure that misdiagnoses the problem. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7827867/AXA-fears-fatal-flaw-will-destroy-eurozone.html

-Nightmare vision for Europe as EU chief warns ‘democracy could disappear’ in Greece, Spain and Portugal. Read more here-http://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.html

-The British economy, more damaged by the banking crisis than previously admitted, will grow more weakly and may never fully recover, the new Office for Budget Responsibility (OBR) said this week. Read more here-http://www.timesonline.co.uk/tol/news/politics/article7150196.ece

-Europe’s Banks Face Second Funding Squeeze on Sovereign Crisis. European banks at risk of writedowns from the sovereign debt crisis face a funding squeeze that may depress earnings, curb lending and imperil economic recovery in the region.

Investors are shunning bank securities on concern Greek, Portuguese and Spanish bonds held by the lenders will plunge in value. Bank bond sales slowed in May to the lowest since Lehman Brothers Holdings Inc.’s failure in 2008 as the extra yield buyers demand to hold the securities over government debt soared to the highest this year.

Firms are wary of lending to each other, depositing record funds with the European Central Bank. “There is a lot of mistrust,” said Christoph Rieger, co-head of fixed-income strategy at Commerzbank AG in Frankfurt. “Banks are trading with the ECB rather than with each other.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aHl8DzEheXq8

-EU Leaders Agree to Publish Banks’ Performance on Stress Tests. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aY6kr9YCqv.o&pos=1

-Greece Cut Four Steps to Junk by Moody’s on ‘Risks’. Greece’s credit rating was cut to non-investment grade by Moody’s Investors Service, threatening to further undermine demand for the nation’s assets as it struggles to rein in the euro region’s second-biggest deficit. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=azXXypoczyMY&pos=3

-Greek Swaps Show 48.5% Probability of Default Within Five Years. Greek credit swaps signal a 48.5 percent probability the nation will default within five years after its debt was cut to junk by Moody’s Investors Service.

The cost of insuring $10 million of Greece’s bonds for five years jumped $55,500 to $811,000 a year, making the nation’s debt the third most expensive to protect after Venezuela and Argentina, according to CMA DataVision. Read more here-http://www.businessweek.com/news/2010-06-15/greek-swaps-show-48-5-probability-of-default-within-five-years.html

-Spanish debt wilts amid €250bn rescue plan confusion. European debt markets remain under high stress on persistent reports that Spain is in secret talks with EU officials and the International Monetary Fund for a support package of up to €250bn (£208bn), the largest rescue in history. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7833942/Spanish-debt-wilts-amid-250bn-rescue-plan-confusion.html

-Spain plays high-stakes poker game with Germany as borrowing costs surge. Spain has upped the ante in a high-stakes poker game with Germany, pushing for the release of EU stress test results for major banks in a move that risks precipitating a dramatic escalation of Europe’s financial crisis. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7831117/Spain-plays-high-stakes-poker-game-with-Germany-as-borrowing-costs-surge.html

-Spain, Portugal Debt May ‘Snowball,’ EU Draft Says. Debt levels in Spain and Portugal may “snowball” in coming years and additional budget cuts are needed to meet deficit targets announced just a month ago, according to a draft European Commission document. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=axXa6hN.YCjk

FED ON HOLD FOR A LONG TIME

-Fed on hold for a long, long time. “Many predict that the economy will take years to return to full employment and that inflation will remain very low. If so, it seems likely that the Fed’s exit from the current accommodative stance of monetary policy will take a significant period of time.”

That was the conclusion from the just-published San Francisco Fed newsletter titled The Fed’s Exit Strategy for Monetary Policy. Indeed, when you go to the rule-of-thumb that reveals statistically the relationship between the funds rate, inflation and the output gap, we estimate that the equilibrium policy rate right now is -5%.

Yet it is 0.25% and we have many a Fed bank president clamouring for rate hikes. And remember, bonds do not go into bear markets unless either the Fed is tightening monetary policy or threatening to do so. David Rosenberg-Gluskin/Sheff

-Fed Study Suggests Rates Will Stay at Record Lows Until ’12. Given high unemployment and low inflation, the Federal Reserve is likely to wait until 2012 before it starts to raise interest rates, a new Fed research paper states.

The paper, released Monday by the Federal Reserve Bank of San Francisco, does not represent the official position of the central bank, whose governors have declined to specify when they might begin to raise rates.

The benchmark short-term interest rate, known as the federal funds rate, has been essentially zero since December 2008, and most economists estimate that the Fed will increase it earlier than 2012. Read more here-http://www.nytimes.com/2010/06/15/business/economy/15fed.html?sq=Federal%20Reserve&st=cse&scp=2&pagewanted=print

FANNIE-FREDDIE FIX AT $160 BILLION WITH $1 TRILLION WORST CASE

-The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry. Fannie, based in Washington, and Freddie in McLean, Virginia, own or guarantee 53 percent of the nation’s $10.7 trillion in residential mortgages, according to a June 10 Federal Reserve report.

Millions of bad loans issued during the housing bubble remain on their books, and delinquencies continue to rise. How deep in the hole Fannie and Freddie go depends on unemployment, interest rates and other drivers of home prices, according to the companies and economists who study them. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=an_hcY9YaJas

-Fannie, Freddie Plunge After Moving to Delist Shares. Fannie Mae and Freddie Mac, the mortgage firms 80 percent owned by U.S. taxpayers, plunged after regulators told them to delist their common and preferred shares from the New York Stock Exchange.

The Federal Housing Finance Agency, which has overseen the two companies since 2008, ordered the moves as a pre-emptive step after the New York Stock Exchange told Washington-based Fannie Mae that its shares no longer met listing standards, FHFA Acting Director Edward DeMarco said today.

“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” DeMarco said in the statement. The delistings are expected to be effective in early July, the companies said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ6GVMxS4_1g&pos=6

U.S. BANKING CRISIS

-Track U.S. bank failures here-http://s.wsj.net/public/resources/documents/info-Failed_Banks-sort.html

-U.S. regulators seized Washington First International Bank in Seattle on Friday evening, bringing the total of failures so far this year to 82. Read more here-http://www.reuters.com/article/idUSTRE65B04U20100612?type=domesticNews

-FDIC to give update on cost of bank failures. U.S. regulators will give an update next week on what they believe will be the total cost of cleaning up the wreckage of bank failures. The Federal Deposit Insurance Corp said its board would meet on Tuesday to update loss and income estimates for its insurance fund.

The fund covers the cost of putting failed banks into receivership and insures accounts of up to $250,000. The last estimate was that bank failures would cost the agency’s insurance fund about $100 billion from 2009 to 2013. Since the beginning of 2009, 247 U.S. banks have failed, many of them small institutions overcome by bad commercial real estate loans. Read more here-http://www.reuters.com/article/idUSTRE65F3AZ20100616

-More Than 90 Banks Miss TARP Payments. More than 90 U.S. banks and thrifts missed making a May 17 payment to the U.S. government under its main bank bailout program, signaling a rising number of lenders are struggling to meet their obligations.

The statistics, compiled by SNL Financial from U.S. Treasury data, showed 91 banks and thrifts skipped the May dividend payment under the Troubled Asset Relief Program, or TARP. It was the first missed payment for 23 of the banks; for the others, it was at least their second miss.

The number of banks missing their TARP payments rose for the third straight quarter. In February, 74 banks deferred their payments; 55 deferred last November. SNL Financial’s analysis found 20 banks have missed four or more payments since the program began in 2008, while eight banks have missed five payments.

Under the TARP program, the U.S. Treasury invested in preferred shares issued banks looking for funds. The banks were to make regular dividend payments to the Treasury, and have the right to repurchase the shares at some point in the future.

While many of the largest U.S. banks easily repaid billions in TARP aid, more than 600 smaller banks still hold $130 billion from the program, created at the height of the financial crisis. Read more here-http://www.cnbc.com/id/37732312

U.S. DEBT-DEFICIT CRISIS

-The government posted its 20th consecutive monthly deficit in May, according to data released Thursday by the Treasury Department. The $135.9 billion shortfall brought the deficit for the first eight months of the fiscal year to $935.6 billion. Read more here-http://money.cnn.com/2010/06/10/news/economy/US_budget_deficit/index.htm

-US Treasury Rolls $284 Billion In Bills, $316 Billion In Total Debt In First 10 Days Of June, Cash Balance Down To $4 Billion. Read more here-http://www.zerohedge.com/article/us-treasury-rolls-284-billion-bills-316-billion-total-debt-first-10-days-june-cash-balance-d

-US faces ’severe’ losses on AIG, Commission warns. The United States’s $182.5bn rescue of troubled insurer American International Group (AIG) at the height of the financial crisis could have been avoided, an influential Congressional commission has found.

The Congressional Oversight Panel on the $700bn Troubled Assets Relief Programme (TARP) proceeds from which in part funded the rescue found that the US Treasury and the Federal Reserve “failed to exhaust all options” before committing the original $85bn in rescue funding in September 2008. The quantum of funding rose to $182.5bn at its peak.

In a detailed 328-page report into AIG, the panel, chaired by Professor Elizabeth Warren, also found that American taxpayers “remain at risk for severe losses” as a result of the uncertainty surrounding whether AIG can hive off key business units, including AIA which it had intended to sell to Prudential. Read more here-http://www.telegraph.co.uk/finance/businesslatestnews/7818836/US-faces-severe-losses-on-AIG-Commission-warns.html

-China’s holdings of US debt climbed to the highest level this year, the US Treasury said Tuesday even as Beijing stepped up attacks on the United States for its burgeoning debt. The cash-rich Chinese government raised its US Treasury bond holdings to 900.2 billion dollars in April, its highest level since November 2009, while posting the second consecutive monthly rise, according to a report on international capital flows.

China remained far ahead as the top foreign debt holder, followed by Japan, which held 795.5 billion dollars in April, and third-placed Britain at 239.3 billion dollars, according to the figures. Read more here-http://news.malaysia.msn.com/business/article.aspx?cp-documentid=4151671

-”UK” Holdings Of US Treasuries Go Exponential, As Foreigners Now Hold $3.96 Trillion Of American Debt. Read more here-http://www.zerohedge.com/article/uk-holdings-us-treasuries-go-exponential-foreigners-now-hold-396-trillion-american-debt

U.S. STATES IN CRISIS

-Tardy States’ Credit Ratings at Risk as Budget Deadlines Near. Eight U.S. states, including California, Pennsylvania, New Jersey and Illinois, risk lower credit ratings because they lack completed budgets less than three weeks before the start of their new fiscal years.

A ninth, New York, has operated without one since its year started April 1. All are gripped by political stalemates over how to cope with a collapse in tax revenue that included a $67 billion decline in the 12 months ended June 30, 2009, according to the Census Bureau. The Nelson A. Rockefeller Institute of Government called that the biggest on record.

Governors and lawmakers already chopped billions of dollars from previous budgets in the deepest recession since the Great Depression. Delays in new spending plans could cut off credit and slow payments to schools, local governments and public employees, Moody’s Investors Service said. Some states may need emergency solutions like California used last year, when it paid vendors with IOUs as a $26 billion budget gap went unresolved.

“If we’re seeing a lot of political infighting, it indicates there may not be a budget plan, or somebody’s just not tackling the problem,” said Edith Behr, a Moody’s analyst in New York. “That’s not a good thing from a credit perspective.”

Illinois, the fifth-most populous state, had its credit rating lowered twice this month, on June 11 by Fitch Ratings to A from A+ and by Moody’s on June 4 to A1 from Aa3. “The state has not demonstrated the political willingness to take action,” Fitch said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=at5kGvTjSMOg

-State Plan Makes Fund Both Borrower and Lender. Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund from the same pension fund. As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

“It’s a classic Albany example of kicking the can down the road,” said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard. Pension costs for the state and municipalities are soaring, a result of enhanced retirement benefits for public employees and the decline in the stock market over the past two years.

And, given declines in tax revenue and larger budget shortfalls, the governments are struggling to come up with the money to make the contributions. Under the plan, the state and municipalities would borrow the money to reduce their pension contributions for the next three years, in exchange for higher payments over the following decade. They would begin repaying what they borrowed, with interest, in 2013.

But Mr. Paterson and other state officials hope the stock market will have rebounded to such a degree by that time that the state’s overall pension contribution burden will have been reduced. The maneuver would cost the state and local governments about $1.85 billion in interest payments, according to an estimate by the State Senate, though a number of factors could drive interest payments up or down.

Another oddity of the plan is that the pension fund, which assumes its assets will earn 8 percent a year, would accept interest payments from the state that would probably be 4.5 percent to 5.5 percent. Read more here-http://www.nytimes.com/2010/06/12/nyregion/12pension.html?pagewanted=print

-61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Becomes Next AIG-In-Waiting By Selling Billions In CDS. Read more here-http://www.zerohedge.com/article/61-underfunded-illinois-teachers-pension-fund-goes-broke-becomes-next-aig-waiting-selling-bi

-Illinois Debt-Default Insurance Climbs to Record Amid $14 Billion Deficit. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aw5XHYjccVN8

REAL ESTATE

-There is no denying the renewed decline in the U.S. residential market, and this transcends the end of the tax credits the sector is fundamentally weak. David Rosenberg-Gluskin/Sheff-Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auJKzgmS6lUw

-U.S. Housing Recovery Dependent on Jobs, Harvard Report Says. ob growth will be the key factor in whether the U.S. real estate market can extend a recovery after the end of the federal homebuyer tax credit, according to a Harvard University study.

High unemployment is fueling the foreclosure crisis and discouraging the household formation that drives property demand, according to the State of the Nation’s Housing report issued today by Harvard’s Joint Center for Housing Studies. The weak labor market resulted in people “doubling up,” or sharing residences, rather than buying their own home, the report said.

“What happens with jobs will matter the most to the strength of the housing rebound,” said Eric Belsky, executive director for the center in Cambridge, Massachusetts. “If employment growth surprises on the upside or downside, housing numbers could too.” Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid=a9eQwFtQvlcw

-Builders Rush to Complete Houses by U.S. Tax Credit Deadline. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=akZGcJglxUaY

-Chart of the week: Housing is collapsing again. There is no denying the renewed decline in the U.S. residential market, and this transcends the end of the tax credits the sector is fundamentally weak. Moreover, demand has not reacted to the latest downdraft in mortgage rates and homebuying intentions are, in a word, moribund.

The National Association of Home Builders (NAHB) housing market index sagged from 22 in May to 17 in June a three-month low. Buyer traffic receded from 14 to 16 but the real story was the four point collapse in the “future sales outlook,” to 23 from 27 it hasn’t been this low since the depths of the recession back in March 2009.

We ran some regressions and found that the “future” component does indeed have the best “fit” with both housing starts and new home sales the latter is set for a renewed 10% in coming months, to a 600k annual unit rate, and the latter by 30% to the 350k level, which would very close to the all-time low of 338k hit in February 2010. Ouch! David Rosenberg-Gluskin/Sheff

-Oil Spill May Cost $4.3 Billion in Property Values. BP Plc’s oil spill may drive down the Gulf Coast’s shore-area property values by 10 percent for at least three years, according to CoStar Group Inc. Losses may total $4.3 billion along the 600-mile (966- kilometer) stretch from the Louisiana bayous to Clearwater, Florida, the property-information service estimates.

“It’s just another blow to an already depressed real estate market,” Norm Miller, CoStar’s vice president of analytics, said yesterday in a telephone interview from San Diego. “The best thing you can do if you’re in real estate in this area is bide your time, don’t panic and don’t try to sell in this environment.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aEFd_tEj12BI&pos=9

-Economists consider tearing down homes to protect housing market. Douglas Duncan, vice president and chief economist for Fannie Mae, raised a provocative idea at a recent meeting of real estate journalists in Austin: Some of the misconceived housing developments built during the boom years might have to be torn down because they don’t make financial sense.

Duncan agreed with Stan Humphries, chief economist at Zillow.com, who warned that a “tremendous shadow inventory” of homes is poised to come on the market. That includes future foreclosures (due to negative equity and continued high unemployment), homes that will end up in foreclosure after failed loan modifications, and homes from what he calls “sideline sellers” who have been biding their time until the housing market improves.

Humphries said home prices won’t bottom out until the third quarter of this year, leading to “the second phase of the housing recession”: below-normal price appreciation for several years. (The long-term appreciation norm is 3 to 5 percent per year.)

Said Duncan: “Some of that shadow inventory could have to be torn down. It was not economically viable when it was put in place.” That includes some boom-time developments in California’s Inland Empire and Central Florida. Duncan said people might find that the cost of sustaining their lifestyle in some developments including high transportation costs to far-away jobs is greater than the cost of the home. That could wipe out demand.

Who would pay for tear-downs? What would happen to the people who have hung on to their homes despite the foreclosures all around them? All are unanswered questions. Economists are discussing the idea, but Duncan said he doesn’t know of any policymakers considering it. “It’s un-American to think about tearing down housing,” he said. “But we have a long history of ghost towns.” Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2010/06/10/AR2010061006075_pf.html

-Commercial Property to Stay 40% From Peak, Pimco Says. U.S. commercial property values are rebounding slowly and may remain as much as 40 percent below their 2007 peak levels, Pacific Investment Management Co. said.

More than $500 billion of real estate will hit the market as lenders dispose of assets or restructure debt on properties where valuations have dropped below loan levels, keeping “general” prices down for three to five years, Newport Beach, California-based Pimco, which runs the world’s biggest bond fund, said on its website. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aBde7npdPx5o

-China Property Bubble to Burst ‘Quickly,’ Nomura Says. The “bubble” in China’s property market is going to burst very quickly, with prices set to fall as much as 20 percent in the next 12 to 18 months, according to Nomura Holdings Inc.

National real-estate prices may drop between 10 percent and 20 percent on average, compared with an increase of about 22 percent last year, Sun Mingchun, a Hong Kong-based economist at Nomura, said in a Bloomberg Television interview.

“If you look at housing prices to disposable income in Beijing and Shanghai, they are 13, 14 times,” said Sun, whose team was ranked third in Institutional Investor’s 2010 Asian poll for China research. “There’s no way you can say there’s no bubble.”

Real-estate prices jumped 12.4 percent across 70 cities in May, adding to the 12.8 percent surge in April that was the most since the data series began in 2005. The gains suggest that measures ranging from a ban on loans for third-home purchases to higher mortgage rates and downpayment requirements for second- home purchases have yet to cool the real-estate market. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aHH9989bIUwA

-China’s Housing Market Isn’t Overheating, Roach Says. The property boom in China isn’t a bubble because it’s supported by “solid” demand for residential housing, according to Stephen Roach, chairman of Morgan Stanley Asia Ltd.

While portions of the real-estate market such as high-end apartments are overheating, demand for residential homes will remain robust as rural Chinese migrate to bigger cities, Roach said in a radio interview from Hong Kong with Tom Keene on Bloomberg Surveillance. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=av4pOFd4COh0

-China’s Bank Regulator Sees Growing Real Estate Risks. China’s banking regulator said it sees growing credit risks in the nation’s real-estate industry and warned of increasing pressure from non-performing loans.

Risks associated with home mortgages are growing and a “chain effect” may reappear in real-estate development loans, the China Banking Regulatory Commission said in its annual report published on its website today.

The regulator has told banks to report on risk exposure by the end of June to help prevent a credit boom from leading to more bad loans. Property-price gains spurred concerns that a record 9.59 trillion yuan ($1.4 trillion) of loans extended last year to combat the effects of the global financial crisis may be causing asset bubbles. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=atVz6HzCna8A

-Milan Proving Bust for Italian Tower as Luxury Lofts Go Begging. Milan’s $2.6 billion CityLife real estate project that includes the tallest building in Italy is struggling to attract buyers for luxury condominiums amid a slump in the country’s property market.

CityLife, billed as the biggest urban development in the country’s business capital, has sold 90 of an initial 390 upscale apartments and penthouses in the 431,000 square-meter (4.6 million square foot) site at the city’s former fairgrounds. The plan’s biggest investors are insurers Allianz SE of Germany and Assicurazioni Generali SpA in Italy.

“They’re flooding the market with such a large number of high-range properties that it can’t possibly absorb, especially in a period of economic slowdown,” said Rolando Mastrodonato, who leads the “Live and Design a New Milan” residents’ group that opposes the project. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a3vJQuBaPUAA

BP GULF OIL SPILL

-BP Oil Spill: Against Gov. Jindal’s Wishes, Crude-Sucking Barges Stopped by Coast Guard. 59 Days Into Oil Crisis, Gulf Coast Governors Say Feds Are Failing Them. Read and watch more here-http://abcnews.go.com/WN/bp-oil-spill-gov-bobby-jindals-wishes-crude/story?id=10946379

-British oil giant forced to suspend paying any dividends until 2011. the news was a major blow for Britain’s pension funds, which rely on BP’s dividend income to provide £1 in every £6 they receive each year. Read more here-http://www.dailymail.co.uk/news/article-1287222/BP-oil-spill-British-pensioners-pick-BP-compensation-fund.html

-Matt Simmons Revises Leak Estimate To 120,000 Barrels Per Day, Believes Oil Covers 40% Of Gulf Beneath The Surface. Read and watch more here-http://www.zerohedge.com/article/matt-simmons-revises-leak-estimate-120000-barrels-day-believes-oil-covers-40-gulf-beneath-su

-Oil Volcano Pressure Too Strong For Containment. Read more here-http://www.rense.com/general91/oilor.htm

-Bud Conrad: The Cost of the Gulf Coast Destruction. Read more here-http://www.caseyresearch.com/displayCdd.php?id=452

-Blowout: The Deepwater Horizon Disaster. A Survivor Recalls His Harrowing Escape; Plus, A Former BP Insider Warns Of Another Potential Disaster. Watch video here-http://www.cbsnews.com/stories/2010/05/16/60minutes/main6490197.shtml?tag=cbsnewsSectionContent.1

-BP’s $20 Billion Fund May Not Stop Spill Lawsuits, Judge Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a8k96de_SVhE

GEOPOLITICAL NEWS

-Saudi Arabia gives Israel clear skies to attack Iranian nuclear sites. Read more here-http://www.timesonline.co.uk/tol/news/world/middle_east/article7148555.ece

-Iran to retaliate if planes, ships inspected: speaker. Read more here-http://news.xinhuanet.com/english2010/world/2010-06/16/c_13353163.htm

-Iran could fire ‘hundreds’ of missiles at Europe: Gates. Read more here-http://www.breitbart.com/article.php?id=CNG.fd8407198a07237977aedaea76eb2eaa.9b1&show_article=1

-Defying sanctions, Iran plans more atomic reactors. Read more here-http://apnews.myway.com/article/20100616/D9GCKEUO1.html

-North Korea Envoy Threatens Military Response to UN. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=atycjhcGVR9U

-North Korea Threatens `All-Out Military Strike’ on South’s Loudspeakers. Read more here-http://preview.bloomberg.com/news/2010-06-12/north-korea-threatens-all-out-military-strike-on-south-s-loudspeakers.html

The Goldbugg Report – June 22, 2010
Posted by Worldwide Precious Metals on Tuesday, June 22, 2010

The Week in Review – June 18th, 2010

June 18, 2010

Gold hit another new record high this week, climbing above $1260 an ounce. The media continues to try to downplay the significance, but it seems investors are finally beginning to ignore the talking heads and are seeing the value in diversifying their portfolios with precious metals as fiat currencies around the world continue to devalue. Those investors astute enough to have taken the steps to diversify their portfolios when prices were “cheap” should be well pleased with the results so far. Both Gold and Silver have now separated themselves from the currency markets, the Equity markets and the Base Metals Markets and are now trading as true hedges against financial crisis (All this while inflation remains low, according to our trusted US office of statistics!!)

Factory activity growth nosedived in the Mid-Atlantic region in June according to a survey by the Philadelphia Federal Reserve Bank. Economists were expecting a reading of 20.9, down from May’s reading of 21.4 and the only thing they were right about was the fact that it was down. The reading came in at a mere 8.0, showing that manufacturing is slowing.

Initial jobless claims jumped again last week ending three straight declines. A bill that would further extend unemployment benefits failed to pass the US Senate on fears that it would simply add more to an already ballooning deficit. Falling gasoline prices helped push down consumer prices, but core consumer prices, which strip out volatile energy and food figures, rose in May by .1 percent.

The beating that everyone expected the housing industry to take after the tax credit expired is coming to pass. New home construction fell by 17.2 percent in May. Sales dropped by more than 20 percent in some areas and applications to buy houses are down by over 30 percent compared with last year according to the Mortgage Bankers Association.

According to statistics compiled by SNL Financial from US Treasury data, 91 banks and thrifts skipped the May dividend payment under the Troubled Asset Relief Program. It was the first time 23 of those banks had missed their payment, for the other 78 it was at least their second time, with some of them missing as many as 5 payments.

On Monday, Moody’s downgraded Greece government bond ratings to junk, citing risks in the euro zone/IMF bailout package. Moody’s went on to announce that Poland needed to launch fiscal reforms if it wants to keep its A2 rating.

Alan Greenspan warned in an opinion piece this week that the US capacity to borrow is not unlimited and that the government may soon have to pay higher interest rates to finance a ballooning deficit. Greenspan speculates that the only way to close the deficit would be to make politically suicidal drastic cuts, rationing medical care or raising the age for health and retirement benefits. An alternative option that would help close the deficit, according to Greenspan, would be significant inflation.

Crude oil had surged to a 5 week high of $78 a barrel, despite a rise in inventory that should have driven the price lower. The ongoing disaster in the Gulf of Mexico and concerns over the apparent economic slowdown drove the price back down to the mid-$70 range again by the end of the week.

The Euro hit a 3 week high against the dollar this week, but news out of Spain regarding a rise in bad bank debts and rising borrowing costs kept the currency from rallying further. The EU is doing their best to spin stories that Spain is in no need of a Greek style bailout, but the rumors that Spain is in deeper trouble than it appears, as rumors almost always do, seem to be stubbornly gaining ground.

Friday to Friday Close

	June. 11^th	June. 18^th	Net Change
Gold	$1230.00	$1258.00	28.00 + 2.28%
Silver	$18.26	$19.17	0.91 + 4.98%
Platinum	$1538.00	$1585.00	47.00 + 3.06%
Palladium	$446.00	$486.00	40.00 + 8.97%

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

	Gold	Silver
Support	1250/1220/1200	18.80/18.40/18.00
Resistance	1260/1280/1300	19.20/19.50/19.80

	Platinum	Palladium
Support	1550/1500/1450	470/450/425
Resistance	1600/1650/1700	500/515/525

Volatility should be expected to continue. On Capitol Hill last week, Ben Bernanke said “I don’t fully understand the movements in the gold price.” He must have one hell of a set of blinders on. People are buying gold because they are afraid. As the word “bailout” becomes commonplace and fiat currencies continue to lose their value, people are fast losing faith in the global financial system and seem to be turning toward the one asset that governments cannot simply print more of, thereby decreasing its value: precious metals. Johann Santer, managing director at Superfund Financial in Tokyo, was accumulating gold as Lehman Brothers was collapsing in 2008. People laughed and scoffed when he predicted, at that time, that gold would hit $1,500 an ounce over the next two to three years. No one seems to be laughing at him now. Credit ratings have become a joke and entire countries are at risk of defaulting on their debt. With the US deficit spiraling out of control, central banks across the globe are looking to diversify a large portion of their US dollar holdings by buying more gold. The manipulation of the gold and silver market, long thought to have been just a crackpot conspiracy theory, is now getting serious consideration and is even finally the subject of an investigation by the CFTC and the US Justice Department. The more that manipulation is exposed and discussed, the greater the chance that investors will no longer accept owning “shares” of an ETF controlled by those responsible for the manipulation as a viable way to have precious metals in their portfolio. We may be standing at the edge of the greatest rush to own precious metals in history which could be caused by instant and massive short covering by J.P. Morgan and their co-conspirators. This occurrence alone could create a massive upward price movement in Gold and Silver. It certainly appears that if there ever was a time to be aggressive in accumulating Physical Gold and Silver that time is NOW. 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. We once again leave you with one final thought: Once demand for a product outpaces its supply, the only way to obtain that limited product will be to pay a premium price for it.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – June 18th, 2010
Posted by Worldwide Precious Metals on Friday, June 18, 2010

The Goldbugg Report – June 15, 2010

June 15, 2010

-Gold Headed for $10,000 by 2012

-An unprecedented crisis in the silver market could easily hand you a long series of double, triple, and even quadruple investment gains

-Richard Daughty: Insufficient Silver to Supply China’s Growing Demand.

GOLD

-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

-The long 11-year first stage of the gold and silver bull market has been completed. The second stage should move up to $2,500 to $3,000. Stage three should take gold to $7,100 to $7,500 based just on real inflation since 1980. The speculative processes have begun as fiat currencies are abandoned. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1275890940.php and http://news.goldseek.com/InternationalForecaster/1276093512.php

-Gold Headed for $10,000 by 2012, Arnold Block

No wishful thinking here! As I see it gold is going to a parabolic top of $10,000 by 2012 for very good reasons – sovereign debt defaults, bankruptcies of “too big to fail” banks and other financial entities, currency inflation and devaluations – which will all contribute to rampant price inflation.

Not surprisingly, I have company in that view:

Money manager, Peter Schiff, told Business Week recently that, “Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years” and highly respected economist David Rosenberg is of the opinion that “There is no doubt that gold can easily double from here.”

The causes:

1. History is No Guide

Gold has only been trading freely since President Nixon’s 1971 decision to deny gold to the French and others attempting to repatriate their paper dollars for the metal. As such, there has been a scant forty years of gold production and trading since it was detached from supporting paper money. This period has also been marked by substantially higher monetary and price inflation as well as currency devaluation.

2. Market Manipulation

The Commodity Futures Trading Commission (CFTC) recently held a major hearing which blew the doors off bullion metals futures trading markets in terms of what was revealed publicly. I predict this public hearing will be viewed in the period ahead as the precious metals price liberation event of the decade.

It is commonly known that JP Morgan Chase is the major player in commodities futures markets trading. Not only do they take massive naked short positions (betting that prices will fall), they do it with large substantial leverage. What isn’t as well known though is that Chase acts as the agent for the Federal Reserve Board and other central banks in “managing” the markets on their behalf. Central banks want “orderly” precious metals markets and prices and currencies which don’t gyrate wildly. Only then can they achieve stealth inflation in their monetary policy which is so beneficial in servicing debt. It also makes for good (meaning effective) politics.

3. Insufficient Physical Inventories

While it is normal for traders to roll their expiring contracts over into new paper trades, some traders accept cash in settlement rather than the metal. To the amazement of everyone, the recent hearing of the CFTC — specifically Jeffrey Christian’s comments — inadvertently confirmed that there is little bullion in storage at the London Metal Exchange or New York’s Comex to back the metals trading. He justified this fact by noting that only one ounce of one hundred traded is paid out in physical metal. This revelation confirmed a much worse reality than even critics, such as the Gold Anti-Trust Action Committee (GATA), had expected. It seems that the Asian and Mid East buyers and owners of bullion have been removing gold from their dealers’ vaults and are taking it “home” thus leaving much less than previously thought in the London, New York and Toronto vaults.

In addition to what looks like a production peak in the gold mining industry (production has fallen in five of the last eight years), central banks have for the first time recently become net purchasers (having bought more gold last year – 425 tons – than at any time since 1964).

The single largest purchasers of metal these days, other than central banks, are the bullion ETF’s (exchange traded funds) which ostensibly have their metal inventories in vaults. These relatively new investment vehicles, unfortunately, are not transparent in their business practices. Regular audits by reputable accounting firms and allocated and segregated bullion inventories stored in reputable vaults are opaque at best. This begs the question: “Do the large ETF bullion funds actually have the metal they purport to own, or is their inventory more the ‘paper gold’ variety in which bullion trading exchanges seem to specialize?”

The effect:

1. The revelations, outlined above, that there is insufficient physical inventory to meet new investment demand for ownership and delivery of physical bullion, is about to blow the price lid skyward.

2. As public awareness of sovereign debt mounts, it will drive home the reality of mounting government insolvency.

3. Confidence in currencies will wilt commensurately.

4. Investment demand for real gold and real money as a safe haven investment will expand exponentially.

5. These events should take place from mid 2011 through 2012 and extend further out toward 2015 before demand is satiated.

6. The dramatic price increases in gold and silver will at that point also satisfy the unstated desire of central banks and politicians to devalue their currencies in order to assist them in meeting their debt and unfunded liabilities.

af After the 2008/2009 crash, governments bailed out their failing financial institutions and investment banks through a variety of innovative measures. The next time round most governments will not be in a position to do so – again. Even more troubling, the IMF (International Monetary Fund) will not be capable of rescuing the increasing number of insolvent governments and their financial institutions.

You may think my aforementioned views are crazy or perhaps just that my imagination is way out of hand or, at best, that I don’t have access to the appropriate reality checks. Be that as it may, I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will drive precious metals bullion and mining stock to unimagined heights.

The circumstances immediately ahead are largely unprecedented. History is therefore only marginally useful as our guide to the future price of precious metals. We are now in genuinely unchartered territory.

Get yourself positioned to take advantage of this event of a lifetime. Protect your assets from the next and more serious leg of the ‘Greater Depression’ directly ahead. Get a running start NOW on growing your future wealth.

-It may simply be a pure coincidence, but since mid-2007, the Fed’s balance sheet has ballooned from $850 billion to $2.3 trillion and during that time, the gold price has risen from $650/oz to $1,250/oz. In other words, about two-thirds of the bull market in gold has occurred in just the past three years. David Rosenberg-Gluskin/Sheff

-Investor Marc Faber said cash and bonds will be “very dangerous” in the next 10 years as governments increase money supply to cover fiscal deficits. “There’s no other way out but to print money,” Faber, the publisher of the Gloom, Boom & Doom report, said at a forum in Seoul today. “In the long run, all paper money will go exactly to its intrinsic value, which is zero.” Faber advised investors to protect themselves with assets such gold and silver. Read more here-http://www.businessweek.com/news/2010-06-09/marc-faber-says-cash-bonds-will-be-very-dangerous-update1-.html

-Demand for gold coming from many sources. It is no longer about investor demand through ETFs and the like that have been driving the gold price physical demand for gold coins and bars has also been very strong. The U.S. mint has been busy supplying investors with 23,000 American Eagles so far in June after a run of 190,000 in May.

The Rand refinery in South Africa, according to the Financial Times, is running at full capacity. The World Gold Council is projecting a new high for investor gold demand in 2010 (after the 1,910 tons in 2009, which also was a record).

Moreover, demand is not just coming from private investors remember, central banks have very deep pockets as well. We see in the WSJ that Russia bolstered its gold reserves by $1.8 billion in May and there are also unconfirmed reports that Iran has also been in buying the yellow metal. David Rosenberg-Gluskin/Sheff-Read more here-http://online.wsj.com/article/SB10001424052748703302604575294093148400182.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

-Eric Sprott: Gold Running in Short Supply. I don’t have a good price target. We get involved in themes that play out for a long time. Interest rates and reported inflation started going down in the 1980s. No one dreamed of buying gold in 2000. You were an idiot talking about it. I was initially attracted to it because I thought there was a physical shortage then. There still is.

Central governments were selling gold 10 years ago. This put a burden on a very small market. Today, central governments are buying, the miners are unhedged, you have big gold ETFs, you have coin sales going crazy. Some central banks are even telling their people to buy gold.

I’ve got to believe that a physical shortage will manifest itself somewhere soon. There’s only 162,000 tons of it out there and I don’t know anyone selling it. Someone’s going to try to buy a bar of gold sometime and it won’t be there.

My partner, John Embry, went into gold many years ago because he thought it would become a substitute for fiat currencies. Governments are printing money and, sooner or later, people will realize that it’s better to own gold than any bank deposits. This theme is obviously massively playing out as we speak.

You look at the quantitative easing (QE) programs, budget deficits. The global fiscal irresponsibility plays into the hands of the gold owner. More people will figure it out and they’ll go there. We now have large investors John Paulson, to name one putting their money into gold. If everyone started putting 5% of their portfolios in gold, there wouldn’t be enough.

I’m convinced the upside for gold is still quite positive. When I see some projections for $2,000, $3,000, or $5,000 per ounce, none of them bothers me. We don’t know where the price will go but it will be the inverse of QE. The more they print, the more it will go up.

The all-time high of 1980 in today’s numbers is something like $2,300, but our world is different today. They didn’t print money as irresponsibly then as we do now. They didn’t have deficits as a percentage of GDP as large as we have today. And there’s 162,000 tons of gold in the world. That’s it. Part 1 of interview here-http://www.thestreet.com/print/story/10775194.html Part 2 of interview here-http://www.thestreet.com/print/story/10775220.html

-With 8,133 tons of gold in its reserves, the United States rates as the world’s largest sovereign holder. In fact, as of March 2010, gold made up 70% of official U.S. reserves. Pretty good, eh? Now, let’s break it down.

8,133 tons of gold=287 million ounces.

287 million ounces x $1,000=$287 billion held in gold reserves.

If $287 billion is 70% of total U.S. reserves, then total U.S. reserves=$410 billion.

Total U.S. government debt, not including unfunded obligations, comes to $14 trillion, so total reserves (of all categories) as a percentage of debt=.029.

And the gold component of those reserves, as a percentage of total government debt=.02.

I think the technical term is a “drop in the bucket.” Even so, one doesn’t want to be naïve about these things 29,000 tons of gold is roughly the equivalent of seven years’ supply. Which is another way of saying that it would be a mistake to completely discount the possibility that desperate governments won’t eventually attempt to dump their gold to defend their currencies, as counterproductive as that might be, given that it would send the price sharply lower. For the time being, however, the central banks are net buyers and so very supportive to gold’s price. Read more here-http://www.caseyresearch.com/displayCdd.php?id=451

-Credit Suisse Helps Alleviate Bernanke’s Gold Confusion, Sees Gold Going To $1,360. Read more here-http://www.zerohedge.com/article/credit-suisse-helps-aleviate-bernankes-gold-confusion-sees-gold-going-1360

-Deutsche Bank’s Lewis Says Gold May Rally Past Record on Crisis. Gold, which touched a record of $1,249.70 last month, may rally another 36 percent as Asian central banks buy for the first time in two decades, said Michael Lewis, head of commodities research at Deutsche Bank AG.

The precious metal may rise to as much as $1,700 an ounce over the next year on concerns that budget deficits will weaken major currencies, Lewis said in an interview yesterday in Lima. Read more here-http://www.businessweek.com/news/2010-06-04/deutsche-bank-s-lewis-says-gold-may-rally-past-record-on-crisis.html

-Gold May Jump to $1,300 on Double Dip, GFMS’s Walker Forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=a1R93Ab7SHdw

-Gold to Reach Parabolic Top of $10,000 by 2012, Yes, $10,000 by 2012! Read more here-http://www.kitco.com/ind/Bock/jun072010.html

-Kelvin Tay, chief investment strategist at UBS Wealth Management, expects gold prices to hit $1500 in 12 months. Read and watch more here-http://www.cnbc.com/id/15840232?video=1517991477&play=1

-Chris Mayer: $7,000 gold. During a week when almost everything went wrong, the gold market went very right. In fact, gold has been going very right for more than a decade. The gold price has more than quadrupled during the last 10 years. So is it too late to buy the stuff? My short answer is, “No.” Read more here-http://www.dailyreckoning.com.au/gold-7000/2010/06/08/ and http://www.moneyweek.com/investments/precious-metals-and-gems/why-no-price-is-too-high-for-gold-02307.aspx

-Gold’s ‘Real Move’ to $7,000 Coming: Asset Manager. The “real move” in gold is to come, predicted Egon von Gruyerz, founder of precious metals investment and storage company GoldSwitzerland.com, on Monday.

He told CNBC he sees the inflation-adjusted price of gold “easily” rising to six times its current price ($1,250) to around $7,000 an ounce in the future on “normal” inflation. “Adjusted for real inflation (as per shadowstats.com) the 1980 gold peak in today’s prices corresponds to around $7,200 today.

So gold could easily go up 6 times from the current price of $1,220 and still be within normal parameters,” von Gruyerz’s latest report for GoldSwitzerland.com said. But von Gruyerz told CNBC gold could go higher if the world encounters hyperinflation. The fears stemming from the European debt crisis will enhance gold’s safe haven appeal, according to von Gruyerz.

“Gold is at this point not a bubble,” he added. “It is not overbought.” An important barrier for gold is $1,220 an ounce and that barrier will be broken and it’s “going to shoot up by probably $100 very quickly,” von Gruyerz told CNBC.

“There will be nowhere near sufficient gold to satisfy demand at current prices. We had been expecting gold to start its acceleration in March 2010 and this is exactly what is happening. We expect the move to be relentless during most of this year with very few major corrections but with high volatility.

Moves of $100 in one day could easily happen. So gold is likely to make a top in the next few years between $5,000 and $10,000,” his report stated. “Gold reflects governments’ deceitful actions in destroying paper money,” he said. “At certain points gold is a commodity. Right now it’s money.” Von Gruyerz sees the dollar collapsing, as well as many other currencies.

“You can only measure the value of currencies now against gold because gold has an absolute value,” he said. “Clueless governments still don’t understand that their ruinous actions have created a credit-infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money.

The consequences are clear: Inflation, hyperinflation, economic and human misery as well as social unrest,” von Gruyerz’s latest report for GoldSwitzerland.com said. Read and watch more here-http://www.youtube.com/watch?v=NRD3-BPbN74 and http://www.cnbc.com/id/37550457

-European gold demand Bernhard Schnellmann: Director for Precious Metals Services Argor-Heraeus. “We see a huge demand for smaller denominations, starting actually from something like 10 grams, 20 grams, one ounce up to 100 gram and most of it is demand coming from all over Europe.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page96985?oid=106014&sn=2010+Detail&pid=102055

-Frank Holmes: Europeans believing in gold. Gold hit a new intra-day high in U.S. dollars this week, but has been doing so in the European currencies for some weeks now. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106006&sn=Detail&pid=33

-James Turk: Germans are voting with their pocketbook. Icelanders voted in a referendum to address their debt problem. Germans have a problem too, but they are voting with their pocketbook. They are dumping the euro and buying physical gold, the demand for which is soaring in Germany. Read more here-http://www.fgmr.com/germans-voting-with-their-pocketbook.html

-Krugerrand Output Jumps to 25-Year High on European Debt Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=ap.smnaduXJQ&source=patrick.net

-Gold Sales to Europe Jump on Crisis, Perth Mint Says. Read more here-http://www.businessweek.com/news/2010-06-03/gold-sales-to-europe-jump-on-crisis-perth-mint-says-update1-.html

-Gold-Coin Haven Demand Saps Supply, Raises Premiums. Demand for gold coins is tightening supplies and boosting premiums as mounting concern over Europe’s debt crisis and a proposed increase in U.K. capital-gains tax spur purchases, according to GoldCore Ltd.

Wholesale premiums on British sovereigns, added to the price of immediate-delivery bullion, have jumped to about 7 percent from as little as 2.5 percent in early May, the broker and dealer said. For the more popular Krugerrands, they have risen between 1 percent and 1.5 percent in the past month. May bullion sales almost tripled from a year earlier, GoldCore said.

Gold climbed to a record $1,252.11 an ounce in London this week on investor demand for an alternative to currencies and on speculation that debt-cutting measures across Europe will slow growth. Gold sales to Europe from the Perth Mint in Australia surged in May, and South Africa’s Rand Refinery Ltd. raised production of blank Krugerrands to a 25-year high.

“We’re finding it difficult to get sovereigns in large volumes,” Mark O’Byrne, executive director of GoldCore in Dublin, said yesterday by phone. “People see the crisis getting worse, not better, and demand is increasing. There’s still a bit of doubt in the market about the capital-gains tax, and sovereigns are exempt” from the levy, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=a7LdH2t3vfd0

-Bill Fleckenstein: Mainstream media still against gold. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/6/7_Mainstream_Media_Still_Against_Gold.html

-Gold ‘debate’ at Vancouver conference fizzles. Read more here-http://www.gata.org/node/8717

-TheStreet.com interviews GATA secretary on gold price suppression. Read more here-http://www.gata.org/node/8712

-Ron Paul: Why Governments Hate Gold. Read more here-http://news.goldseek.com/RonPaul/1275940800.php

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,700 the silver price would be $21.25

Gold to silver ratio at 70 to 1 with gold at $1,700 the silver price would be $24.29

Gold to silver ratio at 60 to 1 with gold at $1,700 the silver price would be $28.33

Gold to silver ratio at 50 to 1 with gold at $1,700 the silver price would be $34.00

Gold to silver ratio at 40 to 1 with gold at $1,700 the silver price would be $42.50

Gold to silver ratio at 30 to 1 with gold at $1,700 the silver price would be $56.67

Gold to silver ratio at 20 to 1 with gold at $1,700 the silver price would be $85.00

Gold to silver ratio at 15 to 1 with gold at $1,700 the silver price would be $113.33

-Let’s put it this way, silver is about 70% below its all-time high. Gold is making all-time highs. Often, one is better off investing in things that are down 70%, rather than things that are making all-time highs. Jim Rogers-Read more here-http://www.321gold.com/editorials/hera/hera060410.html

-An unprecedented crisis in the silver market could easily hand you a long series of double, triple, and even quadruple investment gains. Here’s how. You probably already know that every commodity fortune ever made was created by an imbalance of supply and demand.

When the demand for a certain commodity is high and supplies are low, prices skyrocket. And investors holding the commodity in question get rich. This is exactly what has happened in the case of many natural resources just in the past decade alone.

* Crude oil shot up 620% in 6 years

* Gold is now up over 380% since 2001

* Natural gas soared more than 550% in 4 years

* Uranium spiked 830% in 4 years

* Copper increased nearly 530% in 7 years

* Palladium more than tripled in 3 years

* Platinum prices grew 430% in 6 years

As demand grew and supplies dwindled, the prices for these natural resources ballooned in value. But none of these commodities experienced the supply/demand crisis that silver is currently facing. Take a moment to chew on this. According to GFMS Limited the world’s leading authority on precious metals markets the total amount of above-ground silver supplies dropped by 86% last year.

This left the world with just about 20 million ounces of silver reserves. At the same time, the world demands about 2.5 million ounces of silver per day. That means the entire global supply of above-ground silver could be completely wiped out in just eight days!

Fortunately, silver production companies have been able to keep up with demand but just barely. Last year, silver miners were only able to increase production by just over 3%. And for the past 10 years, there has been no surplus in silver supplies.

This extremely tight supply/demand dynamic of the silver market has been terrific for investors that own the physical metal. Silver prices have increased nearly 350% since 2002. Luke Burgess-Read more here-http://www.wealthdaily.com/articles/top-silver-stocks/2527

-Silver ‘will outperform gold.’ Silver will outperform gold as the yellow metal becomes ever more expensive and investors focus on silver’s industrial demand, according to a fund manager. Demand from investors concerned that loose monetary policy will produce inflation would push the price of both metals higher, Moonraker Fund Management said, but silver, which had fallen behind gold in recent years, was likely to catch up in view of the long-term correlation between the two prices.

“Gold outperformed silver by 46pc over the three years to May 31 2010 and silver, given the long-term correlation between the two metals, is due a catch-up,” the company said. “As gold becomes ever more expensive, investors will turn to silver as an alternative precious metal.”

Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.

“Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can’t be created at the touch of a button.

Rises in the price of gold and silver did not represent bubbles while confidence in Western currencies continued to deteriorate, the company said. “The euro is currently under pressure because of the debt crisis and sterling is next in line, before attention will finally turns to the US dollar.

“Western currencies will continue to be derated versus the currencies of non-indebted countries such as China and Brazil.” Mr. Charlesworth said silver, which is trading at around $18-$19 an ounce, had an additional attribute over gold in that it is continually consumed for industrial purposes.

He said: “Silver has lots of practical applications and is widely used for example in plasma screens, mobile phones and coins. I am more bullish on silver than gold in that when it moves it shifts very quickly and it is due a catch-up with gold.”

He said gold, now trading at around $1,225 per ounce, was set to go much higher, “quite possibly in excess of $5,000”, although the price was impossible to predict for certain. “The gold market really does have the bit between its teeth at the moment but a pullback in prices would only be a buying opportunity. It won’t be until gold is going up by $150 a day that the bubble will burst,” he said.

“It might only reach $5,000 or more for one day but at that point there will be a real crisis of confidence in Western currencies caused by colossal debt and governments will be forced to bring their deficits under control.” Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7803924/Silver-will-outperform-gold.html

-Silver now almost completely bullish, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8706

-Richard Daughty: Insufficient Silver to Supply China’s Growing Demand. Read more here-http://news.silverseek.com/SilverSeek/1276059840.php

-Gene Arensberg: Gold outperforming silver but silver may be better buy. Read more here-http://www.gata.org/node/8713

-Eric King of King World News has interviewed Hugo Salinas Price, president of the Mexican Civic Association for Silver, about the collapsing world monetary system and the prospects for the precious metals. Listen here-http://www.gata.org/node/8716

-Robert Kiyosaki: Silver is the #1 investment. Watch more here-http://www.youtube.com/watch?v=WnZHxyIkJ3A and http://www.youtube.com/watch?v=7D4zjkv1Ssw&feature=related

-Mike Maloney: $1,500 silver. Watch more here-http://www.youtube.com/watch?v=7zUiAw2PBfA

-China encourages Silver Bullion for investment. Watch more here-http://www.youtube.com/watch?v=PqFpl31UwPI&feature=related

-A Silver Shortage? Watch more here-http://www.youtube.com/watch?v=HGPvVjfNYgs&feature=related

-Howard Ruff: Gold and Silver Insurance. Read more here-http://www.kitco.com/ind/Ruff/ruff_may242010.html

-Clive Maund: Implications of the gold and silver divergence. Read more here-http://news.goldseek.com/CliveMaund/1275891240.php

-Taking a Shine to Silver. Read more here-http://www.thestreet.com/print/story/10779041.html

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: The Scariest Job Chart Ever Just Got Even Scarier. We’ve dubbed this chart the “Scariest Job Chart Ever,” as it shows how the decline in employment is WAY uglier than in past recessions.

Calculated Risk has updated it with the latest numbers from this morning, and now it looks even scarier. Why? Check out the two red lines at the bottom. The solid one includes Census hiring, while the dotted line doesn’t include it.

What’s clear is that while we still have a rebound including Census hiring, we’re already flattening out on the dotted line. This is a shape not seen on the other lines. suggesting that the fall is extremely deep, and the recovery is shallow. Read more here-http://www.businessinsider.com/chart-of-the-day-the-scariest-job-chart-ever-just-got-even-scarier-2010-6

-Last Friday, the Labor Department reported that nonfarm payrolls increased by 431,000 in May. It is worth noting that a large majority of last month’s gain in payrolls was due to the hiring of temporary workers for the 2010 census. Today’s chart provides some perspective on the US job market.

Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery, however, job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart).

In fact, the number of US jobs is currently at level first reached in early 2000. Read more here-http://www.chartoftheday.com/20100604.htm?T

Source: www.chartoftheday.com

-Chart of the week: Take a look at Chart 1 and you will see that the market, like life and the seasons, moves in cycles 16 to 18 year cycles, in fact. Sadly, this secular down-phase in the equity market began in 2000 when the major averages hit their peak in real terms, and so the best we can say is that we are probably 60% of the way into it.

This by no means suggests that we cannot get periodic rallies along the way, but in a secular bear market, these rallies are to be rented, not owned. In contrast, corrections in a secular bull market, as we saw in 1987 (as scary as it was), are opportunities to build long-term positions at more attractive pricing.

In secular bear markets, the indices do hit new lows during the recessions (2002, 2009), when they occur; in secular bull markets, you do not make new lows they are just corrections (ie: 1987, 1990, 1994, 1998). David Rosenberg-Gluskin/Sheff

-Another great day for Jim Cramer, another loss for his viewers. After telling his fans to Buy BP on May 21, Cramer, “mesmerized” by its fall, pulls the plug. The cost to those who followed his advice: -33%. Read more here-http://www.zerohedge.com/article/cramer-goes-buy-bye-bye-bp-loses-fans-33-two-weeks

-It’s been a painful 30 days for equities with the S&P 500 down about 13-14%. In the past, such a sharp sell-off didn’t usually end well, unfortunately. We dug through the history books, looking at the past 70 years and found that in the 21 instances when the S&P 500 fell 13-14% in 30 days, the market sold-off by an additional 10%, on average.

This happened in 18 of the 21 instances that we studied (in other words, 85% of the time when the market was down by 13-14% in 30 days, it continued to slide). Each cycle may be different, but it always pays to tip your hand to the historical record. David Rosenberg-Gluskin/Sheff

-We are still in year 10 of a classic 16-18 year secular bear phase; last we looked, the S&P 500 is still in the hole by 27% over the past decade. Historically, during a bear market or a corrective phase for that matter, the S&P 500 bottoms 24% below the 200-day m.a. on average that is the best buying opportunity. As of today, that would mean 840. David Rosenberg-Gluskin/Sheff

-The S&P 500 and the Dow are now just basis points away from making this a 15% decline from the peak and the historical record from 1946 shows that when this occurs, the stock market enters into an official bear market fully 80% of the time.

This correction, in all probability, has further to run. We repeat that the last two times we had an 80% rally off a depressed low in a short 12-13 months span was in the 1930s, and both times the market corrected hard after the parabolic rebound we are talking here about an average pullback of 40%. David Rosenberg-Gluskin/Sheff

-IMF Says Risks to Global Economy Have Risen ‘Significantly’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afwB7INWExaM&pos=5

-Got Gold? Head Of IMF Policy-Steering Committee Says Fund Needs $320 Billion To Be “Properly Resourced”. Read more here-http://www.zerohedge.com/article/got-gold-head-imf-policy-steering-committee-says-fund-needs-320-billion-be-properly-resource

-Martin Armstrong: The IMF Is Nuts, And Doesn’t Understand How It’s Recreating The Second Half Of The Great Depression. Read more here-http://www.businessinsider.com/martin-armstrong-the-imf-is-nuts-and-doesnt-understand-how-its-recreating-the-second-half-of-the-great-depression-2010-6

-‘Liquidity Seizure’ May Renew Recession, Nomura Says. A “liquidity seizure” arising from Europe’s worsening debt crisis could drag the global economy back into recession, according to Paul Schulte, head of multi- asset strategy in Asia excluding Japan at Nomura Holdings Ltd. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=a9U5td0KH0eE

-Illinois A State In Crisis. Years of Mismanagement Pushed Illinois Over the Edge. Read more here-http://rense.com/general91/dd.htm

-10 States Where An Absurd Percentage Of The Population Works For The Government. Read more here-http://www.businessinsider.com/10-states-where-an-insane-percentage-of-people-work-for-uncle-sam-2010-6

-In Brutal Job Market, More Than a Million Quit Looking. Read more here-http://www.cnbc.com/id/37554163?source=patrick.net

-Teens Face Worst Summer Job Market in 41 Years. Read more here-http://www.cnbc.com/id/37573330

-Census Worker Claims Job Numbers Are Being Inflated. Watch more here-http://www.realclearpolitics.com/video/2010/06/03/census_worker_claims_job_numbers_are_being_inflated.html

-Duration of Unemployment in U.S. Rises to Record 34.4 Weeks. Unemployed Americans are facing the longest wait on record to find work, a sign faster economic growth is needed to reduce the jobless rate from close to a 26- year high.

The average duration of unemployment jumped to 34.4 weeks in May from 33 weeks the prior month and 16.5 weeks in December 2007, when the recession began, a Labor Department report showed today in Washington. The number of unemployed has almost doubled to 15 million since the start of worst slump since the 1930s. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8ejQjQlXY1Q&pos=2

-U.S. bankruptcy filing rate near 5-year high. The pace of U.S. bankruptcy filings edged up in May to the second-highest daily level since 2005, reflecting the difficulty Americans have in working off excess debt. Read more here-http://www.reuters.com/article/idUSN0320197720100603?type=marketsNews and http://www.usatoday.com/money/economy/2010-06-09-bankruptcy09_CV_N.htm

-The oil market is signalling that prices have nowhere to go but up as the biggest spill in U.S. history curbs drilling and makes it more expensive to develop new fields. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=ai3jktd3quA0

-Matt Simmons: BP is headed for bankruptcy. Read more here-http://money.cnn.com/2010/06/09/news/companies/simmons_gulf_oil_spill.fortune/index.htm

-Matt Simmons: The Real Nightmare Will Be When A Hurricane Picks Up The Oil And Paints The Gulf Coast Black. Read more here-http://www.businessinsider.com/matthew-simmons-on-oil-hurricane-2010-6

-As China’s Wages Rise, Export Prices Could Follow. Read more here-http://www.nytimes.com/2010/06/08/business/global/08wages.html?pagewanted=print

-Osama bin Laden and top aides are hiding in Sabzevar, Iran. Read more here-http://www.debka.com/article/8841/

-Iran Sanctions Imposed by UN; Turkey, Brazil Vote No. United Nations sanctions on Iran adopted this week by the Security Council include restrictions on financial transactions, a tighter arms embargo and authority to seize cargo linked to nuclear or missile programs.

The 15-nation council voted 12 to 2, with one abstention, to approve a resolution that also freezes the assets of 40 companies, banks and government agencies, and bars the foreign travel of Javad Rahiqi, head of a branch of the Atomic Energy Organization of Iran. Turkey and Brazil voted against the measure, and Lebanon abstained. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a62mP2u4efIk&pos=9

-As reported by The Fiscal Times, President Obama’s commission to study the problem of what to do about the government running short of money is running short of money. Read more here-http://www.americanthinker.com/blog/2010/06/the_commission_to_study_defici.html

-As the Sun Awakens, NASA Keeps a Wary Eye on Space Weather. “The sun is waking up from a deep slumber, and in the next few years we expect to see much higher levels of solar activity. At the same time, our technological society has developed an unprecedented sensitivity to solar storms. Read more here-http://science.nasa.gov/science-news/science-at-nasa/2010/04jun_swef/

-Cash-Strapped CA to Build $1M ‘Fish Ladder’. Watch more here-http://www.breitbart.tv/cash-strapped-ca-to-build-1m-fish-ladder/

-I Pledge to Write Funnier Columns on Goldman: Michael Lewis. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid=aDqGneoy9vj8

-A Room With a View, and a Price. For $35,000 a Night, a Butler, a Waterfall and Free Room Service (Caviar May Be Extra). Read more here-http://online.wsj.com/article/SB10001424052748704256604575294621593546414.html?mod=WSJ_hp_editorsPicks_2

-Don’t sleep longer sleep smarter. Worried that you don’t get the fabled eight hours? That’s your first mistake, says Dr Nerina Ramlakhan, who thinks it’s quality, rather than quantity, that counts. Read more here- http://www.independent.co.uk/life-style/health-and-families/features/dont-sleep-longer-ndash-sleep-smarter-1994018.html

WWW.RARECOLOREDDIAMONDS.COM

-Auction results for Christies Jewels: The Hong Kong Sale June 1 2010 Hong Kong.

-Lot 2436-Lot description-A colored diamond and diamond ring set with a marquise-cut fancy pink diamond weighing 3.08 carats, within a pavé-set diamond surround, accented by marquise-cut diamond shoulders weighing 0.83 and 0.80 carat, to the pavé-set diamond bifurcated half-hoop, mounted in 18k white and rose gold, ring size 5½. Estimate HK$2,400,000-HK$3,200,000 ($310,616- $414,155). Price Realized HK$3,980,000 ($513,044). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318656&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2433-Lot description-A colored diamond and diamond ring, by Van Cleef & Arpels set with a marquise-cut fancy blue diamond weighing 2.00 carats, flanked on either side by three-rows of tapered baguette-cut diamonds, mounted in platinum, ring size 5¼, with French assay mark for platinum, in light green leather Van Cleef & Arpels case. Estimate HK$640,000-HK$950,000 ($82,831-$122,952). Price Realized HK$2,420,000 ($311,952). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318653&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2431-Lot description-A colored diamond and diamond ring set with a brilliant-cut fancy intense yellow diamond weighing 6.48 carats, to the pavé-set diamond bifurcated half-hoop, mounted in platinum and 18k yellow gold, ring size 5¾. Estimate HK$1,450,000-HK$2,000,000 ($187,664-$258,847). Price Realized HK$2,300,000 ($296,483). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318651&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2426-Lot description-A pair of colored diamond and diamond earrings one set with a heart-shaped fancy yellow diamond weighing 3.08 carats, to the pavé-set yellow diamond surround and hook, the other set with a heart-shaped colourless diamond weighing 2.51 carats, to the pavé-set diamond surround and hook, mounted in 18k white and yellow gold, 2.0 cm long. Estimate HK$600,000-HK$800,000 ($77,654-$103,539). Price Realized HK$920,000 ($118,593). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318646&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2364-Lot description-An important colored diamond and diamond ring, by Van Cleef & Arpels set with a cushion-shaped fancy yellow diamond weighing 16.05 carats, within a brilliant-cut diamond surround, flanked by two marquise-cut diamonds, to the single-cut diamond bifurcated quarter-hoop, mounted in platinum and 18k yellow gold, ring size 6½, in navy blue suede Van Cleef & Arpels case. Estimate HK$1,600,000-HK$2,400,000 ($207,077-$310,616). Price Realized HK$3,260,000 ($420,232). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318584&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2363-Lot description-A colored diamond and diamond ring set with a rectangular-shaped fancy light yellow diamond weighing 22.88 carats, flanked on either side by a heart-shaped diamond, mounted in 18k gold, ring size 6. Estimate HK$1,450,000-HK$2,000,000 ($187,664-$258,847). Price Realized HK$2,180,000 ($281,014). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318583&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2362-Lot description-A colored diamond ring set with a brilliant-cut light yellow diamond weighing 17.56 carats, mounted in 14k gold, ring size 5. Estimate HK$800,000-HK$1,200,000 ($103,539-$155,308). Price Realized HK$1,280,000 ($164,999). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318582&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2356-Lot description-A colored diamond and diamond ring by Mitsuo Kaji set with an oval-shaped intense yellow diamond weighing 2.39 carats, flanked on either side by a tapered pentagon-cut diamond, within brilliant and marquise-cut diamond surround accented by light pink diamonds, mounted in platinum, ring size 6½. Estimate HK$320,000-HK$480,000 ($41,415-$62,123). Price Realized HK$572,000 ($73,734). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318576&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2350-Lot description-A colored diamond and diamond ring set with a modified square-shaped fancy intense yellowish green diamond weighing 6.09 carats, to the pavé-set diamond gallery and three quarter-hoop, mounted in 18k gold, ring size 5½. Estimate HK$550,000-HK$800,000 ($71,183-$103,539). Price Realized HK$956,000 ($123,234). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318570&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2346-Lot description-A colored diamond and diamond ring set with a rectangular-shaped light pink diamond weighing 3.96 carats, to the pavé-set diamond hoop, mounted in 18k rose gold, ring size 5¼. Estimate HK$320,000-HK$480,000 ($41,415-$62,123). Price Realized HK$680,000 ($87,656). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318566&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

U.S. DEFICIT-DEBT CRISIS

-The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress. The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year. Read more here-http://www.reuters.com/article/idUSTRE65765820100608 and http://www.bloomberg.com/apps/news?pid=20601109&sid=aa0cI64Gx.4E&pos=15

-Charting The Treasury’s Delusions: Tim Geithner’s Latest Projections For US Public Debt. Read more here-http://www.zerohedge.com/article/charting-treasurys-delusions-tim-geithners-latest-projections-us-public-debt

-Bernanke: I Don’t Know Yet How The U.S. Will Fix Its Deficit. Read more here-http://www.businessinsider.com/bernanke-i-dont-have-a-plan-to-bring-down-the-deficit-yet-2010-6

-Nassim Taleb: Debt Spreading ‘Like a Cancer.’ The economic situation today is drastically worse than a couple years ago, and the euro is doomed as a concept, Nassim Taleb, professor and author of the bestselling book “The Black Swan,” told CNBC on Thursday.

“We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base,” Taleb said. “Banks balance sheets are just as bad as they were” two years ago when the crisis began and “the quality of the risks hasn’t improved,” he added.

The root of the crisis over the past couple of years wasn’t recession, but debt, which has spread “like a cancer,” according to Taleb, who is now relived that public attention has shifted to debt, instead of growth. The world needs to prepare itself for austerity, he warned. “We need to slash debt. Unfortunately, that’s the only solution,” Taleb said. Read more here-http://www.cnbc.com/id/37610064

-One of the prevailing fictions of the moment is that the soaring deficit and knock-on debt load of these United States among other prominent nation-states is but a temporary necessity that, as soon as the crisis is resolved, will recede like a gentle evening tide.

Sticking one’s nose above the westerly horizon, however, provides a dose of reality on the lingering long-term effect of an unresolved sovereign debt crisis. The chart just below paints a crystal-clear portrait of a desperately sick economy, bedevilled by persistent debt caused by stubborn levels of elevated government spending against a steady downtrend in revenue. Read more here-http://www.caseyresearch.com/displayCdd.php?id=450

81 BANKS AND COUNTING

-Three banks with total deposits of almost $2.3 billion were seized by regulators amid losses stemming from soured real-estate loans, raising to 81 the number of U.S. lenders that have collapsed this year.

Banks in Nebraska, Mississippi and Illinois were shut, according to statements on the Federal Deposit Insurance Corp.’s website. The failures drained $313.6 million from the FDIC’s deposit-insurance fund.

Regulators are closing banks at the fastest pace since the 1990s amid loan losses tied to real estate. The FDIC’s list of “problem” lenders is the longest since 1992. FDIC Chairman Sheila Bair said the confidential list rose to 775 banks with $431 billion in assets in the first quarter. That’s an increase from 702 banks with $402.8 billion in assets at the end of the fourth quarter. Read more here-http://www.businessweek.com/news/2010-06-05/banks-seized-by-regulators-in-nebraska-mississippi-illinois.html

-FDIC Finds No Buyer For Failed Arcola Homestead Savings of Illinois. The FDIC, appointed as receiver for the failed bank, could find no willing buyer for the bank. Accordingly, depositors will be paid off with checks from the FDIC that will be mailed on Monday.

When the FDIC is unable to find a buyer for a failed bank, depositors with funds in excess of FDIC insurance limits face the potential loss of all funds in excess of insured deposit limits. Future recoveries of depositor losses will depend on the amount of proceeds from the final disposition of the bank’s assets. Read more here-http://problembanklist.com/fdic-finds-no-buyer-for-failed-arcola-homestead-savings-of-illinois-0107/

-Banking System Collapse: Wake Up America Your Banks Are Dying. Read more here-http://endoftheamericandream.com/archives/banking-system-collapse-wake-up-america-your-banks-are-dying

-Banks Say No. Too Bad Taxpayers Can’t. From the earliest days of the credit crisis, the nation’s big financial institutions have been less than forthcoming about ballooning loan losses buried inside their books.

To some degree this is understandable: denial is a powerful thing, after all, and writing off troubled loans during a period of severe stress is, for bankers, the equivalent of getting a root canal. Read more here-http://www.nytimes.com/2010/06/06/business/06gret.html?src=me&ref=business

-Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money. Read more here-http://www.forbes.com/2010/06/03/goldman-sachs-citigroup-markets-lenzner-morgan-stanley.html

50 STATS ABOUT THE U.S. ECONOMY THAT ARE ALMOST TOO CRAZY TO BELIEVE

-50 Statistics About The U.S. Economy That Are Almost Too Crazy To Believe. Most Americans know that the U.S. economy is in bad shape, but what most Americans don’t know is how truly desperate the financial situation of the United States really is. The truth is that what we are experiencing is not simply a “downturn” or a “recession”.

What we are witnessing is the beginning of the end for the greatest economic machine that the world has ever seen. Our greed and our debt are literally eating our economy alive. Total government, corporate and personal debt has now reached 360 percent of GDP, which is far higher than it ever reached during the Great Depression era.

We have nearly totally dismantled our once colossal manufacturing base, we have shipped millions upon millions of middle class jobs overseas, we have lived far beyond our means for decades and we have created the biggest debt bubble in the history of the world. A great day of financial reckoning is fast approaching, and the vast majority of Americans are totally oblivious.

But the truth is that you cannot defy the financial laws of the universe forever. What goes up must come down. The borrower is the servant of the lender. Cutting corners always catches up with you in the end.

Sometimes it takes cold, hard numbers for many of us to fully realize the situation that we are facing. So, the following are 50 very revealing statistics about the U.S. economy that are almost too crazy to believe. Read more here-http://www.blacklistednews.com/news-9060-0-13-13–.html

#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.

GEORGE SOROS-WE HAVE JUST ENTERED ACT II OF CRISIS

-Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.” Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.

Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance, according to Bank of America Corp.

“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.

Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound.

He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year. His firm, Soros Fund Management LLC, manages about $25 billion.

Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aSewDrZuj1Vg

EU CRISIS

-Three Signs That Europe’s Enormous Bailout Has Already Failed. Read more here-http://www.businessinsider.com/european-overnight-lending-2010-6

-Greek Default Seen by Almost 75% in Poll Doubtful About Trichet. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aq_vuFaKzuVI&pos=1

-Debtors’ Prism: Who Has Europe’s Loans? IT’S a $2.6 trillion mystery. That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.

The problem is, alas, that no one not investors, not regulators, not even bankers themselves knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up.

Early last month, in an indication of just how dangerous the situation had become, European banks which appear to hold more than half of that $2.6 trillion in debt nearly stopped lending money to one another. Read more here-http://www.nytimes.com/2010/06/06/business/global/06toxic.html?src=twt&twt=nytimesbusiness&pagewanted=print

-Euro ‘will be dead in five years’ The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph. Read more here-http://www.telegraph.co.uk/finance/economics/7806064/Euro-will-be-dead-in-five-years.html

-End of the Euro? Not so Fast. Read more here-http://www.zerohedge.com/article/guest-post-end-euro-not-so-fast

-Spanish savings banks could need up to 24bln euros. Spanish Cajas, or savings banks, could need between 24 billion euros ($28.7 billion) and 34 billion euros to restore an 8% equity Tier 1 ratio for each of them, Citi analyst Ignacio Moreno said in a note to clients published Monday, after conducting a stress test of capital and real estate asset quality.

As a result, he said that the cajas should undergo “significant changes” in the next few months including mergers, downsizing and, further ahead, potential listings. Of the 46 cajas existing today, half will disappear, based on the transactions already announced, he noted.

More consolidation is likely in the foreseeable future, according to him, partly because the Bank of Spain’s new provisioning policies will lead to faster recognition of real estate-related losses. Read more here-http://www.marketwatch.com/story/spanish-savings-banks-could-need-up-to-24bln-euros-2010-06-07?dist=beforebell

-Scotland Will Lose 30,000 Public Sector Jobs, Item Club Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aCquwlREDzm0

PAUL FARRELL-AMERICAN INVESTORS PREDICTABLY STUPID LOSERS

-Yes, I am mad as hell again. Wall Street’s soulless, immoral, greedy bankers really believe that the vast majority of America’s 95 million investors are not only “predictably irrational” but “stupid,” as J.P. Morgan Chase’s chief investment officer put it in Forbes a while back.

Worse, Main Street investors are losers for continuing to trust Wall Street after they lost 20% of our retirement money the last decade. Now, worst of all, Wall Street’s traders have profiled Main Street investors in their algorithms: Yes, investors are “predictably stupid losers,” what Vegas croupiers call a mark, a dumb gambler that can be easily conned out of his money.

Why so blunt? Listen: Recently I explained why the Wall Street banks must kill financial reform, to preserve their multibillion dollar bonus pool. One reader commented: “I worked at the Bear Sterns … every word written here is true.

Fact is, bankers regard themselves as wolves and the public as prey, and speak about it openly, among themselves.” Then he added a sucker punch: “What is extraordinary to me is how willingly the sheep submit to this.” Yes, folks, Wall Street is certain that America’s 95 million investors are clueless sheep headed for the slaughterhouse.

But wait, that’s not news. Twenty years ago former bond trader Michael Lewis’ “Liar’s Poker” described the insanity of our addiction to gambling in a few memorable lines: “Men on the trading floor may not have been to school but they have Ph.D.s in man’s ignorance.”

They know that “in any market, as in any poker game, there is a fool. The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market.” And as we now know, in the stock market the vast majority of America’s 95 million investors are fools predictably stupid losers. Read more here-http://www.marketwatch.com/story/story/print?guid=F22B6FE1-A7A1-4618-A148-6FCC7AE8C1BA

REAL ESTATE

-The housing-market recession is not over. Why you shouldn’t be overly optimistic about real estate right now. Read more here-http://www.marketwatch.com/story/story/print?guid=C4AFCD43-4A98-4F87-B277-95DC0B723136

-U.S. Home Foreclosures Climb 44% to Record in May. U.S. home foreclosures reached a record for the second consecutive month in May, with increases in every state, as lenders stepped up property seizures, according to RealtyTrac Inc.

Bank repossessions climbed 44 percent from May 2009 to 93,777, the Irvine, California-based data company said today in a statement. Foreclosure filings, including default and auction notices, rose about 1 percent to 322,920. One out of every 400 U.S. households received a filing.

“We’re nowhere near out of the woods,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in a telephone interview. “We’re likely to set a quarterly record for home seizures if June is anything like May.”

Lenders are completing the “inevitable progression” of taking properties from homeowners who stopped paying, Sharga said. He predicted last month that another 5 million delinquent mortgages will end in foreclosure in addition to properties that had already been repossessed.

Almost 3.1 million properties have been seized by banks since April 2005, Daren Blomquist, RealtyTrac’s marketing communications manager, said in an interview today. “The second quarter won’t be the peak,” Sharga said. “I’m not even sure 2010 will be.”

The previous record for seizures was 92,432 in April. Last month was the first in which every state had an increase in repossessions from a year earlier, according to RealtyTrac. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aF9v9t9hrr7Q

-May Home-Buying Activity Looks Worse Than Expected. How will housing sales fare without the benefit of big tax breaks for home buyers? The early indications are that sales are down very sharply in recent weeks, worse than most brokers and analysts expected.

Of course, economists and real estate analysts expected home sales to slow after the tax credit, of as much as $8,000, expired at the end of April. But early data from real estate brokers indicate that the sales declined as much as 25% to 30 from the year-earlier levels in some markets.

Without the tax bait, “consumers just don’t have that same sense they have to move quickly,” said Patrick Lashinsky, CEO of ZipRealty Inc., a big brokerage firm. Read more here-http://blogs.wsj.com/developments/2010/06/04/may-home-buying-activity-looks-worse-than-expected/?blog_id=36&post_id=12680&source=patrick.net

-Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread. Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal. Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud.

Their crime involved persuading lenders to approve the sale of homes for less than the balance owed known as a short sale without disclosing that there were better offers. They then flipped the houses for a profit. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=avevHVg0VvHs

-Manhattan Empty Condos May Be Rentals as Leases Reign. When Richard J. Bailes and his family paid $4.1 million in March for a four-bedroom apartment in the glass and steel Georgica on Manhattan’s Upper East Side, just eight of the building’s 58 units were occupied, he said.

Bailes and his family had plenty of places to choose from. About 8,700 new condos sit empty in Manhattan, with 75 percent not even listed for sale yet, said appraiser Miller Samuel Inc. Priced at levels the market no longer supports, they’re selling so slowly it would take as long as seven years to find buyers for them all, said Jonathan Miller, president of Miller Samuel.

Miller teamed up with Westwood Capital LLC and developer Gerald Guterman to raise as much as $1 billion to buy empty condos and manage them as rentals. Guterman made his name in the 1980s doing just the opposite.

“Things are going to run out of steam at pretty predictable times,” said Daniel Alpert, managing partner of New York-based Westwood Capital. “In the case of these condos, it’s when the reserve funds run out.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ26jbABFaxA&pos=7&source=patrick.net

The Goldbugg Report – June 15, 2010
Posted by Worldwide Precious Metals on Tuesday, June 15, 2010

The Week in Review – June 11th, 2010

June 14, 2010

Why you should you buy in the summer:
http://www.usagold.com/analysis/doldrums-2010.html

1. Gold hit a new record high this week, climbing above $1250 an ounce. The media loves to downplay the recent skyrocketing price of gold, often saying that gold has not come near its “inflation adjusted” highs. But no matter how they spin it, the fact remains: a new high is a new high.

2. It was a conflicting week for the consumer. Retail sales in dropped in May for the first time since September of last year. Despite that fact, Consumer Confidence rose to a two and a half year high.

3. Bernanke, on Wednesday, said that the US economic recovery was on “solid footing’ but that it could be years before the jobs lost during the recession come back. Bernanke went on to reiterate that the central bank was in no rush to raise interest rates, stating that “a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009. In this environment, inflation is likely to remain subdued.”

4. Chinese inflation hit a 19 month high in May, leading to a debate on whether the People’s Bank of China was going to be raising rates in the near future. One side of the debate says that the measures the Chinese government has put in place to try to cool down the economy may work too well, leading to a need to lower taxes, the other side of the debate says that inflationary triggers have already been fired and that the only way to respond is going to be to raise rates.

5. On Thursday, Treasury Secretary Timothy Geithner indicated that the administration’s patience over China’s currency policy was wearing thin. He told a US Senate hearing that “the distortions caused by China’s exchange rate spread far beyond China’s borders and are an impediment to the global rebalancing we need.” Charles Grassley, the senior Republican Senator on the committee said “The time is long past for any Treasury Department to admit publicly what everyone else already knows, that China is manipulating the value of its currency in order to gain an unfair advantage in international trade.” Such comments will certainly not aid trade negotiations between the two countries.

6. Carl Weinberg, chief economist at High Frequency Economics said on Friday that a restructuring of Greek debt may happen as soon as August, when they are due to receive another tranche of funds from their bailout agreement with the IMF and the European Union. He went on to say “You can’t take a country that’s over borrowed and make it more creditworthy by lending it more money. At High Frequency, we are advising people to take their cell phones on their August vacation.”

7. On the US Housing front, the national foreclosure rate continued to drop in May, but bank repossessions reached a record high. The theory is that banks, overworked with the sheer number of foreclosures already on their books, are simply taking a break from beginning new foreclosure proceedings to try to process the ones that are already in progress faster.

8. Crude oil dipped back below $70 a barrel, mainly on news out of the Eurozone. The US moratorium on deep water drilling may begin affecting production if it lasts longer than six months, adding additional pressure to prices.

9. The Euro continued its slide against the dollar, touching $1.19 at one point before rebounding up to close back at $1.21. Continued sovereign debt issues in the Eurozone have many investors spooked over anything dealing with the embattled currency.

Friday to Friday Close

	June 4^st	June 11^th	Net Change
Gold	$1219.00	$1230.00	11.00 + 0.90%
Silver	$17.40	$18.26	0.86 + 4.94%
Platinum	$1524.00	$1524.00	(27.00) – 1.74%
Palladium	$463.00	$1538.00	14.00 + 0.92%

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

	Gold	Silver
Support	1220/1200/1180	18.00/17.50/17.20
Resistance	1230/1250/1280	18.50/18.75/19.00
	Platinum	Palladium
Support	1520/1500/1450	440/425/400
Resistance	1550/1575/1600	460/475/500

Volatility should be expected to continue. Japan’s new Prime Minister, Naoto Kan, warned Friday that if the country cannot reign in its massive amounts of public debt. He said “We cannot sustain public finance that overly relies on issuing bonds. As we can see in the euro zone confusion that started from Greece, there is a risk of default if the growing public debt is neglected and if trust is lost in the bond market.” So it seems the “contagion” that everyone was worried about spilling over into other countries of the euro zone is not just confined to the euro zone itself. Analysts across the planet, many of them former gold “bears”, and even most of the talking heads in the media are all finally beginning to tout how wise it is to own gold in these uncertain times. Those of you who have been taking advantage of price dips to add to your portfolios may soon be glad you took the opportunity to do so while the metal was still “cheap”. Investors seem to be reaching a state of panic due to the uncertainties brought about by the sovereign debt crisis in Europe that was initially triggered by Greece. Those panicked investors seem to also be turning, more and more, to precious metals to try to find some protection for their hard earned cash. The US mint is already running low on their gold coins again, and South Africa’s mint had to increase Krugerrand production by 50 percent last month to keep up with demand. 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. We leave you with one final thought: Once demand for a product outpaces its supply, the only way to obtain that limited product will be to pay a premium price for it.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – June 11th, 2010
Posted by Worldwide Precious Metals on Monday, June 14, 2010

The Goldbugg Report – June 8th, 2010

June 8, 2010

-Gold prices hit new record – Jun. 8, 2010: http://bit.ly/crnn12

-Top performers favour bullion over mining shares.

-’Decisive break-out to the upside’ for silver forecast

WETASKIWIN ALERT!

WORLDWIDE PRECIOUS METALS IS HOLDING A PRECIOUS METALS SEMINAR IN WETASKIWIN, ALBERTA ON JUNE 24^th.

FOR INFORMATION & REGISTRATION, PLEASE CALL: 1.866.623.2002 OR EMAIL: info@wwpmc.com

GOLD

-Gold prices hit new record – Jun. 8, 2010: http://bit.ly/crnn12

-Concerns over global financial market stability now that the credit crisis is hitting sovereign balance sheets are not likely to reverse course any time soon, and gold, as well as silver, are effective ways to protect the portfolio against this recurring instability. David Rosenberg-Gluskin/Sheff

-What is encouraging too is that after reading the columns in Barron’s (page 38) and the FT (page 10) over the weekend, there are still plenty of skeptics out there on the gold price outlook. Bulls need skeptics there is nothing worse than universal beliefs as they lead to overcrowded trades.

What makes gold different is that, unlike paper money backed by the good word of the government, it has withstood the test of time for thousands of years. It is malleable. It is durable. It can be trusted. It is not the liability of any government.

It has an inelastic supply curve. How many times is gold mentioned in the Old Testament? Try 391 times. How many references to silver? Try 117 times. How many times is paper currency mentioned? None! David Rosenberg-Gluskin/Sheff

-Rosenberg Says Gold May Rise to $3,000 in Several Years. Watch more here-http://www.youtube.com/watch?v=Nz7m3UgGIo8&feature=youtube_gdata

-”In the next two years gold is going to $2,000 or I have to shave my hair off,” said Charles Oliver of Toronto’s Sprott Asset Management, referring to a pledge he has made publicly. He co-manages a $600 million precious metals fund. Read more here-http://www.gata.org/node/8692

-Gold is the safest currency Daniele. London-based CD Capital Founder Carmel Daniele has seen these sorts of market jitters before, and insists there is little to worry about. She envisages gold nearing $2,000 within 12 months. Read more here- http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=105566&sn=Detail&pid=33

-James Turk: Gold hurdles to new record highs. Numerous records continue to be broken by gold, including some longstanding ones that go back to the January 1980 peak. Gold closed the month of May at a new record high against every major world currency except the Japanese yen. Various charts of the gold price in terms of major currencies can be found by clicking this link. Here is a long-term gold chart in terms of US dollars.

The important point of this chart is that gold is climbing in a major uptrend, which is denoted by the rising green trendline under gold’s price. Note too that the deep 2008 correction following the Lehman Brothers collapse did not move gold back to the uptrend line, which is a clear sign of strength.

Since its correction in 2008, gold has been moving away from the trendline. This development means that gold’s upside trajectory is accelerating, which is another sign of strength. It is not difficult to understand why gold’s chart looks so powerful.

The global monetary and banking system continues to unravel from too much debt, a large portion of which is of substandard quality. Also, the worsening sovereign debt crisis is highlighting the risks of all national currencies, while making clear the unrivaled safe haven attributes of gold. Read more here-http://www.fgmr.com/gold-hurdles-to-new-record-highs.html

-James Turk: Is Gold in a Bubble? Gold has been climbing all decade long, but throughout its ascent, it wasn’t until earlier this year that I first heard gold’s remarkable performance described as a “bubble”. Financier George Soros used that term in a seemingly disparaging way, but interestingly, we subsequently found out that he actually owned gold and expected it to climb higher.

Then last week in The Wall Street Journal, Brent Arends asked whether gold is “the next bubble?” I have now seen the “bubble” term used a third time. In an article in this week’s Barron’s, the author states: “The gold bubble could continue to inflate.”

Anyone can read about bubbles in financial history, but there is no need to go to the library to learn about them. We have all witnessed firsthand the Internet bubble and more recently, the real estate bubble.

From these events we know that bubbles are characterized by the persistent and often rapid rise in the price of an asset, which is generally fueled by speculation springing from the widespread and growing belief that the asset’s price will continue to rise. But there is also another important but less well recognized feature that identifies a bubble.

Namely, the asset’s price eventually must rise to a point generally far above the asset’s value. When that peak of overvaluation is reached, the price then falls rapidly – and typically violently like a bursting bubble.

Is that outcome about to happen with gold? No, for the simple reason that one of the principal ingredients of a bubble is missing today. Though the gold price has risen four-fold this decade, importantly, the gold price is not above gold’s value, let alone far above it, which is one of the necessary ingredients of a bubble. Read more here-http://goldmoney.com/is-gold-in-a-bubble.html

and http://www.gata.org/node/8697

-We receive emails all the time asking how gold fits into our deflation view. Well, for one, the widespread consensus that gold is an effective inflation hedge is not on the mark. Our statistical analysis shows there to be a fairly loose link even if gold is a store of value. We also know that in the deflationary 1930s, the Sterling price of gold doubled.

Gold is also a hedge against financial instability and when the world is awash with over $200 trillion of household, corporate and government liabilities, deflation works against debt servicing capabilities and calls into question the integrity of the global financial system. This is why gold has so much allure today.

It is a reflection of investor concern over the monetary stability, and Ben Bernanke and other central bankers only have to step on the printing presses whereas gold miners have to drill over two miles into the ground.

The bottom line is that gold makes up a mere 0.05% share of global household net worth (see page 22 of the FT) and so small incremental allocations into bullion or gold-type investments can exert a dramatic impact. Gold cannot be printed by central banks and is a monetary metal that is no government’s liability. It is malleable and its supply curve is inelastic over the intermediate term.

And central banks, who were selling during the higher interest rate times of the 1980s and 1990s, are now reallocating their FX reserves towards gold, especially in Asia. Gold is in a secular bull market, actually it has been for over a decade and double from where we are today, in my view, it’s a very easy call.

And, if inflation is really the be all that ends all for the gold price, then keep in mind that gold has rallied five-fold since 1999 and yet inflation is the same today as it was then and the core rate has been cut in half. Go figure. Maybe the bottom in gold prices occurred at the same time that global production peaked maybe it is a bull market rooted in little more than a shifting supply curve. David Rosenberg-Gluskin/Sheff

-What the Top of a Gold Bull Market Looks Like. A number of people have sent me links to the news of the proliferation of gold vending machines, with a suggestion that this may be a sign that the mania top is approaching. Personally, I don’t think we’re anywhere near that point.

If you really want to know what the top of the gold market looks like, check out the front pages of the Globe and Mail, and Report on Business, from January 1980 the month that gold peaked in the last secular bull market.

The front page of the Globe and Mail reports on dealers being swamped as gold topped $630 which is $1,619 in today’s dollars. And Report on Business has in-depth coverage on how the gold standard may be about to return. Read more here-http://www.caseyresearch.com/displayCdd.php?id=441

-Gold may rise as high as $1 400 an ounce in 2010 as investors buy the metal as both a safe store of value and a haven from risk amid rising fears over sovereign debt, a co-portfolio manager of the Investec Global Gold Fund told Reuters.

Bradley George said he saw the metal in a range of $1 100 to $1 400 an ounce this year and expected gold to extend its current climb as US debt levels, which have largely been ignored as concerns focused on the euro zone, come under scrutiny later his year.

“Gold will continue to rise as long as you have two things low interest rates and macroeconomic uncertainty,” he said in an interview on Tuesday. “Governments are likely to keep interest rates low to encourage economic growth, and macroeconomic uncertainty (will remain), probably with the US coming into the spotlight in the second half of the year,” he added.

“Investors will continue to move into gold either as a store of value or a safe-haven investment,” he said. “It works for both those types of investors.” Gold prices tend to do well in a low interest rate environment, where the opportunity cost of holding a non-interest bearing asset like bullion is negligible.

“The Fed funds rate is likely to stay low for the remainder of the year, and with inflation starting to tick up you have this situation with negative real rates,” George said. “In a negative real rate scenario, gold tends to perform particularly well.” Read more here-http://www.miningmx.com/news/gold_and_silver/gold-may-reach-$1400-investec.htm

-The price of gold will reach $2,400 in the next decade, according to Castlestone Management’s CEO Angus Murray. The precious metal will also continue to benefit from the current economic woes the markets, especially those in Europe, are experiencing.

‘Gold will move to trade in a range of $1,400 to $1,600 and its effectively doing this now. If nothing else it should be held as an insurance policy – Korea is just an example’, says Murray, adding that $2,400 is a likely destination for the price in the next ten years.

‘In our view, gold will continue to benefit from the combination of reaching a new high in euro terms, sliding global equities, the situation in Greece, the ECB’s reluctance to buy Greek bonds, and soaring demand for gold bars.’

According to the firm, precious metals continue to be insurance in a diversified portfolio, acting as a safe-haven asset in times of economic and geopolitical turmoil. Between December 1999 and December 2009, gold, silver and platinum increased in value by 242%, the equivalent of an average annual return of 13.1%, according to Castlestone’s latest report.

This confirms precious metals outpaced inflation which has increased by 30% during the past decade by an average 2.7% a year. Read more here-http://www.citywire.co.uk/professional/-/news/wealth-management/content.aspx?ID=403516

-The Many Faces Of Gold. Something in the $2,000-$5,000 range for gold is certainly no guarantee, but likewise not at all out of the question based on direct historical precedent. No ranting and raving. No pulling what seem like wild numbers out of the blue. Prices based on human behavior and decision making we have indeed directly experienced in the past. Read more here-http://www.contraryinvestor.com/moprinter.htm

-Jeff Nichols: Changing Demand Makes $2,000+ Gold Likely. Read more here-http://www.hardassetsinvestor.com/features-and-interviews/1/2163-jeff-nichols-changing-demand-makes-2000-gold-likely.html

-Gold and the Budget Deficit. All gold bugs have fond memories of the year 1979. In that year, the price of gold rose from $250/oz. to $600/oz. The reason was not hard to find. Prices in the U.S. that year rose by 13.3%.

The newspapers were screaming, “Double Digit Inflation.” Gold was going up sometimes as much as $50 per day. This was solid confirmation of what everyone knew. Gold goes up when prices are on the rise. Of course, the gold bugs of 1979 overdid things a bit.

They more than tripled its price between Jan. 1, 1979 and Jan. 21, 1980 while the general price level only went up 13%. But it certainly did make the point. And this tells us that, if there is another panic about prices in this country, the price of gold will take a trip to the moon. Read more here-http://www.321gold.com/editorials/katz/katz060110.html

-Bob Hoye: Gold goes to $2,100 next year. Read more here-http://www.321gold.com/editorials/hoye/hoye060310.pdf

-Dow, gold will converge but not by decimating Dow, Pierre Lassonde says. Listen here-http://www.gata.org/node/8691

-Bill Fleckenstein Gold Is Going Higher. Read more and Listen here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/6/3_Bill_Fleckenstein_-_Gold_Is_Going_Higher.html

-Top performers favor bullion over mining shares. Read more here-http://www.marketwatch.com/story/story/print?guid=DA34018D-1DA1-4640-901C-8924BCDA745C

-Iran said to be selling euros to buy dollars and gold. Read more here-http://www.gata.org/node/8701 and http://www.bloomberg.com/apps/news?pid=20601087&sid=abEmXNW80oWE&pos=7

-Gold a ‘Good Choice’ for Boosting Global Use of Yuan. Read more here-http://www.businessweek.com/news/2010-05-28/gold-a-good-choice-for-boosting-global-use-of-yuan-update2-.html

-South African gold output falls hard. In an all too familiar announcement in recent years, the South African Chamber of Mines reported the country’s first quarter gold production fell 15% quarter-on-quarter, extending the downward slide in output. Read more here-http://www.miningmx.com/news/gold_and_silver/South-African-gold-output-falls-hard.htm

-IMF Sells 15.1 Metric Tons Of Gold In April, 152.1 Tons For Sale Remaining As Russia Keeps Waving It In. Read more here-http://www.zerohedge.com/article/imf-sells-151-metric-tons-gold-april-1521-tons-sale-remaining-russia-keeps-waving-it

-Why China is not buying IMF gold. Read more here-http://www.commodityonline.com/news/Why-China-is-not-buying-IMF-gold-28774-3-1.html

-British investors scramble for gold coins to beat tax increase. Read more here-http://www.gata.org/node/8690

-US Mint Sells More Gold Coins In May Than Any Month Since January 1999. Read more here-http://www.zerohedge.com/article/us-mint-sells-more-gold-coins-may-any-month-january-1999

-Coin Update News uncovers U.S. Mint’s secret gold pricing policy. Read more here-http://www.gata.org/node/8700

-SA gold coin output jumps 50 percent to 25-year high. Read more here-http://www.busrep.co.za/index.php?fArticleId=5499216&fSectionId=630&fSetId=662

-Judy Shelton: The recovery starts with sound money. By linking the dollar to gold, Americans would establish a vital beachhead for sound money and provide a model that other nations could emulate. Read more here-http://www.gata.org/node/8685

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,600 the silver price would be $20.00

Gold to silver ratio at 70 to 1 with gold at $1,600 the silver price would be $22.86

Gold to silver ratio at 60 to 1 with gold at $1,600 the silver price would be $26.67

Gold to silver ratio at 50 to 1 with gold at $1,600 the silver price would be $32.00

Gold to silver ratio at 40 to 1 with gold at $1,600 the silver price would be $40.00

Gold to silver ratio at 30 to 1 with gold at $1,600 the silver price would be $53.33

Gold to silver ratio at 20 to 1 with gold at $1,600 the silver price would be $80.00

Gold to silver ratio at 15 to 1 with gold at $1,600 the silver price would be $106.67

-James Turk: Silver inching closer to an upside breakout. Silver is inching closer to its long-awaited upside breakout. The huge accumulation pattern that silver has been building over the past three years is almost complete, as can be seen on the following chart.

I noted in my last commentary that silver looks ready to soar and more to the point, that the developing chart pattern “will manifest its bullish significance when silver climbs above the neckline around $20”. That moment is rapidly approaching. Last week’s correction in prices may perhaps be the last one before silver’s upside breakout.

Few people expect silver prices to rise during the summer, which is normally considered a quiet period for precious metal prices. Maybe the big surprise this year will be a spectacular summer rally for the precious metals. After all, that is what the silver chart is telling us. Read more here-http://www.fgmr.com/silver-is-inching-closer-to-an-upside-breakout.html

-’Decisive break-out to the upside’ for silver forecast. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=105484&sn=Detail&pid=32

-Analyst Sean Brodrick expects the bull market for precious metals to run for “quite some time,” with gold hitting $1,450 /oz. by year-end and silver at $25 not long after. Read more here-http://news.goldseek.com/GoldSeek/1275545100.php

-Butler, Arensberg see some commercial short covering in precious metals. Listen and read more here-http://www.gata.org/node/8689

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: This Canadian Real Estate Region Is Going Completely Nuts. Canadian real estate prices have been rising across the board, but some regions are going wild. The chart below comes from the Real Estate Board of Vancouver.

Check out the price trend for single detached houses, the top line in red. Some houses appear to have almost tripled in value since 2000. Let’s hope for a soft landing, there’s no way this trend can last. Read more here-http://www.businessinsider.com/chart-of-the-day-vancouver-real-estate-2010-6

Source: www.chartoftheday.com

-Chart of the week: One Huge Housing Bubble That’s About To Pop. In addition to all the ructions going on in Europe, this was the week that the world started getting acquainted with the precarious situation in Australia a highly indebted country with full-on exposure to China.

Among the country’s problems? A massive housing bubble that hasn’t popped. The following chart comes courtesy of Steve Keen’s Debtwatch, and it’s fairly self-explanatory. Read more here-http://www.businessinsider.com/chart-of-the-day-house-price-indices-us-australia-2010-5

Source: www.chartoftheday.com

-As we explained earlier there is a fight going on between the dollar and gold for currency supremacy. The recent dollar rally was part of the plan to keep the dollar as the preferred asset or currency. It didn’t work all that well because gold rose more than the dollar. The dollar swap will be used to keep European banks from going under and that is inflationary.

The Fed is obviously buying their subprime assets. The bank proceeds from the garbage sold to the Fed will in all likelihood be used to purchase US Treasuries. In a late note now that Fitch has lowered Spain’s credit rating from AAA to AA+, they’ll be even more pressure on European banks and government for Fed assistance.

Now not only are the banks broke, but so are the governments. That said how could Treasuries be a store of value? They cannot thus; sooner or later professionals will be storming the gold parapets. If you think markets are currently volatile, just wait you haven’t seen anything yet. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1275327480.php

-It was a year and one-half ago we told you that $800 billion in stimulus wasn’t enough. That is now proving to be the case. Get ready for another liquidity barrage, called quantitative easing. It will also mean real interest rates will rise again. The backbone of most all nations of the world is debt not gold, silver or a basket of commodities.

Greece is being blamed, but all told, 19 nations are on the edge of bankruptcy. In fact, central banks in these countries are among the biggest speculators. In the euro zone countries cannot print money so they sell bonds in spite of the rules of the bailout. Many are having a hard time selling bonds. Thus other nations are secretly doing so.

There is talk of another Northern European currency backed by gold. If that happens the dollar will fall because it won’t be able to compete. Those in the southern tier will have to return to their own currencies and do as Argentina did ten years ago.

Those long dollars do not get too comfortable. The corporatist fascist corrupt model will fail because it is already bankrupt, as will many other countries. Read more here-http://news.goldseek.com/InternationalForecaster/1275491100.php

-Yes, it seems that everyone has the cash to spend on an iPad the latest must-have consumer gadget. All you need to do is stop paying your mortgage, as the NYT wrote about this week. David Roseberg-Gluskin/Sheff

-The U.K. budget gap is like a “bed of nitroglycerine,” Bill Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., said in January. He cited the nation’s debt load and the potential for currency devaluation as risks. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a7nPad0T0MWc

-We may well come out of this cycle with tremendous inflation, but the primary trend for the next 3-5 years is deflation. David Rosenberg-Gluskin/Sheff

-To be talking about the revival in the consumer after two years in which real per capita spending fell in back-to-back years, something that we last saw during the Great Depression, is irresponsible at best, dangerous at worst. David Rosenberg-Gluskin/Sheff

-What the U.S. economy is going to look like once the inventory cycle and fiscal stimulus run their course is not going to be very pretty, that much we can assure you. David Rosenberg-Gluskin/Sheff

-Simply put, we are still early in the deleveraging cycle, notwithstanding the great efforts made by U.S. banks to write down bad debts and recapitalize themselves (with government support) much of the delinquent part of the massive $200 trillion in global debt has not really been extinguished but was merely transferred to taxpayer-supported public sector balance sheets.

Once government balance sheets start to come under scrutiny, and this is a global affair stretching from the problem Eurozone areas, to Japan, to the U.K. and now to U.S. state and local governments (and not likely to stop there), the deleveraging cycle typically intensifies.

Governments become tapped out in terms of what they can do stimulus-wise and so the burden is placed back on central banks. However, the problem is that when policy rates are at or near 0%, the emphasis shifts towards money printing and massive balance sheet expansion on the part of the monetary authorities to cushion the blow on the economy and investor confidence.

We may come out of this with massive inflation though the Japanese experience cautions us on this particular point but it will take a long time coming. Deflation is still the primary trend, coupled with massive reflation efforts and the laws of unintended consequences that come along with those efforts the New Deal in the 1930s was not entirely successful in quashing deflationary pressure (and yet the Sterling price of gold managed to double go figure). David Rosenberg-Gluskin/Sheff

-So let’s get the story correct. We are still in the midst of a credit collapse where there is simply too much debt and debt service globally relative to worldwide income. The fact that we had a year-long respite does not alter this view. It was a respite that was induced by what is now an apparent unsustainable pace of bailout and fiscal stimulus in practically every country on the planet, not just the United States.

What has happened was that governments bailed out the banks and massively stimulated the economy but because the revenue cupboard was bare, in part due to the savage effects of the global recession, public sector debt loads exploded at all levels of government, and to varying degrees, in every jurisdiction. David Rosenberg-Gluskin/Sheff

-The U.S., of course, is wealthy and has shown an uncanny ability to withstand storms, but the losses at Fannie, Freddie and the FHA are staggering and will exacerbate the national balance sheet. In addition, local governments are likely to be forced to declare Chapter 9 as finances at the lower levels of the public domain are in deep stress.

The regional banks are also in very rough shape; unfunded liabilities are a really big problem as are underfunded pension liabilities. Finally the U.S. household balance sheet must be downsized. There is simply too much debt and debt service relative to income-generating capacity to believe that economic growth in America will be vibrant or sustainable. David Rosenberg-Gluskin/Sheff

-Having a “perma bearish” view of the U.S. equity market over the past 10 years (keeping in mind that secular phases tend to last 16-18 years) has not altogether been a bad strategy. Moreover, in the next recession, which is likely to occur in the next two years seeing as the cycles now are being increasingly shortened, we are likely to see new lows emerge just as they did in the last two recessions.

The vagaries of a secular bear market equity markets go to new lows in the economic downturn, which is far different than in a secular bull market where the pullback is more akin to a short-term correction (as was the case in 1990). David Rosenberg-Gluskin/Sheff

-Satyajit Das believes the central problem is that governments have already spent more than $1 trillion in taxpayer-generated and borrowed funds but are not getting as much bang for their buck as expected. If you strip out government spending and low interest rates, he notes, there’s not a whole lot of activity going on. The government has tried to prime the pump, but the pump is still just dribbling.

He suggests we not be fooled by recent earnings reports or government stats, pointing to U.S. bank earnings as especially inaccurate. JP Morgan has a balance sheet of $1 trillion and can borrow at essentially zero, he notes. So if they just go out and buy 10-year bonds at 3% they should be able to earn $30 billion a year. Yet the bank announced a profit of $3.3 billion last quarter.

“What does that tell you? It says they are losing money on everything else,” Das says. “Strip out the gifts, and it’s big net loss.” And at big industrial concerns like General Electric, he argues, revenue growth is anemic so earnings growth is solely stemming from cost-cutting and layoffs.

So, Das, if conditions are really this bad, why did the market rally for the past year? “I think that people wanted to believe the fairy tale for a year they wanted to believe things would get better. This is not new, it’s just how we are. It’s like T.S. Eliot said: “Humankind cannot bear very much reality.” Satyajit Das-Independent Australian credit analyst-Read more here-http://www.marketwatch.com/story/story/print?guid=570D769C-2C10-4C74-8FCC-2A2E22E91E5F

-With the S&P 500 currently selling at a P/E of 18.29 and with a dividend yield of a miserly 2%, it’s hard to say that these stocks are selling on the cheap. Especially when you consider that during the depths of the deep recession lasting from 1980 to 1982, the P/Es hit below 7 (averaged 8.4) while dividend yields reached above 6% (averaged 5.4%) levels we’ve been nowhere near hitting at any point in this even more dark and dangerous crisis. Yet. David Galland-Managing Director Casey Research-Read more here-http://www.caseyresearch.com/displayCdd.php?id=445

-So far the S&P 500 is down nearly 10% from the highs, so this is indeed a correction thus far but more often than not, declines like these morph into something more severe even when we are in durable economic expansion phases like 1987 and 1998. This recovery is tentative, at best.

But the numbers we are looking at is a 50% retracement of the March 2009-April 2010 runup, which means 943 on the S&P 500 and the reality that lows in the market, whether they be interim or more fundamental, tend to occur with the index 20% below the 200-day moving average, which at this stage would be 879. David Rosenberg-Gluskin/Sheff

-My father, who is also an economist, was born in New Orleans and has lived there most of his life. Yesterday he sent me the following message: Even if the oil leak stopped today, the existing slick will continue to go ashore. Grass and birds and oysters and shrimp will continue to die. When the grass dies, the barrier islands will be washed away, and the wetlands will wash away too. The LA wetlands will be entirely gone by November 2011. In 2012, New Orleans will be destroyed by a hurricane.

He added that last bit about the hurricane because the barrier islands and wetlands are what currently protect New Orleans from taking the full force of a major storm like that. Barrier islands act as “speed bumps”; as hurricanes pass over them, they lose considerable energy. Also, barrier islands absorb incoming wave energy from the Gulf, protecting the interior wetlands from erosion.

Now, I’ll admit that my dad is sometimes prone to making extreme forecasts that (thankfully) don’t come true. But his sentiment echoes much of what I’ve heard coming from the area. People are scared. David Galland-Managing Director Casey Research-Read more here-http://www.caseyresearch.com/displayCdd.php?id=443

-NY Nearly Goes Broke Again, Delays Paying Bills. Read more here-http://www.cnbc.com/id/37463314

-At a Memorial Day event in upstate NY today I spoke with a friend who works in a medium sized construction company, about 45 people total. His firm does a lot of work for New York State, as do most of the construction companies.

New York stopped paying all of them. They have been asked by the State to keep working on their ongoing projects and the state will pay them at some point in the future, they don’t know when.

Many of these firms have walked out of the projects, they just can’t afford to keep working without being paid.

One firm is owed over $8 million on one job alone and has been told that if they quit, the State will sue them for breach of contract, even though the State will not pay them in the near future.

It appears that the State wants all of the construction companies to carry the State through these tough times.

New York State probably won’t pass a budget this year at all. The politicians are afraid that the cuts will be so severe that the government workers’ unions will make sure they are all defeated in the elections in November. So now we have a State government that is acting exactly like the ostrich, sticking their heads in the sands when danger is at hand. Who’s covering the rear?” Dave from New York-As e-mail to David Rosenberg-Gluskin/Sheff

-Advanced economies face years of anemic growth and the risk of a double-dip recession as their citizens cope with sluggish employment and highly indebted governments, economist Nouriel Roubini said on Monday. Read more here-http://finance.yahoo.com/news/Global-rebound-anemic-rb-3932475673.html?x=0

-Nouriel Roubini, the New York University professor who predicted the global financial crisis before markets peaked, said the Brazilian, Chinese and Indian economies may be overheating and developing asset bubbles. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=awEpuFpupdE0

-Canada G-7’s First to Lift Rate After World Recession. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a8Hls7QsusYg and http://www.bloomberg.com/apps/news?pid=20601082&sid=aWE9xDDFc.ME

-Carney Signals Rate Increases May Be Delayed by Europe Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=auYUZDeamgqY

-On The Descent Into A Weimar Reality. Read more here-http://www.zerohedge.com/article/descent-weimar-reality

-U.S. Inflation to Approach Zimbabwe Level, Faber Says. Read more here-http://preview.bloomberg.com/apps/news?pid=newsarchive_en10&sid=avgZDYM6mTFA

-The Depression Of 2011? 23 Economic Warning Signs From Financial Authorities All Over The Globe. Read more here-http://theeconomiccollapseblog.com/archives/the-depression-of-2011-23-economic-warning-signs-from-financial-authorities-all-over-the-globe

-Robert Prechter’s Glimpse Of The Apocalypse To Come. Read more here-http://www.zerohedge.com/article/robert-prechters-glimpse-apocalypse-come

-Wall Street’s War. Congress looked serious about finance reform until America’s biggest banks unleashed an army of 2,000 paid lobbyists. Read more here-http://www.rollingstone.com/politics/news/;kw=[36899,157778]?RS_show_page=0

-Secretive Bilderberg Club ready for protests. Read more here-http://www.timesonline.co.uk/tol/news/world/europe/article7142478.ece Watch video here-http://www.youtube.com/watch?v=8DtaUoVxDqI

-The Cell Phone: Marty Cooper’s Big Idea. Watch more here-http://www.cbsnews.com/video/watch/?id=6512514n&tag=cbsnewsMainColumnArea.3

-Torrisi’s Two Hour Wait Brings Great Italian for $50: Food Buzz. Read more here-http://www.bloomberg.com/apps/news?pid=20601093&sid=aXAk8tjMx_Kk

-Kindle Isn’t Dead Yet, and Other Reflections on Apple’s iPad. Read more here-http://www.bloomberg.com/apps/harvardbusiness?sid=Hc05a6fd45adbdb4b7019f2756b018bef

-Costco wins popularity contest. Read more here-http://money.cnn.com/2010/06/02/news/companies/walmart_loses_to_costco/index.htm

-The Ten Dirtiest Hotels in America. TripAdvisor.com Compiled a List, Based on Reviews and Pictures from Guests. Read more here-http://www.cbsnews.com/stories/2010/06/03/earlyshow/living/travel/main6543633.shtml

-Colorado State University researchers boosted their forecast for the 2010 Atlantic hurricane season, calling for 18 named storms, 10 of them becoming hurricanes. The researchers also said there is a 76 percent chance that a major hurricane, with winds of 111 mph (178 kph) or greater, will strike the U.S. The past-century average is 52 percent.

The forecast comes less than a week since the U.S. National Hurricane Center predicted an above-average season with 14 to 23 named storms forming before Nov. 30. The most active season on record was 2005, when 28 storms formed, including Hurricane Katrina, which caused New Orleans levees to fail, flooding the city and killing more than 1,800 people.

The CSU team predicts tropical cyclone activity in 2010 will be 195 percent of the average season. By comparison, 2009 activity was about 69 percent of the average season. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=awwrb29U3HyM

-The U.S. military should be prepared to counter cyber attacks intended to disrupt operations as well as to paralyze and destroy entire computer networks, the U.S. Cyber Command’s new head said today. Cyber attacks appear to be evolving from data theft and temporary disruption to “sabotage,” General Keith Alexander said.

The trend “should give us pause for concern,” he told an audience at the Center for Strategic and International Studies, a Washington-based policy group, in his first speech as commander of the U.S. Cyber Command. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=arpLmiI8N0rc

-A North Korean diplomat today said war on the Korean peninsula could begin at any time over accusations that the government in Pyongyang ordered the sinking of a South Korean warship. “The present situation is so grave that a war may break out at any moment,” Ri Jang Gon, North Korea’s deputy ambassador to United Nations offices in Geneva told a conference on nuclear disarmament there, according to a text of his remarks provided by the UN. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aWjQ2YTzE0v8

WWW.RARECOLOREDDIAMONDS.COM

-Christie’s Jewels Sale Fetches $60M in Hong Kong. A heart-shaped fancy vivid blue, 5.01 carat, VS2, diamond garnered $935,000 per carat and sold to an Asian private for $4,686,600. A pair of fancy deep blue heart-shaped diamonds of 2.48 carats and 2.03 carats suspending a pair of 10.12 carats and 9.64 carat pear-shaped diamonds sold for $4,398,984. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=31192

-Christies Jewels: The Hong Kong Sale. A Cartier bracelet mounted with nine sapphires was auctioned for HK$54 million ($6.9 million) in Hong Kong, or eight times more than in 1988, as bidders pursued colored stones and ignored some bargain white diamonds.

Fuelled by Chinese buying, Hong Kong has surpassed Geneva and New York to become Christie’s biggest gems market. Jewellery by Cartier, more than other brands, consistently beat estimates. Tuesday’s auction tallied HK$470 million, the most for a single gems sale by Christie’s, the company said.

“The prices were strong and serious, not inflated,” said Francois Curiel, Christie’s Asia president and jewelry chief, referring particularly to the Cartier item. The bracelet was last publicly auctioned in New York for $902,000, he said.

Colored stones fetched better prices at this Asia auction than previous ones, while some white diamonds sold for bargains, said May. A 6.14-carat white diamond of the best-possible internally flawless clarity and the fifth-ranked color of H sold for HK$1.16 million, even though it has a market value of about HK$1.4 million, according to May. “Some people won some really good bargains,” May said.

Other highlights yesterday included a heart-shaped fancy- vivid blue diamond weighing 5.01 carats, which fetched HK$36.5 million; a pair of diamond earrings that sold for HK$34 million; and a necklace with 51 vitreous jadeite beads that fetched HK$56.7 million, against a presale top estimate of HK$80 million. Read more here-http://www.bloomberg.com/apps/news?pid=20601093&sid=aMJGIM9kmuoo

-Auction results for Christies Jewels: The Hong Kong Sale June 1 2010 Hong Kong. Read all results here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22993#action=refine&intSaleID=22993&sid=e8304642-74e0-4f31-bdeb-5c7ee6ac0c3f

-Lot 2483-Lot description-A stunning pair of colored diamond and diamond ear pendants each set with a heart-shaped fancy deep blue diamond weighing 2.48 and 2.03 carats, suspending a detachable pear-shaped diamond weighing 10.12 and 9.64 carats, mounted in platinum, 3.0 cm long. Estimate HK$28,800,000-HK$38,800,000 ($3,727,391-$5,021,624). Price Realized HK$34,260,000 ($4,416,306). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318703&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2482-Lot description-A superb colored diamond and diamond ring set with a heart-shaped fancy vivid blue diamond weighing 5.01 carats, to the pavé-set diamond surround and bifurcated quarter-hoop, mounted in 18k white gold, ring size 5¾. Estimate HK$35,000,000-HK$55,000,000 ($4,529,816-$7,118,282). Price Realized HK$36,500,000 ($4,705,054). Read more here-

http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318702&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2477-Lot description-An impressive colored diamond and diamond ring set upon a brilliant-cut fancy intense yellow diamond weighing 33.88 carats, within a pear-shaped diamond surround, mounted in platinum and 18k gold, ring size 6½. Estimate HK$9,500,000-HK$12,000,000 ($1,229,521-$1,553,080). Price Realized HK$8,660,000 ($1,116,322). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318697&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2474-Lot description-A rare colored diamond and diamond ring set with a square-shaped fancy vivid yellow diamond weighing 12.87 carats, to the trapeze-cut diamond shoulders, mounted in platinum and 18k gold, ring size 5¾. Estimate HK$7,600,000-HK$10,000,000 ($983,617-$1,294,233). Price Realized HK$9,020,000 ($1,162,729). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318694&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2437-Lot description-An important colored diamond and diamond ring set with a heart-shaped fancy deep blue diamond weighing 2.88 carats, flanked by two triangular-shaped intense and vivid pink diamonds weighing 0.21 and 0.20 carat, within a pavé-set diamond two-tiered surround and half-hoop, mounted in 18k rose gold, ring size 5½. Estimate HK$12,500,000-HK$20,000,000 ($1,617,791-$2,588,466). Price Realized HK$12,980,000 ($1,673,195). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318657&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2429-Lot description-A colored diamond and diamond twin stone ring set with a modified shield-shaped fancy yellow diamond weighing 3.56 carats, and a modified shield-shaped diamond weighing 3.06 carats, within a pavé-set diamond surround, to the polished white gold hoop, mounted in 18k white and yellow gold, ring size 5½. Estimate HK$800,000-HK$1,200,000 ($103,539- $155,308). Price Realized HK$980,000 ($126,327). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318649&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2361-Lot description-A colored diamond and diamond ring set with a round-cornered modified rectangular-shaped fancy vivid yellow diamond weighing 5.09 carats, to the trapeze-cut diamond shoulders, mounted in 18k yellow and white gold, ring size 5¼. Estimate HK$1,600,000-HK$2,500,000 ($207,077-$323,558). Price Realized HK$2,420,000 ($311,952). Read more here-

http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318581&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2359-Lot description-A colored diamond and diamond ring designed as an eternity undulating band, the front set with five pear-shaped yellow, green, pink and brown coloured diamonds within pavé-set diamond surround, mounted in 18k white gold, ring size 5½. Estimate HK$100,000-HK$150,000 ($12,942-$19,413). Price Realized HK$125,000 ($16,113). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318579&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2347-Lot description-A colored diamond and diamond ring set with a cushion-shaped fancy orange-brown diamond weighing 3.02 carats, to the pavé-set diamond surround and three quarter-hoop, mounted in platinum, ring size 5¾. Estimate HK$120,000-HK$180,000 ($15,531-$23,296). Price Realized HK$162,500 ($20,947). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318567&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2345-Lot description-A colored diamond and diamond ring set with a pear-shaped fancy light purplish pink diamond weighing 2.01 carats, to the partly diamond-set criss-cross hoop, mounted in 18k white and rose gold, ring size 5. Estimate HK$250,000-HK$350,000 ($32,356-$45,298). Price Realized HK$325,000 ($41,894). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318565&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2325-Lot description-A colored diamond ring set with a cut-cornered modified rectangular-shaped fancy vivid yellow diamond weighing 2.01 carats, to the pavé-set vivid yellow diamond surround, gallery and three quarter-hoop, mounted in 18k gold, ring size 6. Estimate HK$250,000-HK$350,000 ($32,356-$45,298). Price Realized HK$312,500 ($40,283). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318545&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

FIVE MORE U.S. BANKS FAIL-78 FOR THE YEAR-GREATEST CONSOLIDATION IN HISTORY?

-3 Fla. banks, 1 each in Nev., Calif. shut down. Regulators on Friday shut down three banks in Florida and one each in Nevada and California, bringing the number of U.S. bank failures this year to 78. The Federal Deposit Insurance Corp. took over the Florida banks, all owned by holding company Bank of Florida Corp.

They are Bank of Florida-Southeast, based in Fort Lauderdale, with $595.3 million in assets; Bank of Florida-Southwest, based in Naples, with $640.9 million in assets; and Bank of Florida-Tampa Bay, based in Tampa, with $245.2 million in assets.

The FDIC also seized Las Vegas-based Sun West Bank, with $360.7 million in assets, and Granite Community Bank, located in Granite Bay, Calif., with $102.9 million in assets. Read more here-http://finance.yahoo.com/news/3-Fla-banks-1-each-in-Nev-apf-392122267.html?x=0&sec=topStories&pos=main&asset=&ccode

-Are We About To Witness The Greatest Banking Consolidation In U.S. History? As the number of bank failures in the United States continues to accelerate, many analysts are warning that we could soon see unprecedented changes in the U.S. banking industry.

In fact, there are some economists that are warning that we could be about to witness the greatest banking consolidation in U.S. history. As dozens of small and medium size banks have failed, the megabanks have systematically been gobbling up larger and larger slices of market share.

In fact, if current trends continue, it doesn’t take much imagination to foresee a future where the entire U.S. banking industry has been consolidated down to between 5 and 10 “superbanks”. So would that be so bad?

Well, yes it would. It would represent a massive shift in financial power away from the American people to big, global corporate banks. But if you happen to be a fan of big, global corporate banks perhaps you will really love what is about to happen to the U.S. banking industry. Read more here-http://theeconomiccollapseblog.com/archives/are-we-about-to-witness-the-greatest-banking-consolidation-in-u-s-history

U.S. FEDERAL DEBT HITS 13 TRILLION-IS THE WORLD BROKE?

-The federal government is now $13 trillion in the red, the Treasury Department reported Wednesday, marking the first time the government has sunk that far into debt and putting a sharp point on the spending debate on Capitol Hill. Calculated down to the exact penny, the debt totaled $13,050,826,460,886.97 as of Tuesday, leaping nearly $60 billion since Friday, the previous day for which figures were released.

At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day. That’s almost three times the daily average of $1.7 billion under the previous administration. Read more here-http://www.washingtontimes.com/news/2010/jun/2/federal-debt-tops-13-trillion-mark/print/

-An American Concept: Crushing Debt. Read more here-http://www.caseyresearch.com/editorial/3421?ppref=GLD066ED0510D

-Why U.S. debt matters to you. Read more here-http://money.cnn.com/2010/06/03/news/economy/U.S._debt_impact/index.htm

-Is the World Broke? Entitlements, Spending May Spell Doom. Read more here-http://www.foxbusiness.com/story/markets/industries/government/world-broke/ and http://www.foxbusiness.com/topics/special-coverage/is-the-world-broke.htm

CLIVE MAUND-THE LOOMING FINANCIAL HOLOCAUST IS CLOSER THAN WE THOUGHT

-We had expected the broad stockmarket and the resource sector to stabilize and start to recover last week and they did, and while we are likely to see further recovery in the days and perhaps weeks ahead, there have been some ominous developments in the recent past that we would be most unwise to ignore.

The market did not go into full crash mode because it was not technically ready to, although it got close to it, and crucial support held for now. However, heavy technical damage was inflicted and a broad review of long-term charts reveals that a blood-curdlingly dangerous setup has developed across a wide spectrum of markets.

You may recall that day early in May when the Dow Jones Industrials mysteriously plunged by nearly 1000 points intraday. In an effort to placate unnerved investors, the media tried to pass it off as a technical glitch.

What actually caused it was a wave of heavy selling caused by those who suddenly “saw the writing on the wall”. If this drop was due to some technical glitch then why, after bouncing, did the market drop to even lower levels a week or two later? Read more here-http://news.goldseek.com/CliveMaund/1275325200.php

EU IN CRISIS

-Greece urged to give up euro. The Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy. Read more here-http://business.timesonline.co.uk/tol/business/economics/article7140270.ece

-Spain Loses AAA Rating at Fitch Amid Deficit Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5flzkIWKSAk&pos=1

-Europe’s banks will have to write off 195 billion euros ($237 billion) of bad debts by 2011 and their ability to sell bonds may be curtailed as governments finance fiscal deficits, the European Central Bank said. With governments facing “heavy financing requirements over the coming years” there’s a “risk of bank bond issuance being crowded out,” the Frankfurt-based ECB said in its biannual Financial Stability Report yesterday.

“The risk that this implies for bank funding costs also raises the possibility of a setback to the recovery in banking sector profitability.” The report reflects the aftershocks of a global financial crisis that led to more than $1.7 trillion in writedowns and credit losses since early 2007.

In Europe, governments increased borrowing to fund bank bailouts and stimulus programs to haul the economy out of recession. Now they are trying to shrink bulging budget deficits that triggered a sovereign debt crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aZ3qPa0yxsAU and http://finance.yahoo.com/news/ECB-warns-of-more-bank-loan-rb-639304907.html?x=0

-The EU unemployment rate hit 10.1 per cent in April, its highest since the euro came into being in 1999. Almost 16 million people were out of work across the 16 countries that share the euro, the European Union said. The numbers reached more than 23 million in the 27-nation EU as a whole, including non-euro giants Britain and Poland, 2.4 million more than one year earlier.

Deficit-plagued Spain, with a 19.7 per cent rate beaten only by Latvia, saw unemployment among under-25s reach a dizzying 40.3 per cent in the first quarter of 2010. Read more here-http://news.smh.com.au/breaking-news-business/eu-jobless-hits-record-101-per-cent-20100601-wv7l.html

-Italy’s Municipalities Face Derivative Losses of $1.4 Billion. Italian municipalities face losses of about 1.1 billion euros ($1.4 billion) on derivative contracts with the country’s banks, outstripping gains by 11 times.

Combined losses at the end of March 2010 compared with an estimated 100 million euros of gains on derivatives among Italian regions, cities and towns, data from the Bank of Italy show. At 227 million euros, local authorities of Campania have the largest so-called mark-to-market losses among the country’s 20 regions, according to the data.

Four banks are on trial in Milan for fraud in the sale of derivatives to the city, a case that may set a precedent for other municipalities, while Bari prosecutors are investigating Bank of America Corp. and a unit of Dexia SA for misleading the region of Puglia on swaps. Italy’s Senate Finance Committee in March proposed restricting derivatives to larger towns and banning some swaps altogether. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aC1XMxLHRL34&pos=6

CALIFORNIA MUNICIPAL OFFICIALS TALK BANKRUPTCY

-Two years after Vallejo, California, filed for bankruptcy protection, officials in nearby Antioch are also tossing around the ‘B’ word. Antioch’s leaders earlier this month said bankruptcy could be an option for the cash-strapped city of roughly 100,000 on the eastern fringe of the San Francisco Bay area.

Antioch’s fiscal woes are standard issue for local governments in California: weak revenue from retail sales and property taxes is forcing spending cuts, layoffs and furloughs. But cost-cutting measures may not be enough to keep Antioch’s books balanced, so its city council is openly discussing bankruptcy.

“We just want to alert people to the possibility,” Antioch Mayor Pro Tem Mary Helen Rocha said. Orange County Treasurer Chriss Street would not be surprised if more local governments across the Golden State sound a similar alarm.

Street expects more talk of municipal bankruptcy across California because local government finances are in such dire shape a situation underscored on Wednesday when a top finance officer for Sacramento County projected a worse-than-expected shortfall for the county of $181 million, which could force more than 1,000 layoffs from the county’s payroll.

“You don’t have the easy out of increasing revenue and you have a lot more call on services because of the economy,” Street said. “There’s no such thing as entertaining bankruptcy; there’s ending denial.”

Orange County, California’s third most populous county, declared bankruptcy in 1994, at the time marking the biggest municipal bankruptcy in U.S. history, after suffering $1.7 billion in losses from bad investments. The county emerged from bankruptcy in 1996. Read more here-http://www.reuters.com/article/idUSTRE64Q6CQ20100527

-Buffett Says He Expects ‘Terrible Problem’ for Municipal Debt. Warren Buffett, whose Berkshire Hathaway Inc. has been trimming its investment in municipal debt, predicted a “terrible problem” for the bonds in coming years.

“There will be a terrible problem and then the question becomes will the federal government help,” Buffett, 79, said today at a hearing of the U.S. Financial Crisis Inquiry Commission in New York. “I don’t know how I would rate them myself. It’s a bet on how the federal government will act over time.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ.XP9I_j5Yc&pos=2

ERIC SPROTT-A BUSTED FORMULA

-There’s nothing wrong with throwing a little money at a problem to make it go away. There’s equally nothing wrong with throwing a little borrowed money at a problem to make it disappear, as long as you have the means to pay that borrowed money back.

But what happens if you throw a lot of borrowed money at a problem, and the problem doesn’t go away? If you’ve ever experienced a situation like that you can probably understand how Europe feels right now. It just unleashed a magnificent $1 trillion euro bailout and the market responded with a selloff by the end of the week! So what happened?

That money was supposed to make the problem go away, after all. And it was a lot of money. Why did the market respond to it with such disdain? We believe the market’s reaction is confirming what we have long suspected: that these bailouts provide next to no long-term value. They don’t produce real jobs. They don’t improve productivity.

They just prolong the precarious leverage game played by the financial sector, and do so at tremendous cost to taxpayers. “Bailout and Stimulate” has been the rallying call for governments and central banks since the beginning of this financial crisis and it has certainly had its impact over the last two years, but not the type of impact we need to propel real, sustainable growth.

There are three recent, glaring examples of this busted “Bailout and Stimulate” formula in action. The key point to remember with bailouts and stimulus is that it’s ultimately your money that the government is spending and your children’s money. The numbers strongly suggest that your money isn’t being spent wisely.

We need real jobs and real growth, not bigger, more leveraged banks. The market isn’t oblivious it can see what’s happening. Gold’s recent strength in lieu of seemingly ‘deflationary’ economic data confirms the market’s doubts over government intervention in the financial system. Needless to say, we remain bearish. Read more here-http://www.sprott.com/Docs/MarketsataGlance/05_10%20A%20Busted%20Formula.pdf

REAL ESTATE

-IMF Economist Argues Home Prices Still Have Far To Fall. Dour predictions about the housing market aren’t the norm anymore, as many economists have grown optimistic that home prices will begin rebounding strongly next year. But International Monetary Fund economists Prakash Loungani has found plenty of reasons to remain glum.

Loungani, at a National Economists Club luncheon in Washington Thursday, presented his analysis of housing busts since 1970 in the countries that make up the Organization for Economic Cooperation and Development. His prediction: Home prices will fall much farther and for much longer.

On average, the previous housing slumps lasted 18 quarters, with prices dropping 22% from peak to trough. By contrast, the current housing slump has lasted only 14 quarters, during which prices have dropped just 15%.

But the latest boom was so much bigger than the previous ones that it’s logical to anticipate an even more brutal downturn, Loungani argued. Prices rose 113% over 41 quarters, compared with 39% average price increase over 39 quarters seen in the previous booms. Loungani likened the current cycle to a rollercoaster which has roared up a steep hump and now needs to come down again.

“A lot of adjustment has taken place in house prices, so we shouldn’t discount that. But it’s true that we shouldn’t declare victory too soon. We’ve now had a fresh shock from what’s happening in Europe,” he said after the luncheon.

Loungani marshaled other evidence that home prices are still inflated. He found that prices in OECD countries in 2009 were substantially out of whack with rents and incomes in those countries compared with average values from 1970 to 2000. In the long run, he argued, incomes and rents will act as weights on home prices, bringing them back to earth.

Price-to-rent and price-to-income ratios were well above historical values in all OECD countries except Japan, Germany and Switzerland, according to Loungani’s analysis. New Zealand, Australia, the Netherlands and Belgium saw the biggest misalignment with historical price-to-income values, while Canada, Sweden, Norway and Australia saw the largest gaps in price-to-rent values.

Loungani said his analysis of prices and rents in U.S. metro areas suggests that many markets on the West coast and in parts of the Northeast could yet see prices plummet a further 30-40%. Read more here-http://blogs.wsj.com/economics/2010/05/27/imf-economist-argues-home-prices-still-have-far-to-fall/?utm_source=patrick.net

-New Home Sales Set to Plunge in Former Bubble Markets. New home sales in Phoenix and Las Vegas, two U.S. markets hardest hit by foreclosures, are set to plunge as a federal tax credit for homebuying expires, according to data from real estate researcher Metrostudy.

A sample of subdivisions in both cities showed sales contracts for new homes “pulled back sharply in May and contract cancellations spiked,” Houston-based Metrostudy said in an e-mail. Would-be buyers canceled about 40 percent of new home contracts in San Diego in May, up from 10 percent in April, the company said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=adSkz7WCGd0o&pos=6

-Owners Stop Paying Mortgages, and Stop Fretting. For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.” A growing number of the people whose homes are in foreclosure are refusing to slink away in shame.

They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by. This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can.

Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads. “I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s.

She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.” Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics. While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time. More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property double the rate of a year earlier. Read more here-http://www.nytimes.com/2010/06/01/business/01nopay.html?source=patrick.net&pagewanted=print

-Owners Bet on Raising the Rent, and Lost. Read more here-http://www.nytimes.com/2010/05/29/business/29real.html?source=patrick.net

-Problems continue in high-rise condo market. It really didn’t take a $40,000 study from the Sierra Club to determine that Las Vegas was overbuilt, putting a strain on natural resources. Just look at the vacant buildings.

Nowhere is it more apparent than in the high-rise condominium market where 5,527 completed units are sitting empty, waiting to be sold, housing analyst Larry Murphy said Friday at a meeting of the Las Vegas High-Rise and Condominium Association.

With an average of 22 high-rise closings a month, Las Vegas has a 250-month supply of inventory, or about 21 years, the president of SalesTraq research firm said. In comparison, the supply for traditional homes on the market here is between two and three months.

“I’m not passing judgment of what’s good and what’s bad. I’m just saying we have a 21-year supply,” Murphy told about 100 real estate professionals at Cili’s restaurant. Read more here-http://www.lvrj.com/business/problems-continue-in-high-rise-condo-market–95147259.html?source=patrick.net

-McMansion welfare: Why does government subsidize home ownership? Read more here-http://money.cnn.com/2010/06/02/news/economy/shiller_housing_qa.fortune/index.htm

-Top Chinese Central Banker: Our Property Crisis Is Worse Than The US And UK Bubbles. Read more here-http://www.businessinsider.com/top-chinese-central-banker-our-property-crisis-is-worse-than-the-us-and-uk-bubbles-2010-6

-Huge Price Cuts Rumored From Chinese Developers Due To Collapsing Demand. China Vanke Co, the country’s largest publicly listed developer, may cut apartment prices by 10 to 30 percent within three months, the Beijing News said this week. Read more here-http://www.businessinsider.com/shanghai-property-bubble-2010-5

The Goldbugg Report – June 8th, 2010
Posted by Worldwide Precious Metals on Tuesday, June 8, 2010

The Week in Review – June 4th, 2010

June 4, 2010

The week opened spectacularly, as far as news is concerned. Canada raised interest rates a quarter point, the first of the so-called “G-7” nations to do so. The European Central Bank warned on Monday that there was another 195 billion euros in potential loan losses for European banks over the next 18 months. That announcement was immediately followed up by the news that Spain’s second largest savings bank has asked for up to 3 billion euros from a government rescue fund.

The Labor Department’s report released Friday showed that, aside from a boost provided by the hiring of temporary Census by the government, the private sector is still not hiring. Unemployment dropped to 9.7%, but that figure is apparently a reflection that people are simply giving up looking for work and therefore falling out of the calculation.

On Thursday, three top Federal Reserve officials said that it may soon be time to begin raising interest rates. Such a move is not likely to take place at the June 22-23 policy meeting, but it is notable that they are beginning to discuss such a move more openly.

On Friday, a spokesman for Hungary’s prime minister supported the view that Hungary had only a slim chance of avoiding a debt crisis similar to Greece. Danske Bank said “The comparison with Greece might be ‘overdone’, but one can hardly say that public finances are in good shape in Hungary.”

European trade unions said on Friday that European government budget cuts to combat debt crises are going too far and could trigger an economic depression. John Monks, the head of the European Trade Union Confederation said that there was “quite a bit of social unrest in some countries” over austerity measures. He went on to say “We’re seeing cut, cut, cut in all the countries simultaneously which is what they did in 1931 and that caused the Great Depression”

BP finally got a cap in place over the well that is supposed to theoretically capture up to 90% of the oil coming out of the blown out well in the Gulf of Mexico. President Obama, speaking before Carnegie Mellon University this week, declared that it is time to tap the nations Natural Gas Reserves in a move to cleaner energy. Oil moved back down to the $72 a barrel range.

The Euro dropped to fresh four year lows against the dollar on continued news out of Europe. According to Ashok Shah, the CIO at London & Capital, “There is a risk that the sovereign debt crisis could morph into another run on under-capitalized banks in Europe.” Shah went on to say that “The IMF can support liquidity, but can do nothing about solvency.”

Friday to Friday Close

	May. 31^st	June. 4^th	Net Change
Gold	$1216.00	$1219.00	3.00 + 0.25%
Silver	$18.41	$17.40	(1.01) – 5.49%
Platinum	$1551.00	$1524.00	(27.00) – 1.74%
Palladium	$463.00	$430.00	(33.00) – 7.13%

Month End to Month End Close

	Apr. 30^th	May. 31^st	Net Change
Gold	$1180.00	$1216.00	36.00 + 3.05%
Silver	$18.60	$18.41	(0.19) – 1.02%
Platinum	$1740.00	$1551.00	(189.00) – 10.86%
Palladium	$553.00	$463.00	(90.00) – 16.27%

Year to Date Close

	Dec. 31^st	May. 31^st	Net Change
Gold	$1098.00	$1216.00	118.00 + 10.75%
Silver	$16.95	$18.41	1.46 + 8.61%
Platinum	$1470.00	$1551.00	81.00 + 5.51%
Palladium	$407.00	$463.00	56.00 + 13.76%

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

	Gold	Silver
Support	1200/1180/1170	17.40/17.00/16.75
Resistance	1220/1225/1250	18.00/18.50/19.00

	Platinum	Palladium
Support	1500/1480/1450	425/415/400
Resistance	1550/1575/1600	450/470/500

Volatility should be expected to continue. As the crisis in Europe continues to deepen, it seems people continue to lose faith in the fiat paper currencies printed up by world governments. Geo-political tensions between North and South Korea continue to inject fear into the marketplace. The oil industry as a whole is coming under fire from the US government. Despite BP’s assurance that they will pay to clean up “every drop” of oil that has spilled from the runaway well in the Gulf of Mexico, there are rumors and suggestions that the US government should seize BP’s assets. Such rumors are stoking fear by foreign companies to invest in the US. The labor market is weak, with nearly all growth this month coming from the government’s hiring of temporary census workers. The investing public at large seems to be quickly losing confidence in the administration’s ability to handle the growing problems it is facing. Much of the lack of confidence seems to be fueled by the constant rhetoric that none of what is going on is the current administration’s fault. Even the public grows tired of Obama’s constant repetition of “none of this is the fault of this administration, we inherited this problem, but we will take responsibility for it.” Blaming the previous administration for everything, especially when Obama’s own administration has been in office for close to two years, with Democrats in control of Congress for even longer than that, is starting to wear down the American people. Mid-term elections should prove to be interesting this coming November. 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 – June 4th, 2010
Posted by Worldwide Precious Metals on Friday, June 4, 2010

The Goldbugg Report – June 1, 2010

June 1, 2010

-Thomas Kaplan: Gold Will Keep Going Up

-Alix Steel: Top 5 reasons gold prices move.

-James Turk: Silver inching closer to an upside breakout.

WETASKIWIN ALERT!

WORLDWIDE PRECIOUS METALS IS HOLDING A PRECIOUS METALS SEMINAR IN WETASKIWIN, ALBERTA ON JUNE 24^th.

FOR INFORMATION & REGISTRATION, PLEASE CALL: 1.866.623.2002 OR EMAIL: info@wwpmc.com

GOLD

-A billionaire goes all-in on gold. Gold is setting records again, boosting the holdings of central banks, Armageddon worrywarts, and ordinary people who own gold bars, coins, and jewelry. But few individuals stand to benefit as much as low-profile billionaire Thomas Kaplan.

A New York-born commodities magnate who earned a doctorate in British colonial history at Oxford, Mr. Kaplan oversees an empire devoted largely to gold. Many fund managers and high-rollers have allocated small percentages of their portfolios to gold as a hedge against inflation. But Mr. Kaplan is the bull of bullion.

He has gone further than perhaps any other major investor, betting the majority of his wealth on gold and other precious metals. And it reflects his deeply held conviction that global economic instability could bring rising demand for gold.

Through his firm, Tigris Financial Group, and affiliates, Mr. Kaplan has loaded up on bullion and bought up properties in 17 countries on five continents, where geologists are exploring for more. Tigris subsidiaries have taken stakes in mining companies, including tiny firms that have yet to produce an ounce.

Though he won’t disclose how much physical gold he owns, Mr. Kaplan, who is 47 years old, controls up to 30% of the shares in some so-called junior miners. Together, his holdings amount to a nearly $2 billion bet on gold, more than the Brazilian central bank’s bullion is currently worth.

“I’ve reached a point where I feel the only asset I have confidence in is gold,” Mr. Kaplan said in an interview at Tigris’s midtown Manhattan headquarters. Read more here-http://www.gata.org/node/8666

-Thomas Kaplan: Gold Will Keep Going Up, This bubble isn’t one. Read more here-http://www.forbes.com/2010/05/24/gold-economy-finance-euro-opinions-contributors-thomas-kaplan_print.html

-Speculators are buying gold faster than the world’s biggest producers can mine it as analysts forecast a 27 percent rally that may extend the longest run of annual gains since at least 1920. The median in a Bloomberg survey of 23 traders, analysts and investors shows gold will reach $1,500 by the end of the year.

“You could see gold go up another $1,000,” said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. in San Antonio and in 2006 correctly predicted that gold would reach $700 within two years. “All of the turmoil and problems we’ve seen in Europe is just another reminder that there’s a lot of value in gold as a safe haven.”

“People are afraid of the debasement of all the currencies,” said Peter Schiff, president and chief global strategist for Darien, Connecticut-based Euro Pacific Capital, whose clients have more than $2 billion in assets. “What’s surprising is that gold is still as low as it is,” he said, predicting $5,000 to $10,000 an ounce in the next five to 10 years.

Gold is still at half the peak set in 1980, after adjusting for inflation. Then, prices rose to $850, equal to $2,266 today, according to a calculator on the website of the Federal Reserve Bank of Minneapolis. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a6f.XxAJB0Rc

-The wonderful thing about this business is how dynamic it is how fast things can change. Gold was already in a full-fledged bull market heading into the Lehman collapse, but the unwinding of all the carry trades following the banks demise took gold down 27% back then, so the best that could be said was that this was a “relative out-performer” because the CRB was down a sharper 56% peak-to-trough.

In part, the gold price succumbed not only to a huge round of profit-taking as investors liquidated their winners in one of the most massive margin calls of all time, but the sharp move into greenbacks didn’t help as the DXY (U.S. dollar index) rallied 23% in a classic flight-to-safety bid.

Compare and contrast that backdrop to what we have seen unfold in this latest round of financial market turbulence the U.S. dollar has rallied 8% and we have seen the CRB slide 10%, but lo’ and behold, the gold price has not only risen 10% against the U.S. dollar but has made new highs in every currency.

This is yet another sign from the market that gold is indeed being treated as a monetary metal a currency of its own as opposed to solely being part of the commodity complex. As an aside, it’s now possible to withdraw gold bars out of the ATM at least in Abu Dhabi (see the front page of yesterday’s NYT!).

Interesting times indeed but if you need something to buy, buy what has been working. Demand for jewellry out of India is reportedly booming even as investor demand for the metal is waning, according to the World Gold Council. And while concerns over gold becoming a ‘crowded trade’ may be legitimate with ETF inflows ballooning at the fastest pace since last October (see page 22 of the FT) to a record of over 2,000 tons.

However, the bottom line is that quite unlike the growth rate of paper currency around the globe, mined production of gold is down 9% over the past 12 months. So maybe the demand side is overdone but the supply backdrop is highly constructive for this bull market in gold we still see $3,000 per ounce and believe this to be a rather conservative forecast.

The chart bellow puts the secular bull market in gold into perspective comparisons with other manias that ultimately morphed into bubbles. We will get there eventually but gold is hardly in a bubble right now. David Rosenberg-Gluskin/Sheff

-How is the stock market performing? It all depends on how you measure. When measured in US dollars, the Dow currently trades approximately 28% below its all-time record high. However, when measured with that other world currency (gold), the picture is even more bleak.

To help illustrate the point, today’s chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 8.5 ounces of gold to “buy the Dow.”

This is considerably less that the 44.8 ounces back in the year 1999. When priced in gold, the US stock market has been in a severe bear market for the entire 21st century. Read more here-

http://www.chartoftheday.com/20100521.htm?T

Source: chartoftheday.com

-J.S. Kim: 10 gold charts they don’t want you to see. Read more here-http://www.gata.org/node/8663

-Greeks queue to buy gold sovereigns for financial security in turbulent times. Read more here- http://business.timesonline.co.uk/tol/business/economics/article7135543.ece and http://www.gata.org/node/8678

-US Mint: Record sales for gold, silver bullion in May. Read more here-http://www.commodityonline.com/news/US-Mint-Record-sales-for-gold-silver-bullion-in-May-28497-3-1.html

-Alix Steel: Top 5 reasons gold prices move. Read more here-http://www.gata.org/node/8673 and http://www.thestreet.com/print/story/10760375.html

-Brett Arends: Is gold the next bubble? Read more here-http://www.gata.org/node/8679 and http://www.gata.org/node/8684

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1274681460.php

-Gold The only currency that can’t be printed on a whim. Read more here-http://www.gata.org/node/8670

-Gold Use Fell in 1st Quarter, to Be ‘Strong’ in 2010, WGC Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=aDnwPIJfoSj4

-Money managers continue to like gold over cash. With currencies exceptionally volatile currently, many of the world’s top money managers are looking to gold rather than cash. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=105418&sn=Detail&pid=33

-Gold rising in all currencies sign of distrust Groh. Doug Groh of the Tocqueville Gold Fund reckons gold rising in all currencies is a reflection of the concern and distrust for central bank authorities, political authorities and what’s going in the world. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=105343&sn=Detail&pid=102055

-Bloomberg interviews the current President of the World Gold Council Aram Shishmanian. In this interview Shishmanian says that gold will never go below $1,000 again and that gold, as an invest class, is now main stream. Listen here-http://www.bloomberg.com/avp/avp.htm?N=video&T=Shishmanian%20Interview%20on%20Gold%20from%20May%2019%20&clipSRC=mms://media2.bloomberg.com/cache/vui3M6AMxohk.asf

-What Does the Future Hold For Gold? Can gold investors count on continued loose and destructive monetary and fiscal policy? That is most likely, in my opinion, when the following is considered.

* Federal budget deficits are projected into the future, with no end in sight

* Mortgage defaults are still increasing and Fannie/Freddie are holding hundreds of billions in bad paper

* Union pension funds (think militant voting bloc) are short hundreds of billions of dollars

* Many states are insolvent and will be in line for hundreds of billions of dollars in bailout money (think public sector workers and their militant voting bloc)

* Social Security is underfunded

* Medicare is insolvent

* Medicaid is insolvent

* National health care has yet to start

Conclusion-Unfortunately for the Nation as an entity, these crises will continue and the same remedies will continue. Indeed, the magnitude of the problems facing America are so immense and intractable I believe one should seriously consider converting more than a little of one’s hard earned wealth from paper-backed-by-nothing to that “barbaric relic” gold. Lorimer Wilson-Read more here-http://www.kitco.com/ind/Wilson/may272010.html

-Gold at $36,000 Not as Ridiculous as It Sounds? Read and watch more here-http://www.cnbc.com/id/37352471

-GoldCore’s O’Byrne interviews rogue trader Leeson about market manipulation. Read more here-http://www.gata.org/node/8677

-Jeff Nielson: ‘Loose-Lips’ does it again, part 3 of the great debate. Read more here-http://www.gata.org/node/8664

-LBMA gold shorts backed by central banks, Rickards tells King World News. Listen here-http://www.gata.org/node/8668 and http://www.youtube.com/watch?v=W57cTDVb8NM

-Marc Faber on Bloomberg: Bearish on everything except precious metals. Watch more here-http://www.youtube.com/watch?v=aPZ44PLALmU

-Gold-dispensing ATMs: Coming to a city near you. Read more here-http://money.cnn.com/2010/05/27/news/companies/gold_atm/index.htm