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The Week in Review – July 20th, 2010

July 30, 2010

The precious metals markets appear to have been the victim of another assault by “Da Boyz” this week. Options expiry time rolled around again, and the big boys took the opportunity to engineer favorable conditions for them to continue covering their massive short positions.

The next battle to come up for Congress has been set: The expiration of the Bush tax cuts. General consensus is that letting those tax cuts expire, which would be the equivalent of raising taxes, would add additional weight to an already dragging recovery. James Bullard, president of the Federal Reserve Bank of St. Louis, had this to say “Increasing taxes while you’re trying to get the economy to recover is not a good plan.” Deutsche Bank analysts said in a research note earlier this week that letting the tax cuts expire would “halt the economic recovery by 2011.”

US consumer sentiment dropped to its lowest level in 9 months in July. Most view this as an indication that consumer spending for the coming months will be extremely weak. A Reuters-Ipsos poll this week showed that 46% view Obama’s handling of the economy and jobs as unsatisfactory.

In Greece, where the sovereign debt crisis in Europe kicked off, summer holiday season has begun. In honor of this, striking truck drivers cut off fuel and food supplies, picketing seamen scared off cruise liners and public sector unions began their sixth strike of the year. While the country is, so far, on track with the austerity measures which it was forced to undertake in order to qualify for the emergency bailout loan that prevented a default on Greek sovereign debt, concerns continue to run high that things may still collapse in the embattled country.

Spain’s unemployment rate hit a 13 year high of 20.09 percent in the second quarter. Several of Spain’s banks also failed the “stress test”, raising concerns that the country may be the next in line for a Greek style bailout. Unemployment across the Eurozone as a whole continues to be stuck at 10 percent.

The International Monetary Fund said on Friday that some smaller US Banks that have heavy exposure to commercial real estate may need to raise more capital. This could lead to further tightening of credit by the banks that typically fund a struggling small business sector. Coinciding with the IMF’s statements, Republicans in the US Senate blocked a $30 billion plan to help community banks boost lending to small businesses. The Democrats refused to allow Republicans to amend yet another bill that would increase spending without cutting costs in other areas.

30 year mortgage rates hit record lows for the sixth straight week in a row, but many are not able to take advantage of it since understaffed lenders who are overwhelmed by foreclosures are keeping rates higher to try to keep their work load manageable.

The euro rose against the dollar this week apparently on elation over the results of the “stress test” results on Europe’s banks. The glow from the overblown and overrated stress tests in the Eurozone may soon fade, however, as higher taxes and public spending cuts across the board begin to take effect and start dragging on the struggling economies of the member countries.

Crude oil continued to trade around the $77 a barrel range this week.

Friday to Friday Close

	July. 23rd	July. 30th	Net Change
Gold	$1189.00	$1184.00	(5.00) – 0.42%
Silver	$18.14	$17.99	(0.15) – 0.83%
Platinum	$1545.00	$1574.00	29.00 + 1.88%
Palladium	$467.00	$494.00	27.00 + 5.78%

Month End to Month End Close

	June. 30th	July. 30th	Net Change
Gold	$1245.00	$1184.00	(61.00) – 4.90%
Silver	$18.65	$17.99	(0.66) – 3.54%
Platinum	$1530.00	$1574.00	44.00 + 2.88%
Palladium	$442.00	$494.00	52.00 + 11.76%

Year to Date Close

	Dec. 31st	July. 30th	Net Change
Gold	$1098.00	$1184.00	86.00 + 7.83%
Silver	$16.95	$17.99	1.04 + 6.14%
Platinum	$1470.00	$1574.00	104.00 + 7.07%
Palladium	$407.00	$494.00	87.00 + 21.38%

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

	Gold	Silver
Support	1175/1160/1150	17.50/17.35/17.20
Resistance	1200/1220/1225	18.20/18.30/18.50

	Platinum	Palladium
Support	1532/1500/1480	467/450/430
Resistance	1580/1600/1650	500/520/530

Volatility should be expected to continue. The recent dip in prices (brought about once again by JP Morgan Chase and the rest of “Da Boyz”) is presenting a perfect opportunity for the astute investor to add precious metals to their portfolio. The underlying factors that have been driving precious metals prices higher have not changed: consumer sentiment has been plummeting, the temporary high in the Eurozone brought about by the bank “stress tests” there is beginning to wear off, and high unemployment remains a problem across the globe. Despite earnings reports that have come in better than expected for most companies, corporate guidance for the second half of the year is abysmal. Inflation is beginning to creep higher in Europe and increasing tax rates may soon drag a fledgling recovery back down both in Europe and the US. The CFTC is working towards establishing position limits in the precious metals markets to put a stop to the rampant manipulation that large institutions like JP Morgan Chase and HSBC have been able to engineer. We have confirmation directly from the CFTC that they will begin taking public comments and will establish those position limits within 180 days. Taking advantage of price dips as “Da Boyz” continue to unwind and cover their short positions in advance of the CFTC establishing those position limits may be the best way to diversify your portfolio by adding precious metals to it before the prices skyrocket higher in a market that will finally be free to trade as it should. 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 – July 20th, 2010
Posted by Worldwide Precious Metals on Friday, July 30, 2010

The Goldbugg Report – July 27, 2010

July 27, 2010

- David Morgan said he believes silver will be over $20 by the end of the year, and could reach $25 as the desire to own gold and silver will return.

- “Gold it is just an asset that, like everything else in life, has its time and place. And now is that time.” Paul Tudor Jones founder and chairman of Tudor Investment

- Gold as a percentage of global financial assets chart.

“SPECIAL GOLDBUGG ANNOUNCEMENT!”

Worldwide Precious Metals proudly welcomes the latest “Goldbugg”, namely Cassius Kingston Bugg born to Lucas & Crystal Bugg on July 18^th, 2010!

GOLD

-As you can see on the chart below, it compares gold as a percentage of global financial assets at the apex of gold’s last big bull market in 1980, to today. Based on that, gold would seem to have a long way to go before reaching a top.

Of course, things won’t roll out in exactly the same way this time around but a solid case can be made that the economic problems are much worse today than they were in 1980. How high could the price of gold go?

Given the price of gold is really just a reflection of the underlying currency unit it is priced in, the answer to the question is to ask yourself how well the government is handling fiscal and monetary policy. If we “go Zimbabwe,” then the price of gold could top $1,000,000 per ounce. Casey Research-Read more here-http://www.caseyresearch.com/displayCdd.php?id=489

-”Gold it is just an asset that, like everything else in life, has its time and place. And now is that time.” Paul Tudor Jones founder and chairman of Tudor Investment-Read more here-http://www.gata.org/node/8814

-The consensus view among the Hedge funds is that the price of gold trading at around $1,200 an ounce will rise to well above $1,500 before it suffers any sizeable correction. This expectation of further prices rises (gold has increased four-fold since 2002) is based in part on the view that bullion provides a hedge against a rise in inflation.

Some fund managers believe a sharp jump in inflation is unavoidable as a result of central banks’ monetary easing policies, which have, in effect pumped more money into the economy. Historically, they say, the correlation between gold and inflation is hard to ignore.

Over the past half century, the gold price has tracked the amount of money in the world measured broadly in terms of “M2″ monetary supply fairly accurately, peaking at times of inflation, such as the mid-1970s and early 1980s. The hedge funds argue that the recent swelling of the monetary base will translate into a spike in monetary supply. When it does, gold prices will follow. Read more here-http://www.gata.org/node/8814

-These 72 Analysts Believe Gold Will Go Parabolic To Between $2,500 and $15,000! Read more here-http://news.goldseek.com/GoldSeek/1279566456.php

-Eric King: The gold bull market will end in a mania. The chart below was sent to me by one of our listeners. Unfortunately he did not know who created it, but it gives a clear illustration of why the bull market in gold will end in a mania. There is a great deal of fear in the gold and silver markets at this point. You can clearly see looking at the chart that we are in phase II and that we are climbing a “Wall of worry.”

Investors are worried that if the stock market is going to fall that gold will head lower as well and sentiment has dropped off accordingly. It may be the case that gold would go down if the stock market heads lower, but the truth is that no one knows how gold is going to react in the short-term. It is being accumulated and has been under accumulation for many years.

The smart money knows this is a cycle where investors move away from traditional paper investments and into gold. As gold corrects lower, there are large amounts of physical buyers that buy the dips and continue to accumulate on weakness. This is one of the primary reasons why gold has remained strong so far this summer.

We are nearing the end of July and I think it will be interesting to see how gold trades in August to close out the summer. If gold remains firm in August that would surprise many professionals. Some have been looking for a correction to the $1,000 area, which on the surface would seem reasonable as gold continues to consolidate between roughly $1,000 and $1,200.

Having said all of that, bull markets in many cases surprise investors and traders alike on the upside. Take a look again at the chart, and note one more time the “Wall of worry.” Although that chart is comprised of the Nasdaq mania and subsequent collapse, you can see that during phase II there were dips, and sometimes significant market reactions.

The important thing to note is that they were always, without exception, buying opportunities to accumulate prior to the mania. Use weakness in gold as an opportunity to continue dollar cost averaging into the metal at lower prices. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/7/21_The_Gold_Bull_Will_End_In_A_Mania.html

-Jeff Clark: Is Now a Good Time to Buy Gold? Read more here-http://www.caseyresearch.com/editorial/3532?ppref=GLD014ED0710B and http://news.goldseek.com/GoldSeek/1279472400.php

-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 (gold production is lower today than it was a decade ago; hardly the same can be said for fiat currency).

Moreover, gold makes up a mere 0.05% share of global household net worth, 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. David Rosenberg-Gluskin/Sheff

-The real value of gold $52,831 an ounce? In terms of US dollar circulation and US gold holdings, to make the dollar convertible into gold would mean a gold price in excess of $50,000 an ounce. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108331&sn=Detail&pid=33

-Jim Rogers: I will hold gold to $2,000. Read more here-http://money.outlookindia.com/article.aspx?266216

-Kyle Bass Explains Why Gold And The Dollar Can Trade As One. Read more here-http://www.businessinsider.com/kyle-bass-explains-why-gold-and-the-dollar-can-trade-as-one-2010-7

-Price falls make gold more attractive to long term investors Nichols. The recent decline in gold prices is more typical of the northern summer hiatus than a sea-change in pattern and price dips remain excellent buying opportunities for the gold investor. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108316&sn=Detail&pid=33

-Investment flows to prop up gold GFMS. Read more here-http://www.miningmx.com/news/gold_and_silver/Investment-flows-to-prop-up-gold-GFMS.htm

-Double dip or recovery Has gold had its day? Whether we are entering a double dip recession or a mild recovery gold will perform well in both scenarios. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108217&sn=Detail&pid=33

-Top Chinese Economists Call For Government To Ditch U.S. Treasuries And Buy Gold. Read more here-http://www.businessinsider.com/top-chinese-economist-calls-for-government-to-ditch-us-treasuries-and-buy-gold-2010-7 and http://www.gata.org/node/8842

-Russian central bank still buying gold but purchase volumes slipping. While central bank gold policies continue to hit the headlines, the net position in terms of tonnage change so far this year is small. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108272&sn=Detail&pid=33

-Short term price outlook for gold and silver. The VM Group/ABN Amro’s latest metals report takes a fairly conservative view on the prospects for gold and silver prices in the short to medium term. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108204&sn=Detail&pid=33

-Can gold be a haven for all of inflation, deflation and stock crash? Read more here-http://opinion.financialpost.com/2010/07/16/can-gold-be-a-haven-for-all-of-inflation-deflation-and-stock-crash/

-Gold Coin Sellers Angered by New Tax Law. Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions. Read more here-http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611

-On 1099-Tax Reporting Requirements For Half Ounce Gold Transactions. Read more here-http://www.zerohedge.com/article/1099-tax-reporting-requirements-half-ounce-gold-transactions and http://www.businessinsider.com/obamas-health-care-contains-a-hidden-tax-on-gold-coins-2010-7

-All Gold To Be Tracked? Read more here-http://www.thedailybell.com/1224/All-Gold-to-be-Tracked.html

-Michigan Says Enough To Fed: Takes Matters Into Own Hands As It Starts Using Own Currency And Gold. Read more here-http://www.zerohedge.com/article/michigan-says-enough-fed-takes-matters-own-hands-it-starts-using-own-currencyand-gold

-Competing currency being accepted across Mid-Michigan. Watch part 1 here-http://www.connectmidmichigan.com/news/story.aspx?id=481793 and part 2 here-http://www.connectmidmichigan.com/news/story.aspx?id=482130

-Reuters actually puts gold questions to BIS, which clams up. Read more here-http://www.gata.org/node/8834 and http://uk.reuters.com/article/idUKLNE66F03J20100716

-Max Keiser interviews Ben Davies on gold, silver suppression, BIS swaps. Read more here-http://www.gata.org/node/8843

-Izabella Kaminska: Looks like BIS swaps relieved gold market squeeze. Read more here-http://www.gata.org/node/8850

-Central banks care mainly about saving big banks, Eric Sprott tells King World News. Read more here-http://www.gata.org/node/8845

-Hinde Capital’s Ben Davies On The Gold Market. Read more here-http://www.zerohedge.com/article/hinde-capitals-ben-davies-gold-market

-Guest Post: Carpe Aurum Seize the Gold. Read more here-http://www.zerohedge.com/article/guest-post-carpe-aurum-seize-gold

-Ferdi Lips warned about gold market’s 100-1 leverage nine years ago. Read more here-http://www.gata.org/node/8840

-Adrian Douglas: Proof of gold price suppression gold and the U.S. dollar. Read more here-http://www.gata.org/node/8844

-FT stumbles into central bank admissions of market manipulation. Read more here-http://www.gata.org/node/8833

-Rust discovered on Bank of Russia-issued ‘gold’ coins. Read more here-http://www.gata.org/node/8835

-Gold Makes Dead Portuguese Dictator Top Investor. Read more here-http://www.bloomberg.com/news/2010-07-21/gold-makes-dead-portuguese-dictator-top-investor-without-gains-to-prove-it.html

SILVER

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

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

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

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

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

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

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

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

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

-David Morgan said he believes silver will be over $20 by the end of the year, and could reach $25 as the desire to own gold and silver will return. “It will become apparent that gold and silver to some degree will be the asset of the day,” he said. Read more here-http://www.kitco.com/reports/debbie_july222010_focus.html

-James Turk: Waiting for silver’s upside breakout. Two months ago I stated that silver is inching closer to an upside breakout. It turns out that “inching” was the right word because since then silver has been moving at a snail’s pace. Nevertheless, the huge accumulation pattern that silver has been building over the past three years remains intact, as can be seen on the following chart.

The accumulation pattern on the above chart is nearly complete. All silver needs now is one last push above the neckline around $20. As I noted back on April 1st, silver looks ready to soar once that key level is hurdled.

In presenting my outlook for 2010 I said: “We need to start thinking about silver hurdling above $50.” Noting that this event was only a 20% probability in my view for 2010, I went on to add that “this important event which is unimaginable to many will I expect happen in 2011.”

That forecast remains on track, but two events are necessary. The obvious one is that silver must first hurdle above $20, but secondly, silver needs to approach $30 this year. This $30 price target is needed to keep silver on track for challenging $50 next year.

Given that we are now in mid-July, the limited time constraint means that $20 needs to be hurdled soon if silver is going to reach $30 before the end of this year. As a consequence, the next few weeks will be critically important for silver. Read more here-http://www.fgmr.com/waiting-for-silvers-upside-breakout.html

-Jay Taylor interviews GoldMoney’s James Turk on many gold and silver topics. Listen here-http://www.gata.org/node/8848

-Silver institute Q2 news. Read more here-http://www.silverinstitute.org/images/pdfs/2q2010.pdf

-Commodity Manipulation May Be Easier to Prove With U.S. Financial Overhaul. Traders will face new rules aimed at making it easier for regulators to prove manipulation in markets for commodities such as oil, wheat and natural gas under the financial overhaul signed by President Barack Obama. Read more here-http://www.bloomberg.com/news/2010-07-19/commodity-manipulation-may-be-easier-to-prove-with-u-s-financial-overhaul.html

-Ted Butler: When, not if. Today, President Obama signed into law the historic Financial Regulatory Reform legislation package. I reviewed this in “A Done Deal” a few days ago, so I won’t restate my position here. I’m putting this short missive out to bring your attention to a new video put out by Commissioner Bart Chilton on the same issue. Watch video here-http://www.cftc.gov/files/oirm/video/cftc_023455.wmv Read more here-http://news.silverseek.com/SilverSeek/1279732290.php and http://www.gata.org/node/8846

-On King World News, Butler is bullish for precious metals in short term. Silver market analyst Ted Butler tells Eric King of King World News that he’s bullish on the precious metals in the short term now that the technical funds in the futures market have been nearly cleaned out by the big commercial traders.

Butler is also encouraged by the financial regulation legislation just passed by Congress, which requires the U.S. Commodity Futures Trading Commission to establish position limits in futures trading in gold and silver. Listen here-http://www.gata.org/node/8836

-Gene Arensberg: Metals in backwardation but a little more slippage likely. Read more here-http://www.gata.org/node/8839

-The Coming Silver Supernova. Few investment opportunities arise in our lifetime like silver. The stage is set for a silver price percentage gain of extraordinary magnitude! Forget the popular refrain of “Got Gold?” and make some additions to your portfolio to take advantage of the coming silver supernova!

Diminishing Supply: Increasing Demand, Massive Short Position Exists, and underground Silver Is Limited and Will Become Much More Expensive to Mine, The Result: The Price of Silver Can Only Increase Dramatically! The stage is set for a silver price percentage gain of extraordinary magnitude! It is time to embrace the new refrain “Got silver?” Read more here-http://news.silverseek.com/SilverSeek/1279818424.php

-Why the silver price looks set to surge. Read more here-http://www.moneyweek.com/investments/precious-metals-and-gems/resurgent-silver-prices-02902.aspx

-Scotiabank gives long abuse to cancer victim trying to reclaim her silver. The difficult attempt of a cancer-stricken Toronto woman to exchange her Scotiabank silver certificates for real metal, witnessed last week by a writer for the Globe and Mail, whose account of the matter is appended, recalls the difficult attempt of Harvey and Lenny Organ to do the same thing with the same bank.

The bank’s mistreatment of the Toronto woman is so outrageous that perhaps some of those who were skeptics of the Organs’ story will begin to wonder if there isn’t after all really a bullion banking policy to discourage buyers from taking possession of their metal precisely because the banks are selling far more claims to metal than they have actual metal. Chris Powell-GATA-Read more here-http://www.gata.org/node/8837

-If you want to know why Scotiabank abused that cancer-stricken silver depositor. Read more here-http://www.gata.org/node/8841

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Charts of the week: U.S. dollar and inflation. Read more here-http://dshort.com/inflation/inflation-since-1872.html?decline-in-purchasing-power-of-dollar-since-1871 and http://dshort.com/inflation/inflation-since-1872.html?inflation-linear and http://dshort.com/inflation/inflation-since-1872.html?alternate-inflation-1872-present

-”If you’ll not settle for anything less than your best, you will be amazed at what you can accomplish in your lives.” Vince Lombardi-Bio here-http://en.wikipedia.org/wiki/Vince_Lombardi

-”Nobody who ever gave his best regretted it.” George Halas-Bio here-http://en.wikipedia.org/wiki/George_Halas

-”Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.” Thomas Jefferson-Bio here-http://en.wikipedia.org/wiki/Thomas_Jefferson

-In periods where “black swans” are no singular occurrences, but are practically coming in flocks, the status of gold as a safe haven has yet again proven its worth. Nassim Nicholas Taleb

-I am often asked when it will be time to buy real estate again. An old adage says, “Never try to catch a falling safe.” The Wall Street variation is “never try to catch a falling knife.” Real estate is still in decline, and there is still a huge overhang of foreclosed and unsold properties.

Until these have been worked through and the market has rebalanced itself, residential and commercial real estate will not bottom out. Inflation hedges only make sense if they have an upside. At these prices, the upside is a long ways away, if not non-existent. Howard Ruff-Read more here-http://www.kitco.com/ind/Ruff/ruff_jul192010.html

-Federal Reserve Chairman Ben Bernanke warned Congress Wednesday that the economic outlook remains “unusually uncertain.” Read more here-http://www.bloomberg.com/news/2010-07-21/bernanke-says-fed-is-prepared-to-act-as-needed-to-aid-u-s-economic-growth.html and http://money.cnn.com/2010/07/21/news/economy/bernanke_testimony/index.htm

-Recessions in U.S. May Be More Frequent, Severe, Credit Suisse’s Soss Says. Read more here-http://www.bloomberg.com/news/2010-07-21/recessions-in-u-s-may-be-more-frequent-severe-credit-suisse-s-soss-says.html

-John Malone gave a little-noticed interview to The Wall Street Journal from Allen & Co.’s annual Sun Valley conference. Asked about the biggest risks to Liberty, his media conglomerate, Mr. Malone said his concern was this country’s survival. “We have a retreat that’s right on the Quebec border. We own 18 miles on the border, so we can cross. Anytime we want to, we can get away.”

His wife is more concerned: She’s already moved her personal cash to Australia and Canada. “She wants to have a place to go,” said Mr. Malone, No. 400 on this year’s Forbes list of the richest people in the world, “if things blow up here.” Read more here-http://www.observer.com/2010/wall-street/new-doom

-But we still have to ask the question: if things are as bright as the bulls would have us believe, then why is the IMF seeing another $250bln in additional commitments? David Rosenberg-Gluskin/Sheff

-We’re in a struggle between inflation and deflation right now. We may never get to a negative consumer price index, but the danger is a drop in asset prices and the destruction of credit. It means corporate bonds defaulting because companies aren’t getting enough business and they can’t pay off their debts. It means foreign governments defaulting.

It’s individuals with mortgages who can’t get out from under their 16 tons of debt. The economy can’t recover, and unemployment stays high. Stocks would be in trouble because some companies would be going bankrupt while others couldn’t get the credit they need to grow. Bill Gross-Read more here-http://money.cnn.com/magazines/moneymag/moneymag_archive/2010/08/01/105959264/index.htm

-Faber Sees Fed Introducing `Massive’ Quantitative Easing. Watch video here-http://www.bloomberg.com/news/2010-07-16/faber-sees-fed-introducing-massive-quantitative-easing-video.html

-Bank of Canada Forecast Includes `Gradual’ Rate Rises to Curb Inflation. Read more here-http://www.bloomberg.com/news/2010-07-22/bank-of-canada-forecast-includes-gradual-rate-rises-to-curb-inflation.html and http://www.bloomberg.com/news/2010-07-20/canada-raises-lending-rate-will-weigh-future-moves-against-slower-growth.html

-Bank of Canada Raises Benchmark Interest Rate to 0.75%. Read more here-http://www.bloomberg.com/news/2010-07-20/bank-of-canada-raises-benchmark-interest-rate-to-0-75-text-of-statement-.html

-Ireland Credit Rating Cut by Moody’s on Debt Outlook. Read more here-http://www.bloomberg.com/news/2010-07-19/moody-s-downgrades-ireland-s-government-bond-rating-to-aa2-stable-outlook.html

-Hugh Hendry: “If There Was A Way To Short Obama, I Would”. Read more here-http://www.nytimes.com/2010/07/20/business/global/20hedge.html?_r=2&src=twt&twt=nytimes

-Poll: Faith in Social Security system tanking. Read more here-http://www.usatoday.com/news/washington/2010-07-20-1Asocialsecurity20_ST_N.htm

-A Quiet Axis Forms Against Iran in the Middle East. Read more here-http://www.spiegel.de/international/world/0,1518,706445,00.html

-Facebook Passes 500 Million User Milestone, CEO Says. Read more here-http://www.bloomberg.com/news/2010-07-21/facebook-passes-500-million-user-milestone-ceo-says.html

-10 products to never buy generic. Read more here-http://www.walletpop.com/blog/2010/07/19/10-products-to-never-buy-generic/

-10 Company Perks That Will Make You Insanely Jealous. Read more here-http://www.businessinsider.com/10-company-perks-that-will-make-you-insanely-jealous-2010-7#sc-johnson-concierge-1

-The 10 Most Expensive Cities In The World. Read more here-http://www.businessinsider.com/the-ten-most-expensive-cities-to-live-in-the-world-2010-7#10-copenhagen-denmark-1

-Computers to translate world’s ‘lost’ languages after program deciphers ancient text. Read more here-http://www.dailymail.co.uk/sciencetech/article-1296214/Computer-program-translates-ancient-language.html

-Buffett Auctions Autographed Ice-Cream Spoon to Aid Children’s Hospitals. Read more here-http://www.bloomberg.com/news/2010-07-21/buffett-auctions-autographed-ice-cream-spoon-to-aid-children-s-hospitals.html

-Manchester United, Tiger Woods Top Forbes Lists of the Richest in Sports. Read more here-http://www.bloomberg.com/news/2010-07-21/manchester-united-tiger-woods-are-atop-forbes-lists-of-richest-in-sports.html

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

-While global rough diamond output will be higher this year than in 2009, supply constraints will lead to a “significant” shortfall over the next three to five years as the largest mines are depleted, the company said. Bloomberg-Read more here-http://www.bloomberg.com/news/2010-07-20/diamond-market-recovers-on-economic-growth-higher-u-s-demand-petra-says.html

-Duke of Windsor’s Jewel Gifts to Bride May Sell for $5 Million. Read more here-http://www.bloomberg.com/news/2010-07-22/duke-of-windsor-s-jewel-gifts-to-bride-may-fetch-5-million-at-sotheby-s.html

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

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

-Richard Russell on Diamonds. When I first suggested (many years ago) that my subscribers buy top quality diamonds, it was a time when nobody wanted diamonds. I was told repeatedly that you “buy diamonds at retail and sell them at wholesale.” besides, I was told that “new diamond mines are opening all over the world.”

Further, it was said that the price of diamonds had done nothing for the last decade, and what could change? Well alot has changed. Diamonds are now sizzling in price. Chinese and Indian women adore them. And the Russian covet them. Currently there’s a scarcity of large, good quality stones. Most American jewellers have never seen anything like it.

Nobody wants to sell their inventory of diamonds. Today any good quality stone over 8 carats will bring a price of mover a million dollars. I understand that dealers are calling retailers and asking them if they have any stones that they don’t want to can’t sell.

The Hong Kong market is now the hot market for diamonds. Today the only way a diamond dealer can make a real profit is if he is lucky enough to find an uninformed private party who is ready to sell “mom’s old wedding ring.” Why do you think you are seeing all those big ads for “We want your diamonds and we’ll pay top prices for your jewellery? Read more here-http://www.321gold.com/editorials/russell/russell071310.html

DEBT CRISIS

-17 Charts That Show The World’s Sovereign Debt Fate. Read more here-http://www.businessinsider.com/19-charts-that-show-the-worlds-sovereign-debt-fate-2010-7#we-all-know-the-story-of-the-pigs-gips-to-morgan-stanley-1

-US financial system support up $700 bln in past year-watchdog. Increased housing commitments swelled U.S. taxpayers’ total support for the financial system by $700 billion in the past year to around $3.7 trillion, a government watchdog said on Wednesday. Read more here-http://www.reuters.com/article/idUSN2010140720100721 and http://money.cnn.com/2010/07/21/news/economy/TARP_report/index.htm

-The U.S. Federal Reserve’s balance sheet rose in the latest week on an increase of its holdings of mortgage-backed securities, Fed data released on Thursday showed. The balance sheet a broad gauge of Fed lending to the financial system rose to $2.324 trillion in the week ended July 14 from $2.314 trillion the previous week.

They reached a record $2.333 trillion on May 19 on rising ownership of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and the Government National Mortgage Association (Ginnie Mae). The central bank’s holding of housing agency MBS grew to 1.129 trillion on Wednesday, up from $1.118 trillion a week earlier.

The Fed had committed to buy up $1.25 trillion in MBS and $175 billion in bonds issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank System. Read more here-http://www.reuters.com/article/idUSTRE66E6C120100715-

-UK deficit fears reappear as debts hits £927bn. Plans to cut Britain’s mountainous national debt have been given fresh urgency by new figures showing that the state of the public finances is even worse than feared. Read more here-http://www.telegraph.co.uk/finance/economics/7901306/UK-deficit-fears-reappear-as-debts-hits-927bn.html

-John Mauldin: The Debt Supercycle. Read more here-http://news.goldseek.com/MillenniumWaveAdvisors/1279490063.php

U.S. ECONOMIC CRISIS

-Comparisons to the Great Depression keep popping up. Read more here-http://www.usatoday.com/money/markets/2010-07-19-1930smarket19_CV_N.htm

-The Fed Charts That Show The True Nightmare Of Our Economy. Chairman of the Federal Reserve Ben Bernanke spoke to members of the Senate today on the reality of our economy. He denied being “out of bullets,” but the reality is that he is facing up to an extraordinary combination of deflation, unemployment, and sovereign debt woe. Read more here-http://www.businessinsider.com/the-fed-charts-that-show-the-true-nightmare-of-our-economy-2010-7#mortgage-delinquencies-remain-high-1

-Rosenberg: Still Not Convinced? Here’s 13 More Signs The Recovery Has Hit The Skids. Read more here-http://www.businessinsider.com/rosenberg-13-more-signs-the-recovery-has-hit-the-skids-2010-7#bank-credit-contracted-at-a-7-annual-rate-1

-Consumer Metrics Institute: In about 20 days the 2010 slowdown could be more severe on a day-to-day basis than the 2008 ‘Great Recession’. Read more here-http://www.economicpolicyjournal.com/2010/07/consumer-metrics-if-things-continue-in.html

-Consumer sentiment sinks to lowest in 11 months. Read more here-http://news.yahoo.com/s/nm/20100716/bs_nm/us_usa_economy_sentiment

-Stores push summertime ‘Christmas’ sales. Retailers are pumping still more energy this year into trying to get shoppers to loosen their purse strings early for Christmas with sparkly ornaments, holiday music and special prices. In July. Read more here-http://news.yahoo.com/s/ap/20100719/ap_on_bi_ge/us_christmas_in_july

-Buffett warns Obama U.S. economy only halfway back. Read more here-http://www.reuters.com/article/idUSTRE66E7AB20100715?feedType=RSS&feedName=topNews

U.S. JOBS

-Chart of the week: Nevada Is The New King Of Unemployment. The chart below from Calculated Risk, points to what are some shocking realities for states breaking unemployment records and a reshaping of the worst hit parts of the country.

Now Nevada is number 1 for unemployment, rather than Michigan, which held the title for four years until May 2010. Rhode Island, Georgia, and Connecticut are notably close to their records. Read more here-http://www.businessinsider.com/chart-of-the-day-state-unemployment-rates-2010-7

Source: chartoftheday.com

-Unemployment Rate Declines in 40 States Even As Economy Double Dips, Nevada Worst State Again. Read more here-http://www.zerohedge.com/article/unemployment-rate-declines-40-states-even-economy-double-dips-nevada-worst-state-again

-Payrolls Fall in 27 U.S. States, Led by California. Payrolls decreased in 27 U.S. states in June, led by California and New York, signalling the slowdown in hiring is broad-based. Employers in California cut staff by 27,600 workers last month and those in New York reduced employment by 22,500, the Labour Department said today in Washington. Tennessee, Arizona and New Mexico rounded out the five states with the biggest job losses. Read more here-http://www.bloomberg.com/news/2010-07-20/payrolls-decline-in-27-u-s-states-signaling-broad-based-hiring-slowdown.html

-Jobless Claims in U.S. Increase More Than Economists Forecast to 464,000. Read more here-http://www.bloomberg.com/news/2010-07-22/unemployment-claims-in-u-s-increase-more-than-forecast-to-464-000.html

-Congress Extends $34 Billion Jobless Benefits Package. Read more here-http://www.bloomberg.com/news/2010-07-22/congress-set-to-approve-extension-of-unemployment-benefits-for-millions.html

-US Economy Will Return To December 2007 Employment Levels in 2021. Read more here-http://www.zerohedge.com/article/us-economy-will-return-december-2007-employment-levels-2021

BANKING CRISIS

-U.S. bank failures hit 96. Read more here-http://www.bloomberg.com/news/2010-07-17/investor-group-led-by-former-bank-of-america-executive-buys-three-lenders.html

-Regulators list 40 North Carolina banks as ‘troubled.’ Nearly half of North Carolina’s 86 state-chartered banks are on N.C. regulators’ list of troubled institutions, up 74 percent in less than a year and a grim record that underscores the strain of the multiyear downturn.

The tally of 40 troubled banks compares with 23 in October 2009. Typically, there are only two or three on the list. Regulators are legally barred from disclosing individual bank names or ratings. Doing so could risk a “run” on deposits, which could prevent banks from working through problems.

However, banks where conditions have deteriorated significantly are made public. In North Carolina, there are seven of those, according to state and federal regulators’ records. Read more here-http://www.charlotteobserver.com/2010/07/19/1569384/regulators-list-40-nc-banks-as.html

-Bailed-out small US banks face takeover risk panel. Smaller banks that got U.S. government bailout money are likely to run into trouble repaying it and may become vulnerable to takeovers as a result, a congressional watchdog agency warned on Wednesday.

In its latest critique of the Treasury Department’s handling of the Troubled Asset Relief Program, or TARP, the Congressional Oversight Panel said smaller banks face far more difficulty than their big Wall Street counterparts in exiting the bailout program. Read more here-http://www.reuters.com/article/idUSN1412464020100714

-David Cameron Raids Dormant U.K. Accounts as Minister Attacks Banks. Read more here-http://www.bloomberg.com/news/2010-07-18/cameron-raids-dormant-u-k-accounts-while-minister-attacks-rip-off-banks.html

-British banks face £390bn ‘funding gap’. British banks face a funding crunch next year as they attempt to refinance debt amounting to double the amount they raised on average during the years of the credit boom. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7901326/British-banks-face-390bn-funding-gap.html

-The crisis affecting Europe is nothing new. It goes back three years and the beginning of the credit crisis, 60% of the subprime CDOs, collateralized debt obligations, had been sold to European institutions. These were the mortgage bonds, which contained a variety of toxic waste, which the rating agencies, S&P, Moody’s and Fitch, in collusion with banks and brokerage houses, had sold as AAA bonds, when in fact their ratings should have been considerably lower.

The holders of these bonds in many instances became insolvent and had to be bailed out by capital injections from central banks, most of the funds were lent by the Federal Reserve. These debt problems, as in the US, have never been resolved. Those companies and institutions have over the past three years been allowed to keep two sets of books. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1279473600.php and http://news.goldseek.com/InternationalForecaster/1279725447.php

OIL-WE HAVE KILLED THE GULF

-Matthew Simmons: “We’ve Now Killed The Gulf Of Mexico”. Matthew Simmons has been saying the spill is worse than anyone admits for weeks, and he hasn’t been wrong yet. Today he tells Bloomberg we’ve now killed the Gulf of Mexico. Simmons says the leak is much bigger than the cameras show thanks to a big gushing hole around ten miles from the sunken rig:

“What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…and 120,000 minimum of toxic poison has now covered the floor of the Gulf of Mexico. So what they’re talking about is the biggest environmental cover-up ever.

And they knew that that well, that riser, would finally deplete. And then they could say it’s over. And unfortunately, we now have killed the Gulf of Mexico.” Oil could decimate aquatic life by depleting oxygen and poisoning the food chain. This would also kill the $2.2 trillion Gulf economy. Read more here-http://www.businessinsider.com/matthew-simmons-we-now-have-killed-the-gulf-of-mexico-2010-7

-China Passes U.S. as World’s Biggest Energy Consumer, IEA Says. Read more here-http://www.bloomberg.com/news/2010-07-19/china-passes-u-s-as-biggest-energy-consumer-as-oil-imports-jump-iea-says.html

STOCK MARKET

-The latest Shiller P/E ratio continues to point to a market that is overvalued. At the most current reading of 20.1x, the S&P 500 is 23% overvalued (relative to the long-term average), up slightly from the 21% overvalued reading in June.

In fact, on this basis, July marks the ninth consecutive month that the S&P 500 has been overvalued by 20% or more. What will it take to get the market back to fair value? For the Shiller P/E to mean revert to the long-term average of 16.4x, we would need to see a sell-off of about 170 points, to 900 on the S&P 500. David Rosenberg-Gluskin/Sheff

-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 (ie, 2002, 2009), when they occur; in secular bull markets, you do not make new lows they are just corrections (ie, 1987, 1990, 1994, 1998). The market is not as cheap as the pundits, who rely on year-ahead EPS estimates, deem it to be.

When one incorporates cyclically-adjusted corporate earnings in ‘real’ terms, equities are still roughly 20% overvalued even after the recent correction. More fundamentally, it would seem reasonable to expect that the equity market will trade down to a valuation level that is historically commensurate with the end of secular bear markets.

This would typically mean no higher than a price-earnings multiple of 10x and at least a 5% dividend yield on the S&P 500. So, we very likely have quite a long way to go on the downside. But it will not be a straight line and there will be intermittent rallies, as we experienced a year ago April; however, not even that 80% bounce off the lows managed to violate any of the long-term trend lines, which continue to portray a primary bear market, not unlike what we endured from 1966 to 1982.

Back then the principal cause was an inflationary spiral; this time it is a deflationary debt deleveraging that is the root cause. Within the next 12 to 18 months, I can see the S&P 500 breaking back below 900, and a substantial test of the March 2009 lows cannot be ruled out. David Rosenberg-Gluskin/Sheff-Read more here-http://www.zerohedge.com/article/qa-david-rosenberg-bearish-outlook

-A Mid-Year Bull vs. Bear Investing Smackdown, David Rosenberg vs. James Paulsen. Read more here-http://online.wsj.com/article/SB127939762798918181.html

-David Rosenberg Explains His Investing Mantra: S.I.R.P. Read more here-http://www.businessinsider.com/david-rosenberg-explains-his-investing-mantra-sirp-2010-7

-Dow May Crash to 7,500 If 10,600 Not Breached. Read more here-http://www.cnbc.com/id/38253735

-Bond Yields Imply The Fair Value Of The S&P Is 750. Read more here-http://www.zerohedge.com/article/bill-miller-says-large-caps-once-lifetime-buying-opportunity-and-he-has-many-them-sell-you

-Charles Nenner: “Long-Term Investors Should Wait Until Dow Hits 5,000″. Read more here-http://www.zerohedge.com/article/charles-nenner-long-term-investors-should-wait-until-dow-hits-5000

-Hussman: Here’s Why The Market Is Not Cheap And You Should Start Saving. Read more here-http://www.businessinsider.com/hussman-heres-why-the-market-is-not-cheap-and-you-should-start-saving-2010-7

-Clive Maund: Don’t get fleeced get rich, stock market crash update. Read more here-http://www.clivemaund.com/article.php?art_id=2309

-You Won’t Understand How Badly Our Stock Market Is Doing Until You Look At These Charts. Read more here-http://www.businessinsider.com/you-cant-fully-appreciate-how-badly-our-stock-market-is-doing-until-you-look-at-these-charts-2010-7?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29

-Equity Analysts Were Nearly 100% Over-Bullish For The Past 25 Years. Read more here-http://www.businessinsider.com/grading-equity-analysts-failed-over-bullish-for-25-years-2010-7

-Will The “Cult Of The Equity” Investor Die? Read more here-http://www.businessinsider.com/cult-of-the-equity-investor-die-2010-7

REAL ESTATE

-Haven’t we learned? We just came off the largest credit bubble-turn-bust experience since the 1930s: one in seven mortgage debtors are either in arrears or already in the foreclosure process, 90 banks have failed so far this year, and 25% of the U.S. household sector has a sub-600 FICO score.

But yet, we see this article in the Wall Street Journal Signs of Risky Lending Emerges in U.S. and are completely dumbfounded. The country is going to fight a debt deleveraging process by enticing the riskiest borrowers to line up at the trough yet again.

Fannie is offering financing to first-time buyers who only have a $1,000 down-payment. Several banks are now offering clients home-equity lines of credit of up to $2.5 million. According to FICO and J.D. Power, 8% of all loans made last quarter by the banks were to borrowers with the weakest credit scores up from 6.2% at the end of last year. Surreal. David Rosenberg-Gluskin/Sheff

-Banks repossessed a record number of U.S. homes in the second quarter, so the headline news of slower foreclosure notices was a bit misleading. The banks took over 269,962 properties, up 5% sequentially and 38% from a year ago (RealtyTrac data).

In a normal year, banks repossess 100,000 homes they are on now track for over a million in 2010! And, more than 3 million homeowners will receive at least one foreclosure notice (oh, but it would be far, far worse without HAMP, right?).

So, the headlines last week read that foreclosure filings were down 7% YoY, but it’s not the change but the continued astronomical levels that is the real story north of 300,000 for sixteen months in a row. It’s an unmitigated disaster. And, the shadow bank inventory will inevitably flow into the market and continue to depress real estate prices likely for years. David Rosenberg-Gluskin/Sheff

-Purchases of U.S. Existing Homes Fell in June. Sales of U.S. previously owned homes fell in June for a second month, adding to evidence the market will slump as the effects of a federal tax credit fade. Read more here-http://www.bloomberg.com/news/2010-07-22/purchases-of-u-s-existing-homes-fall-a-second-month-as-tax-credit-fades.html

-Housing Bubble Leaves $4 Trillion Hangover. The bursting of the U.S. housing bubble has left homeowners buried under about $4 trillion of excess mortgage debt, according to Dhaval Joshi, the chief strategist at RAB Capital.

The Chart of the day compares the total amount of home loans outstanding with the value of residential real estate, as compiled by the Federal Reserve, for the past two decades. The latter is adjusted to reflect the average 40 percent debt to value ratio that prevailed from 1990 to 2005.

Mortgage balances were $3.64 trillion higher than the adjusted figure as of March 31, as shown in the top panel. The actual ratio, which stood at 62 percent at the end of the first quarter, appears in the bottom panel.

To eliminate the excess and bring down the ratio to its historical norm, either house prices would have to surge or home-loan repayments and defaults would have to accelerate, Joshi said today in an interview.

“In either scenario, it would be a disaster,” the strategist said, adding that prices are unlikely to recover any time soon. The U.S. has 4 million more homes than it needs, by his count. Interest rates will have to stay relatively low for “a prolonged period” to revive the housing market, he said.

Joshi raised what he called the “4 trillion dollar question” in a July 9 report. Read more here-http://www.bloomberg.com/news/2010-07-16/housing-bubble-leaves-4-trillion-hangover-chart-of-the-day.html

-U.S. Housing Starts Drop to Lowest Level Since October. Housing starts fell in June to the lowest level in eight months after the expiration of a U.S. government tax incentive caused sales to slump. Read more here-http://www.bloomberg.com/news/2010-07-20/housing-starts-in-u-s-slide-to-lowest-level-since-october-on-sales-slump.html

-Homebuilder Confidence in U.S. Falls to One-Year Low. Read more here-http://www.bloomberg.com/news/2010-07-19/homebuilder-confidence-in-u-s-falls-to-lowest-level-since-april-of-2009.html

-Fannie Subpoenas to Show $30B Bad Mortgages, Rosner Says. Fannie Mae and Freddie Mac’s regulator may identify as much as $30 billion of debt included in mortgage bonds that the companies can force sellers to repurchase, according to Joshua Rosner, an analyst who in 2007 predicted the collapse in the market for the securities. Read more here-http://www.bloomberg.com/news/2010-07-21/fannie-freddie-subpoenas-reveal-30-billion-of-bad-mortgages-rosner-says.html

-Gov’t watchdogs: mortgage program is not working. Bailout watchdogs say Obama mortgage program is failing to help homeowners facing foreclosure. Read more here-http://finance.yahoo.com/news/Bailout-watchdog-calls-apf-1527849934.html?x=0

-Banks Can’t Hold Back Highend Mortgage Foreclosures For Long. Read more here-http://www.businessinsider.com/banks-cant-hold-back-highend-mortgage-repos-for-long-2010-7

-Homeowners Use Room-Renting Site to Dodge Foreclosure. Read more here-http://www.bloomberg.com/news/2010-07-19/u-s-homeowners-use-airbnb-com-s-room-renting-site-to-dodge-foreclosure.html

-Chinese Central Bank Warns Of ‘Relatively Large’ Property Collapse This Year. Read more here-http://www.businessinsider.com/china-property-prices-fall-2010-7

-Poor Chinese Are Throwing Money Into An Inescapable Capital Trap. Read more here-http://www.businessinsider.com/chinese-real-estate-a-capital-trap-2010-7

-Watch out, the great £50bn property unload is about to begin. Banks are ready to purge unwanted commercial property from their balance sheets as part of the normal boom and bust cycle – only this time around the world has changed. Read more here-http://www.telegraph.co.uk/finance/comment/jeremy-warner/7903205/Watch-out-the-great-50bn-property-unload-is-about-to-begin.html

-Lack of Sales Leaves Dubai Property Buyers Guessing on Prices. Read more here-http://www.bloomberg.com/news/2010-07-20/dubai-s-lack-of-home-sales-auctions-leaves-purchasers-guessing-on-prices.html

TOP SECRET AMERICA

-Everyone knows that after 9/11, dealing with the threat of terrorism became priority #1 in Washington. The government ramped up the existing security apparatus and created a giant new bureaucracy on top of that. It’s big business now.

How big? And what do all these people do? And are they effective? The answers have been shrouded in secrecy. Until now. This week, the Washington Post is running the results of a two-year investigation into the subject, in a multi-part series called “Top Secret America.” Among the details uncovered by the Post’s journalists:

Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security, and intelligence in about 10,000 locations across the United States. An estimated 854,000 people hold top-secret security clearances.

Just in Washington and the surrounding area, 33 building complexes for top-secret intelligence work are under construction or have been built since September 2001. Together they equal almost three Pentagons, about 17 million square feet of space.

Analysts who try to make sense of documents and conversations obtained by foreign and domestic spying share their judgments by publishing 50,000 intelligence reports each year a volume so large that many are routinely ignored. Read more here-http://projects.washingtonpost.com/top-secret-america/ and http://www.pbs.org/wgbh/pages/frontline/topsecretamerica/

The Goldbugg Report – July 27, 2010
Posted by Worldwide Precious Metals on Tuesday, July 27, 2010

The Week in Review – July 23, 2010

July 23, 2010

Obama signed the Frank-Dodd bill into law this week. View the video of Commissioner Bart Chilton, from the Commodities and Futures Trading Commission discussing the new law by visiting the following link (the video is in Microsoft’s WMV format, if you have an Apple computer we recommend downloading Windows Media Player for Mac OS or getting the Flip4Mac plugin for QuickTime so that you can view the video): http://www.cftc.gov/files/oirm/video/cftc_023455.wmv.

Commissioner Chilton specifically states, in the video linked above, that the CFTC now has the legal power to establish and enforce position limits on all futures contracts, including gold and silver which are traded on the COMEX. The CFTC now has the power to criminally prosecute anyone found in violation of the law. This should include institutions like JP Morgan Chase and HSBC who are two of the parties responsible for the suppression of gold and silver prices through the use of their massive short sell positions. It should be anticipated that these institutions will increase their level of short covering in order to reduce their short sell positions prior to the establishment of contract limits by the CFTC.

To quote Ted Butler, who has long championed position limits of 1500 contracts in silver, “As to when legitimate position limits in COMEX silver should be enacted, the proper answer is yesterday. That should always be the regulatory response to a crime in progress.” The timing on when legitimate limits will be put in place, and what those limits will be, is now up to the CFTC and we concur with Mr. Butler that the CFTC should be pressed to enforce the new law now. Once the enforcement begins in earnest, JP Morgan and the rest of “Da Boyz” will have to cover their massive short positions in silver or their traders will face steep penalties, perhaps even jail time, under the new law.

On Wednesday, Bernanke began giving testimony on the state of the economy in front of the US Congress. His most memorable phrase from his testimony was that the outlook on the economy was “unusually uncertain”. The stock market subsequently nosedived on this confirmation that the economy is not as rosy as the administration would like for us all to believe. Bernanke continued his testimony on Thursday, stating that the Federal Reserve will try to push borrowing costs even lower if the job market does not improve soon.

Adding pertinence to Bernanke’s comments over employment, new claims for unemployment benefits climbed much higher than expected last week. The US Senate finally passed their vote to extend employment benefits for the long-term unemployed, which will most likely cause a spike in unemployment figures again for next week.

Rating agencies are concerned over legal liability under the new bank reform law. Ford motor company which was the only American auto company that did not require a bailout during the crisis, was due to issue an asset-backed debt offering. Ford has decided not to go ahead with the bond deal, which was backed by auto loans, since it cannot use credit ratings in its offering documents, a legal requirement for the sales to go through. Ford cannot use credit ratings in their offering because companies such as Fitch, Moody’s and Standard & Poor’s will no longer allow bond issuers to list their ratings in public sale documents since the new law makes it easier for investors to sue the rating agencies for assigning unrealistic ratings.

Home loan interest rates fell to fresh 30 year lows, even as sales of previously occupied homes dropped in June. The expectation is that sales will continue to drop, eventually leading to a 10 month supply of homes on the market and depressing housing prices even further.

The criteria for the European “stress tests” for banks leaked out early, much to the chagrin of the officials in charge of the tests. The tests assume no risk of sovereign default, leading many to say that the tests will not reflect the full extent of potential problems in Europe. The euro, which had already been falling against the dollar this week, fell sharply even before the results of the stress tests were published.

European Central Bank president Jean-Claude Trichet called for all industrial countries to cut public spending and raise taxes immediately in order to help boost the fragile recovery. This is directly opposite of the thinking in the US and UK. Both Bernanke and the Bank of England publicly discussed the possibility of further easing policies this week if the recovery continues to falter.

Crude oil approached $80 this week as strong earnings boosted the outlook on the economy. A tropical system appears to be headed into the Gulf of Mexico over the weekend, potentially affecting output for the oil companies in the area which may boost prices over the next week.

Friday to Friday Close

	July. 16th	July. 23rd	Net Change
Gold	$1190.00	$1189.00	(1.00) – 0.08%
Silver	$17.84	$18.14	0.30 + 1.68%
Platinum	$1516.00	$1545.00	29.00 + 1.91%
Palladium	$452.00	$467.00	15.00 + 3.32%

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

	Gold	Silver
Support	1175/1160/1150	17.75/17.50/17.20
Resistance	1200/1220/1225	18.30/18.50/18.75

	Platinum	Palladium
Support	1500/1480/1450	450/430/425
Resistance	1550/1600/1650	475/500/520

Volatility should be expected to continue, perhaps even increase. The new financial reforms law now requires the Commodities and Futures Trading Commission to set position limits on ALL futures contracts which means that JP Morgan Chase and the rest of “Da Boyz” will be out of business as far as their massive and manipulative shorting of the precious metals markets goes. Once the CFTC begins enforcing the new law, the precious metals market will be set free of the manipulation it has suffered under for years. This may mean a drastic increase in prices as uncertainty continues to plague economies worldwide. Earnings season is upon us and despite a wealth of better than expected earnings reports; the stock market continues to yo-yo up and down as uncertainty over the state of the global economic recovery continues to rattle investors. Unintended side-effects of the new financial reform law are already becoming apparent as evidenced by Ford pulling their bond deal because the ratings agencies would not give them ratings to use. If the only American auto company that did not take bailout money can’t get credit, we can expect that the average American will find it even harder to do so until the new law is understood completely, which may take years. Ownership of physical gold and silver should no longer be considered just as a profit potential vehicle but should be considered as an essential portion of one’s asset portfolio as an insurance policy against the potential of a world-wide meltdown in fiat currencies, including the US dollar. 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’ve been commenting on the issue of position limits for months and it now appears that the precious metals markets will soon be set free. Keep your eyes on the news. Precious metals appear poised to be the “safe haven” play for a rattled investor and in a free and un-manipulated market; prices may explode rapidly to the upside. Below you will find the e-mail addresses for members of the CFTC so that you can urge them to move quickly to set the appropriate position limits, (specifically 1500 contracts, as recommended by Ted Butler) immediately, and set the precious metals markets free from any further manipulation.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – July 23, 2010
Posted by Worldwide Precious Metals on Friday, July 23, 2010

The Goldbugg Report – July 20th, 2010

July 20, 2010

-It’s time to preserve your portfolio’s purchasing power. In a world of increasing volatility and uncertainty, precious metals bullion provides tangible, predictable wealth protection for currency-denominated investment portfolios. -Nick Barisheff

-Goldman Sachs sees silver rising by more than 15% in the next 6 months and has raised its 6 month silver forecast to $21.50/oz. Goldcore

-Gold far more desirable than its dollar value. There isn’t enough gold out there for it to be a true means of exchange but it is still the ultimate measure of value in its deeply realistic monetary role. Julian Philips Mineweb

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,300 the silver price would be $16.25

Gold to silver ratio at 70 to 1 with gold at $1,300 the silver price would be $18.57

Gold to silver ratio at 60 to 1 with gold at $1,300 the silver price would be $21.67

Gold to silver ratio at 50 to 1 with gold at $1,300 the silver price would be $26.00

Gold to silver ratio at 40 to 1 with gold at $1,300 the silver price would be $32.50

Gold to silver ratio at 30 to 1 with gold at $1,300 the silver price would be $43.33

Gold to silver ratio at 20 to 1 with gold at $1,300 the silver price would be $65.00

Gold to silver ratio at 15 to 1 with gold at $1,300 the silver price would be $86.67

-Goldman Sachs sees silver rising by more than 15% in the next 6 months and has raised its 6 month silver forecast to $21.50/oz. Goldcore

-Silver will hit $25 during the next 12 months and soar to $100 by 2012. Paul Mladjenovic-Read more here-http://www.kitco.com/ind/Mladjenovic/july152010.html

-Silver ‘robbed of its lustre’. There is evidence to support allegations that the price of silver has been manipulated and suppressed by the large US bullion banks, says precious metals analyst David Levenstein, of Lakeshore Trading.

“These companies continually use the futures markets to create price distortions in the market. At the moment, there is a huge [disparity] between the price and the real market situation,” says Levenstein. Historically, silver’s price moves, in percentage terms, are greater than those of gold.

But, unlike gold, the price of silver is way off its all-time high, when it traded at above $50/oz. The demand for silver has exceeded supply for almost 20 years. But why is the price of this metal so depressed? Levenstein asks.

In 1940, the US government owned almost half the world’s 10billion ounces of silver. Today, it owns none. The only way to bring the supply and demand into balance is going to be higher prices.

Levenstein, who began trading silver in 1979, believes that silver is going to be one of the best investments of the decade. Read more here-http://www.timeslive.co.za/business/article545100.ece/Silver-robbed-of-its-lustre and http://www.gata.org/node/8819

-Staggering Stats About Silver Supply. Read more here-http://news.silverseek.com/SilverSeek/1278997440.php

-Silver The Early Stages of Re-monetisation? Read more here-http://www.moneymorning.com.au/20100715/silver-the-early-stages-of-re-monetisation.html

-Futures positions make gold, silver very bullish again, Butler tells KWN. Listen here-http://www.gata.org/node/8811

-Dr. Jeffrey Lewis: What are the Differences between Investing Silver and Gold? Read more here-http://news.silverseek.com/SilverSeek/1279160285.php

-Dr. Jeffrey Lewis: “Jobless Recovery” is Great for Metals Investors. Read more here-http://news.goldseek.com/GoldSeek/1279174080.php

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

-Betting against gold is the same as betting on governments. He who bets on governments and government money, bets against 6,000 years of recorded human history. Charles de Gaulle

-Gold is headed to $1650 and beyond. All your concerns in retrospect will be seen to have been concerns caused by manufactured noise. Time and time again you have seen this. Time and time again gold will not be stopped. Nothing has changed. Nothing has been rescued. The can that is being kicked daily down the path is going to turn around and bite the kickers. Gold is the only insurance. Jim Sinclair

-A successful and sophisticated investor friend of mine bought more bullion coins yesterday, bought ‘em during the correction. He told me, “I’ll never sell them, I consider them part of my estate. I don’t give a damn what the dollar price or the euro price of gold is. If I own 10,000 ounces of gold (and I intend to) I’ll always be wealthy. And I don’t have to worry about inflation, devaluation or solvency of any counter-parties. Richard Russell-Read more here-http://www.321gold.com/editorials/russell/russell071310.html and http://www.thedailycrux.com/content/5198/Richard_Russell

For the past several years, as currency creation has reached unprecedented levels, gold, silver and platinum have resumed their traditional role as a store of wealth. Over time, purchasing, or adding to, a core holding of physical bullion is a prudent investment strategy.

While a minimum 10 percent allocation is considered adequate under normal conditions, a much larger allocation of 20 percent or more is suggested for protection today. If you have not already done so, now is the time to rethink your investment strategy and preserve your hard-earned wealth with physical bullion. Nick Barisheff-Read more here-http://news.goldseek.com/GoldSeek/1279204500.php

-Chart of the week: Actually, Gold Isn’t Just A Worthless Rock. Yesterday, money manager and writer James Altucher wrote a column slamming gold, arguing that ultimately it was just a worthless rock. And to back it up, he cited various periods when gold didn’t return that much.

The folks at MF Mine Fund argue that Altucher cherry picked a period that coincided with the peak of the previous boom, and as such they’ve put together this chart, breaking the time since 1968 down to three periods. As you can see, only in the middle one do equities outperform. The norm over the last 40+ years is for gold to outperform. Read more here-http://www.businessinsider.com/chart-of-the-day-equities-vs-gold-2010-7

Source: chartoftheday.com

-Data from the gold options market shows that smart money believes that gold will go higher in the coming months and that the recent fall in prices may be another correction and consolidation prior to another move up in prices.

Open interest in options which allow holders to buy gold at $2,000 an ounce by December 2011 has surged a massive 11-fold on the Comex since May 11. Open interest to buy at $1,500/oz by the end of the year has fallen by 33 percent which suggests that gold market participants remain unsure of gold’s short and medium term prospects but confident of higher prices in the long term. Read more here-http://www.bloomberg.com/news/2010-07-14/gold-options-divergence-signals-a-bullish-pause-for-rally-chart-of-day.html

-Harry Schultz on the Power Elite, Free Markets, the Internet and Why Gold Is Going Much Higher. Read more here-http://www.thedailybell.com/1204/Harry-Schultz-on-the-Power-Elite-Free-Markets-the-Internet-and-Why-Gold-Is-Going-Much-Higher.html

-We know that the supply curve of gold is more inelastic now than it has ever been and that the marginal costs of production are rising sharply. We also know that Bernanke is probably going to have to become even more aggressive in terms of expanding the Fed’s balance sheet, which means more monetary creation, at least as far as base money is concerned.

At the same time, demand is rising from many sources take a read of the article Hedge Funds Join the Rush to Stock Up on Gold (this is only a page 15 story in the weekend FT). Also have a look at Big Inflows Into Money Market Funds as Double-Dip Fears Rise (this is a front page story in Saturday’s newspaper) the equity bulls still think that this cash ($3 trillion worth) is going to be diverted to the stock market.

Sorry, but it has left the stock market more and more of this retail cash is finding its way into gold and precious metals, which is why commodity funds have attracted $11 billon of fresh new inflow so far this year. David Rosenberg-Gluskin/Sheff

-Buying Gold in the Summer Sales. Read more here-http://www.321gold.com/editorials/ash/ash071010.html

-Seasonal impact means recent pull backs in gold could be short lived. Despite continued strong demand, gold may trade sideways for a few weeks before the next break to the upside. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107811&sn=Detail&pid=33

-James Turk: Fear Index at 16-year high amid dollar debasement. The Fear Index has risen to a 16-year high. As of June 30th, the Fear Index is 2.35%, based on M3 data made available by shadowstats.com. Here is the formula and calculation for June 30th.

The following chart illustrates the Fear Index at the end of each month since December 1967. It also highlights important low points in the Fear Index and the gold price at those points in time.

There are two important conclusions to be made from the above chart.

1) The Fear Index remains in an uptrend. Given the ongoing uncertainty about bank solvency and sovereign debts that cannot be repaid, there is no reason to assume that the Fear Index is about to reverse course any time soon. It is therefore reasonable to expect that the Fear Index will keep climbing higher. Given the formula above, this result can be achieved in two ways. M3 has to decline and/or the gold price must rise. I expect it will be the latter.

2) Do not be misled by today’s seemingly high price of gold. Even though gold was $1,240 at June 30th and near its record high price, gold remains good value. Note that the Fear Index is still less than the 2.49% low it reached in February 1985. The Fear Index is still less than the 2.60% level marked by the dashed line on the above chart that I have used to delineate exceptionally low levels reached by the Fear Index.

Thus, gold remains good value and should continue to be accumulated. The Fear Index makes clear that gold’s high price is simply a result of the debasement of the dollar, and not that gold has become overvalued. Read more here-http://www.gata.org/node/8823

-Gold keeps rising as panicky investors look for security. Gold price may go beyond record high to top $2,000 an ounce as bullion sales rocket and central banks stock up. Read more here-http://www.guardian.co.uk/business/2010/jul/11/gold-shines-uncertain-market

-Hedge funds look for a golden edge. Not so long ago hedge funds would send their most junior analysts to the seminars that bullion bankers hosted. Gold, for much of the past two decades, was the ultimate dreary asset of interest only to central bankers and miners.

Now those same bankers are struggling to find time in their diaries to fit in many of the hedge fund industry’s biggest players. In mid-town New York funds that employ barely 100 staff are finding themselves with gold holdings larger than those of some developed nations.

The reason for this is simple. Amid fears that the global economy could be heading for a double-dip recession and as financial markets continue to gyrate some hedge managers are becoming increasingly bullish about the precious metal. They are drawn to gold’s traditional status as a store of value in crises.

Paulson & Co. is the largest hedge fund to back gold, but others including Soros Fund Management, Tudor Investment Corp., Greenlight Capital, and Third Point, are now converts. “I have never been a gold bug,” Paul Tudor Jones, founder and chairman of Tudor Investment, wrote last year. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”

The consensus view among the funds is that the price of gold trading at around $1,200 an ounce will rise to well above $1,500 before it suffers any sizeable correction. This expectation of further prices rises (gold has increased four-fold since 2002) is based in part on the view that bullion provides a hedge against a rise in inflation.

“The number of funds who are exposed to gold has increased massively in the last three or four years,” says Philip Klapwijk, executive chairman of GFMS, a precious metals consultancy. In common with other investors, hedge funds are also keen to hold their gold in physical form either as bars in a vault or as an investment in an exchange-traded fund backed by physical assets.

Marcus Grubb, head of investment research at the World Gold Council, an industry-backed body, says the funds are looking to reduce counterparty risk in the event of another crisis: “In the past they might have been happy to just use futures strategy. Now they are looking to have physical investment.”

Many analysts agree that gold is likely to set fresh nominal all-time highs in the coming months. But they also see the weight of investment in the metal as a warning signal. Mr. Klapwijk says the rush to invest in the metal is not irrational.

The motivation is fear about the debasement of paper currencies and of a panic in markets fuelled by any worsening in the eurozone debt crisis. But he also says that gold currently has “elements of a bubble.” Jeffrey Currie, head of commodities research at Goldman Sachs, points to a strong historical inverse relationship between gold prices and real interest rates.

The time to sell, he says, will be when the economy returns to normal. “It’s pretty simple. Just stay long until real rates rise, likely driven by central banks taking liquidity out of the system.”

Paulson & Co. remains optimistic that the trade is not crowded.

In a presentation to potential investors, salesmen from the firm point out that gold ETF holdings amount to $78.3 billion, a fraction of the $2,849 billion held by U.S. money market funds. The implication is that, with massive unconventional monetary easing under way, gold will become the ultimate store of value. Read more here-http://www.gata.org/node/8814 and http://www.ctv.ca/generic/generated/static/business/article1635220.html

-Getting gold for China is world’s top financial problem, Rickards tells KWN. Listen here-http://www.gata.org/node/8827

-Jordan Roy-Byrne: More Clueless Mainstream Commentary on Gold. Read more here-http://www.321gold.com/editorials/roy_byrne/roy_byrne071410.html

-Darryl Robert Schoon: The End-Game and The Illusory Gold Bubble. Read more here-http://www.321gold.com/editorials/schoon/schoon071410.html

-WGC study on holding gold reserve assets: Natalie Dempster World Gold Council. Read more here-http://www.moneyweb.co.za/mw/view/mw/en/page295799?oid=495836&sn=2009+Detail

-Gold ‘biscuits’ selling like hotcakes in Mumbai. With jewellers offering gold accumulation schemes Indian consumers are tuning into gold bars as an investment opportunity and prefer to take delivery of physical gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=107818&sn=Detail&pid=34

-Central Bank structural shift key to gold’s strong performance. While not the only reason for the strong price performance, the shift from net sellers to net buyers has had an impact. And, it is likely to continue to do so. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107967&sn=Detail&pid=33

-CNBC Europe interviews Hinde Capital’s Davies on gold paper risk. Read more here-http://www.gata.org/node/8805

-Hinde Capital CEO Ben Davies speaks with King World News on the nature of money and concludes that the current market bubble isn’t in gold but in paper money, and it’s a bubble about to be pricked. Listen here-http://www.gata.org/node/8822

-Gold fund manager Ben Davies praises GATA in King World News interview. Listen here-http://www.gata.org/node/8809

-BIS Swaps $12.6 Billion for Gold With Banks. The Bank for International Settlements swapped about $12.6 billion for gold with commercial banks in five months through April, more than eight times the amount sold globally by central banks last year.

The information shows the amount of metal related to swaps held by the BIS grew from about zero in November to about 349 metric tons by the end of April. The figures are calculated by subtracting the bank’s own gold holdings, currently at 120 tons, from its total amount held as reported by the International Monetary Fund, the World Gold Council said.

“It demonstrates once again the effectiveness of gold as a reserve asset because even in the midst of a severe liquidity crisis, institutions owning gold were able to make use of it to generate dollars,” said George Milling-Stanley, the producer funded council’s managing director of government affairs. Read more here-http://www.bloomberg.com/news/2010-07-08/bis-swaps-12-6-billion-for-gold-dwarfs-central-bank-sales-chart-of-day.html

-Telegraph notes BIS gold swap mystery, quotes GATA’s Douglas. Read more here-http://www.gata.org/node/8818

-Julian Phillips: BIS swap shows gold is back as money. Read more here-http://www.gata.org/node/8806

-BIS swap transactions show creative use of gold GFMS. GFMS Chairman Philip Klapwijk says the operations validate gold’s centrality to the financial system. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107900&sn=Detail&pid=33

-BIS gold swap best news to hit gold in 30 years. As the reported BIS gold swap transaction effectively represents back door remonetisation of gold, it is extremely positive for the yellow metals future path. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107700&sn=Detail&pid=33

-Reg Howe: BIS swaps seem meant to stretch out paper gold. Read more here-http://www.gata.org/node/8830

-Mike Kosares: BIS gold swap signifies a threat to Europe, not to gold. Read more here-http://www.gata.org/node/8825

-FT’s Lex on gold and the BIS: Nothing to see here. Read more here-http://www.gata.org/node/8815

-Gene Arensberg: Huge short covering in gold by large commercials. Read more here-http://www.gata.org/node/8816

-Murray Pollitt: Investors and fund managers are too distant from their money. Read more here-http://www.gata.org/node/8824

-Tinfoil hats are earned just by questioning central banks. Read more here-http://www.gata.org/node/8821

-Adrian Douglas: Price suppression follows inevitably from fractional reserve gold banking. Read more here-http://www.gata.org/node/8820

-Jeff Nielson: How the banksters serve the gold buyers. Read more here-http://www.gata.org/node/8808

-Is gold price manipulation becoming a respectable topic? Read more here-http://www.gata.org/node/8810

-Peter Grandich has a $50,000 bet for two gold perma-bears. Read more here-http://www.gata.org/node/8828

-A Modern Day Gold Rush. Businesses try to cash in on surging gold prices by selling prospecting gear, storage and even gold-bar vending machines. Read more here-http://www.businessweek.com/bwdaily/dnflash/content/jul2010/db2010079_208857.htm

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: As the charts below illustrate, we are into an unprecedented period of market volatility as the secular forces of deflation bump against recurring rounds of policy reflation. Twelve years of no return but with massive swings along the way (Chart 1). And, look at Chart 2, which takes this year’s choppy pattern into focus six whippy rallies and selloffs, and again, no return. Very frustrating for the bulls and the bears. David Rosenberg-Gluskin/Sheff

-Goldman Sachs Group Inc. agreed to pay $550 million and change its business practices to settle U.S. regulatory claims it misled investors in collateralized debt obligations linked to subprime mortgages. Read more here-http://www.bloomberg.com/news/2010-07-15/goldman-sachs-to-pay-record-550-million-to-settle-sec-subprime-fraud-suit.html

-Historian warns of sudden collapse of American ‘empire’. Harvard professor and prolific author Niall Ferguson opened the 2010 Aspen Ideas Festival Monday with a stark warning about the increasing prospect of the American “empire” suddenly collapsing due to the country’s rising debt level.

“I think this is a problem that is going to go live really soon,” Ferguson said. “In that sense, I mean within the next two years. Because the whole thing, fiscally and other ways, is very near the edge of chaos. And we’ve seen already in Greece what happens when the bond market loses faith in your fiscal policy.”

Ferguson said empires such as the former Soviet Union and the Roman empire can collapse quite quickly and the tipping point is often when the cost of servicing an empire’s debt is larger than the cost of its defense budget. “That has not been the case I think at any point in U.S. history,” Ferguson said. “It will be the case in the next five years.” Read more here-http://www.aspendailynews.com/section/home/141349

-Chinese rating agency strips Western nations of AAA status. China’s leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West. Read more here-http://www.telegraph.co.uk/finance/china-business/7886077/Chinese-rating-agency-strips-Western-nations-of-AAA-status.html

-Portugal had its credit rating cut two levels to A1 at Moody’s Investors Service on prospects for weak economic growth and a growing debt burden after the government allowed its budget deficit to balloon. “The Portuguese government’s financial strength will continue to weaken over the medium term,” Moody’s said in a statement today, adding that the outlook is stable.

“The Portuguese economy’s growth prospects are likely to remain relatively weak unless recent structural reforms bear fruit over the medium-to-longer term.” Read more here-http://www.bloomberg.com/news/2010-07-13/portugal-downgraded-at-moody-s-on-high-debt-level-for-foreseeable-future-.html

-The Federal Reserve has become more pessimistic about the economy. The Fed’s latest forecast, included in the minutes of the central bank’s June 23 meeting released Wednesday, is the latest sign of growing concern that the recovery is losing steam. Read more here-http://money.cnn.com/2010/07/14/news/economy/fed_outlook/index.htm and http://www.bloomberg.com/news/2010-07-14/fed-officials-saw-no-need-for-further-stimulus-trimmed-growth-forecasts.html

-Sales at U.S. Retailers Fell for a Second Month in June. Sales at U.S. retailers dropped in June for a second month, indicating the economic recovery dissipated heading into the second half of 2010. Read more here-http://www.bloomberg.com/news/2010-07-14/sales-at-u-s-retailers-fell-for-a-second-month-in-june.html

-Crude oil will climb to as much as $90 a barrel by the end of this year and $100 in 2011, T. Boone Pickens, the billionaire energy hedge-fund manager, said today. Prices will “move up here pretty quick in the third quarter,” Pickens, chairman of Dallas-based BP Capital LLC, said today in an interview on Bloomberg Radio with Tom Keene.

Pickens said he expects oil in the range of $85 to $90 a barrel by the end of 2010 and $95 to $100 a barrel in 2011. Read more here-http://www.bloomberg.com/news/2010-07-14/crude-oil-futures-fall-from-two-week-high-as-supplies-climb-equities-drop.html

-Shadowstats’ John Williams Exposes The Media’s Propaganda Spin, Or Why Watching CNBC Can Be Hazardous To Your Wealth. Read more here-http://www.zerohedge.com/article/shadowstats-john-williams-exposes-medias-propaganda-spin-watching-cnbc-can-be-hazardous-your

-Iran War Even Closer? Read more here-http://www.thedailybell.com/1210/Iran-War-Even-Closer.html

-Obama Meets With Warren Buffett to Discuss Economic Growth, Job Creation. Read more here-http://www.bloomberg.com/news/2010-07-14/obama-meets-with-warren-buffett-to-discuss-economic-growth-job-creation.html and http://money.cnn.com/2010/07/14/news/economy/obama_buffett_meeting/index.htm

-Obscure book by British adviser becomes cult hit after Warren Buffett tip. An obscure book about the collapse of the German economy in the 1920s has become cult reading among leading financiers, after a tip from billionaire investor Warren Buffett. Read more here-http://www.telegraph.co.uk/finance/financetopics/recession/7883931/Obscure-book-by-British-adviser-becomes-cult-hit-after-Warren-Buffett-tip.html

-Americans in 70% Majority See More Jobless as Deficit Widens. More than 7 out of 10 in the U.S. say the economy is mired in recession, and the country is conflicted over how to balance concerns over joblessness and the federal budget deficit, according to a Bloomberg National Poll. Read more here-http://www.bloomberg.com/news/2010-07-13/americans-in-70-majority-see-frozen-unemployment-as-budget-deficit-widens.html

-Many early baby boomers may have a hard time making ends meet in retirement, according to a new study. The Employee Benefit Research Institute estimates that 47% of boomers between the ages of 56 and 62 are likely to run shy of the cash they’ll need to pay for basic expenses and uninsured health costs in retirement. Read more here-http://money.cnn.com/2010/07/14/retirement/boomers_retirement_savings/index.htm

WWW.RARECOLOREDDIAMONDS.COM

DEBT-DEFICIT CRISIS

-The debt crisis remains unresolved. In the third quarter of 2007, total U.S. credit market debt as a percentage of GDP rang in at 344%. At the end of the first quarter of 2010 it totalled 357%.

You can also see the global nature of the problem in the following chart showing just government debt as a percentage of GDP (and ignoring unfunded liabilities, such as Social Security and Medicare). Most notably, the world’s two largest economies, the U.S. and Japan, are both well into the red with Japan, especially, at clear and present risk. Read more here-http://www.caseyresearch.com/displayCdd.php?id=483

-June Budget Deficit in U.S. Narrowed to $68.4 Billion. The U.S. government posted a smaller budget deficit in June compared with the same month last year as the economic recovery brought in more tax revenue.

The excess of spending over receipts fell to $68.4 billion last month from $94.3 billion in June 2009, according to a Treasury Department report issued today in Washington. It was the 21st consecutive shortfall. For the fiscal year to date, the budget deficit totaled $1 trillion compared with $1.42 trillion during the prior year to date.

Even as the economy recovers from the deepest recession since the 1930s, the budget deficit is forecast to reach a record $1.6 trillion this fiscal year as the government funds efforts to revive growth and employment. The mounting shortfalls underscore the challenge facing the Obama administration. Read more here-http://www.bloomberg.com/news/2010-07-13/u-s-budget-deficit-narrowed-to-68-4-billion-in-june-on-higher-tax-income.html

-June Federal Budget Deficit Comes At ($68.4) Billion, $1 Trillion+ In Deficit Raked Up For First Nine Months. Read more here-http://www.zerohedge.com/article/june-federal-budget-deficit-comes-684-billion-expectations-69-billion-previous-93-billion

-June Deficit Fails To Account For $142 Billion In Excess June Borrowings; U.S. Has Issued $1.5 Trillion Excess Debt Over Budget In Past 4 Years. Read more here-http://www.zerohedge.com/article/june-deficit-fails-account-142-billion-excess-june-borrowings-us-has-issued-15-trillion-exce

-Obama’s debt commission warns of fiscal ‘cancer’. The co-chairmen of President Obama’s debt and deficit commission offered an ominous assessment of the nation’s fiscal future here Sunday, calling current budgetary trends a cancer “that will destroy the country from within” unless checked by tough action in Washington.

The two leaders former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce debate in Congress.

“There are many who hope we fail,” Simpson said at the closing session of the National Governors Association annual meeting. He called the 18-member commission “good people with deep, deep differences” who know the odds of success “are rather harrowing.”

Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in fall 2008, the coming fiscal calamity is staring the country in the face. “This one is as clear as a bell,” he said. “This debt is like a cancer.” Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956_pf.html

-Niall Ferguson: A U.S. Debt Crisis Is On Its Way. Read and watch more here-http://finance.yahoo.com/tech-ticker/niall-ferguson-a-u.s.-debt-crisis-is-on-its-way-518725.html?tickers=tlt,tbt,^dji,^gspc,spy,^ftse&sec=topStories&pos=9&asset=&ccode

-UK debt is ‘twice as much as we thought’. The true scale of the national debt is £2 trillion more than twice the official figure, an alarming study shows. The black hole in the public accounts equates to £78,000 for every household in the country.

The ‘real’ state of the national finances is exposed in a study published today by the Centre for Economics and Business Research, which warns of a series of mammoth debts that aren’t revealed by the official figures.

The national debt forecast to reach £932m by next spring does not include a number of expensive liabilities, such as the cost of civil service and town hall pensions and projects funded under the Public Finance Initiative.

Putting these liabilities into the official figure would add £1.13 trillion to Britain’s whopping overdraft, according to CEBR. Under the worrying scenario, the debt would jump from 62% to 138% of Britain’s income. In its study, CEBR warned that the Government cannot formulate a plan to revive the economy while the liabilities remain hidden. Read more here-http://www.thisismoney.co.uk/news/article.html?in_article_id=508582&in_page_id=2&ito=1565

STOCK MARKET

-Stock Bears Outnumber Bulls for First Time Since April ‘09. Read more here-http://www.bloomberg.com/news/2010-07-14/stock-bears-outnumber-bulls-for-first-time-since-april-09.html

-John Hussman: The Market Is 40% Overvalued. “On a valuation basis, the S&P 500 remains about 40% above historical norms on the basis of normalized earnings. The disparity between our valuation assessment and the putative undervaluation being touted by Wall Street analysts is so great that a few remarks are in order.

First, virtually every assessment that “stocks are cheap” here is based on the ratio of the S&P 500 to year-ahead operating earnings estimates, and often comes with a comparison of the resulting “earnings yield” with the depressed 10-year Treasury yield.

What’s fascinating about this is that this is the same basis on which analysts deemed stocks to be about 40% undervalued just prior to the 2007 top, following which the market plunged by more than half. Read more here-http://www.businessinsider.com/john-hussman-the-market-is-40-overvalued-2010-7

-Rosenberg’s Explanation For Recent Market Surge: Liquidity Pump And Short Covering. Read more here-http://www.zerohedge.com/article/rosenbergs-explanation-recent-market-surge-liquidity-pump-and-short-covering

-’Sell the Rallies’ Before S&P 500 Correction, UBS Says: Technical Analysis. Investors should “sell the rallies” as the Standard & Poor’s 500 Index will soon enter a strong correction, according to technical analysts at UBS AG. The U.S. benchmark index will fall to between 944 and 1,000 at the end of the third quarter, UBS analysts Michael Riesner and Marc Mueller wrote in a note dated yesterday.

“Although the rally is going higher than initially thought, our negative medium-term view is unchanged and we would use strength to sell instead of chasing the market on the upside,” Zurich-based Riesner said in a phone interview today. “In the very short-term the sharp rally of the last six sessions shows that the market is getting increasingly overbought.” Read more here-http://www.bloomberg.com/news/2010-07-14/-sell-the-rallies-before-s-p-500-correction-ubs-says-technical-analysis.html

-Computerized stock trading leaves investors vulnerable. The time it takes to read this sentence is all it takes for nearly 2 million stock trades to flash through the stock market. Most of those trades aren’t coming from trigger-happy day traders and mutual fund managers with billions of dollars at their disposal.

It’s a flood of machine gun speed fury coming from an army of computers programmed to obey complicated algorithms that are hyperactively buying and selling. What does that mean to you, the individual investor? The next time you buy or sell a stock, forget the quaint idea that there is a living, breathing human being on the other side of the transaction. You’re trading with a computer.

Not only are the markets completely computerized, more than half of the market’s volume is churned by computers programmed to spot certain patterns in trading. These machines see stocks not as securities used by companies to raise money, but rather, symbols, numbers and bits that are traded, swapped and exchanged.

And now, traders say, humans are responding to machines rather than the other way around. Increasingly, too, the machines are reacting to each other, trying to second-guess what their next moves might be on how to take advantage of an edge that might be gone in milliseconds. “There are no real buyers or sellers,” says Joe Saluzzi, trader at Themis Trading. “It’s all about the machines.” Read more here-http://www.usatoday.com/money/markets/2010-07-09-wallstreetmachine08_CV_N.htm

-Ellen Brown: How stock brokers became bookies, the insidious transformation of markets into casinos. Read more here-http://www.webofdebt.com/articles/brokers_bookies.php

-Wall Street Fix Seen Ineffectual by Four of Five in U.S. Americans harbour doubts that a financial-regulation bill about to be passed by Congress will do what President Barack Obama says it will: help avoid another crisis and make their finances safer.

Almost four out of five Americans surveyed in a Bloomberg National Poll this month say they have just a little or no confidence that the measure being championed by congressional Democrats will prevent or significantly soften a future crisis. More than three-quarters say they don’t have much or any confidence the proposal will make their savings and financial assets more secure.

A plurality 47 percent says the bill will do more to protect the financial industry than consumers; 38 percent say consumers would benefit more. Read more here-http://www.bloomberg.com/news/2010-07-13/wall-street-fix-from-congress-seen-ineffectual-by-four-out-of-five-in-u-s-.html

BANKING CRISIS

-Crisis Awaits World’s Banks as Trillions Come Due. The sovereign debt crisis would seem to create worry enough for European banks, but there is another gathering threat that has not garnered as much notice: the trillions of dollars in short-term borrowing that institutions around the world must repay or roll over in the next two years.

The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.

Their concern is that banks hungry for refinancing will compete with governments which also must roll over huge sums for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.

“There is a cliff we are racing toward it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”

Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.

U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.

How banks will come up with the money is an open question. With investors worried about government over-indebtedness in Greece, Spain, Ireland and other parts of Europe, many banks have been reluctant or unable to sell bonds, which they typically use to raise money that they lend on to businesses and households. Read more here-http://www.nytimes.com/2010/07/12/business/global/12refinance.html?_r=3&pagewanted=print

-Maryland, New York, Oklahoma Banks Shuttered as Failures This Year Hit 90. Read more here-http://www.bloomberg.com/news/2010-07-10/maryland-new-york-oklahoma-banks-shuttered-as-failures-this-year-hit-90.html

-Bank Profits Depend on Debt-Writedown `Abomination’. Bank of America Corp. and Wall Street firms that notched perfect trading records in the first quarter are now depending on an accounting benefit last used in the depths of the credit crisis to prop up their results.

Bank of America, the biggest U.S. bank by assets, may record a $1 billion second-quarter gain from writing down its debts to their market value, Citigroup Inc. analyst Keith Horowitz estimated in a June 23 report. The boost to earnings, stemming from an accounting rule that allows banks to book profits when the value of their own bonds falls, probably represented a fifth of pretax income, Horowitz wrote. Read more here-http://www.bloomberg.com/news/2010-07-11/bank-earnings-depending-on-debt-writedown-abomination-in-latest-forecast.html

-James Turk: Banks are not lending again. I need to correct an article I wrote last month stating that banks are lending again. Total bank loans have indeed grown as I reported, but not because banks made new loans. Instead, the increase was a result of pure accounting.

On April 1, 2010, the accounting rules for banks changed. Credit previously extended in the form of derivatives booked off bank balance sheets now has to be accounted for on a bank’s balance sheet. Thus, in accordance with rule FAS 166/67, banks brought about $300 billion of assets and liabilities onto their balance sheets in April. This was credit already extended.

So contrary to the conclusion in my previous article, bankers are still sitting on their hands. They are not making new loans, when taking into consideration the bookkeeping change explained above. Bankers are still trying to repair their over-leveraged balance sheets, as we can see in the following chart.

Note too that bank purchases of US government paper continue to taper off. I noted earlier this year I noted how banks were using their depositors’ money to buy US government paper. The pace of those purchases is slowing down. Read more here-http://www.fgmr.com/banks-are-not-lending.html

-Spanish Banks Boost ECB Borrowing 48% to Record 126 Billion Euros in June. Read more here-http://www.bloomberg.com/news/2010-07-14/spanish-banks-boost-ecb-borrowing-48-to-record-126-billion-euros-in-june.html

-Iceland Faces Second Wave of Bank Failures as Loan Ruling Depletes Assets. Read more here-http://www.bloomberg.com/news/2010-07-14/iceland-faces-second-wave-of-bank-failures-as-loan-ruling-depletes-assets.html

-Latest European Stress Test Rumor: 23% Haircut On Greek Debt Held In Trading Books. Read more here-http://www.zerohedge.com/article/latest-stress-test-rumor-23-haircut-greek-debt-held-trading-books

U.S. DOLLAR-INFLATION-DEFLATION-HYPERINFLATION

-Central banks start to abandon the U.S. dollar. There’s mounting evidence that central bankers have little faith in the greenback these days. Can we blame them? Read more here-http://wallstreet.blogs.fortune.cnn.com/2010/07/09/central-banks-start-to-abandon-the-u-s-dollar/

-James Turk: Inflation, not deflation, is the threat to the dollar. GoldMoney founder and GATA consultant James Turk argues that the U.S. dollar has reached its “Havenstein moment,” named for the president of Weimar Germany’s Reichsbank who printed the mark into oblivion.

Inflation, Turk writes, is already raging as measured by oil and other commodity prices, and since the dollar is not restrained by any requirement for redeeming it in precious metals, deflation isn’t even possible. Read more here-http://www.gata.org/node/8804

-King World News: James Turk explains disbelief of chances for deflation. Listen here-http://www.gata.org/node/8812

ERIC SPROTT-WITHER GREEN SHOOTS

-With the summer now upon us, the “Sell in May and Go Away” adage has proven itself true once again. The major market indexes are all turning downward, and while they haven’t dropped enough yet to warrant panic, we certainly want to be positioned properly if this trend continues into the fall.

The market tea leaves are no longer sending mixed signals either most of the new data is decidedly bearish. So what happened to all the ‘green shoots’? What happened to the strong recovery the market rally was promising? Economic data released over the past two weeks have decimated any remaining belief in a lasting economic recovery.

Slowdowns are appearing in the US, Europe, Japan and even China. Auto sales, housing starts, employment, consumer confidence, factory orders, consumer purchase intentions just about every aspect of the economy that can be measured, is showing decided weakness.

At the end of the day, nobody should be surprised by the recent economic data. The stock market rally that began in March ’09 was driven by monetary phenomena rather than anything fundamental, and based on data from CMI for 2010 it appears that we have already entered an economic contraction phase.

The market is now beginning to reflect the fact that the green shoots were actually just the early signs of weeds, and it would suffice to say that virtually all the major world governments have some serious gardening to do.

The recent contractions don’t necessarily mean that we’ll experience a repeat of 2008’s stock market performance in 2010, but it does suggest that investors should question the real fundamentals underlying their investments, lest the market begins to trade on them again. Read more here-http://www.sprott.com/Docs/MarketsataGlance/06_10%20Wither%20Green%20Shoots.pdf and http://www.zerohedge.com/article/sprott-wither-green-shoots

REAL ESTATE

-Taking into count the shadow inventory of foreclosed homes in the U.S., what we have is a two-year backlog of unsold homes. David Rosenberg-Gluskin/Sheff

-U.S. Home Seizures Rise 38% to Record as Banks Process Backlog. A record 269,962 U.S. homes were seized from delinquent owners in the second quarter as lenders set a pace to claim more than 1 million properties by the end of 2010, according to RealtyTrac Inc.

Home seizures climbed 38 percent from a year earlier and 5 percent from the first quarter, the Irvine, California-based data company said today in a statement. More than 1.65 million properties received a foreclosure filing, including notices of default, auction and bank repossession, in the first half. That was up 8 percent from the first six months of 2009.

“Foreclosures haven’t peaked yet,” Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts, said in a telephone interview. Unemployment suggests that bank repossessions may climb for another six to nine months, he said.

Waning consumer confidence and the jobless rate, which was 9.5 percent in June, are holding back a housing recovery. The expiration of a federal tax credit for homebuyers also cut demand, even as average borrowing costs for a 30-year fixed-rate loan set record lows. The rate was 4.57 percent last week, according to McLean, Virginia-based mortgage finance company Freddie Mac.

“It’s not interest rates that will get us out of this, but jobs,” Retsinas said. “New defaults seem to have stabilized, but there’s still a lot of volatility overall.” One in 78 U.S. households received a foreclosure filing in the first half, and filings surpassed 300,000 for the 16th consecutive month in June, RealtyTrac said.

A total of 529,633 homes were seized by lenders the last stage of the foreclosure process in the first half, said Daren Blomquist, the data firm’s marketing manager. Read more here-http://www.bloomberg.com/news/2010-07-15/u-s-home-seizures-rise-38-to-record-as-banks-process-forclosure-backlog.html

-The 15 States With The Most Underwater Mortgages. Read more here- http://www.businessinsider.com/the-15-states-with-the-most-underwater-homes-2010-7

-Pending Home Sales Have Crashed To Record Lows, Prices To Follow. Read more here-http://www.businessinsider.com/pending-home-sales-crash-to-record-lows-prices-to-follow-2010-7

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The Goldbugg Report – July 20th, 2010
Posted by Worldwide Precious Metals on Tuesday, July 20, 2010

The Week in Review – July 16th, 2010

July 16, 2010

What a news filled week! The US Senate gave final approval to the Frank-Dodd bill (commonly referred to as FinReg) on Thursday. Wall Street seemed to view the event as a bit of a relief, despite the fact that over 70% of the country has no idea what is even contained in the controversial bill. The bill will now make its way to Obama’s desk for what is sure to be an elaborate and overly dramatic signing ceremony sometime next week. The “hope and change” phrases Obama is sure to weave into the flowery speech for the auspicious occasion may come back to bite him, however. Many analysts think that banks will simply pass on the additional costs imposed on them by the new bill to the customer, much the same way that the credit card reforms simply caused card companies to raise their fees and lower their credit limits.

The minutes for the Federal Reserve’s June 22-23 meeting were released this week and show that the Fed is concerned over the faltering recovery. The Fed apparently feels that they should be ready to consider additional steps to take to boost the economy if the recovery continues to slow down. Sounds like the Fed is warming up the printing presses again, though it seems that it doesn’t matter how much money they print since the banks aren’t lending it out.

New claims for jobless benefits fell to their lowest level in almost two years last week. The figure was somewhat padded by the fact that some US automakers are keeping their plants open during the annual re-tooling shutdown due to demand for some models, a questionable decision since auto sales declined last month. Continuing to skew the numbers is the fact that many of the unemployed no longer qualify for benefits, and have therefore fallen out of the measurement statistic.

Retail sales fell for the second straight month in June, despite the fast approaching school year. Retailers, who have already resorted to slashing prices to draw customers to their storefronts, are going to be hard pressed to come up with new ways to bring in the battered consumer.

Demand for home loans fell to a 13 year low last week despite near record low mortgage rates under 5%. Refinancing applications were down as well as continued high unemployment and talk of a faltering recovery kept the consumer cautious. The latest saga in the housing crisis is that Homeowner Associations are able to foreclose on homes (and are doing so) faster than the banks that own the mortgages on them! Some homeowners are losing their homes to Homeowner Associations over missed payments totaling less than one month’s worth of their mortgage payment. Such occurrences are helping crush housing prices further in the areas where they are taking place.

Late Thursday the Securities and Exchange Commission and Goldman Sachs announced that they had reached a settlement in the recent fraud case. Both sides are declaring victory: The SEC declared it a win for forcing Goldman to pay a record setting fine of $550 million, Goldman declared it a win due to the fact that they won’t have to actually admit to committing fraud.

Prior to the Goldman news, and an announcement by BP that oil was no longer flowing into the gulf, the stock market had reversed its recent rally on disappointing economic news which seemed to reinforce that the recovery would continue to slow in the second quarter.

Crude oil remains bound in the mid-$70 a barrel range. Progress in the Gulf of Mexico disaster had BP’s shares on the rise again, and two potential storm systems seem to be lending support to prices.

The Euro continued to gain ground on the dollar this week on news that the Sovereign Debt Crisis in the Eurozone seemed to be stabilizing somewhat.

Friday to Friday Close

	July. 9th	July. 16th	Net Change
Gold	$1209.00	$1190.00	(19.00) – 1.57%
Silver	$18.05	$17.84	(0.21) – 1.16%
Platinum	$1530.00	$1516.00	(14.00) – 0.92%
Palladium	$455.00	$452.00	(3.00) – 0.66%

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

	Gold	Silver
Support	1185/1175/1150	17.70/17.50/17.20
Resistance	1220/1230/1250	18.50/18.75/19.00

	Platinum	Palladium
Support	1500/1475/1450	440/425/400
Resistance	1540/1560/1600	475/500/520

Volatility should be expected to continue if not increase. Refer back to our June 17 memo regarding the “Summer Dulldrums” in which we stated that we expected surprises to drastically affect the market this summer, unlike summers past. Obama will sign the Frank-Dodd financial reform bill into law sometime next week and as institutions start ramping up to make the changes that the new law will require of them, things may get crazy. If the final language of the bill stayed the same as it made its way through both sides of Congress, it will say that “The CFTC SHALL set limits on ALL futures contracts.” The word “shall” is key here; it means that the CFTC not only has the power to act to curb the massive manipulation in the precious metals markets, but that they MUST ACT TO DO SO BY LAW. This means that JP Morgan and the rest of “Da Boyz” will be scrambling to unwind their short positions in the metals markets as clearly they are well above any limits that will be established. These banks have already begun the unwinding process of their massive short positions over the last couple of weeks. The methodology they have been employing has been to remove their bids, causing a brief downward turn in the market prices. (This is not selling activity!) When the market prices reach their desired target level, they activate their buying programs as an exit strategy for their short positions. This is known as “short covering”. The result of this activity is a decrease in the massive short sell positions that they hold and should result in upward pressure on prices. What does this mean for you? It means that every single dip should be bought. We’ve been saying that the manipulation in the precious metals markets might soon be coming to an end for months now, and that when it does, prices have the potential of skyrocketing. Over the next few weeks “Da Boyz” may be escalating this activity in order to deplete their massive short sell positions. The astute investor should be poised to take advantage of these intraday lows whenever they might occur as the long-term bull market for precious metals is becoming even more entrenched. 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. Ownership of physical gold and silver should no longer be considered just as a profit potential vehicle but should be considered as an essential portion of one’s asset portfolio as an insurance policy against the potential of a world-wide meltdown in fiat currencies, including the US dollar.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – July 16th, 2010
Posted by Worldwide Precious Metals on Friday, July 16, 2010

The Goldbugg Report – July 13th, 2010

July 13, 2010

-Gold has corrected to the 50-day moving average in recent weeks, which in the past has been a terrific entry point for the past six months, each low has been higher and each high has been higher too. Nice upward channel that is to be respected and to be bought. David Rosenberg-

-The wealthiest people will be those who bought silver today and indeed, while gold’s meteoric rise still has room to run, silver’s run is yet to get started. As such, it certainly appears evident that now is the time to buy all things silver…

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 U.S. turned 234 years old Sunday, and yet over half of the nation’s money supply was created since Helicopter Ben took over the flight controls four years ago. No wonder gold is in a full fledged bull market. The annual output of gold has declined 12% in the past decade while the marginal cost has more than doubled, to $500, according to David Hale.

Moreover, David points out in his recent report that since 1900, more than 80% of the world’s proven reserves have ready been mined. The marginal cost of pressing on Dr. Bernanke’s printing machine is basically zero, and, the prospects of a re-expansion of QE by the Fed as double-dip risks rise with each and every passing data-point are rather high.

Gold has corrected to the 50-day moving average in recent weeks, which in the past has been a terrific entry point for the past six months, each low has been higher and each high has been higher too. Nice upward channel that is to be respected and to be bought. David Rosenberg-Gluskin/Sheff

-Technicals have taken over the gold complex but the charts are still so firm that the price could correct another $50/oz from here and it still would not violate any of the bullish long-term trend lines. Nothing moves in a straight line whether it is in a secular bull market or not (and gold is). One of the current hurtles for gold is that central banks are monetizing their holdings through sales to the BIS (see page C14 of the WSJ on these latest “bank swap” arrangements). David Rosenberg-Gluskin/Sheff

-The gold market continues to digest the news of the 346 tonne gold swap with the BIS. There is a lot of uncertainty regarding the news which has not been confirmed or clarified by the BIS or the IMF. The Wall Street Journal said the swap was made by central banks while another respected financial newspaper said the sale was by commercial banks (see News below).

Speculation is that it was by central banks and may have been by one or a combination of three of the PIGS Portugal, Spain and or Greece. The news may have led to weakness in the gold market Tuesday and Wednesday as it created uncertainty and jittery traders may have sold until clarity is gained.

A central bank or central banks having to resort to swap their best performing monetary asset in order to raise funds is a further sign of the distressed state of the international financial and monetary system. The fact that the central banks swapped the gold rather than sold it is also an indication of their favourable view of gold and a sign that central banks are increasingly unlikely to liquidate gold holdings. Indeed, they look set to become net buyers of gold again in 2010.

While 346 metric tonnes of gold sounds like a lot, it is actually only worth some $13bn at current prices miniscule compared to wholesale money markets and to foreign exchange reserves of creditor nations such as India, Russia and China. The news has created uncertainty which may lead to further short term weakness but it is bullish for gold long term.

The role of gold itself as an important safe haven currency within international currency reserves and within the monetary system is being increasingly appreciated. Indeed it is not beyond the realms of possibility that we may see gold sharply revalued in the coming months (as was done by Roosevelt in the 1930s) in order to stave off a deflationary depression and provide stability to the international monetary system. Goldcore.com

-Gold demand in China, the world’s second-largest consumer, gained in the first half as government measures to cool the property market and falling equities spurred investment demand, the Shanghai Gold Exchange said.

The total volume of gold traded on the exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons, said Song Yuqin, vice general manager at the exchange. Silver turnover soared more than fivefold, Song told a conference in Beijing today.

Gold surged to a record last month as investors sought to protect their wealth against the market turmoil caused by the European sovereign debt crisis, including declining currencies. Song’s remarks add to signs that investors worldwide are boosting holdings of the commodity.

“Gold- and silver-trading volume expanded sharply in the first half of this year because a declining stock market, the government’s efforts to cool the property market and the general volatility in the global financial market have all fueled the investors’ enthusiasm,” Song said. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aHEdob4hSNI8

-China’s big gold rush. Gold has a powerful ally in promoting it: the state. Consider a recent push by the Chinese government for its citizens to buy more gold as an investment. Industrial Commercial Bank of China recently signed an agreement with the World Gold Council to help promote domestic demand for gold through new investment products.

The country is also turning to television advertising to encourage its growing middle class to buy gold as an investment. State owned China Central Television has run spots urging citizens to buy gold, as well as silver, a major shift from only a few years ago when the country imposed strict controls on precious metals purchases for its citizens.

The World Gold Council estimates suggest China could exhaust its known gold mining reserves in six years from now. “This supply trend is only likely to reverse if China, which is still relatively undiscovered in terms of global exploration budgets, were to attract significant capital investment for exploration,” the council said in a recent report.

That would leave China scrambling for more gold imports, once again putting its mark on global commodity demand. In Chinese culture, gold is a symbol of wealth. It is a tradition to give gold as a gift after a baby is born, on birthdays, at Chinese New Year and as part of wedding jewellery. Read more here-http://www.theglobeandmail.com/globe-investor/chinas-big-gold-rush/article1626211/

-China’s gold output this year may gain 5 percent from about 313 metric tons last year, Song Quanli, deputy party sectretary general at China National Gold Group Corp., China largest gold producer, said in an interview today.

“But the output growth cannot keep up with the demand growth so far this year given investors’ enthusiasm for physical gold holdings such as gold bars,” Song said. “Our retail branches reported 30 percent to 40 percent growth in sales in the first half of this year.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ax95PNLzKJKQ

-How does China really view gold? Chinese officials have been making contrasting statements on how it views gold? What is the true picture? Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=107396&sn=Detail&pid=102055

-Russia’s central bank said the value of its gold holdings advanced 2.8 percent last month to $28.2 billion, in an e-mailed statement today. That’s the highest level since Bank Rossii started reporting the value of its gold holdings in 1993. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aEt2AO1CV1u4

-Central Banks Push Up the Gold Price. Read more here-http://www.caseyresearch.com/editorial/3494?ppref=GLD178ED0710A

-Gold may rise to higher than $1,300 an ounce in the second half of this year, GFMS Ltd. Executive Chairman Philip Klapwijk said in slides prepared for delivery at a Beijing conference today.

“Investors will remain the principal driver of prices this year, with a breach of $1,300 in the second half a strong possibility,” he said in the slides. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aTLgCELSAVmI and http://www.miningweekly.com/article/gfms-says-gold-could-still-top-1-300oz-this-year-2010-07-07

-John Embry: U.S. dollar’s collapse inevitable. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2010/MPLID_062510_pg204Emb.pdf

-China seen letting U.S. down gently as it prepares for dollar’s fall. Read more here-http://www.gata.org/node/8797

-All currencies have depreciated against gold and silver this year. Read more here-http://www.gata.org/node/8798

-Gold Better than Currencies. Read more here-http://www.cnbc.com/id/15840232?video=1537611706&play=1

-Gold to Hit $1,350 by Year-End: Expert. Read more here-http://www.cnbc.com/id/38052340

-Peter Grandich’s mid-year market update. Choosing to be heavily overweighed in precious versus base metals has been the right choice for quite some time now and I don’t see any change to that on the horizon. That doesn’t mean avoid base metals but instead have your main focus on the precious gold, silver, platinum and palladium. And within the precious, gold continues to be my favorite.

So not to be a broken clock and rehash over and over the same bullish factors, I invite anyone who isn’t familiar with my reasons to own the yellow stuff to visit the gold and precious metals categories to see what I’ve said in the past. I think I’ve been pretty “spot-on” when it comes to the metals.

Bottomline-I noted last week that with July and August being the two most seasonally-weak months for gold and the current price being quite above its 200-Day M.A., there was risk down to $1,185. I said I would welcome a base-building period and that’s what I think we’ll have for a few weeks. $1,300+ remains my 2010 target and as I already have noted, I don’t envision the end of the mother of all gold bull markets ending until gold has a “2” handle ($2,000+). Read more here-http://www.grandich.com/2010/07/2010-mid-year-update/

-Gold 75% Under owned In 20 Years, Or Exter’s Pyramid For Gen X/Y. Read more here-http://www.zerohedge.com/article/gold-75-underowned-20-years-or-exeters-pyramid-gen-xy

-Gold is not as expensive as it seems. For the past nine months, gold has been trading consistently over $1,000 an ounce. It reached a high of $1,259 on June 18th, up 35% from a year earlier. After adjusting for inflation, today’s heady prices are some way off the 1980s mania. The 2010 yearly average of $1,154 is still 29% below the inflation-adjusted price in 1980 of $1,623. Read more here-http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=7933596&story_id=16531196&fsrc=scn/tw/te/dc/goldrush

-Gold set to shine as dollar flood fuels double-dip recession. Read more here-http://blogs.telegraph.co.uk/finance/ianmcowie/100006809/gold-set-to-shine-as-dollar-flood-fuels-double-dip-recession/

-Jim Rickards: Gold is money and probably manipulated for its deadly power. Read more here-http://www.gata.org/node/8787

-European banks use gold reserves to raise cash. European commercial banks have begun using their holdings of gold to raise cash with the Bank for International Settlements, in a further sign of strains in the money markets on which many rely for funding.

The BIS, the so-called “central banks’ central bank,” took 346 tonnes of gold in exchange for foreign currency in “swap operations” in the financial year to March 31, according to a note in its latest annual report. In a gold swap, one counterparty, in this case a bank, sells its gold to the other, in this case the BIS, with an agreement to buy it back at a later date. Read more here-http://www.gata.org/node/8793

-Mysterious BIS gold swaps are likely a bullion bank bailout. Read more here-http://www.gata.org/node/8803

-Mystery around BIS gold swaps impugns them as market rigging. Read more here-http://www.gata.org/node/8799 and http://www.gata.org/node/8795

-With BIS gold swap, central banks throw the kitchen sink at gold. Read more here-http://www.gata.org/node/8792

-Izabella Kaminska: BIS gold swap intrigue continues. Read more here-http://www.gata.org/node/8802

-BIS gold swaps Bulls and Bears fight out the implications. The gold swaps with the BIS have both bullish and bearish meanings for the price of the metal and some of these are set out below. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107626&sn=Detail&pid=33

-Paulson Hit With $2 Billion In Redemption Requests, Likely Source Of Recent Gold Market Liquidations. Read more here-http://www.zerohedge.com/article/paulson-hit-2-billion-redemption-requests-likely-source-recent-gold-market-liquidations and http://www.businessinsider.com/john-paulson-socked-with-2-billion-in-redemptions-at-the-end-of-june-2010-7

-Got Gold Report: Euro shorts cover, silver lame. Read more here-http://www.gata.org/node/8791

-Jeff Nielson: The seven sins of GLD. Read more here-http://www.gata.org/node/8794

SILVER

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

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

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

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

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

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

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

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

-The price of silver is still stuck in a range between $17.50/oz and $19/oz. It seems to me that each time it trades at the high, selling comes in, and when it hits the lows of this range we see buying. The break above $19/oz seems to have been a false break to the upside.

However, prices at the bottom end of this range offer buying opportunities, and I believe that we will soon the break above the $19/oz. And, once the price has breached $19.50/oz then prices are set to trade towards $21/oz and then $25/oz. David Levenstein-Read more here-http://www.kitco.com/ind/Levenstein/jul072010.html

-Sell Bonds, Buy Precious Metals, Rice as ‘Refuge,’ Rogers Says. Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.

“Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.

The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, said Rogers, who co-founded the Quantum Hedge Fund in 1970. Commodities are good to buy as supply shortages are already developing, the Singapore-based investor said.

Gold prices will rise to more than $2,000 per ounce, said Rogers, without giving a timeframe. “I do own gold,” he said. “Gold has been extremely strong of late, but I’m not rushing out to buy gold. I don’t like to buy things that have been going straight up.”

While gold has been trading at all-time highs, silver remains 60 to 70 percent below its peak and is a better investment, he said. Silver reached an all-time high of $50.35 in New York in 1980. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=amjjFTilt7Bg

-Why the gold rush may not be over. Jim Rogers says buy silver. Read and watch more here-http://money.cnn.com/2010/07/08/markets/gold/index.htm

-Historical Silver: Gold Ratio Suggests Parabolic Top For Silver of Over $100 per Ounce! Approximately 70 respected economists, academics, gold analysts and market commentators (see list below) are of the firm opinion that gold is going to go to at least $2,500 if not as high as $10,000 per ounce (or more) before the parabolic top is reached.

As such, just imagine what is in store for silver given its historical price relationship with gold. We’re looking at an extreme case scenario of a future parabolic top of perhaps as much as $714 per ounce for silver, the ‘poor man’s gold’. Let me explain.

The current price of gold and the price of silver the silver:gold ratio continues to hover around the 67:1 range which is way out of whack with the historical relationship between the two precious metals. It begs the question: “Is now the perfect time to buy silver instead of the much more expensive gold metal?”

It is critical to step away from all the noise and clutter that passes for knowledge and take the time to gain perspective on where the price of gold and silver are in terms of the ‘big picture’, i.e., where they are in their individual performance channels and in respect to their historical relationship with each other over the long, medium and short term and, based on those relationships, how they might perform in the future.

Silver-Silver has proven itself, time and again, to be a safe haven for investors during times of economic uncertainty and, as such, with the current economy in difficulty the silver market has become a flight to quality investment vehicle. The 49% increase in silver in 2009 attests to that in spades (albeit up only 10% in the first 6 months of 2010).

During the last parabolic phase for silver in 1979/80 silver went from a low of $5.94 on January 2nd, 1979 to a close of $49.45 in early January, 1980 which represented an increase of 732.5% in just over one year.

Such a percentage increase from the current price for silver would represent a future parabolic top price of $155. Frankly, such prices seem impossible in practical terms but that is what the numbers tell us.

Silver-Gold Ratio-How both gold and silver perform, in and of themselves, does not tell the complete picture by a long shot, however. More important is the price relationship – the correlation – of one to the other over time which is called the silver-gold ratio.

Based on silver’s historical correlation r-square with gold of approximately 90 – 95% silver’s daily trading action almost always mirrors, and usually amplifies, underlying moves in gold. With significant increases in the price of gold expected over the next few years even greater increases are anticipated in silver’s price movement in the months and years to come because silver is currently seriously undervalued relative to gold as the following historical relationships attests.

Let’s look at the silver-gold ratio from several different perspectives:

-Over the past 125 years the mean silver-gold ratio (i.e. 50% above and 50% below) has been 45.69 ounces of silver to 1 ounce of gold.

-In the last 25 years (since 1985) the mean silver-gold ratio has increased to 66.9:1

-The present silver-gold ratio is range-bound between 63:1 and 70:1 (66.77:1 at the end of June 2010).

-Interestingly, during the build-up to the parabolic blow-off in 1979/80 silver outpaced gold going up 732.5% vs. gold’s 289.3% causing the ratio to drop from 38:1 in January 1979 to 13.99:1 at the parabolic peak for both metals in January,1980.

Summary-History will look back at the artificially high silver to gold ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. This fiat currency experiment will end badly in a currency crisis.

The wealthiest people will be those who bought silver today and indeed, while gold’s meteoric rise still has room to run, silver’s run is yet to get started. As such, it certainly appears evident that now is the time to buy all things silver. Read more here-http://www.kitco.com/ind/Wilson/july062010.html

-The identified new end use sectors that will come to determine the silver balance ahead are reliant on silver’s unique properties, which have been understood and utilised for millennia. Among these unique properties are the fact that silver is the best conductor of all metals, and that its antimicrobial properties offer perhaps excellent protection against infection and diseases.

These properties may see silver gain recognition as the greenest and cleanest of all metals, leaving it best placed to tackle certain important problems that face the world this century, such as improvements in security measures, climate change, health issues, and the aging Western population. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=106740&sn=Detail&pid=102055 Read Fortis silver report here-http://www.virtualmetals.co.uk/pdf/FBNSB0610.pdf

-The U.S. Mint reported 3,001,000 one-ounce bullion 2010 American Silver Eagles were sold during June, up from 2,245,000 sold in June 2009. The Mint also reported 97,000 one-ounce American Eagles gold bullion coins were sold during June 2010, down from 116,000 one-ounce coins during the same period of 2009.

So far this year, the Mint reported total American Eagle Bullion silver sales of 19,044,000 as of July 7th. However, the May 2010 total sales were reported at 3,636,500 one-ounce silver bullion coins. Total sales of the one-ounce silver bullion coins for the entire year of 2009 were a record 28,766,500 ounces. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=107634&sn=Detail&pid=34

-Rethinking the case for investing in silver. Read more here-http://news.silverseek.com/SilverSeek/1278422680.php

-How to Profit From the Gold to Silver Ratio. Read more here-http://goldmoney.com/how-to-profit-from-the-gold-to-silver-ratio.html

-Indian silver imports poised for strong recovery. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=107523&sn=Detail&pid=102055

-Patrick Heller: Massive drain of Comex silver inventories continues. Read more here-http://www.gata.org/node/8788

-Seriously Underpriced Silver. Read more here-http://news.silverseek.com/SilverSeek/1278565440.php

-Jeff Nielson: Inventory fraud increases in silver market. Read more here-http://www.gata.org/node/8786

-Metals smash down was just another paper affair, Butler tells King World News. Listen here-http://www.gata.org/node/8789

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Before the secular bear market in U.S. equities and the secular bull market in precious metals ends, both the Dow and the gold price will be sitting at 5,000. David Rosenberg-Gluskin/Sheff-Read more here-http://www.businessinsider.com/david-rosenberg-is-dow-5000-really-possible-2010-6

-Chart of the week: At gold’s bottom in April 2001, the Dow/Gold ratio (DJIA divided by gold price) was 41.2. It now stands at 7.9 (as of July 2). When gold peaked in January 1980, the Dow/Gold ratio reached “one,” meaning they were both selling for about the same price. To hit that same ratio today, gold will have to go higher and the Dow simultaneously lower.

The fundamental reasons gold will rise are far from over, and a second leg down in the broader markets seems almost locked in at this point. In this context, Doug Casey’s call for a $5,000 gold price doesn’t seem so farfetched. It also coincides with his call for a Greater Depression, an environment not exactly suited for higher stock prices. $5,000 gold = 5,000 Dow. Read more here-http://www.caseyresearch.com/displayCdd.php?id=475

-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

-Be sure to take advantage of the summer’s golden buying opportunities. 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://news.goldseek.com/GoldSeek/1276201069.php

-Note to journalism students. When we celebrate investigative reporting, it’s for issues like war crimes, nursing home scandals or police corruption. It’s not to report that LeBron James has opened a Twitter account. Mitch Albom

-“A man who has committed a mistake and doesn’t correct it is committing another mistake.” Confucius-Bio here-http://en.wikipedia.org/wiki/Confucius

-As noted about a zillion times over the last couple of decades, I believe the vast majority of people who work in the financial industry are heavily tilted in their views to the “always positive” side of things. I truly believe you could toss them off the top of the Empire State Building and all the way down they would say the same thing: “so far so good!” Peter Grandich

-LeBron James, the National Basketball Association’s Most Valuable Player the past two seasons, should sign a short-term contract and plow his wealth into gold and silver to protect himself against hyperinflation, according to the National Inflation Institute.

“If LeBron wants his money to be worth anything he should sign a short-term contract, because the economic picture five years out looks pretty bleak,” says Gerard Adams, the founder and director of the group, in a telephone interview.

“LeBron James has said he wants to become a billionaire, but that will only happen if he takes his current wealth and invests it into gold and silver, in order to protect himself from hyperinflation.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aUYvD6Yv5nFU

-I was on Larry Kudlow’s show yesterday (with one of his bullish buddies I’ll call him Curly, but I think it was Donald Luskin) and I came to the conclusion that the market seems to embody his conviction or lack thereof to paraphrase: “I’ve got one toe in but am ready to take it out any time.” One toe in the market, not all 10, and with no conviction and this is from someone who normally has a bullish bent. David Rosenberg-Gluskin/Sheff

-China’s stock market is down 26% so far this year, which is an ominous signpost for the emerging market landscape. Davd Rosenberg-Gluskin/Sheff

-U.S. small caps are now in bear-market terrain Russell 2000 down 21% from its April high. Remember what they say about the generals once the troops retreat, and also recall that it was the small cap stocks that led the 2009 bear market rally. David Rosenberg-Gluskin/Sheff

-In terms of keeping score, the Dow, thus far, is down 13% from the nearby peak and the S&P 500 is off 15.5%. We should add that along with the small caps, the S&P Financials index is also down 20.3% from the nearby high, again, fractionally in bear market territory, and was also the leader through most of last year’s recovery.

Remember, this group led the 2007 top and turned in the 2009 bottom for the entire market is now woefully underperforming; not a constructive sign. Moreover, despite the gains in the major averages, winning stocks barely outnumbered losers, and not only that, declining stocks outnumbered advancing stocks by more than a two-to-one ratio yesterday. So call it a case of bad breadth. David Rosenberg-Gluskin/Sheff

-Since the April 23rd peak, a total of $2.4 trillion of paper wealth has been wiped out by the 16% correction in the stock market. Guidance is going to be the key in the coming earnings reporting season, and the very early indications are not rosy (according to Rosie). David Rosenberg-Gluskin/Sheff

-The reason why everyone bought into the V-shaped recovery view was because the equity market told them that this must be the case. Now, we have a situation where $1.6 trillion of wealth has been wiped off the books in the past three months from the stock market setback and so it’s no coincidence that at the margin, question marks are surfacing over the longevity of the recovery if not the longevity, then certainly its veracity. David Rosenberg-Gluskin/Sheff

-There is no doubt that the combination of lower prices and higher earnings estimates has enticed the bulls into claiming that the stock market has entered into deep undervalued zone at a 12.5x P/E multiple. However, history shows that trough multiples could get as low as 10x, so there is nothing to say that the market could not get cheaper still, especially with all the uncertainty overhanging the economic outlook. David Rosenberg-Gluskin/Sheff

-Quote of the day undoubtedly goes to Paul Krugman who said that “We are looking at what could be a very long siege here,” in terms of the U.S. economic outlook (in a Bloomberg interview). With regards to his debate in BusinessWeek with hedge fund manager John Paulson, our leanings are towards Krugman’s view that we are in the early stages of a classic debt deleveraging phase where recoveries are short and snappy and recessions take place with greater frequency than many are able or willing to realize.

But Krugman’s solutions that the government engage in a “kitchen sink strategy” assumes that the government is really the answer. The question he has to answer on behalf of the Administration is why their forecast of an 8% unemployment rate, given all the stimulus it was going to provide, never did materialize, and what exactly is the long-term benefit to the economy of paying people to be out of work for two years. That’s our jobs strategy? David Rosenberg-Gluskin/Sheff

-Here’s Why The Great Recovery Is A Big Fat D.U.D.D. Read more here-http://www.businessinsider.com/broyhill-dudd-2010-7#-1

-David Rosenberg: Here’s 9 Charts That Will Fool You Into Seeing A V-Shaped Recovery. Read more here-http://www.businessinsider.com/david-rosenberg-heres-9-charts-that-will-fool-you-into-seeing-a-v-shaped-recovery-2010-7#capacity-utilization-rate-and-the-year-over-year-change-in-nonfarm-payrolls-1

-24 Depressing Pieces Of Evidence That Difficult Economic Times Lie Ahead. Read more here-http://www.businessinsider.com/24-pieces-of-evidence-that-difficult-economic-times-might-lie-ahead-2010-7#treasury-yields-1

-EMU break-up risks global deflation shock that would dwarf Lehman collapse, warns ING. A full-fledged disintegration of the eurozone would trigger the worst economic crisis in modern history, devastate every country in Europe including Germany, and inflict a deflationary shock on the US. There would be no winners, warns the Dutch bank ING in a new report “Quantifying the Unthinkable”. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7877724/EMU-break-up-risks-global-deflation-shock-that-would-dwarf-Lehman-collapse-warns-ING.html

-U.S. Consumer Bankruptcies Rise 14% in First Half. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aL6wTrijbVzQ&pos=4

-‘Consumer Hangover’ Threatens U.S. Retail Outlook. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aS6JF0JmuRtA

-$100 Oil Is Coming Sooner Than You Think. Read more here-http://www.businessinsider.com/100-oil-is-coming-sooner-than-you-think-2010-7

-Obama’s ‘Presidency in Peril’ or ‘Failed President?’ 12 deadly signs Wall Street’s ‘Conspiracy of Weasels’ killed Obama’s reforms. Read more here-http://www.marketwatch.com/story/story/print?guid=A3604D3F-AF24-43A5-A355-E8CFEC4DCACB

-La Nina Expected to Form by August, May Mean More Hurricanes. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aY33mfT9LuhI

-Peterson’s $1 Billion Bet Shows Return as Deficit Concerns Rise. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aaZSHjKgh4Yk

-Buffett Donates $1.6 Billion to Gates Foundation. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=acHWFmuIPZs8

-Steven Perkins, a former broker with PVM Oil, has been banned at least five years and fined £72,000 ($137,000) after the financial watchdog ruled that he poses “an extreme risk to the market when drunk”. The alcoholic trader cost his firm £6million last summer after going on an unauthorized trading splurge after a drinking binge at a PVM golf weekend.

Perkins took the Monday, June 29, 2009 off work but continued to drink from around midday onwards, and in the early hours of the next day, he bought a net 7.13 million barrels of oil. The unusually high trading volume in the typically quiet overnight period sent prices surging, and pushed up the price of Brent crude by more than £1.30 to an eight-month high. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aYdtxRaGB2O8

-Former PVM Oil Futures Ltd. broker Steve Perkins will resume his trading career in Switzerland after being banned from working in the U.K., the Daily Telegraph said, without citing where it got the information. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQ868TT9Cfbw

WWW.RARECOLOREDDIAMONDS.COM

-New Publication Highlights Immense Appeal of Pink Diamonds. Rio Tinto today announced the launch of its new publication, Rare and Collectable, which focuses on the unique market position occupied by the rare pink diamonds from Rio Tinto’s Argyle Diamond Mine.

Timed to coincide with the 26th Argyle Pink Diamonds Tender, Rare and Collectable places the rarity of Argyle pink diamonds in the context of global supply and demand and the resulting strong price appreciation. This publication is considered timely given the increasing propensity for affluent investors and collectors to diversify their portfolios through acquisitions of rare diamonds.

Discovered in 1979, the Argyle Diamond Mine produces virtually the entire supply of the world’s pink diamonds. Rio Tinto very quickly realised that the rare quality of its pink diamonds would be valued and this resulted in careful marketing to reflect their uniqueness, exclusivity and glamour.

According to Tom Albanese, Chief Executive of Rio Tinto, “Thirty years ago there were very few people who believed Australia could hold the secret of diamonds even fewer could foresee the discovery of the rarest of all diamonds the Argyle pink diamond. Patience, diligence and the efforts of resource experts and investors have been rewarded, as events of the past three decades have unfolded.”

Rare and Collectable also provides an insight into the separate market position held by pink diamonds in comparison to its white counterparts, along with the compelling metrics that are driving the value of pink diamonds, even in times of economic uncertainty. According to Jean-Marc Lieberherr, General Manager for the Sales and Marketing of diamonds from all Rio Tinto’s mines,

“In the rarified world of Argyle pink diamonds we are continuing to see strong demand in both the mature and emerging markets. On the supply side there are no known pink diamond mines or deposits and even if another was found, it takes at least 10 years for a mine to proceed from discovery to production.”

These fundamentals are providing a catalyst for growth in investment demand and with only around a decade of remaining mine life at Argyle, these rare pink diamonds are becoming rarer. Read more here-http://www.argylepinkdiamonds.com.au/en/docs/Collectablerelease%20FINAL.pdf

U.S. HEADING FOR DEPRESSION

-Double-dip fears as US recovery falters. Fears that the US is about to drag the rest of the world into a double-dip recession gripped investors by the throat this week, plunging markets into a dark frame of mind. Read more here-http://www.telegraph.co.uk/finance/markets/7868977/Double-dip-fears-as-US-recovery-falters.html

-Krugman Says U.S. Economy Is Facing a ‘Long Siege.’ “We are looking at what could be a very long siege here,” Krugman said in an interview today in Princeton, New Jersey, with Carol Massar of Bloomberg Television’s “Street Smart.” “We really are at a stage where we should have a kitchen-sink strategy. We should be throwing everything we can get at this.”

At a time when European countries such as Germany are calling for austerity measures to rein in budget deficits, Krugman is calling for more stimulus to prevent a repeat in the U.S. of Japan’s decade of economic malaise in the 1990s.

“The most effective things you can do, in terms of actual bang for the buck, is actually having the federal government go out and hire people,” he said. “We are deep in the hole here, and you need to be unconventional to get out of it.” Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=ajsHBWT_hxvk

-Why The Greater Depression Still Lies Ahead. If policymakers do not understand the real cause of a problem, they will in all likelihood be unable to provide a genuine solution. Messrs. Barack Obama, Benjamin Bernanke and Timothy Geithner do not understand the real cause of this debt crisis.

They are politicians first and economists or students of the market second if at all. Therefore, it is not wise to count on them to tell us when the Great Recession is over, or to provide a plan to prevent another one in the future.

The cause of the Great Depression in the 1930s, and the Great Recession beginning in 2007, was one and the same: an overleveraged economy. Excessive debt levels are the direct result of the central bank providing artificially low interest rates and of superfluous lending on the part of commercial banks.

The easy money provided by banks eventually brings debt in the economy to an unsustainable level. At that point, the only real and viable solution is for the public and private sectors to undergo a protracted period of deleveraging. The ensuing depression is, in actuality, the healing process at work, which is marked by the selling of assets and the paying down of debt.

Unfortunately, our politicians today are focused on fighting this natural healing process by promoting the accumulation of more debt. During this latest economic contraction, the Federal Reserve took interest rates to near 0%, and the Obama administration is leveraging up the public sector to record levels in a bid to re-leverage the private sector.

The government’s philosophy is tantamount to sticking a frostbitten man in the freezer so he won’t have to suffer the pain associated with the thawing of his extremities. Read more here-http://www.forbes.com/2010/06/30/greater-depression-still-ahead-personal-finance-economy_print.html

-Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost to the world economy and, above all, to the millions of lives blighted by the absence of jobs will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world most recently at last weekend’s deeply discouraging G-20 meeting governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. Read more here-http://www.nytimes.com/2010/06/28/opinion/28krugman.html?pagewanted=print

1932 ALL OVER AGAIN

-With the US trapped in depression, this really is starting to feel like 1932. The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

-The Great Depression is a time that stands out as a time of great debate. During the Great Depression, FDR acted nearly exactly as we have in the Great Recession, expanding the size and scope of the government and pushing through new spending bills to incite economic activity. However, as the dust begins to settle from the first boom, investors are again looking for the bust.

The Dow Jones Industrial Average is repeating history all over again, forming the dreaded head and shoulders technical pattern that first sent stocks into a second bear market in 1932, following a few short years of stimulus-driven recovery. In 2007, the Dow Jones Industrial Average formed a head and shoulders pattern, and a bear market followed, just as it had 78 years earlier in 1929.

Today, the Dow Jones has formed another head and shoulders, just as it had following recovery in 1930 in which the stock markets prepared for another down leg. However, if those technical indicators aren’t enough to send you screaming sell, take a look at what traders like to call the “death cross.”

Known as the “death cross,” investors look for a very important technical indicator to point the future for the markets. The “death cross” is actually made up of the 50 and 200 day moving average. When the 200 day moving average crosses above the 50 day moving average, as it soon will, the market is said to go bearish. When the 200 day moving average is below the 50 day moving average, the market will soon rise.

Currently, the two moving averages are less than 10 points apart on the S&P 500 index, showing that with just a modest dip in the stock market, we can expect an even deeper plunge ahead. The death cross has become even more powerful as more investors trade more technically than they ever have before, and with just one little X, the whole market could enter into a massive selloff.

The most popular trade following a “Death Cross” is a flee from stocks and equities into hard assets and deflation-resistant debt obligations. Should the death cross come to bear, expect a selloff in equities, followed briefly by an increase in activity in the Treasury markets, and then eventually a move to hard assets like gold, silver, and other commodities.

Investors should expect that the physical markets will be the first to move, with a strong appetite for physical gold at $1,200 an ounce originating in Asia, as well as small time players gobbling up silver at near $17 per ounce. Both those prices, just ticks from today’s prices, are solid support levels, allowing for virtually no drop in either commodity before buying interest takes over selling interest.

Today’s prices may be the very cheapest that we’ll see for precious metals in quite some time, especially with demand nearly maxed out even at $17 for silver and $1200 for gold, two prices far higher than this time just one year ago. Dr. Jeffrey Lewis-Read more here-http://news.goldseek.com/GoldSeek/1278508609.php

STOCK MARKET-DOW REPEATS GREAT DEPRESSION PATTERN ACCORDING TO CHARTS

-The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.

“Those who don’t remember history are doomed to repeat it there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said. Read more here-http://www.cnbc.com/id/38092759

-Prechter says Dow could fall to 1,000. Long time technical analyst Robert Prechter said on Tuesday he expects that as the U.S. economy sinks into a deflationary depression stocks will plunge. The Dow Jones industrial average stock index could fall to between about 1,000 and 3,000 points over the next five to seven years, he said in a telephone interview. Read more here-http://www.reuters.com/article/idUSTRE6653XM20100706 and http://www.nytimes.com/2010/07/04/your-money/04stra.html?pagewanted=print

-Biggs Cuts Stock Investments by Half as Risk of Recession Grows. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=auMV9NaJR.tk

-Hussman: Inflation Is Coming, And The Market Is Only In The First Part Of A Big Decline. Read more here-http://www.businessinsider.com/hussman-big-inflation-is-coming-and-the-market-is-only-in-the-first-part-of-a-big-decline-2010-7

-CNBC Guest Says Absent Plunge Protection Team Stepping In, Market Would Fall; Wien, Kernan Disgusted. Read more here-http://www.zerohedge.com/article/cnbc-guest-says-absent-plunge-protection-team-stepping-market-would-fall-wien-kernan-disgust

BANKING CRISIS

-Europe’s ‘toothless’ bank tests making matters worse. RBS and other City institutions have warned that Europe’s stress tests for banks are almost useless and may further damage confidence if they fail to cover the risk of large losses on sovereign defaults by Greece and other Club Med states. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7873792/Europes-toothless-bank-tests-making-matters-worse.html

-EU Stress Tests Will Cover 91 Banks, Assume Bond Drop. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aXxpvl3b5VEA&pos=2

-European Banks’ Hidden Losses Threaten EU Stress Test. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=abl8IFKnuuaU

-Here Are The 6 European Banks That May Need A Bailout. Read more here-http://www.businessinsider.com/stress-test-losers-2010-7

JOBS

-As a sign of just how much slack there is in the U.S. labour market, and how much job insecurity there really is, the number of work stoppages (there were only five strikes in the past year at companies employing 1,000 workers or more) fell to the lowest levels since records began in 1947. David Rosenberg-Gluskin/Sheff

-U.S. Unemployment Insurance Tracker. Read more here-http://projects.propublica.org/unemployment/

-7.9 million jobs lost many forever. Read more here-http://money.cnn.com/2010/07/02/news/economy/jobs_gone_forever/index.htm

-Expect lots of government layoffs at state, local level. Read more here-http://www.usatoday.com/money/economy/employment/2010-07-06-jobs06_ST_N.htm

-Here’s The Real Reason Unemployment Is So High: Because The Government Makes It Impossible For Small Businesses To Hire Employees. Read more here-http://www.businessinsider.com/why-does-our-government-make-it-so-hard-for-small-businesses-to-hire-2010-7

Source: www.chartoftheday.com

-Chart of the week: The Scariest Job Chart Ever Gets Uglier. Read more here-http://www.businessinsider.com/chart-of-the-day-the-scariest-job-chart-ever-gets-uglier-2010-7 and http://www.chartoftheday.com/20100702.htm?T

-Chart of the week: Why Have the Jobs Gone Away? It’s no secret that the private sector in the U.S. has been shedding jobs at an alarming rate, while the public sector has grown fat milking the production of the private sector.

Just look at the chart below showing the most recent data from the Bureau of Labor Statistics on private employment (from January 2008 through June 2010) compared to the chart on federal government employment for the same period.

Since January of 2008, the private sector has shed 7.9 million jobs, reflecting a decline of 6.8% in total private employment over the past 30 months, while the federal government has added 469,000 jobs, indicating an increase of 17.1% over the same period. Read more here-http://www.caseyresearch.com/displayCdd.php?id=475

-Chart of the week: Young Americans Learn That Trying To Find Work Is Pointless. Read more here-http://www.businessinsider.com/chart-of-the-day-unemployment-by-age-young-americans-2010-7

Source: www.chartoftheday.com

U.S. DEBT-DEFICIT CRISIS

-U.S. marks 3rd-largest, single-day debt increase $166 billion jump spurs concerns over policy. The nation’s debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.

The one-day increase for June 30 totalled $165,931,038,264.30 – bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.

Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.

“What matters is the overall trend line, and the overall trend line is shooting up,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call. Read more here-http://www.washingtontimes.com/news/2010/jul/7/us-marks-3rd-largest-single-day-debt-boost/

-US Ends June With $13.2 Trillion In Debt, Adds $210 Billion In Total Debt, On Track To Breach Debt Ceiling In Under Six Months. Read more here-http://www.zerohedge.com/article/us-ends-june-132-trillion-debt-adds-210-billion-total-debt-track-breach-debt-ceiling-under-s

-Deficit hits $1 trillion in June for second year. Read more here-http://thehill.com/blogs/on-the-money/budget/107669-deficit-hits-1-trillion-in-june-for-second-straight-year

-IMF presses US to cut debt. Read more here-http://news.yahoo.com/s/afp/20100708/pl_afp/useconomyimf

-Niall Ferguson: The US Has 6 Years Before Debt Payments Surpass Defence Spending. Read more here-http://www.businessinsider.com/niall-ferguson-the-us-has-6-years-before-debt-payments-surpass-defense-spending-2010-7

-Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole. Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion. “This is what the state owes right now to schools, rehabilitation centers, child care, the state university and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.” Read more here-http://www.nytimes.com/2010/07/03/business/economy/03illinois.html?_r=2&partner=MYWAY&ei=5065

-Borrowing has been the answer to all economic troubles in the past 25 years. Now debt itself has become the problem, says Philip Coggan. Read more here-http://www.economist.com/node/16397110/print and http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis

SOVEREIGN DEBT

-The 23 Countries Most Likely To Default. Read more here-http://www.businessinsider.com/here-are-the-23-countries-most-likely-to-default-2010-7#23-kazakhstan-1

-18 Charts That Tell You Everything You Need To Know About The World’s Sovereign Debt. Read more here-http://www.businessinsider.com/18-charts-sovereign-debt-cds-2010-7

REAL ESTATE-FORECLOSURES-MORTGAGES

-This is no time for complacency with regard to the outlook for house prices and mortgage defaults in the U.S. First, here are some numbers: Two-thirds of American homeowners have a mortgage 56 million in total. Around 50% are guaranteed by the GSEs, 35% are held directly on the balance sheets of the banks, and 15% are private label.

Estimates I’ve seen suggest that 14% of these 56 million mortgages are already in arrears or in the foreclosure process. This means that about eight million Americans have stopped paying their mortgage. Staggering.

Other estimates suggest that over 90% of these late-paying/non-paying debtors will never get back to being current. So what we are looking at is something like 7.2 million mortgages that will inevitably go into foreclosure in the near future.

Meanwhile, the pace of foreclosures has been slowed via loan modifications brought on by government pressure and the simple fact that banks do not want to take deflated property onto their books.

What does not get reported often enough is that the rate of non-foreclosure on delinquent borrowers is surging 24% of the people who have not made a single mortgage payment in the last two years have still not been foreclosed on. The banks don’t want to take the hit and in the meantime the foreclosure pipeline is completely clogged up.

(It has to be said that the banks are content in kicking the can down the road since homeowners are making good on their second lien $842 billion outstanding, most held at the big four banks, and they are holding these at par even as the first lien has already gone bad!) When this foreclosure pipeline gets unleashed, I fear that the wave of supply is going to precipitate another leg down in home prices.

Also, keep in mind that the loan modifications are not even working half of them are re-defaulting within 12 months (and this is happening even after monthly payments have been cut 50%). The principal reason is the negative net equity position most of the homeowners in arrears find themselves in (the amount by which mortgage balances exceed the true value of real estate for those in default or near-default could be as much as $2 trillion).

Currently, over 17% of homeowners are “upside down” on their mortgage and another 10% decline in home prices would take that share up to 27%. This, in turn, would dramatically lift mortgage default rates. If the banks ever do a “short sale”, which the Administration clearly wants them to do, then the entire second lien is wiped out cutting deeply into bank capital (if not wiping it out entirely).

I only bring this up because I heard Dick Bove (and other bank analysts) talk about how the banks are a huge buy now that the financial regulation bill is behind us and the uncertainty gone. Maybe that’s true for non-consumer, non-mortgage lenders, but we have to be aware that the problems with housing finance are very likely to remain a huge overhang for many U.S. banks in coming months and quarters. David Rosenberg-Gluskin/Sheff

-Luxury Vacation-Home Sales Fade With Pace of Economic Recovery. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aswl8_QJ1sjU&pos=5

-The U.S. real estate sector is still in massive excess supply we mentioned the runup in the office vacancy rate yesterday and today we cite another survey from Reis showing that in the shopping center space, the vacancy rate edged up to 10.9% in Q2 from 10.8% in Q1 and 10.0% a year ago a 20-year high.

Net effective rents dipped 0.5% QoQ and by 2.8% on a YoY basis. Moreover, residential property prices, especially in Florida, are still deflating against the backdrop of a lingering glut of supply (see page C6 of the WSJ ‘Bulk Sales’ of Condos Clear Supply, at a Cost. So, those who only see inflation because stamp prices are going to rise two cents are missing a big story across wide swaths of the economy. David Rosenberg-Gluskin/Sheff

-The housing bubble hangover, part 2. Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-housing-bubble-hangover-part-2.aspx?page=all

-Bulk Condo Sales Reveal A Gut-Wrenching Property Price Collapse. Read more here-http://www.businessinsider.com/massive-us-property-price-declines-uncovered-in-bulk-sales-of-condos-2010-7

-Here’s Why Commercial Real Estate Hasn’t (Yet) Been A Disaster But Probably Will Be. Read more here-http://www.businessinsider.com/and-heres-why-commercial-real-estate-hasnt-yet-been-a-complete-disaster-but-will-be-2010-7

-The commercial vacancy rate in the U.S. continue to rise, now at 17.4% in Q2 from 17.3% in Q1 and 16.0% a year ago. David Rosenberg-Gluskin/Sheff

-US shopping center vacancy rates rose in 2nd qtr. Read more here-http://www.reuters.com/article/idUSN0610302020100707

-China’s property market braced for 30pc drop. Standard Chartered has told clients to prepare for a fall in property prices of up to 30pc in Beijing, Shanghai, Shenzen, and other large cities in China as the delayed effects of monetary tightening begin to bite. Read more here-http://www.telegraph.co.uk/finance/china-business/7875713/Chinas-property-market-braced-for-30pc-drop.html

-Rogoff Says China Property Starting to ‘Collapse’. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=aA9Y5VxWh9lw

-Housing Shortage Makes Australian Home Prices Almost Twice U.S. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=a4vbRYnAyv_A

The Goldbugg Report – July 13th, 2010
Posted by Worldwide Precious Metals on Tuesday, July 13, 2010

The Week in Review – July 9th, 2010

July 9, 2010

It was another Yo-Yo week, shortened by the Fourth of July holiday in the US. The stock markets were up for the third straight day on Thursday but Daryl Guppy, CEO of Guppytraders.com urged caution. Guppy remarked on Monday that the Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression. Despite a boost in retail sales this month, MasterCard reported on Thursday that sales of luxury goods are down leading to speculation that even the wealthy may be starting to hoard cash in preparation for another downturn.

US Consumer credit took a nosedive in May and was also revised down significantly for April as well. The Federal Reserve said Thursday that outstanding credit to US consumers fell 9.15 billion, much larger that the projected $2 billion decrease. April’s reading was even further off: The original report was a rise in consumer credit of $1 billion, the newly revised April reading was instead a drop of $14.86 billion. This appears to be more proof that the “Credit Crunch” is far from over, and may actually even get worse now that “FinReg” has passed.

Initial claims for unemployment fell more than expected and continuing claims were the lowest they’ve been in seven months. The data may be completely inaccurate, however, due to the fact that many people have given up trying to find a job and they are no longer counted in the data. Continuing claims data is also skewed by the fact that Congress still has not moved to pass a law extending benefits for those who have been out of work longer than the standard benefits would cover, so they too are not counted in the figure.

The European Central Bank and the Bank of England both agreed to continue to keep rates at their exceptionally low levels again this week. Stubborn inflation measurements in Britain may mean that the Bank of England has no choice but to begin raising rates in the near future.

Thirty One percent of all home sales are foreclosures. In a normal market, only 1 to 2 % of sales is a foreclosure and the largest defaulters on mortgages has become the wealthy themselves. Many who have been losing money on their investment properties are simply walking away from them, apparently without a care that their actions are helping to push prices for neighboring homes even lower.

US wholesale inventories climbed higher in May, hitting their highest levels in 11 months. This is good news for economic growth, but it was offset by the first decline in wholesale sales. The sales decline was unexpected, and was the first such decline in over a year.

South Korea shocked the global economic community by raising rates on Friday. It seems that despite continuing problems in the Eurozone, which they believe may have an effect on their own economy, more immediate concerns about inflation are taking precedence.

Crude oil is still hanging on to that mid $70 a barrel range despite the ongoing saga in the Gulf of Mexico that should have helped to drive the price down. Positive inventory numbers and improving investor sentiment apparently helped keep the price up despite uncertainty about the future of oil drilling of the US Coast.

The Euro continued to gain ground on the dollar this week, breaking above $1.25 for the first time in many weeks.

Friday to Friday Close

	July. 2nd	July. 9th	Net Change
Gold	$1207.00	$1209.00	2.00 + 0.17%
Silver	$17.68	$18.05	0.37 + 2.09%
Platinum	$1495.00	$1530.00	35.00 + 2.34%
Palladium	$426.00	$455.00	29.00 + 6.81%

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

	Gold	Silver
Support	1180/1150/1125	17.50/17.00/16.50
Resistance	1215/1225/1250	18.20/18.50/19.00

	Platinum	Palladium
Support	1500/1480/1450	445/425/400
Resistance	1550/1600/1650	460/475/500

Volatility should be expected to continue. Damon Vickers, managing director of Nine Points Capital Partners said on Thursday that as the real estate market continues to flounder and credit continues to tighten investors in search of liquidity may trigger a selloff similar to the one that occurred in 2008. Quietly swept under the rug by the media was a massive gold swap that took place by the Bank for International Settlements. In its 2010 annual report the BIS said that “gold, which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold, stands at 8,160.1 million in special drawing rights, equivalent to 346 tonnes this year, up from nil in 2009.” The amount has jumped to 382 tons since the report was released. The Wall Street Journal had originally reported that the swap was with a central bank, but it was quietly corrected by the BIS, who said the swap was with “commercial banks”. Many analysts think that is simply a smokescreen and that one or more central banks brokered a deal with one or more commercial banks to arrange the swap (no “commercial bank” has 382 tons of gold on its books!). The idea behind these swaps is that one party trades the gold for foreign exchange currencies held by the other party, agreeing to unwind the transaction at an agreed upon price at a later date. Should the trade not be undone, the party that traded the currencies becomes the owner of the gold. In other words, to put it bluntly, GOLD IS BEING USED AS MONEY. The bigger question is this: What country or countries had to resort to trading their gold in order to build up foreign exchange currencies, and are they going to be able to return those currencies to the BIS at the end of the swap agreement? If not, we can expect a financial implosion in that country the likes of which we have not yet seen throughout the current “Sovereign Debt Crisis”. The astute investor would take advantage of any price dips in this volatile market to add to, or even begin, their precious metals portfolio. Precious metals are straining against the artificial restraints of a manipulated market and the ropes are starting to fray. When those ropes finally snap and the free market takes control once again, prices of precious metals could explode to the upside. 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. Ownership of physical gold and silver should no longer be considered just as a profit potential vehicle but should be considered as an essential portion of one’s asset portfolio as an insurance policy against the potential of a world-wide meltdown in fiat currencies, including the US dollar.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

The Week in Review – July 9th, 2010
Posted by Worldwide Precious Metals on Friday, July 9, 2010

The Goldbugg Report – July 6th, 2010

July 6, 2010

-Before the secular bear market in U.S. equities and the secular bull market in precious metals ends, both the Dow and the gold price will be sitting at 5,000. David Rosenberg

-12 Must-See Charts That Gold Bulls Will Love.

-Analyst Dan Smith Sees `More Upside’ for Silver Prices. Watch video in report.

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 allure of the equity market is likely not going away; however, one cannot deny that bonds and bullion have clearly been, and will likely remain, the top-performing asset classes. David Rosenberg-Gluskin/Sheff

-When we lunched with Bob Farrell two weeks ago, he brought along a report he wrote back on December 27, 1999 titled “Here Comes Santa Clause and the Bus Stops Here.” The major point on the front page of the report was that investor expectations for annual returns from the equity market “in the next 10 years have risen from 14 per cent to 19 per cent in the past year.”

However, instead of +19% per year, investors have endured -3% returns annually over the past decade. The allure of the equity market is likely not going away; however, one cannot deny that bonds and bullion have clearly been, and will likely remain, the top-performing asset classes. David Rosenberg-Gluskin/Sheff

-12 Must-See Charts That Gold Bulls Will Love. Read more here-http://www.businessinsider.com/erste-bank-gold-12-charts-2010-6

-Fantastic Presentation On How To Analyze And Think About Gold Prices. Read more here-http://www.businessinsider.com/jason-ruspini-gold-2010-6

-Precious Metals or Mining Stocks? Those who want to invest in the precious metals sector are confronted with a decision: should they buy precious metals (i.e. gold, silver, and platinum) or mining stocks?

The answer partly depends on factors like risk tolerance, timing, and understanding of the mining industry. However, certain basic principles can help guide those interested in profiting from the secular precious metals bull market.

For most investors, the choice is clear. First, accumulate physical metal as the anchor to your portfolio. Gold, silver and platinum are safer and devoid of the risks that accompany their respective mining stocks (e.g., poor management, mining accidents, political risk).

Accumulating physical metal on a regular basis is the best and safest way to profit from the long-term precious metals bull market. Read more here-http://goldmoney.com/precious-metals-or-mining-stocks.html

-For the Last Time, Is Gold in a Bubble? While a few mainstream outlets are coming around to at least acknowledging gold’s stellar run, most remain skeptical or outright bearish. And the blasphemy they purport is that gold is in a bubble. Let’s settle it, right now, and shut these naysayers up.

Gold returned 10 (and as much as 14) times your money in the 1970s bull market, and the Nasdaq advanced over 1,900% during its run. Our current gold price is up about 400% (when measured on a daily basis, not monthly as in the chart). In fact, the Nasdaq gained 182% in the final year of its peak, and gold surged 80% in four weeks during the blow-off top of January 1980.

None of this is happening to our current gold price. Note to doubters: we’ve got a long way to go before we start legitimately using the “bubble” word. Besides, the fact that these skeptics aren’t buying and don’t even own any gold in the first place is further proof we’re not in a bubble. Ever notice none of them claim to own it? And they definitely need to catch up on world affairs.

The World Gold Council (WGC) reported that Russia, Venezuela, the Philippines, and Kazakhstan all bought gold in the first quarter. Central bank sales, meanwhile, remain depressed. Russian President Medvedev won’t quit his quest to move international reserve assets away from the dollar.

And his country’s central bank is backing up his words; it increased its gold reserves by $1.8 billion and decreased its currency reserves by $6.6 billion so far this year. China, the world’s largest gold producer, already buys all the gold produced within its country.

But the WGC recently forecasted that overall gold consumption in China could double in the coming decade, a demand that production certainly won’t be able to match. The Iran/Israel showdown appears closer almost every week.

As further evidence that each side is preparing for conflict, Saudi Arabia recently agreed to permit Israel to use a narrow corridor of its airspace to shorten the distance for a bombing run on Iran all done with the agreement of the U.S government. Simultaneously, the UN Security Council imposed a new round of sanctions on Tehran. Nobody appears to be backing down.

And the current run in gold is with no inflation. Core CPI has fallen to the lowest level since the mid-1960s but what happens when inflation does set in? And what if it’s as bad or worse as the 14% rate we got in the ‘70s?

Sure, deflation is the immediate concern, but with a U.S. federal debt of $13 trillion, unfunded future liabilities exceeding $50 trillion, and a current budget deficit of over 10% of GDP, a massive debasement of the dollar is virtually ensured, triggering an onslaught of inflation. It’s coming. With all these concerns, these guys don’t want to own gold?

Bubble, schmubble. Stocks are vulnerable, bonds are toast, currencies are fiat. Other than cash, where are you going to put money right now? Gold could correct, of course, and I frankly hope it does. I’m not counting on it, though.

The price is just as likely to head the other direction. But if it does temporarily fall, while the bubble-heads are smirking, I’ll be buying. Someday I think we’ll be reversing roles. Read more here-http://www.caseyresearch.com/editorial/3479?ppref=GLD178ED0610D and http://news.goldseek.com/GoldSeek/1277445960.php

-Why the recent gold price surge is definitely not a bubble. In another excerpt from the Erste Bank Special report on Gold, Ronald Stoeferle explains why gold is not another example of a price bubble ready to burst. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106984&sn=Detail&pid=33

-IMF Gold Holdings Fall 15.25 Tons in May as Russia’s Assets Rise. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aK_B.CGNr5js

-Russia Buys 22 Tons Of Gold In May. Read more here-http://www.zerohedge.com/article/russia-buys-22-tons-gold-may

-Chart of the week: Russia Is On A Gold Binge. If anyone has been buying gold on strength, then it’s Russia. The nation just bought another 22.5 tonnes of gold reserves in May, after adding 27.6 tonnes in April. This continues a long streak of gold additions since 2005, as shown in the chart below.

If Russia kept up the April-May 2010 rate of gold additions in June, then Q2 buying will prove itself the largest quarterly accumulation of gold reserves for Russia in recent history. (Note the last data point shown is only a 2-month period comprised of April and May)

Given gold’s performance, Russia has been looking smart, so far at least, despite today’s golden air pocket. Across the same period, America has added virtually nothing, as shown in blue. Luckily America’s stagnant gold reserves are still more than 10 times even Russia’s latest 703 tonne stash. Read more here-http://www.businessinsider.com/chart-of-the-day-gold-russia-2010-7

Source: chartoftheday.com

-Gold the optimal investment in deflation and inflation. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=106795&sn=Detail

-Gold in the context of the financial crisis. In another article from the Erste Bank 2010 report on gold, Ronald Stoeferle looks at the metal in respect to the current financial crisis and draws parallels from history. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106932&sn=Detail&pid=33

-In which phase of the gold bull market are we? Gold is seen as transitioning from phase 2 to phase 3 in an ongoing bull market which still has some way to run. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106818&sn=Detail&pid=33

-Government action can decimate your wealth: gold may be the answer. As global sovereign debt and large government deficits continue to play havoc with major currencies, gold is exhibiting classic bullish signs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=106999&sn=Detail&pid=34

-Now China sources newly mined gold from the USA. We are now used to China sourcing huge volumes of metals from external sources to drive its industrial machine forwards, but the latest announcement from Coeur d’Alene Mines on its deal to have its gold concentrates purchased and processed by China’s largest gold producer suggests that precious metals are on China’s vast shopping list too.

China is already the world’s largest gold miner, and many analysts now assume following the country’s announcement last year that it had been building up its gold reserves for six years unknown to the West that it is still expanding its gold holdings in a way that does not necessarily show the gold going into official reserves.

And now it appears to be looking elsewhere to purchase supplies of the yellow metal without overtly impacting the market. What is significant, perhaps, is that this suggests that China’s commitment to gold is both ongoing and likely to increase.

The country, through its financial institutions and state television advertising, has been persuading its ever growing middle classes to purchase gold (and silver) as a good investment. There seems little doubt that the state is doing the same thing itself as a means of diversifying its huge reserves. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106850&sn=Detail&pid=92730 and http://www.gata.org/node/8767

-Gold price could double in next three years-Rule. Rick Rule says, while the price of gold could go significantly higher, it will be a spectacularly volatile ride and he would love to be wrong. The gold price could well double in nominal terms over the next three years says Global Resource Investments founder, Rick Rule, but the circumstances surrounding such a move could include extreme social unrest, and will definitely involve massive volatility.

“I’m afraid I’m a good old-fashioned gold bug. You’ve heard all of the arguments through Aristotle forward about why gold is simultaneously a store of value and a medium of exchange. Despite the fact that those arguments are old, they’re still very valid,” he told Mineweb.com’s Gold Weekly podcast.

“Gold works reasonably well as money, as value separate and apart from its utility as money, but probably most importantly in the first instance there’s no constituency for devaluation in gold – it isn’t simultaneously somebody else’s liability.

As Rule explains, “while it can be a financial instrument in my hand, it isn’t an asset that is simultaneously someone else’s obligation or promise to pay, which a banknote is. It is solely an asset, not anybody else’s liability.”

Added to this, he says, if the US continues to flood the world with dollars, as he suspects it will, people who want access to the US market will have to devalue their own currencies to continue to compete in it. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107168&sn=Detail&pid=102055

-Peter Grandich, who sees no end in sight to the “mother of all gold bull markets,” expects the price of the yellow metal to climb past $2,000+ before the ride eventually comes to an end. Read more here- http://news.goldseek.com/GoldSeek/1277994322.php

-Gold May Rise to $1,385 on Trend Channel: Technical Analysis. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a0_V3T_qv8BU

-Alex Cowie: Why gold is trending toward $27,163. Read more here-http://www.gata.org/node/8775

-Clive Maund gold market update. Read more here-http://www.clivemaund.com/article.php?art_id=68

-James Turk: People are starting to distinguish between paper gold and real gold. Listen here-http://www.gata.org/node/8770

-Central Banks See Growing Reserve Asset Role for Gold. Read more here-http://www.gata.org/node/8760 and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106888&sn=Detail&pid=33

-Imagine gold’s price if any of this cash had gone into actual metal. Read more here-http://www.gata.org/node/8783

-World’s Biggest Gold Coin Auctioned for $4.02 Million. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=abq.jFPtmODI

-1983 magazine profile shows BIS constantly intervening in gold market in secret. Read more here-http://www.gata.org/node/8773

-Why central banks do care about gold: the connection to interest rates. Read more here-http://www.gata.org/node/8774

-Lawrence Williams: Central banks, investment houses probably rig gold. Read more here-http://www.gata.org/node/8782

-Adrian Douglas: Is discovering the gold fraud worse than the fraud itself? Read more here-http://www.gata.org/node/8769

-Adrian Douglas: Manipulative derivatives in gold and silver keep growing. Read more here-http://www.gata.org/node/8771

-Jason Hamlin: Gold price manipulation exposed. Read more here-http://www.gata.org/node/8776

-Zero Hedge: Was AIG manipulating the precious metals markets? Read more here-http://www.gata.org/node/8785

-Tinfoil hats are surrounding Kitco’s senior market analyst. Read more here-http://www.gata.org/node/8781

-Wall Street Journal patronizes trend toward taking possession of gold. Read more here-http://www.gata.org/node/8762

-Commodity position limits included in financial regulation bill. Read more here-http://www.gata.org/node/8780