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The Goldbugg Report – August 31st, 2010

August 31, 2010

-”Should I buy gold now, or wait for a pullback? I assert that the highs for gold have yet to be charted”, Jeff Clark

-Gold to make new highs as we trend into 2011-Foster.

-Before this secular move is over, silver will outperform gold. The current status just shows that this bull run has a long, long way to go. Bill Haynes, Founder of CMI Gold & Silver Inc-Read more

GOLD

-I want everyone out of all stocks and bonds except for gold and gold items. Before this bear market is over it’s going to take down everything. We’re in cash and gold, and probably less cash as time goes on. Richard Russell-Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/8/21_Richard_Russell_-_The_Stock_Market_Is_Crumbling.html and http://www.321gold.com/editorials/russell/russell082410.html and http://www.321gold.com/editorials/russell/russell082610.html

-Jeff Clark: “Should I buy gold now, or wait for a pullback?” The answer comes when you look at the big picture. If you pull up a 9-year chart of gold, what sticks out is that the price is near its all-time nominal high. One could be forgiven for thinking it looks toppy or at least ripe for a pullback. But I assert that the highs for gold have yet to be charted.

What will a gold chart look like after adding five years to it? When projecting gold’s potential price peak, there are many ways to measure it. Conservatively, gold reaching its inflation-adjusted 1980 high would have it topping around $2,400 an ounce. More radically, if the U.S. tried to cover its cumulative foreign trade deficit with its current gold holdings, gold would need to hit about $32,000/oz.

Let’s take something more middle of the road, and apply the same trough-to-peak percentage advance gold underwent in the 1970s. (I think there’s a greater than 50/50 chance it does more than that, given the precarious nature of the U.S. dollar.) Gold rose from $35 in 1970 to $850 in 1980, a factor of 24.28. Our price bottomed in 2001 at $255.95; multiply that by 24.28 and you get a gold price of $6,214 per ounce.

Sound too high? Well, would it feel high if you had to pay $12.50 for a Big Mac? At $3.39 today at my local McDonald’s, that’s about what it would cost ten years from now if we get the same rate of inflation we had in the late 1970s. So if gold hits $6,214, what might it look like on a chart if you bought today around $1,200?

$1,200 doesn’t seem so pricey, does it? I’m not saying there won’t be pullbacks or that you shouldn’t try to buy at lower prices. Just keep a big-picture perspective. Let’s say gold falls to $1,100 and you’re kicking yourself for having bought at $1,200 if gold reaches $6,200 an ounce, the profit difference between buying at $1,200 and buying at $1,100 is only 1.6%.

If gold gets whacked to $1,000 (at which point I’ll be buying with both hands) the difference is still only 3.2%. Heck, even if gold peaks at $2,400, you still get a double from current levels. (But unless government monetary policies immediately reverse course, gold isn’t stopping at $2,400.)

So there’s my answer. Yes, you have to accept my projection of gold’s ultimate price plateau. And you have to sell at some point to realize the profit. But if the final chapter of this bull market looks anything like the chart above, I don’t think you’ll be too upset having bought at $1,200. Read more here-http://www.caseyresearch.com/articles/3532/is-now-a-good-time-to-buy-gold/

-A contact of mine was kind enough to send me a copy of a speech that Ben Bernanke delivered on Japanese monetary policy back when he was still teaching economics at Princeton A Case of Self-Induced Paralysis.

Imagine that he gave this speech 11 years ago, and everything he laments in his speech is part and parcel of the U.S. macro and market backdrop today. In any event, without getting too critical, this is the earliest piece we can find three years ahead of his famous “What If” speech on November 22, 2002.

What really caught our eye on the same day that gold prices rose another $10 an ounce was the section on “How to Get Out of a Liquidity Trap”, which we are clearly in considering that record-low mortgage rates have not stopped home sales from cratering to record-low levels.

In particular, the subsection that contains one of the solutions to a deflationary debt deleveraging cycle, which is what he was advocating for Japan back then: “Depreciation of the Yen”. Indeed, instead of depreciating, the yen has strengthened 15% since Mr. Bernanke gave that speech, and look where Japan is today.

So, it would go without saying that embarking on investment strategies that are inversely correlated with the greenback would seem to make good sense, and the gold price would certainly fit that bill (we should add silver into that mix as well). David Rosenberg-Gluskin/Sheff

-Gold to make new highs as we trend into 2011 Foster. Portfolio Manager Joe Foster of Van Eck Associates gives his views on the near term prospects for the gold price and looks for sound money policies. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=110107&sn=Detail&pid=33

-Gold’s Low Correlation To Other Asset Classes. Read more here-http://www.forbes.com/2010/03/30/gold-dollar-correlation-intelligent-investing-asset-allocation_print.html

-Rethinking Gold: What if It Isn’t a Commodity After All? Read more here-http://online.wsj.com/article/SB10001424052748703908704575433670771742884.html?mod=WSJ_hps_sections_personalfinance

-Gene Arensberg: Large commercials not aggressively short gold yet. Read more here-http://www.gata.org/node/8947

-David Levenstein: Have faith in gold and not in government rhetoric. Despite assurances to the contrary, the US economy is still struggling and the primary trend for gold remains very much intact and upward. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=110151&sn=Detail&pid=33

-Egon von Greyerz: Hyperinflation Is Coming And Western Civilization Is About To Collapse. Read and watch more here-http://www.businessinsider.com/egon-von-greyerz-2010-8 and http://matterhornassetmanagement.com/2010/08/16/there-will-be-no-double-dip/

-Gold Investment surges as investors change their mindset. According to the World Gold Council’s Jason Toussaint, the surge in investment demand for gold in Q2 is indicative of a paradigm shift in the way in which investors view gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=110266&sn=Detail&pid=33

-Gold Demand Jumps 36% as Investors Step Up Purchases of ETFs, Council Says. Gold demand rose 36 percent in the second quarter as investors boosted purchases of bullion-backed funds and sent prices surging during Europe’s sovereign-debt crisis, the producer-funded World Gold Council said. Read more here-http://www.bloomberg.com/news/2010-08-25/gold-demand-jumped-36-in-second-quarter-on-etfs-world-gold-council-says.html and http://www.zerohedge.com/article/gold-spikes-world-gold-council-says-gold-demand-surges-36-q2-sees-ongoing-demand-out-china-a

-Germany, the world’s largest retail gold investor. As doubts persist over public debt levels and the euro, European retail investors are becoming a burgeoning element in the market – up 115% quarter-on-quarter. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=110257&sn=Detail&pid=33

-Gold Imports Into India May Reach 2009’s Level This Month, Council Says. Gold imports by India this year may reach 2009’s level as early as this month because of “robust” demand in the world’s biggest buyer of bullion, according to the World Gold Council.

Purchases in the six months ended June were 348 metric tons, compared with 559 tons in all of last year, the group said. Jewelry demand surged 67 percent to 272.5 tons in the period and sales for investment more than tripled to 92.5 tons. Read more here-http://www.bloomberg.com/news/2010-08-25/india-gold-imports-may-have-reached-2009-level-in-july-august-wgc-says.html

-Bank of Korea ‘Under Pressure’ to Boost Gold Holdings, Shinhan’s Oh Says. Read more here-http://www.bloomberg.com/news/2010-08-26/bank-of-korea-under-pressure-to-boost-gold-holdings-shinhan-s-oh-says.html

-Gold’s Glitter Remains Despite Spiralling Price. In the wake of complaints lodged by a few gold traders, Nepal Rastra Bank [the Central Bank of Nepal] on Tuesday directed banks to “temporarily” suspend gold supply. The suspension has resulted in a shortage of gold in the market, spurring price hikes, gold traders say. Read more here-http://www.gata.org/node/8940

-Fed ‘probably’ manipulates gold, seeks to ‘destroy’ it, says Ron Paul. Read more here-http://www.gata.org/node/8954

-Over lunch with the FT, more ignorant snickering about gold. Read more here-http://www.gata.org/node/8953 and http://www.ft.com/cms/s/2/e13b361e-abe8-11df-bfa7-00144feabdc0.html

-Thieves stole a $550,000 gold bar from a treasure museum where it went on display after a Florida salvager recovered it from the wreck of a Spanish galleon that lay on the ocean floor for centuries. Read more here-http://www.reuters.com/article/idUSTRE67J0PN20100820?type=domesticNews and http://www.cnn.com/2010/CRIME/08/19/florida.gold.bar.stolen/index.html and http://www.cnn.com/2010/US/08/24/stealing.history/index.html?eref=rss_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_us+%28RSS%3A+U.S.%29

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

-We’ve had a summer of more sellers than buyers of silver. The public is so far away from this market it is incredible. The gold silver ratio is around 65 to 1, before this is over it will be 15 or 20 to one. Some investors have been disappointed that silver has not outperformed gold in this precious metals bull market.

Before this secular move is over, silver will outperform gold. The current status just shows that this bull run has a long, long way to go. Bill Haynes, Founder of CMI Gold & Silver Inc-Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/8/25_Silver_Flying%2C_Gold_Marching_Towards_Highs.html

-Manipulating the Silver Market. If someone were manipulating the silver market, you would see exactly what has actually occurred in silver over the past several days. To manipulate the price you would use your buying power and accumulate long positions until you force silver above resistance in the high $18.40s and thereby trigger all the buy-stops sitting there, including the one we placed.

You would then sell your long positions into those buy-stops and keep selling until (1) you became short and (2) your selling drove prices lower. I have just described exactly what has just taken place in silver. What we have seen is a classic textbook case of market manipulation.

We have seen it so many times before in recent years, it is the reason I warned on 18 August: “Let’s see if silver can hold this level, particularly with option expiry coming soon.” I expect that we will see the rest of this repetitive pattern of manipulation play out over the next few days until this month’s options expire. I also expect that silver will remain under $18 during this period.

There may in fact be another bout of selling pressure by the shorts to shake out some more weak-hands. It would give the manipulators an even bigger profit when they buy back on even lower prices the short positions they established on the breakout above $18.40. Consequently, I will not be surprised if the 2-year uptrend line in the following chart is broken this week.

I don’t think that uptrend line will be broken, but don’t panic if it is. And don’t be distracted from the big picture – both technical and fundamental. Technically, silver has nearly completed a huge accumulation pattern, and the ‘head-and-shoulders’ pattern in the above chart is far more important than the 2-year uptrend line.

Silver is approaching an important upside breakout. It is the breakout that I have been anticipating for months. The fundamental picture for silver is just as bullish. Monetary debasement throughout the globe is causing astute people everywhere to carefully look for prudent alternatives.

It is inevitable that they eventually discover what countless people have already discovered over the past decade that gold and silver are safe-havens from monetary debasement. Thus, everything remains in place for an upside explosion in silver. With each passing day, week and month we are getting closer. Be ready for that breakout by not losing sight of the big picture. Read more here-http://www.fgmr.com/manipulating-the-silver-market.html

-Adam Hamilton: Big Autumn Silver Rally 2. Silver has been drifting in a rather lackluster summer. Ever since surging to $19.50 in mid-May, this often-popular white metal has been grinding sideways to lower. By late July it had fallen over 10% to about $17.50. But despite silver’s recent excitement-bereft sojourn, it actually has excellent potential for a big autumn rally in the coming months.

The bottom line is silver looks very bullish heading into autumn 2010. Big seasonal gold-demand spikes are approaching, and rising gold prices get traders excited about silver. After consolidating high and forming a strong base for at least a year, silver has the perfect springboard from which to launch to new bull highs.

Couple this with converging major support lines, near-oversold technicals, and little enthusiasm today, and silver is perfectly positioned for a fast ride higher in the coming months. Overarching all these bullish silver technicals is this metal’s continuing panic-driven undervaluation relative to gold.

Until this valuation gap is fully closed, silver has a lot of ground to regain and thus should rally faster on balance to catch up. Thanks to all these bullish influences, this year’s big autumn silver rally certainly has the potential to surprise on the upside. Read more here-http://www.321gold.com/editorials/hamilton/hamilton082010.html

-Silver and gold explosive, Hinde Capital’s Ben Davies tells King World News. Listen here-http://www.gata.org/node/8955

-Ted Butler’s weekly interview with King World News. Silver market analyst Ted Butler tells King World News in his weekly interview that the silver futures market looks 90 percent bullish and the gold futures market about 60 percent bullish, even as he reminds listeners that the futures markets don’t reflect supply and demand for real metal. Butler adds that the biggest silver short, JPMorganChase, still appears not to be increasing its short position. Listen here-http://www.gata.org/node/8945

-Silver ‘Looking Cheap’ Lures Investors, Prompting Decline in Ratio to Gold. Read more here-http://www.bloomberg.com/news/2010-08-26/silver-looking-cheap-lures-investors-prompting-decline-in-ratio-to-gold.html

-Is silver finally breaking through key resistance at $18.50 per ounce? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=110335&sn=Detail&pid=32

-Silver’s Historical Correlation with Gold Suggests A Parabolic Top As High As $714 per Ounce. Read more here-http://www.munknee.com/2010/07/silver%E2%80%99s-historical-correlation-with-gold-suggests-a-parabolic-top-as-high-as-714-per-ounce/

-Silver demand picks up in India. Festival season in India has picked up pace with Onam, a spring festival celebrated with much gusto and, given the high price of gold, people are buying silver to mark the occasion. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page32?oid=110148&sn=Detail&pid=102055

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: In Case It Wasn’t Obvious That The Homebuyer Tax Credit Created A Huge Distortion. Tuesday morning the NAR reported that existing home sales in July plunged 27.2%. Not surprisingly, the end of the homebuyer tax credit caused these sales to fall off a cliff. People just didn’t realize how high that cliff was.

In case there were any doubt that it made a difference, check out this chart from Waverly Advisors which shades in the period of the tax credit. Home sales started rising immediately, and have fallen off immediately with the tax credit’s expiry. Read more here-http://www.businessinsider.com/chart-of-the-day-existing-home-sales-and-homebuyer-tax-credit-2010-8

Source: chartoftheday.com

-Chart of the week: The “Distressing Gap” Between New And Existing Home Sales Still Isn’t Closed. Wednesday’s new home sales numbers did nothing to take the sting out of Tuesday’s massive existing home sales miss, showing further weakening in home sales overall.

Bill McBride of Calculated Risk points out the “distressing gap” between between existing home sales and new home sales. Notably, most of the buying on the market has been of distressed properties and, according to Calculated Risk, this is what is allowing existing homes to remain above the less flexibly priced new homes. Read more here-http://www.businessinsider.com/chart-of-the-day-new-and-existing-home-sales-2010-8

Source: chartoftheday.com

-“I think there is still a realistic possibility in the U.S. that it’s slipping into this pattern like Japan has 10, 20 years of stagnation.” David Wyss-Chief Economist at S&P

-“We don’t believe there is any “bond bubble”. However, there is a bubble in people believing there is a “bond bubble”. Here’s how you will know if there is a bond bubble ask your colleagues how many of them own bonds in their personal accounts.

When nobody/almost nobody raises their hand you should be comforted in knowing that the prospects of the existence of a “bond bubble” have been reduced. By the way, this tactic has worked wonderfully for gold over the last decade.” John Roque-WJB Capital-Read more here-http://www.bloomberg.com/news/2010-08-22/bond-funds-attracting-cash-like-stocks-during-dot-com-boom-credit-markets.html and http://www.bloomberg.com/news/2010-08-23/-shocked-investors-shake-up-fund-industry-as-bond-love-affair-sets-record.html

-Let the housing market find its own equilibrium. Stop wasting taxpayers’ money on trying to influence what structure people would like to live in. David Rosenberg-Gluskin/Sheff

-We’re not sure whether to be happy or sad over the fact that some of our long-standing views once viewed as controversial are now making the headlines in the popular press. David Rosenberg-Gluskin/Sheff

-We could see a situation where another 4 to 5 million jobs could be shed in the United States especially in the three sectors (construction, finance and state/local government) that were, and remain, the most affected by the housing crisis and financial collapse. David Rosenberg-Gluskin/Sheff-Read more here-http://online.wsj.com/article/SB20001424052748703589804575445131261936148.html

-Now we’ll tell you why this is a depression, and not just some garden-variety recession. For all the chatter about whether the recession that started in December 2007 ended sometime last year, here is what you should know about the historical record.

The 1930s depression was not marked by declining quarterly GDP data every single quarter. In fact, the technical recessionary aspect to the initial period following the asset and credit shock goes from the third quarter of 1929 to the third quarter of 1933.

There was another deep downturn in 1937-38, but the initial recession lasted four years and if you read the Benjamin Roth diary, you will see the euphoric response to any piece of good news as brief as they may have been.

Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the markets at all times. David Rosenberg-Gluskin/Sheff-Read more here-http://www.cnbc.com/id/38831550

-Another eight U.S. banks were closed on Friday by the FDIC, bringing the year-to-date tally to 118. Credit card rates were just lifted to a nine-year high, 22% of Fidelity’s 401(k) holders are drawing loans against their plans, fully one-quarter of American households have a sub-600 FICO score, and 48% of the 1.3 million folks who enrolled in the Administration’s mortgage relief program had dropped out by the end of July.

So, we are supposed to believe that credit strains are easing just because of the recent Fed Loan Officer Survey showing a greater willingness by the banks to extend credit? What else are the banks going to tell the pollsters with the huge political backlash against the lending community? David Rosenberg-Gluskin/Sheff

-The consensus has certainly taken down its numbers on profits and on the economy, but by not nearly enough. The consensus of equity analysts still sees 13% growth in operating S&P 500 EPS for the coming four quarters, even though the math does not work at all. For one, margins have already very rapidly expanded to cycle highs.

This means that there is very low potential for profits to grow much in excess of nominal GDP growth, which, at best, will be low single digits. That would put EPS for the next year closer to $80 than the $88 consensus forecast and place the forward P/E closer to 13x than 12x (it is 12x on consensus view).

Of course, if the economy does double-dip, then we are talking about EPS going down closer to $60 if the historical pattern during downturns reasserts itself, which then means the forward P/E multiple is really north of 17x. This is why valuation is so tough beauty is in the eyes of the beholder.

Historically, the forward P/E with consensus estimates is 15.6x, and yet if you look at what we actually end up with, it is 19.2x. So the consensus is always publishing an earnings forecast that makes the market look cheap! And, this “bias” is close to 20%, on average.

We still prefer the Shiller P/E, which uses the ‘bird-in-the-hand’ earnings, takes them in real terms, and cyclically-adjusts the earnings data, and the multiple here is 20.6x, which is 26% above the historical norm. So sorry, the only way you can get this market to show that it is “attractively” priced is to rely on consensus earnings projections, which by the way, are coming down but still too high. David Rosenberg-Gluskin/Sheff

-Mark Cuban: Put Money in Bank Not Stocks. Stashing cash in a bank is a better choice for investors than buying U.S. stocks, according to Mark Cuban, a billionaire entrepreneur who owns the Dallas Mavericks basketball team.

“Something is going to give in this market,” Cuban wrote about stocks in an Aug. 20 posting on his Blog Maverick website. “I want to have as much capital available as possible for when it happens.” Read more here-http://www.bloomberg.com/news/2010-08-23/put-money-in-bank-not-u-s-stocks-billionaire-cuban-says-chart-of-day.html

-Stiglitz Says European Economy at Risk of Double-Dip Recession. Read more here-http://www.bloomberg.com/news/2010-08-24/stiglitz-says-government-cuts-set-to-push-europe-into-double-dip-recession.html

-U.S. Has `Realistic Possibility’ of Stagnation, S&P’s Wyss Says. The U.S. has a “realistic possibility” of falling into a Japanese-style economic slump, said David Wyss, chief economist at Standard & Poor’s. U.S. consumer prices, excluding food and energy, increased less than 1 percent for a fourth month in July, Labor Department data showed, while Japan’s so-called core inflation rate has remained mostly negative since September 1998.

“I think there is still a realistic possibility in the U.S. that it’s slipping into this pattern like Japan has 10, 20 years of stagnation,” Wyss said at a seminar in Tokyo today hosted by the Securities Analysts Association of Japan. “A rising population in the U.S. creates more need for capital, more need for housing, which makes deflation a little less likely, but I’m not sure if that makes it impossible.” Read more here-http://www.bloomberg.com/news/2010-08-24/u-s-has-realistic-chance-for-japan-style-stagnation-s-p-s-wyss-says.html and http://www.nytimes.com/2010/08/24/business/global/24deflate.html?pagewanted=all

-Fed’s Charles Evans Says U.S. Recovery Uncertain as Housing Not `Out of the Woods’. Read more here-http://www.bloomberg.com/news/2010-08-24/fed-s-evans-says-u-s-recovery-uncertain-as-housing-not-out-of-the-woods-.html

-Housing Slide in U.S. Threatens to Drag Economy Into Recession. Housing led the U.S. out of seven of the last eight recessions. This time, it may kill the recovery. Home sales collapsed after a federal tax credit for buyers expired in April. Since then, the manufacturing-led expansion, which began in the second half of 2009, has been waning, with jobless claims rising and factory orders falling.

“If foreclosures continue to mount and depress home prices, that could send the economy back into a recession,” said Celia Chen, an economist who tracks the industry for Moody’s Analytics Inc. “The housing market and the broader economy are closely intertwined.” Read more here-http://www.bloomberg.com/news/2010-08-23/housing-slide-in-u-s-may-drag-economy-into-recession-as-foreclosures-rise.html

-Roubini Says Q3 Growth in U.S. to Be `Well Below’ 1%. Nouriel Roubini, the New York University economist who predicted the global financial crisis, said U.S. growth will be “well below” 1 percent in the third quarter and put the odds of a renewed recession at 40 percent.

Roubini, chairman of Roubini Global Economics LLC, said his forecast assumes the government will lower its estimate for growth in the second quarter to an annual rate of 1.2 percent “at best.” Read more here-http://www.bloomberg.com/news/2010-08-25/roubini-sees-u-s-growth-below-1-chance-of-double-dip-recession-at-40-.html

-Hussman: Bernanke’s Quantitative Easing Is About To Trigger A Collapse In The US Dollar. Read more here-http://www.businessinsider.com/hussman-bernankes-quantitative-easing-is-about-to-trigger-a-collapse-in-the-us-dollar-2010-8

-Alen Mattich: Inflation via competitive devaluations may be only way out. Could the Federal Reserve’s decision to restart its quantitative easing program trigger a dollar collapse? That’s what John Hussman, a fund manager, argues in his latest weekly note to investors. And the case he makes is strong as long as one ignores that other central banks don’t want and are unlikely to accept a big dollar devaluation. Read more here-http://www.gata.org/node/8950

-Bernanke Must Raise Benchmark Rate 2 Points, Rajan Says. Raghuram Rajan accurately warned central bankers in 2005 of a potential financial crisis if banks lost confidence in each other. Now the International Monetary Fund’s former chief economist says the Federal Reserve should consider raising rates, even as almost 10 percent of the U.S. workforce remains unemployed.

Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Rajan and William White, former head of the Bank for International Settlements’ monetary and economic department.

After Europe’s debt crisis recedes, Fed Chairman Ben S. Bernanke should start increasing his benchmark rate by as much as 2 percentage points so it’s no longer negative in real terms, Rajan says. Read more here-http://www.bloomberg.com/news/2010-08-22/bernanke-must-raise-benchmark-2-points-in-prescient-rajan-s-latest-warning.html

-Ambrose Evans-Pritchard: America no longer needs Chinese money, for now As the Sino-American showdown in the South China and Yellow seas escalates into the gravest superpower clash since the Cold War, the United States cannot wisely rely on China to help fund its budget deficit for any longer.

The cacophony of voices in Beijing questioning or mocking the credit-worthiness of the US is now deafening, from premier Wen Jiabao on down. The results are in any case manifest: US Treasury data show that China has cut its holdings of Treasury debt by roughly $100 billion (L65 billion) over the past year to $844 billion.

ZeroHedge reports that net purchases by the big three of China, Japan, and the UK (Mid-East petro-dollars) have been sliding for two years. In August they bought the least amount of US debt this year. Read more here-http://www.gata.org/node/8951

-Loans From Retirement Plans Rise to 10-Year High. The number of people borrowing from their retirement-savings plans reached a 10-year high in the second quarter, according to Fidelity Investments, as Americans grappled with slowing economic growth. Read more here-http://www.bloomberg.com/news/2010-08-20/loans-from-401-k-plans-rise-to-10-year-high-fidelity-says.html and http://money.cnn.com/2010/08/20/news/economy/fidelity_401k_withdrawal/index.htm

-Illinois Pension May Sell $3 Billion of Assets to Pay Benefits. Illinois’s Teachers Retirement System may sell $3 billion of investments to pay for benefits this year because the state can’t make its contributions to the fund, a spokesman said.

The pension plan sold $200 million of assets in July and $290 million in August, Dave Urbanek, spokesman for the $33 billion fund, said in a phone interview. “We understand from the comptroller that there is no money to pay us,” said Urbanek. “If we don’t get a state contribution, we will have to sell more.” Read more here-http://www.bloomberg.com/news/2010-08-24/illinois-pension-may-sell-3-billion-of-assets-to-pay-benefits-this-year.html

-Chinese don’t believe their own government inflation data. Lydia Wang, a 28-year-old marketing manager in Shanghai, gripes that the shoes and clothing she normally buys are at least 50 percent pricier than in 2009. Wu Sengyun, a 54-year-old retiree in the coastal city of Ningbo, Zhejiang, says prices of fruit and fish are up more than 20 percent in the past year.

Willy Lin has cut back on free drumsticks in the canteen of his Jiangxi clothing factory as meat and vegetables grow dear. “The workers suffer,” he says. “Everybody is crying.” Read more here-http://www.bloomberg.com/news/2010-08-25/china-s-official-inflation-data-mask-surge-in-food-prices-medical-costs.html

-The Erosion of America’s Middle Class. While America’s super-rich congratulate themselves on donating billions to charity, the rest of the country is worse off than ever. Long-term unemployment is rising and millions of Americans are struggling to survive. The gap between rich and poor is wider than ever and the middle class is disappearing. Read more here-http://www.spiegel.de/international/zeitgeist/0,1518,druck-712496,00.html

-Japan and the Ancient Art of Shrugging. Read more here-http://www.nytimes.com/2010/08/22/opinion/22kato.html

-Bugattis Sell for ‘Crazy Money’ as Classic Cars Beat S&P 500. In May, an anonymous buyer paid more than $30 million for this 1936 Bugatti Type 57SC Atlantic, a silver-blue coupe with a raised spine that runs the length of the car. Mullin declined to comment on media reports that he was the buyer.

It’s the highest price ever paid for a car, topping the old record by about $2 million. The same Bugatti sold in 1971 for $59,000. Read more here-http://www.bloomberg.com/news/2010-08-25/bugattis-sell-for-crazy-money-as-classic-cars-beat-s-p-500.html

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

-Rio Tinto’s Pink Diamonds Tender Starts, Goes to China. Rio Tinto’s annual Argyle Pink Diamonds Tender is starting to do the rounds, and is on view to invited traders and diamond investors in Perth. This year’s tender includes 55 pink diamonds.

A highlight of the 2010 collection is a 2.02 carat round brilliant fancy vivid purplish pink diamond. Inspired by the Tender collection’s theme of “Earth Magic”, Argyle Mystra, is expected to “captivate bidders with its color saturation and purplish hues,” according to the company.

“The color saturation across this year’s collection has set a new benchmark with many more “vivid” pinks than previous years,” Business Manager Josephine Archer said.

Two other stones have also been named in honor of mystical metaphors Argyle Iris, a 1.43 carat fancy purplish red square shaped diamond, named after the Greek messenger goddess and, representing a touch of heaven on Earth, Argyle Ava, a 0.50 carat fancy purplish red round shaped diamond.

In recognition of the rareness of these diamonds, and to coincide with the tender, Argyle Pink Diamonds has released a new publication, Rare and Collectable that places this rarity in the context of global supply and demand and the resulting strong price appreciation.

Tender viewings will be held in Perth (August16-22), Hong Kong (September 13-20), Shanghai (September 25) and New York (October12-17). This will be the first time that the Argyle Pink Diamonds Tender will be showcased in mainland China, in recognition of the growing importance of this market for rare colored diamonds. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=34385

MORGAN STANLEY-GOVERNMENT DEFAULTS INEVITABLE

-Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director. “Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today.

“The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote.

Rather than miss principal and interest payments, governments may choose a “soft” default in which they pay back debts with devalued currencies resulting from faster inflation or force creditors to take lower returns, Mares said in an interview.

Borrowing costs for so-called peripheral euro-region nations from Greece to Ireland surged today, resuming their ascent on concern that governments won’t be able to cut their budget deficits. Standard & Poor’s lowered Ireland’s credit rating yesterday on the rising cost of supporting nationalized banks.

Population trends may be a better predictor of the ability to meet obligations rather than debt as a percentage of gross domestic product, which doesn’t reflect governments’ available revenue and is “backward-looking,” Mares wrote.

While the U.S. government’s debt is 53 percent of GDP, one of the lowest ratios among developed nations, its debt as a percentage of revenue is 358 percent, one of the highest, the report said. Italy has one of the highest debt-to-GDP ratios, at 116 percent, yet has a debt-to-revenue ratio of 188, Mares said. Read more here-http://www.bloomberg.com/news/2010-08-25/morgan-stanley-says-government-bond-default-is-question-of-how-not-if-.html

KOTLIKOFF-U.S SOCIAL SECURITY IS A PONZI SCHEME

-Retiree Ponzi Scheme $16 Trillion Short. Social Security just celebrated its 75th birthday. Love it or hate it, it has done its job and should retire. We need a new system, the Personal Security System, which retains Social Security’s best features, scraps the rest, and covers its costs. Social Security’s objective forcing people to save for retirement is legit. Otherwise millions of us would seek handouts in our old age.

But Social Security has also played a central role in the massive, six-decade Ponzi scheme known as U.S. fiscal policy, which transfers ever-larger sums from the young to the old. In so doing, Uncle Sam has assured successive young contributors that they would have their turn, in retirement, to get back much more than they put in. But all chain letters end, and the U.S.’s is now collapsing.

The letter’s last purchasers today’s and tomorrow’s youngsters face enormous increases in taxes and cuts in benefits. This fiscal child abuse, which will turn the American dream into a nightmare, is best summarized by the $202 trillion fiscal gap discussed in my last column.

The gap is the present value difference between future federal spending and revenue. Closing this gap via taxes requires doubling every tax we pay, starting now. Such a policy would hurt younger people much more than older ones because wages constitute most of the tax base. Read more here-http://www.bloomberg.com/news/2010-08-25/retiree-ponzi-scheme-is-16-trillion-short-laurence-kotlikoff.html Watch interview here-http://www.bloomberg.com/video/62454402/

-Laurence Kotlikoff: U.S. Is Bankrupt and We Don’t Even Know It. Read more here-http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html

-”Enron Accounting” Has Bankrupted America: U.S. Deficit Really $202 Trillion, Kotlikoff Says. Read and watch more here-http://finance.yahoo.com/tech-ticker/%22enron-accounting%22-has-bankrupted-america-u.s.-deficit-really-202-trillion-kotlikoff-says-535354.html?tickers=udn,tlt,tbt,uup,TIP,^gspc,GLD&sec=topStories&pos=9&asset=&ccode

-Neeraj Chaudhary: Happy Birthday Social Security? Read more here-http://www.321gold.com/editorials/chaudhary/chaudhary082010.html

GERALD CELENTE-WE’RE HEADED FOR THE GREATEST DEPRESSION

-The fake “recovery” was nice while it lasted, says famous apocalyptic forecaster Gerald Celente, founder of the Trends Research Institute. But now the fun’s over, and we’re headed for what Celente describes as the “Greatest Depression.”

Specifically, the always startling Celente says the country is headed for rising unemployment, poverty, and violent class warfare as the government efforts to keep the economy going begin to fail. The crux of the problem, Celente argues, is that the middle class has been wiped out.

America used to be a land of opportunity for all, where hard-working people could build their own small businesses in their own communities and live prosperous and fulfilling lives. But now a collusion of state and corporate interests that Celente describes as “fascism” have conspired to help only the biggest companies and the richest Americans.

This has put a shocking amount of the country’s wealth in the hands of a privileged few and left the rest of the country to subsist on chicken-feed wages and low job satisfaction as Wal-Mart “associates” or worse.

The answer, Celente says, is to bring back the laws that prevented huge companies from getting so big and powerful, and put some opportunity back in the hands of ordinary people. But doing that is going to take a while. And in the meantime, we’re headed for trouble. Read and watch more here-http://finance.yahoo.com/tech-ticker/and-now-we%27re-headed-for-the-greatest-depression-says-gerald-celente-535350.html

U.S. BANK FAILURES HIT 118

-ShoreBank of Chicago, Seven Others Shuttered as 2010 Failures Climb to 118. ShoreBank Corp., the Chicago lender operating under a Federal Deposit Insurance Corp. cease-and- desist order for 13 months, and seven other banks were shut by regulators as 2010 bank failures climbed to 118.

Regulators also closed four banks in California, two in Florida and one in Virginia. All eight closures cost the FDIC’s deposit-insurance fund $473.5 million, the agency said yesterday. This year’s bank failures will surpass last year’s total of 140, FDIC Chairman Sheila Bair said last month in a Bloomberg Television interview. Read more here-http://www.bloomberg.com/news/2010-08-21/shorebank-of-chicago-seven-others-shuttered-as-2010-failures-climb-to-118.html and http://jsmineset.com/2010/08/24/cumulative-bank-failures-reported-by-fdic/

-Fed’s Hoenig Says Largest Banks Still Benefit From Government Safety Net. Read more here-http://www.bloomberg.com/news/2010-08-23/fed-s-hoenig-says-largest-banks-still-benefit-from-government-safety-net.html

STOCK MARKET

-Dow Faces Bouncy Ride to 5,000: Strategist. The Dow Jones Industrial Average will lose about half of its value over the next couple of years as it follows a Nikkei-like pattern of several sharp rallies in an overall decline, according to Charles Nenner, founder and president of Charles Nenner research.

Stocks are currently in a bear-market rally, and looking at charts and past trends, unemployment and leading indicators suggest the Dow will drop to 5,000 in the next two to two-and-a-half years, Nenner told CNBC in an e-mail.

Deflation will arrive, along with a sharp double-dip recession, pushing the Dow lower, although, like the Japanese market, stocks will see several jumps of 30 percent to 40 percent, he said.

“Things look really bad for the next 10 years,” Nenner said.

Nenner is bullish on gold and silver over the longer term and expects the precious metals to start a new leg higher by the end of the year. Read more here-http://www.cnbc.com/id/38826988 Watch video here-http://www.bloomberg.com/news/2010-08-25/charles-nenner-sees-dow-falling-to-5000-in-two-years-video.html

-Hindenburg Omen Inventor Exits From Stocks. And he’s out. The blind mathematician behind the Hindenburg Omen (you remember, that’s the technical indicator that tells us a stock market crash is nigh) tells the Wall Street Journal he’s gotten out of stocks a little more than a week before September, when this crash is supposed to happen.

Jim Miekka, who developed the indicator more than a decade ago, says its “sort of like a funnel cloud. It doesn’t mean it’s going to crash, but it’s a high probability. You don’t get a tornado without a funnel cloud.”

The Hindenburg Omen, named after the airship that exploded as it was docking in New Jersey in 1937, has preceded every crash since 1987, but it has also popped up plenty of times without any subsequent market decline. It resurfaced in mid-August and became popular fodder for various trading oriented blogs.

It was triggered by two important statistical events. One, NYSE highs and lows both exceeded 2.5% stocks reaching 52-week highs were 2.9% of stocks traded at the Big Board, while stocks hitting 52-week lows were 2.6%. And two, a rising 10-week moving average for the NYSE compared to a negative indicator that shows market fluctuations (the McClellan Oscillator).

The trends had to be reconfirmed, and they were last week. Read more here-http://blogs.forbes.com/lizmoyer/2010/08/23/hindenburg-omen-prompts-exit-from-stocks/?partner=dailycrux

-In Striking Shift, Small Investors Flee Stock Market. Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market. Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group.

Now many are choosing investments they deem safer, like bonds. If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked. Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.

One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

So is the timing. After past recessions, ordinary investors have typically regained their enthusiasm for stocks, hoping to profit as the economy recovered. This time, even as corporate earnings have improved, Americans have become more guarded with their investments.

“At this stage in the economic cycle, $10 to $20 billion would normally be flowing into domestic equity funds” rather than the billions that are flowing out, said Brian K. Reid, chief economist of the investment institute. He added, “This is very unusual.” Read more here-http://www.nytimes.com/2010/08/22/business/22invest.html?_r=3&hp=&pagewanted=print

FIRM FACES CHARGES OVER OIL TRADING

-Firm Faces Civil Charges for Oil Trading Mayhem. A big high-frequency trading firm faces possible civil charges by regulators after its computer ran amok and sparked a frenzied $1 surge in oil prices in February, according to documents obtained by Reuters and sources familiar with the continuing investigation.

Infinium Capital Management confirmed only that it is the company at the center of a six-month probe by CME Group Inc. into why its brand new trading program malfunctioned and racked up a million-dollar loss in about a second, just before markets closed on February 3.

The glitch explains for the first time the lightning-quick oil-trading surge of that day and it may have been a catalyst for the abrupt and largely unexplained $5 slide amid record volumes the following two days. The firm’s buying frenzy also reveals how faulty computer codes, known as algorithms, can spark sharp volatility and send electronic markets spinning all in the blink of an eye.

Futures exchange operator CME Group is looking into the incident, which occurred at the New York Mercantile Exchange and highlights some of the same electronic-trading concerns raised by May’s “flash crash” in the U.S. stock market. Read more here-http://www.gata.org/node/8957 and http://www.reuters.com/article/idUSTRE67O2QQ20100825

REAL ESTATE

-U.S. Existing Home Sales Plunge by Record. Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery. Read more here-http://www.bloomberg.com/news/2010-08-24/sales-of-u-s-existing-homes-drop-more-than-estimated-to-3-83-million-rate.html

-Sales of U.S. New Homes Dropped to Record Low in July. Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signalling that even with cheaper prices and reduced borrowing costs the housing market is retreating. Read more here-http://www.bloomberg.com/news/2010-08-25/sales-of-u-s-new-homes-unexpectedly-fell-to-record-low-in-july.html

-One in 10 mortgage holders faces foreclosure. Government aid efforts having little impact stemming housing crisis. One in 10 American households with a mortgage was at risk of foreclosure this summer as the government’s efforts to help have had little impact stemming the housing crisis.

About 9.9 percent of homeowners had missed at least one mortgage payment as of June 30, the Mortgage Bankers Association said Thursday. Read more here-http://www.msnbc.msn.com/id/38864587/ns/business-real_estate/ and http://www.bloomberg.com/news/2010-08-26/mortgage-payments-one-month-overdue-increase-as-u-s-economic-growth-slows.html

-Foreclosure Study Shows Dramatic Value Drop. Nationwide, more than a half million homes fell into foreclosure in the first half of 2010. More than 900,000 were repossessed in 2009. Now a new study, conducted by MIT and Harvard researchers, reveals the drop in value to a foreclosed property is even more staggering than many would believe.

“Foreclosed homes sell for less, not just a little bit less, but much less than comparable homes sold in the same area at the same time but voluntarily outside the foreclosure process,” explains Harvard Professor of Economics John Campbell. “In fact, the discount on average is about 27% which is really a very large number.”

And a foreclosure is bad news for the neighbourhood. The study-which examined 1.8 million home sales in Massachusetts from 1987 to 2009 reveals nearby homes within 250 feet of a foreclosure lose 1% of value. One reason the condition of a foreclosed house often deteriorates and falls into disrepair. Read more here-http://liveshots.blogs.foxnews.com/2010/08/23/foreclosure-study-shows-dramatic-value-drop/?test=latestnews

-Nearly 50 percent leave Obama mortgage-aid program. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments.

Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say. More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.

“The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics. Read more here-http://news.yahoo.com/s/ap/20100821/ap_on_bi_ge/us_mortgage_aid

-Commercial Property Owners Choose to Default. Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans. Read more here-http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html

-15 Signs The U.S. Housing Market Is Headed For Complete And Total Collapse. Read more here-http://www.businessinsider.com/15-signs-that-the-us-housing-market-is-headed-for-complete-and-total-collapse-2010-8

-Lack of Jobs, Foreclosures May Keep Housing in U.S. Depressed. Read more here-http://www.bloomberg.com/news/2010-08-25/foreclosures-lack-of-jobs-will-probably-keep-home-sales-in-u-s-depressed.html

-Gross Says Mortgage Yields Would Soar Without Government Aid. Read more here-http://www.bloomberg.com/news/2010-08-24/pimco-s-gross-says-mortgage-yields-would-soar-without-u-s-government-aid.html

GEOPOLITICAL NEWS

-Iran has material for 1-2 atom bombs: ex-IAEA aide. Iran has stockpiled enough low-enriched uranium for 1-2 nuclear arms but it would not make sense for it to cross the bomb-making threshold with only this amount, a former top U.N. nuclear official was quoted as saying. Read more here-http://www.reuters.com/article/idUSTRE67P20L20100826

-Iran Joins Nuclear Power Club as Russia Starts Reactor Under UN’s Watch. Iran, under United Nations sanctions for its nuclear program, said it ended a 36-year quest to join the club of atomic-powered nations when Russia’s Rosatom Corp. switched on a reactor along the Persian Gulf coast. Read more here-http://www.bloomberg.com/news/2010-08-20/iran-to-join-nuclear-power-club-as-russia-starts-reactor-under-un-s-watch.html

-Russia Opening Iran Nuclear Plant Advances Goal to Play Power-Broker Role. Read more here-http://www.bloomberg.com/news/2010-08-21/russia-opening-iran-nuclear-plant-advances-goal-to-play-power-broker-role.html

-U.S. Assures Israel That Iran Threat Is Not Imminent. The Obama administration, citing evidence of continued troubles inside Iran’s nuclear program, has persuaded Israel that it would take roughly a year and perhaps longer for Iran to complete what one senior official called a “dash” for a nuclear weapon, according to American officials.

Administration officials said they believe the assessment has dimmed the prospect that Israel would pre-emptively strike against the country’s nuclear facilities within the next year, as Israeli officials have suggested in thinly veiled threats. Read more here-http://www.nytimes.com/2010/08/20/world/middleeast/20policy.html?_r=2&hp

-Iran unveils long-range bombing drone. Read more here-http://www.cnn.com/2010/WORLD/meast/08/22/iran.drone.unveiled/index.html?hpt=T2 and http://news.yahoo.com/s/nm/20100822/ts_nm/us_iran_military_drone

-CIA sees increased threat from al-Qaeda in Yemen. For the first time since the Sept. 11, 2001, attacks, CIA analysts see one of al-Qaeda’s offshoots rather than the core group now based in Pakistan as the most urgent threat to U.S. security, officials said.

The sober new assessment of al-Qaeda’s affiliate in Yemen has helped prompt senior Obama administration officials to call for an escalation of U.S. operations there including a proposal to add armed CIA drones to a clandestine campaign of U.S. military strikes, the officials said.

“We are looking to draw on all of the capabilities at our disposal,” said a senior Obama administration official, who described plans for “a ramp-up over a period of months.” The officials, who spoke on the condition of anonymity to discuss intelligence matters, stressed that that analysts continue to see al-Qaeda and its allies in the tribal areas of Pakistan as supremely dangerous adversaries.

The officials insisted there would be no letup in their pursuit of Osama bin Laden and other senior figures thought to be hiding in Pakistan. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2010/08/24/AR2010082406553_pf.html and http://online.wsj.com/article/SB10001424052748704125604575450162714867720.html?mod=WSJ_hpp_MIDDLETopStories

The Goldbugg Report – August 31st, 2010
Posted by Worldwide Precious Metals on Tuesday, August 31, 2010

The Week in Review – August 27th, 2010

August 27, 2010

The DOW spent the week wavering back and forth between being positive and negative for the year as precious metals climbed higher. Congratulations are in order once again for those of you who have been taking advantage of price dips to add more metals to your portfolio!

A gloomy picture has been emerging over the last several weeks about the true state of the economy. This “gloom and doom” sentiment seems to have been kicked off by the Fed’s announcement earlier this month that they were ready to re-start their Quantitative Easing programs in an effort to jump start the flagging recovery. Nouriel Roubini declared on Thursday that the chance of a “double dip” recession was now over 40%. Some analysts place their estimates of a double dip occurring at closer to 50%.

In a week with abysmal news and a volatile market, the bright spot was that new claims for unemployment actually fell more than expected. The four week average of new claims, however, which is supposed to be a better measure of labor market trends, rose to its highest since late November.

We stated in our August 20 memo that California would be running out of cash again by October and may have to begin writing IOU’s to cover obligations again. It appears that it will be much sooner than October when that scenario occurs. The embattled state has already begun delaying payments to school districts and counties and may actually be issuing IOU’s by the end of this month.

Durable goods orders in the US had their largest decline in 1 and ½ years in July according to a Commerce Department report on Wednesday. The decline, combined with a downward revision in the US Gross Domestic Product for the second quarter, reinforced the view that the recovery in the US is stalling.

Consumer sentiment went down in late August, but was still better than late July’s reading according to Thomson Reuters/University of Michigan’s Surveys of Consumers. This week’s round of bad news may be a drag on consumer sentiment the next time around however.

In a much anticipated and much overblown speech on Friday, Ben Bernanke said essentially the same thing he’s been saying for 2 weeks; the recovery has softened more than expected and “The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.” This was essentially just a restatement of the Fed policy that he’d previously described before Congress and in other words, means more Quantitative Easing is waiting in the wings.

The dollar plummeted against the yen this week, hitting its lowest levels against that currency since 1995. The euro declined against the dollar this week apparently on news that Standard & Poor’s was downgrading Ireland’s credit rating Wednesday. In a surprise move on Friday Britain announced that its economy grew faster than originally thought in the second quarter, hitting a nine year high. The news out of Europe did not seem to help the euro move higher though.

New and existing home sales set records this week, and they weren’t good ones. Existing home sales were down over 27% in July, which was almost twice what was expected and a 15 year low. New home sales were down over 12%, the slowest pace on record. There is now officially a 12.5 month supply of homes on the market. The bright spot was that the number of people whose mortgages were “underwater”, where they owe more than the home is worth, declined. This good news was tempered by the fact that the decline appears to be due to the sheer number of foreclosures which have taken those “underwater” properties out of the statistics.

Crude oil spent most of the week moving down as inventory numbers and a decline in durable goods orders helped push the price down. Thursday the price regained its mid-$70 a barrel range again however and appeared ready to finish out the week there on Friday.

Friday to Friday Close

	August 20th	August 27th	Net Change
Gold	$1229.00	$1237.00	8.00 + 0.65%
Silver	$17.96	$19.05	1.09 + 6.07%
Platinum	$1514.00	$1537.00	23.00 + 1.52%
Palladium	$476.00	$501.00	25.00 + 5.25%

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

	Gold	Silver
Support	1225/1210/1200	19.00/18.80/18.60
Resistance	1250/1265/1280	19.50/19.80/20.00

	Platinum	Palladium
Support	1550/1575/1600	480/470/460
Resistance	1530/1550/1600	510/520/550

Volatility should be expected to continue. We are close to just two months away from November elections in the US. Sagging approval ratings may lead the Obama administration and the Democratic Party to begin to make panicked and misguided attempts to try to boost the economy in the hopes that they can salvage seats in Congress come November. Previous stimulus attempts have proved ineffective thus far at reviving the flagging economy and the odds are good that any attempt to rapidly pass emergency stimulus measures would be disastrous for the economy. Hopefully Congress realizes this and will put the economy first and foremost ahead of their political careers. Economic growth in the US is slowing, and the specter of Sovereign debt is beginning to rear its head again in the Eurozone. The housing market in the US, long thought to be the key to kick starting the recovery, is performing abysmally and there does not appear to be any reprieve in sight. As sentiment over the state of the global economy declines, precious metals are becoming more attractive to investors as a hedge against the rising fear and uncertainty. As the above ground supply dwindles, prices may skyrocket from their current levels. September is fast approaching and that has historically been a horrible time period for the stock markets. Savvy investors will be taking advantage of any price dips in precious metals to add to or even to start, their precious metals portfolios. 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 – August 27th, 2010
Posted by Worldwide Precious Metals on Friday, August 27, 2010

The Goldbugg Report – August 24th, 2010

August 24, 2010

-Crude oil will hit $100 a barrel while gold will reach $1,500 an ounce by the end of this year, Byron Wien

-Hinde Capital report: Silver velocity the coming bullet.

-Silver historical pointers to better things ahead. See the Chart.

GOLD

-Crude oil will hit $100 a barrel while gold will reach $1,500 an ounce by the end of this year, said Byron Wien, vice chairman of Blackstone Advisory Services. Read more here-http://www.cnbc.com/id/36221000/Byron_Wien_Oil_at_100_Gold_at_1_500_by_Year_End

-Embry Still Burns Bright. John Embry interview with The Gold Report.

TGR: You had an interesting interview with Mineweb recently. The headline used a quote from your interview. It reads: “If gold is not between $1,500 and $2,000 in the next 18 months, I’m dead wrong.” What specifically would you be “dead wrong” about? The price? The timing? The underlying fundamentals?

JE: I would say probably the underlying fundamentals, because I think that they’re sufficiently bad that we will not be able to hold this together for another 18 months. In that event, I would see the gold price moving up sharply. They could conceivably keep this thing stuck together for 18 months.

I just don’t believe it. If it’s not $1,500 to $2,000 by then, clearly I’m wrong in the sense that they’ve been able to allay the difficulties in the system longer than I thought. The United States is plunging back into a hard recession, if not worse. The implications of that for the gold price are extraordinarily bullish.

TGR: What’s your view of silver compared to gold in this economic environment?

JE: I like it better, believe it or not, as much as I love gold for the simple reason that there’s so much less aboveground inventory in silver. Unlike gold, silver gets consumed at a reasonably rapid clip because of its medical and industrial uses. The current price ratio of gold to silver is about 65 to 1.

Historically, it has been as low as 15 to 1. As the whole precious metal cycle really starts to lift off again, I suspect that the silver ratio is going to fall fairly significantly from 65. If that happens, clearly you’re going to have a better percentage gain in silver than you are in gold. I wouldn’t have all my money in silver, but I would certainly have solid exposure.

TGR: Do you have any parting thoughts?

JE: My one parting thought is that people have to understand how serious this is and protect themselves. They’ve got to have some precious metals in their portfolio. If they don’t, I think they’ll rue the day they didn’t.

TGR: How much should they have?

JE: I used to say 5% to 10% before this mess started rolling. I’d say a minimum of 25% now. Read more here-http://www.theaureport.com/pub/na/7087 and http://www.gata.org/node/8925

-John Embry: “Gold’s On the Cusp of a Parabolic Move Up.” Read more here-http://www.sprott.com/Docs/InvestorsDigest/2010/06_23_2010%20Gold%27s%20on%20the%20cusp%20of%20a%20parabolic%20move%20up.pdf

-Dundee Capital Markets: History shows that gold and gold equities outperform under three scenarios; heightened economic/financial risk, outright inflation and/or deflation. The latter risk is spotted by our gold reflation gauge, which jumped into positive territory lately.

As such, we have become more comfortable with golds’ fundamentals and are raising the gold group to an overweight stance. The next push up, in our view, could mark the beginning of a much-awaited price bubble in gold land. Read more here-http://research.dundeesecurities.com/Research/Incubator081810.pdf

-Mindich’s Eton Park Leads Hedge Funds Joining John Paulson’s Bet on Gold. Eric Mindich’s $13 billion Eton Park Capital Management LP led hedge funds in raising gold investments last quarter, joining billionaire John Paulson’s bet that bullion will increase amid inflation concerns.

Eton Park bought 6.58 million shares of SPDR Gold Shares, an exchange-traded fund that tracks the price of bullion, in the second quarter, according to a regulatory filing yesterday. The investment was valued at $800.3 million as of June 30, making it the hedge fund’s biggest holding.

Leon Cooperman and Dmitri Balyasny also added shares of the gold fund, while George Soros and David Einhorn acquired shares in mining companies. Hedge-fund managers have been investing in bullion and gold miners after the worst financial crisis since the Great Depression shook confidence in equities and currencies, and as increased government spending fanned speculation inflation may accelerate.

Paulson, who offers clients investments denominated in gold, started putting money into the precious metal last year. Gold futures have gained 39 percent since the start of 2009 and reached a record on June 21. Read more here-http://www.bloomberg.com/news/2010-08-17/mindich-s-eton-park-leads-hedge-fund-managers-joining-paulson-s-gold-bet.html

-Jim Trippon: China’s first gold rush is underway. I mentioned in my article how big the coming stampede is. If you haven’t already read about it then read these bullet points. Changes in China will make 2010 a golden year for investing in gold:

1. China is actively promoting consumer investment in gold

2. China will let many more banks import and export gold for consumption

3. China will also open gold trading to foreign companies in China

4. China is going shopping globally for “large scale” new gold sources

5. Beijing is helping to create new consumer products to boost demand

6. China is stockpiling more gold in its reserves

There are plenty of good reasons why Beijing believes that now is the time for China to go for the gold. For investors, the important fact is that China will push up global demand. Even though China is the world’s largest gold producer it cannot mine enough of its own ore.

China had to import 100 tons of bullion a year even before Beijing’s latest gold drive. The new demand from China will drive gold prices higher worldwide. The important starting point is gauging just how much demand the Chinese will add to the global market. Read more here-http://seekingalpha.com/article/221079-profiting-from-the-chinese-gold-rush

-Chinese spending on gold sextupled in the noughties. The annual rate of growth of gold spending in China has been 23% this decade and the nation’s gold purchases could see an additional 200 tonnes of consumption in the next decade. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109714&sn=Detail&pid=33

-Demand perspectives: driving the gold price ever higher. Six key demand factors which will come together and help drive the gold price upwards over the next couple of years. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109887&sn=Detail&pid=33

-Gold and Silver Highs Adjusted for CPI-U/SGS Inflation. Despite the June 28th historic high gold price of $1,261.00 per troy ounce, gold and silver prices have yet to approach their historic high levels, adjusted for inflation.

The London afternoon fix, per Kitco.com of January 21, 1980 would be $2,382 per troy ounce based on July 2010 CPI-U-adjusted dollars and would be $7,727 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [all series not seasonally adjusted].

In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce [London afternoon fix, per silverinstitute.org] has not been hit since, including in terms of inflation-adjusted dollars.

Based on July 2010 CPI-U inflation, the 1980 silver price peak would be $139 per troy ounce and would be $450 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [again, all series not seasonally adjusted]. John Williams-Shadowstats.com

-Aden Sisters: All the glitters. As you can see looking at gold’s big picture since 1967, this rise since November 2008 came from a cyclical eight year low bottom that tends to precede good sized rises in gold.

That’s been another big plus in gold’s favor, along with so many others. The point is, despite normal ups and downs, gold remains very bullish. So again, stay with it we strongly believe you’ll be glad that you did. Read more here-http://www.321gold.com/editorials/aden/aden081710.html and http://news.goldseek.com/AdenResearch/1281981363.php

-Frank Holmes: What’s driving gold. Read more here-http://www.usfunds.com/interactive/whats-driving-gold/?CFID=1574644&CFTOKEN=36191514

-Frank Holmes: Gold and deflation. Gold attractive in deflationary environment. History shows that gold performs well in a deflationary environment. Deficit spending puts downward pressure on the dollar, and when the dollar falls, investors tend to turn to gold. Read more here-http://www.321gold.com/editorials/holmes/holmes081710.html and http://news.goldseek.com/GoldSeek/1281978886.php

-The Best Gold Interview of 2010. Much of what passes for “insider” information these days is often conspiracy-edged or largely conjecture. True inside information is actually hard to come by. So what follows is the refreshingly candid and uncut version of my talk with a first-hand participant in the murky and little-understood world of gold bullion, mints, and bullion dealers.

Customarily, when considering a company for a potential recommendation, I hold a series of discussions with management. It was during one of these vetting procedures that I spoke with Andy Schectman of Miles Franklin and heard some disturbing reports about supply that every investor should know.

Andy is a bullion seller, so you’re welcome to take his comments with a grain of salt. On the other hand, what he sees week after week and what he hears from his high-level industry contacts might just make you pull back on that salt shaker and re-inventory the number of ounces you own. Read more here-http://www.caseyresearch.com/editorial/3585?ppref=GLD192ED0810C and http://news.goldseek.com/GoldSeek/1281969661.php

-Billionaire investor George Soros in the second quarter stuck with his big bet on gold. Read more here-http://www.reuters.com/article/idUSTRE67F4T320100816?loomia_ow=t0:s0:a49:g43:r1:c0.165746:b36575198:z0 and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=109850&sn=Detail

-Roger Wiegand: Gold Readies For A Major Price Thrust To $1,325-$1,375 This Fall. Read more here-http://www.kitco.com/ind/Wieg_cor/roger_aug182010.html

-Western Economies Face Hyperinflation: Gold Bull. Read more here-http://www.cnbc.com/id/38767004

-Gold is the best investment at this time West. Midas Letter Editor James West sees gold as being in a long and slow ‘mania’ continuing more or less unabated on a macro level. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109788&sn=Detail&pid=33

-David Levenstein: Gold remains firm despite global currency volatility. The yellow metal consolidated above $1200/oz at the end of last week and it looks set to break above the 50 day moving average. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109790&sn=Detail&pid=33

-Physical market is beating paper gold, Turk tells King World News. Listen here-http://www.gata.org/node/8926

-Peter Brimelow: Gold gearing up? Read more here-http://www.gata.org/node/8939

-Iran Imports 23 Tons of Gold in 4 Months, 22 Tons in the Previous Year. Iran imported 23 tons of gold in the four months ending July 22, the state-run Fars news agency reported. Imports of the precious metal totaled $855 million and came from Turkey, the United Arab Emirates, Russia and Switzerland, Fars said. The Persian Gulf country imported 22 tons of gold in the year ending March 20, the agency said. Read more here-http://www.bloomberg.com/news/2010-08-17/iran-imports-23-tons-of-gold-in-4-months-22-tons-in-the-previous-year.html

-Chris Weber: How much gold remains in Fort Knox? Not much. Read more here-http://www.gata.org/node/8929

-Tons of gold imports in UAE turn out to be fake. Several tons of gold imported into the UAE by traders and investors turned out to be fake on closer inspection, resulting in millions of dirhams in losses and high levels of stress to the victims.

Speaking to Emirates 24|7, Mohamad Shakarchi, managing director of Emirates Gold, said: “A lot of people in the UAE who tried to import gold at lower prices or through dubious overseas companies have been cheated.

We have inspected many consignments from African countries, especially Ghana, and found that there is not an ounce of gold in them. For importing pure dust or other metals with yellow colour, these traders have paid several million dirhams.” Read more here-http://www.gata.org/node/8921

-Central banks and investors weigh in as gold market transforms. The global gold market has been transformed over the past decade. Jewellery, for decades the backbone of gold consumption, has moved to the sidelines amid voracious demand from investors. Central banks, for years big sellers of bullion, have performed a radical U-turn and started to buy.

These changes help explain the surge in gold prices to a nominal all-time high of more than $1,200 a troy ounce earlier this year, from roughly $250 an ounce in 2000. Adjusted for inflation, however, prices are still far from their all-time high above $2,300 an ounce, reached in 1980 during the Soviet invasion of Afghanistan and the oil crisis. Read more here-http://www.gata.org/node/8930

-Henry Smyth: The recent history of the future of gold. Read more here-http://www.gata.org/node/8920

-Gold, silver ETFs are price-suppression schemes, Hinde Capital report finds. Read more here-http://www.gata.org/node/8913

-Hinde Capital’s attack on gold ETF makes Financial Times. Read more here-http://www.gata.org/node/8922

-Hinde Capital’s Ben Davies discusses his indictment of ETFs with King World News. Listen here-http://www.gata.org/node/8914

-Martin Hennecke on CNBC: Most market manipulation suppresses commodities, gold. Watch more here-http://www.gata.org/node/8916

-Jim Rickards: Political intervention destroying price discovery and markets. Read more here-http://www.gata.org/node/8927

-Adrian Douglas: The imminent failure of the second London Gold Pool. Read more here-http://www.gata.org/node/8936

-Adrian Douglas: Gold market isn’t ‘fixed’; it’s rigged. Read more here-http://www.gata.org/node/8919

-GATA distributes international press release on Douglas study. Read more here-http://www.gata.org/node/8937

-Alasdair Macleod: Central banks in deep trouble for their gold manipulation. Read more here-http://www.gata.org/node/8934

-Ian Gordon: Lies, manipulation, and deception all for naught. Read more here-http://www.gata.org/node/8933

-’Banging the close’ is illegal in commodities, unless you bang it down. Read more here-http://www.gata.org/node/8923

-A review of gold, silver market manipulation complaints to the CFTC. Read more here-http://www.gata.org/node/8924

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

-Those who believe a recovery is on the way had best examine their premises. The Fed, Wall Street and banking intend to buy two more years. If they are successful inflation will elevate substantially and the only place to find safety will be in gold and silver related assets. A word to the wise should be sufficient. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1282140352.php and http://news.goldseek.com/InternationalForecaster/1281888240.php

-Hinde Capital report: Silver velocity the coming bullet. Hinde Capital in London, whose CEO, Ben Davies, lately has thrown himself into the campaign to expose manipulation of the precious metals markets, this month published a long report on the excellent prospects for silver, citing the concentrated short position of the bullion banks and the work of silver market analyst Ted Butler. The Hinde report is titled “Silver Velocity the Coming Bullet.”

Long term silver fundamentals imply a substantial re-rating of silver will happen, but this was first highlighted at the beginning of the decade and as yet remains highly undervalued. When such assets are so undervalued one has to maintain a core allocation. However as Fund managers, we also have to look for prudent times to increase (or even reduce) such holdings.

We look for inflection points on nearer term horizons to adjust allocations higher. Right now we believe is that time. Although the current gold/silver ratio at 65 looks to be the mean of a severe financial crisis and boom time, we believe this will become the upper band (cheaper end) of the spread.

At this point in the monetary cycle we envisage the silver spread narrowing to nearer 50 or tighter this fall (on overshoots) in line with the surfeit liquidity that similarly buoyed markets in 2007 despite the onset of subprime mortgage issues. Should we see more monetisation of silver then this spread will narrow dramatically and sooner.

We believe the near term catalysts for an outperformance of silver are a pick up in monetary velocity (notably Asia), a potential cessation to excessive ‘manipulative’ silver Comex shorts by a very concentrated number of bullion banks (namely two), positive seasonals, and a trend ready silver bullion market.

We believe the narrowing in the gold silver spread will be based on a superlative break out to nominal new highs. The coming silver bullet just may be approaching faster than we could imagine.

-Silver historical pointers to better things ahead. Rick Mills revisits silver’s history and the silver-gold ratio and looks for an upwards rerating in this time of fiat currencies. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=110010&sn=Detail&pid=32

-Silver Institute world silver survey 2010. Read more here-http://www.silverinstitute.org/images/stories/silver/PDF/wss10sum.pdf

-Morgan retreating from silver rig, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8917

-Malaysian state introduces gold and silver Islamic currency. Read more here-http://www.gata.org/node/8915 and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=109729&sn=Detail&pid=34

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: A Really Long View Of Inflation Shows That It’s All The Fed’s Fault. In its latest investor letter, Matterhorn Asset Management warns of a hyperinflationary depression worse than Japan’s, as piles and piles of worthless paper collapse in on themselves.

Who do they blame for this predicament? The Fed, of course. In this chart, they claim to back-measure the CPI going to 1800, and the point to take away is that while there were inflationary spells in the past, what really got the ball rolling was the creation of The Federal Reserve and the dissolution of the gold standard. Read more here-http://www.businessinsider.com/chart-of-the-day-inflation-1800-2009-2010-8

-Matterhorn Asset Management: Here’s 7 Reasons Why The Coming Hyperinflationary Depression Will Be Way Worse Than Japan. Read more here-http://www.businessinsider.com/matterhorn-asset-management-there-will-be-no-double-dip2010-8 and http://matterhornassetmanagement.com/2010/08/16/there-will-be-no-double-dip/

Source: www.chartoftheday.com

-Chart of the week: Goldman Sachs Thinks The End Of The Stimulus Is Going To Crush GDP Growth. Goldman Sachs (via Zero Hedge) have released what certainly is a depressing sight in their latest GDP report. The bank continues to predict that U.S. GDP will remain positive through 2011, with 1.5% growth in H2 2010 and 1.5% growth for Q1 2011, rising to 3% growth by the year’s end. But that’s pretty much anemic growth, and below consensus.

More interesting might be the impact of the withdrawal of fiscal stimulus on GDP growth for the U.S. economy. The positive impact of said stimulus can be viewed in the first half of this chart, pointing to how it dragged up the U.S. growth rate through some more difficult quarters. But now with its withdrawal, its absence will be felt through 2011, where the pace of growth might have been lifted by its retention.

This could partially explain Goldman’s projection that unemployment is set to rise back to 10% in the middle of 2011. Read more here-http://www.businessinsider.com/chart-of-the-day-gdp-growth-fiscal-stimulus-2010-8

Source: www.chartoftheday.com

-”What’s happened is a lot of U.S. companies have reached the limit of how much they can slash their workforce and work existing employees to the bone.” Nariman Behravesh-Chief economist with IHS Global Insight-Read more here-http://www.caseyresearch.com/displayCdd.php?id=512

-The latest WSJ/NBC News poll contained some jarring results. No need to call for a double-dip the first recession never ended. At least, that is the perception of two-thirds of the American public (you know, the ones that actually make up the economy). David Rosenberg-Gluskin/Sheff

-“Change of a long term or secular nature is usually gradual enough that it is obscured by the noise caused by short-term volatility. By the time secular trends are even acknowledged by the majority they are generally obvious and mature.

In the early stages of a new secular paradigm, therefore, most are conditioned to hear only the short-term noise they have been conditioned to respond to by the prior existing secular condition. Moreover, in a shift of secular or long term significance, the markets will be adapting to a new set of rules while most market participants will be still playing by the old rules.” Bob Farrell

-In a nutshell, we are in the early stages of a secular credit collapse following the biggest credit bubble in human history. The credit expansion that began with the Diner’s Club card in the 1950s (one card per family!) finally morphed into a full-fledged bubble post the 2001 “ownership society” craze when buy-now, pay-later mortgage loans populated and polluted the financial backdrop.

The bubble was the result of a universal, irrational and linear belief in real estate asset appreciation that developed in the 1990s and reached its glorious peak in 2007. But the problem of not having enough income nationally (globally, in fact) to support the record debt load, especially as asset prices succumbed to their own grotesque degree of overvalued excess, led to the credit collapse and financial crisis.

The credit collapse and financial crisis continued through 2008 despite the cry and hue from the economic intelligentsia that all we were in for was a soft-landing during this wonderful period labelled “The Great Moderation.” In turn, what followed were that all the king’s horses and all the king’s men brandishing marvellous new tools attempting, with futility, to put Humpty back together again.

We then got a pause in the collapse and a spectacular bear market rally in the final eight months of 2009 and into early 2010. But as Mick Jagger put it in an oldie but goodie, “it’s all over now.” David Rosenberg-Gluskin/Sheff

-The cumulative household debt-income ratio peaked in Q1 2008 at 136%. Currently, this ratio is at 126%. But the pre-bubble norm was 70% (no wonder 25% of Americans have a sub-600 FICO score). To get down to this normalized ratio again, debt would have to be reduced by around $6 trillion. So far, nearly $600 billion of bad household debt has been destroyed. In other words, we have much further to go in this deleveraging phase. David Rosenberg-Gluskin/Sheff

-The event that shattered the overdone psychological environment this cycle was the abrupt reversal in the market for residential real estate. Real estate had become the foundation for practically the entire society’s financial plan, not to mention the primary source of discretionary dollars for most households’ profligate consumption. Never before had the home been used abused as an automatic bank teller as was the case during the 2001-07 mortgage cash-out cycle. David Rosenberg-Gluskin/Sheff

-We continue to receive Wall Street research telling us to overweight stocks and underweight bonds. This does not happen at true fundamental bottoms in equity prices and Treasury yields. I continue to get asked what will turn me more bullish. This doesn’t happen at lows, either.

At the true lows, the bears get asked why they’re not even more bearish. At the lows, people threaten to call the police when equity brokers go cold-calling. What the bulls still refuse to see is that we are in an entirely new paradigm and that the old rules of thumb are rarely, or are ever going to be able to be relied upon, as was the case in the familiar credit-expansion days of yore.

There is simply too much debt overhanging the U.S. household balance sheet the largest balance sheet on the planet. And, despite the deleveraging efforts to date, the process of balance sheet repair is still in its infancy. David Rosenberg-Gluskin/Sheff

-Canadian Imperial Bank of Commerce said “continuing weakness in the U.S. economy” may force the Bank of Canada to delay interest-rate increases after September. CIBC reduced its forecast for the central bank’s overnight rate to “no higher” than 2 percent by the end of 2011, a quarter percentage point lower than its previous forecast.

CIBC also reduced its forecast for the Canadian dollar to parity with the U.S. dollar by the end of 2011. Earlier, it had forecast that one U.S. dollar would be worth 98 Canadian cents. Read more here-http://www.bloomberg.com/news/2010-08-18/cibc-forecasts-delay-in-canada-interest-rate-increase-due-to-u-s-economy.html

-Vietnam devalued its currency for the third time since November, moving to reverse a slump in exports that helped to drive stocks close to a bear market. Read more here-http://www.bloomberg.com/news/2010-08-18/vietnam-devalues-currency-to-boost-exports-as-stocks-approach-bear-market.html

-10 Signs the U.S. Is Becoming a Third World Country. Read more here-http://www.activistpost.com/2010/08/10-signs-us-is-becoming-third-world.html

-U.S. Economy Faces ‘Painful Period,’ Berkshire’s Sokol Says. The U.S. is facing a “painful period” in the next five years as homeowners and governments unwind debt built up during the housing boom, Berkshire Hathaway Inc.’s David Sokol said today.

“All of that just feeds into a slow-growth environment,” Sokol, who heads Berkshire’s energy and luxury-flight divisions, said today in an interview at Bloomberg headquarters in New York. “If we could average 2 percent for the next five years, we’d be pretty happy.” Read more here-http://www.businessweek.com/news/2010-08-16/u-s-faces-painful-period-due-to-debt-sokol-says.html

-States in the Red. Most states have addressed or still face gaps in their budgets totalling $121 billion for fiscal year 2011. See more here-http://s.wsj.net/public/resources/documents/st_STATEBUDGET100414_20100414.html

-US Says Bankruptcies Reach Nearly 5-Year High. U.S. bankruptcy filings have reached the highest level since 2005, government data released on Tuesday show, as the economy slows and the unemployment rate hovers just below double digits. Read more here-http://www.cnbc.com/id/38744090

-Max Keiser interviews William K. Black, watch his absolutely stunning indictment of the U.S. banking system, Wall Street and the U.S. government. Watch more here-http://www.youtube.com/watch?v=5Bf5Frx1lZk&feature=player_embedded

-Martin Armstrong: Deflation: To Be Or Not To Be. As Martin Armstrong says herein, what is coming is more sinister and less understood than the 1929 economic model. The fact is it is coming without any doubt. Gold is the only insurance against this insidious currency driven event. Read more here-http://jsmineset.com/wp-content/uploads/2010/08/Deflation-to-Be-or-Not-to-Be-08-05-2010.pdf

-Back to School? Bring Your Own Toilet Paper. Read more here-http://www.cnbc.com/id/38711521

-A Consumer Reports for the Cheap. Read more here-http://bucks.blogs.nytimes.com/2010/08/16/a-consumer-reports-for-the-cheap/?src=me&ref=business

-How to Set Your Child’s Allowance. Read more here-http://bucks.blogs.nytimes.com/2010/08/16/how-to-set-your-childs-allowance/?src=me&ref=business

-America’s 10 Most Dangerous Jobs. Last year was the safest year in the American workplace, but heights, weather and heavy equipment still put many people at risk. Which 10 jobs are the worst? Read more here-http://money.cnn.com/galleries/2010/pf/1008/gallery.most_dangerous_jobs/index.html

-What’s Popular Around the World? Read more here-http://images.businessweek.com/ss/10/08/0812_popularity_index_international/1.htm

-Best Countries in the World. Read more here-http://www.newsweek.com/photo/2010/08/15/best-countries-in-the-world.html

-British sniffer dogs help Italian fraud squad sniff out cash. British-trained sniffer dogs are being recruited by Italian police to help step up their fight against mafia money laundering. Read more here-http://www.telegraph.co.uk/news/worldnews/europe/italy/3550787/British-sniffer-dogs-help-Italian-fraud-squad-sniff-out-cash.html

-Why the US keeps minting coins people hate and won’t use. Read more here-http://www.bbc.co.uk/news/world-us-canada-10783019

-Gold-Dusted Dunhill-Namiki Stars in $650,000 Bonhams Fountain Pen Auction. Read more here-http://www.bloomberg.com/news/2010-08-18/gold-dusted-dunhill-namiki-stars-in-650-000-bonhams-fountain-pen-auction.html

RARECOLOREDDIAMONDS.COM

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

-Argyle diamond mine. Learn more here-http://en.wikipedia.org/wiki/Argyle_diamond_mine

-Rio Tinto launched its exclusive 2010 Argyle Pink Diamond Tender. This year’s collection features 55 pink diamonds that are notable for their depth of color. Highlights in the collection include a classic, 2.02-carat, round, brilliant, fancy, vivid purplish pink diamond known as the “Argyle Mystra,” a 1.43-carat, fancy purplish red, square-shaped diamond named “Argyle Ava” and a 0.50-carat, fancy purplish red, round-shaped diamond.

The names of the diamonds were inspired by the tender collections theme of “Earth Magic.” “We are delighted to showcase this beautiful collection to the world,” said Josephine Archer, the business manager for Argyle Pink Diamonds. “The color saturation across this year’s collection has set a benchmark, with many more vivd pinks than precious years.”

Tender viewings will be held in Perth, Australia through August 22 and then in Hong Kong from September 13 to September 20 and in New York from October 12 to October 17. Rio Tinto noted that 2010 is the first year the collection will be showcased on Mainland China, with a tender viewing scheduled in Shanghai on September 27.

The company also released a new publication, Rare and Collectible, to coincide with the tender viewings. The publication highlights the increasing rarity and investment potential of Argyle pink diamonds within the context of global supply and demand. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=32178 and http://www.israelidiamond.co.il/english/News.aspx?boneID=918&objID=7746

-Stuck for gift ideas for the woman who has everything? This tiara of 178 rare pink diamonds set in platinum and rose gold will set you back $2.3 million. Read more here-http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10666912

-Rio Tinto Announces Indian Bridal Campaign Initiative. Rio Tinto Diamond is launching a marketing campaign focused on the Indian bridal occasion. The campaign, titled Nazraana, will focus on the growing segment of diamond accessories for family and friends celebrating at Indian weddings. Read more here-http://www.idexonline.com/portal_FullNews.asp?id=34376

ATTACK ON IRAN COMING IN DAYS?

-Israel has only mere days to launch an attack on Iran’s Bushehr nuclear reactor if Russia makes good on its plan to deliver fuel there this weekend, former US ambassador to the UN John Bolton warned Tuesday. He said that once Russia has loaded the fuel into the reactor slated for Saturday Israel would no longer be willing to strike for fear of triggering widespread radiation in an attack.

“This is a very, very big victory for Iran,” Bolton told The Jerusalem Post. “This is a huge threshold.” Bolton, who also once oversaw US non-proliferation policy, said that when Russia announced the plans to load the fuel last Friday, “the element of surprise was essentially taken away” from Israeli calculations.

Bolton noted that he doesn’t “have a clue” as to whether Israel would actually attack, but he said, “If Israel was right to destroy the Osiraq reactor, is it right to allow this one to continue? You can’t have it both ways.” Israel took out Iraq’s Osiraq reactor during a stealth mission in 1981. It is also believed to have conducted a similar strike on an alleged Syria nuclear site in 2007.

Russia signed a contract with Iran to construct the Bushehr reactor in 1995, but has several times delayed completion. In announcing the long-overdue fuel installation, which should make Bushehr operational in September, Russia did not indicate why it was going ahead with the final stages now.

In addition to Bushehr for which Russia says it has guarantees it will receive back the spent fuel, the material needed to make a nuclear bomb Iran has its own uranium enrichment facilities. Iran expert Ilan Berman of the American Foreign Policy Council said that the uranium enrichment plants are the real backbone of Iranian efforts and expenditures to get a nuclear weapons capability, and he suspected that they, rather than Bushehr, would be Israel’s primary targets in any attack.

He suggested that Bolton was setting up a “straw man” by focusing on the fuel delivery to the Bushehr reactor. “It’s not at all clear that Bushehr would be a high value target because it’s only tangentially related to any conceivable Iranian nuclear weapons program,” he said. “My suspicion is this isn’t a game changer. This isn’t going to give Iran enough fissile material for a bomb overnight.”

Berman added that since Bushehr is the most public Iranian nuclear facility, and therefore well monitored by international inspectors, it was also a less likely candidate for use by Iran to construct a bomb, though he nevertheless said if it became operational it would be “an enormous PR coup for the Iranians.”

Bolton dismissed the idea that international inspectors would contain the threat from the Bushehr reactor, pointing to instances inspectors had been kicked out. He also said it was unlikely that Israel would attack Bushehr now and make another sortie against the enrichment facilities in later months because that would be a much more challenging task.

For one thing, he point out that an attack on Bushehr would likely spur the Russians to transfer to Iran advanced missile defense systems it has agreed to sell Tehran but refrained from actually delivering. Instead, Bolton indicated, if Israel were to attack now it would probably hit multiple targets. Iran, for its part, dismissed talk of a possible Israel strike. Read more here-http://www.jpost.com/LandedPages/PrintArticle.aspx?id=185060

-’Israel’s Existence Is in Danger’ If It Attacks Nuclear Plant, Iran Says. Iran will respond if Israel attacks its first nuclear power plant, which will begin loading fuel Aug. 21, according to the Persian Gulf country’s defense minister.

“In that case we will lose a power plant, but Israel’s existence will be in danger,” Ahmad Vahidi was cited as saying today by the state-run Mehr news agency, in response to questions about the possibility of an attack by Israel on the Russian-built atomic facility at Bushehr.

The Foreign Ministry’s spokesman, Ramin Mehmanparast, said today he “doubts” that Israel would “make such a dangerous move.” In comments on state television, he said, “Any aggression against this power plant will result in a serious reaction.” Read more here-http://www.bloomberg.com/news/2010-08-17/-israel-s-existence-is-in-danger-if-it-attacks-nuclear-plant-iran-says.html

-Iran says to unveil array of weapons next week. Defence Minister Ahmad Vahidi said on Tuesday that Iran will unveil next week an array of weapons, including missiles, speedboats and a long range drone, the ISNA news agency reported. Read more here-http://www.breitbart.com/article.php?id=CNG.3feb3f5f39259253ed4519db00d15acd.4e1&show_article=1

-Exclusive: Al Qaeda Plans for Israel War. Al Qaeda is warning its supporters and sympathizers to prepare for a new war in the Middle East, which it says will pit Israel against Iran. Al Qaeda’s franchise in Yemen, the self-styled al Qaeda in the Arabian Pennisula (AQAP), issued an audio message this month with a lecture by its second-in-command Saeed al Shehri in which he tells jihadists in the Middle East that “what is expected is for the war to begin by the Jews against Iran.”

Israel will stage air strikes on Iran’s nuclear installations to start. Shehri expects the Iranian Shia regime to try to take advantage of an Israeli attack on its nuclear facilities to seize the holy cities of Mecca and Medina by blaming Saudi Arabia for helping Israel attack. In turn, the Israelis will seize territory in the Levant to establish “the greater state of Israel.”

The Sunni Arab population of the Middle East will be caught between the “Jews in the Middle East and Iran in the Peninsula.” Iran will attack American installations in the Gulf, encourage its proxies in Iraq and Afghanistan to attack Americans, and engage in a global terror campaign. Read more here- http://news.yahoo.com/s/dailybeast/9517_alqaedaplansforwarwithisrael

-Iran will build uranium enrichment centers, nuclear chief says. Read more here-http://edition.cnn.com/2010/WORLD/meast/08/16/iran.nuclear/#fbid=dJRVgaJMdno&wom=false

STOCK MARKET CRASH COMING?

-Is a Crash Coming? Ten Reasons to Be Cautious. Read more here-http://online.wsj.com/article/SB10001424052748703723504575425723973560744.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.0863308:b36545500

-What is the Hindenburg Omen? Read more here-http://en.wikipedia.org/wiki/Hindenburg_Omen

-’Hindenburg Omen’ Flashes. Technical Gauge and Its Creator Sense Stock Gloom; ‘Good Conspiracy Theories’? Read more here-http://online.wsj.com/article/SB20001424052748703321004575427791421316112.html

-Hindenburg Omen: Is a Stock Market Crash Imminent? Read more here-http://www.thestreet.com/print/story/10835851.html

-Deflation’s coming, says Gary Shilling, and It’s Going To Clobber The Stock Market. Read more here-http://www.businessinsider.com/gary-shilling-deflation-2010-8

U.S. FED

-Fed Buys $2.551 Billion Treasuries in Resumption of Purchases. The Federal Reserve bought $2.551 billion of Treasuries in the first outright purchase of U.S. government debt since October to prevent money from being drained from the financial system. Read more here-http://www.bloomberg.com/news/2010-08-17/fed-buys-2-55-billion-of-treasuries-in-first-outright-purchase-since-2009.html

-Federal Reserve Buys $3.609 Billion of Treasuries in Reinvestment Program. Read more here-The Federal Reserve bought $3.609 billion of Treasuries as part of a program to reinvest principal payments on its mortgage holdings into long-term government debt to prevent money from being drained out of the financial system.

-Fed’s Hoenig: Keeping Rates Too Low ‘Dangerous Gamble’. The Federal Reserve is undertaking a “dangerous gamble” by keeping rates at near zero for so long, and must start raising rates or risk damaging the nascent U.S. recovery, a top Federal Reserve official said on Friday. Read more here-http://www.cnbc.com/id/38693128 and http://www.bloomberg.com/news/2010-08-13/hoenig-says-fed-s-zero-rate-policy-reinforces-doubts-on-economic-recovery.html

-How the US economy is being ‘Japanised’. Federal Reserve policy is taking a worrying turn towards monetarism. This can only result in an American ‘lost decade’. Read more here-http://www.guardian.co.uk/commentisfree/cifamerica/2010/aug/12/useconomy-usdomesticpolicy

-Time is running out for the West. The Great Recession has dramatically shrunk the time left for the big AAA states to prevent a full-blown sovereign debt crisis as their demographic time-bomb threatens, US rating agency Moody’s has warned. Read more here-http://www.telegraph.co.uk/finance/economics/7950775/Time-is-running-out-for-the-West.html

-U.K., U.S., France, Germany `Well Positioned’ on Aaa Ratings, Moody’s Says. Read more here-http://www.bloomberg.com/news/2010-08-17/u-s-u-k-france-germany-well-positioned-on-aaa-ratings-moody-s-says.html

U.S. DEBT-DEFICIT

-U.S. Budget Deficit Forecast Increased by CBO to $1.066 Trillion for 2011. The U.S. Congressional Budget Office predicted the budget deficit for fiscal year 2011 will be $1.066 trillion, revised up from an estimate of $996 billion in March.

The nonpartisan agency said today in a semi-annual report on the state of the budget that the deficit will be 7 percent of the nation’s gross domestic product in 2011. The budget deficit has become a central issue in November’s midterm elections.

The CBO projected that the cumulative deficit for the next decade will be $6.27 trillion, compared with its March estimate of $5.99 trillion. Read more here-http://www.bloomberg.com/news/2010-08-19/u-s-budget-deficit-forecast-increased-by-cbo-to-1-066-trillion-for-2011.html

-Fannie Mae and Freddie Mac reform: Would it add $5 trillion to US debt? The Obama administration held a conference Tuesday about how to reform mortgage giants Fannie Mae and Freddie Mac. Reform could involve adding Fannie and Freddie’s roughly $5 trillion in obligations, in effect, to the federal balance sheet.

In the end, losses to Fannie and Freddie related to the financial crisis may cost taxpayers $305 billion, according to one estimate recently published by Mr. Zandi and Alan Blinder of Princeton University. But that figure could rise or fall depending on what happens with the economy and with government policies on housing. Read more here-http://www.csmonitor.com/layout/set/print/content/view/print/320109

-Global Deficits Will Create $4.5 Trillion in New Debt: Hedge Fund Manager. How much additional sovereign debt does the world have to issue this year, just to make up the massive, growing budget deficits? Read more here-http://www.cnbc.com/id/38739845/

BANKING

-Illinois Regulators Close Bank, 110th in U.S. This Year. Illinois racked up its 14th bank failure of the year as state regulators on Friday shut down Palos Bank & Trust Co. in Palos Heights, Ill. Palos Bank & Trust had total assets of $493.4 million and total deposits of $467.8 million as of June 30, the Federal Deposit Insurance Corp. said.

First Midwest Bank of Itasca, Ill., plans to purchase all of Palos’s deposits at a premium of 1% and most of its assets. The FDIC has agreed to help shoulder losses on $343.8 million of those assets. The FDIC expects the failure to cost its deposit insurance fund an estimated $72 million.

Palos Bank & Trust is the 110th U.S. bank to fail this year. Since the recession officially began in December 2007, more than 270 banks have failed. Read more here-http://www.bloomberg.com/news/2010-08-14/chicago-area-lender-first-midwest-buys-shut-down-bank-third-in-10-months.html

-Banks May Face $134 Billion Loss on Loan Refunds, Compass Says. Bank of America Corp. and JPMorgan Chase & Co. are among 11 lenders that could suffer $133.8 billion in combined losses as mortgage-bond investors and insurers demand refunds for soured loans, according to an analysis by Compass Point Research and Trading LLC.

That’s the base estimate by analyst Chris Gamaitoni, who told clients costs may range from $55.3 billion in a best-case scenario to $179.2 billion at worst. The losses would be in addition to $28 billion of buyback demands by Fannie Mae and Freddie Mac that Compass previously predicted. Deutsche Bank AG and Goldman Sachs Group Inc. are among lenders confronting the biggest potential impact, according to Gamaitoni’s report.

Lenders have been barraged by claims from mortgage buyers and insurers who say banks sold housing debt to investors based on untrue or misleading data about home loans. The estimated losses exceed 10 percent of tangible book value at eight of the banks Gamaitoni cited. While solvency isn’t at risk, the drain on profit could last for years, he said.

“The investor community overall doesn’t understand the magnitude of the problem,” Gamaitoni said in a telephone interview. Gamaitoni was a senior financial analyst at Fannie Mae before joining Compass Point, a Washington-based research and investment banking firm founded in 2007 by former executives of Friedman Billings Ramsey & Co. Read more here-http://www.bloomberg.com/news/2010-08-18/bofa-jpmorgan-may-lead-banks-facing-134-billion-loss-on-loan-repurchases.html

JOBS

-Jobless Claims in U.S. Rose to Highest Since November. laims for U.S. jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year, indicating the economy may be slowing faster than forecast.

The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today in Washington. The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling contraction.

“There’s a red flag being waved right now that says ‘Danger,’” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Growth is going to slow in the second half and we might face something a little more ominous than that.” Read more here-http://www.bloomberg.com/news/2010-08-19/jobless-claims-in-u-s-rose-to-500-000-highest-since-november.html

-Chart of the week: Today’s Unemployment Claims Ruined Any Hope Of A Decent Jobs Situation This Year. Initial jobless claims came in today at 500,000, which as a 12,000 increase from the previous week’s level, and substantially worse than the 475,000 expected by consensus.

What does this mean? Whereas before jobless claims were merely ’stubbornly high’, and not declining meaningfully, now they’ve clearly gotten worse, as shown below in a chart from Waverly Advisors. What this means is that even if things start to get better, and jobless claims improve, it’s fair to say they will remain pretty ugly through year’s end. Read more here-http://www.businessinsider.com/chart-of-the-day-initial-jobless-claims-2010-8

Source: www.chartoftheday.com

-Jobless millions signal death of the American dream for many. Even the criminals have fallen on hard times in America’s poorest city as the long-term unemployed struggle to keep a grasp on normality. Read more here-http://www.guardian.co.uk/world/2010/aug/15/jobless-millions-death-american-dream

ANOTHER THREAT TO ECONOMY BOOMERS CUTTING BACK

-America’s baby boomers those born between 1946 and 1964 face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they’ll have to spend in retirement.

Policy makers have long worried that Americans aren’t saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren’t rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.

“We will have to learn to make do with a lot less in material things,” says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.

Banks, home buyers and bond issuers are all benefiting as the U.S. Federal Reserve holds short-term interest rates near zero to support a recovery. But for many of the 36 million Americans who will turn 65 over the next decade and even for the 45 million who have another decade to go the resulting low bond yields, combined with a volatile stock market, are making a dire retirement picture look even worse.

Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.

“If these rates stay as low as they are, then a lot more people are going to be hurting,” says Jack Van Derhei, research director at the Employee Benefit Research Institute. The non-partisan outfit estimates that if current conditions persist, nearly three in five baby boomers will be at risk of running short of money in retirement.

“There are going to be many luxury items that will simply have to be eliminated,” for retirees to make ends meet. Read more here-http://online.wsj.com/article/SB10001424052748703321004575427881929070948.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

CHINA

-China Cuts Long Term Treasuries By Most Ever as Yields Drop. China cut its holdings of Treasury notes and bonds by the most ever, raising speculation a plunge in U.S. yields that sent two-year rates to a record low has made government securities unattractive.

The Asian nation’s holdings of long-term Treasuries fell by $21.2 billion in June to $839.7 billion, a U.S. government report showed yesterday. Total Chinese investment in U.S. debt declined 2.8 percent to $843.7 billion, the least in a year, following a 3.6 percent slide in May.

China, America’s largest creditor, is cutting back after scrapping its currency peg in June, giving it less reason to buy dollars and invest them in Treasuries. China is also turning more bullish on Europe and Japan, purchasing bonds of both nations.

The shift comes as President Barack Obama increases U.S. debt to record levels, counting on overseas investors to buy, as he borrows to sustain the U.S. economic expansion. Read more here-http://www.bloomberg.com/news/2010-08-17/china-cuts-long-term-treasury-holdings-by-most-ever-as-u-s-yields-decline.html

-China Favors Euro Over Dollar as Bernanke Alters Path. China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.

The nation has been buying “quite a lot” of European bonds, said Yu Yongding, a former adviser to the People’s Bank of China who was part of a foreign-policy advisory committee that visited France, Spain and Germany from June 20 to July 2. Japan’s Ministry of Finance said Aug. 9 that China bought 1.73 trillion yen ($20.1 billion) more Japanese debt than it sold in the first half of 2010, the fastest pace of purchases in at least five years.

“Diversification should be a basic principle,” Yu said in an interview, adding a “top-level Chinese central banker” told him to convey to European policy makers China’s confidence in the region’s economy and currency. “We didn’t sell any European bonds or assets, instead we bought quite a lot.” Read more here-http://www.bloomberg.com/news/2010-08-15/china-favors-euros-over-dollars-as-bernanke-shifts-course-on-fed-stimulus.html

-China Doubles Korea Bond Holdings as Asia Switches From Dollar. China more than doubled South Korean debt holdings this year, spurring the notes’ longest rally in more than three years, as policy makers shifted part of the world’s largest foreign-exchange reserves out of dollars. Read more here-http://www.bloomberg.com/news/2010-08-18/china-doubles-korean-bond-holdings-as-central-bank-switches-from-u-s-debt.html and http://www.gata.org/node/8931

-China Tops Japan as World’s No. 2 Economy. China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three decade rise from Communist isolation to emerging superpower.

Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion, the Japanese Cabinet Office said today. Japan remained bigger in the first half of 2010, the government agency said. Japan’s annual GDP is $5.07 trillion, while China’s is more than $4.9 trillion. Read more here-http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in-second-quarter-capping-three-decade-rise.html

-Andy Xie: China Swallows Obama Stimulus Meant for U.S. Economy. The global economy is like fried ice cream: If you don’t act fast, it turns into a mess. American pundits, Nobel laureates included, are predicting Japan-style deflation for the U.S. and Europe.

They are urging the Federal Reserve to pursue another round of quantitative easing to stop the onset of an Ice Age for Western economies. The Fed didn’t oblige at its last meeting, but it threw a bone to the deflation crowd by promising not to pull money out of its previous round of asset purchases to stimulate a recovery.

On the other side of the world, consumer prices are surging. Emerging markets as a whole now have an inflation rate of more than 5 percent. India is registering price increases of more than 13 percent. China’s are more than 3 percent. But it surely feels a lot higher for average Chinese. Much of the “heat” comes from the property market in emerging markets.

Million-dollar flats in Mumbai have panoramic views of the city’s slums. Hong Kong’s real-estate prices have almost reclaimed their 1997 peak, though the economy has barely grown since then in per-capita terms. Overpaid bankers who pay 15 percent income tax in Hong Kong are stretched to buy Beijing or Shanghai properties.

Moscow is somehow always near the top of the list of the world’s most expensive cities. The emerging markets are on fire. Read more here-http://www.bloomberg.com/news/2010-08-17/china-drains-obama-stimulus-meant-for-u-s-economy-commentary-by-andy-xie.html

-William Pesek: Beware of $1 Trillion Under Chinese Mattress. Now that’s one big mattress. Last week, we learned China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income not reported in official figures 80 percent of it by the nation’s wealthiest. This massive pile of stashed cash is equal to about 30 percent of gross domestic product.

There may be both good and bad news in the above study conducted for Credit Suisse Group AG. The good: it lends credence to the domestic-demand story for Chinese growth. It turns out, the average urban disposable household income is 32,154 yuan, or 90 percent more than official figures. The bad: China’s rich-poor gap may be much bigger than we realize. Read more here-http://www.bloomberg.com/news/2010-08-15/beware-1-trillion-lying-under-chinese-mattress-william-pesek.html

EUROPE

Matthew Lynn: Debt Virus Spreads During Make-Believe Recovery. The euro area is growing again. The banking system has survived its stress tests. The Greeks have implemented their first austerity measures with some success.

The fevered predictions of the early summer that the euro was doomed, and that Europe’s sovereign-debt crisis would rip through countries such as Spain and Portugal like a virus, have been forgotten. The crisis appears to be over.

Don’t believe it. Under the surface, the cracks in the euro are getting worse. The imbalances in the euro area are growing all the time. The resistance to the bailout package will rise as the terms turn out to be immoral and absurd. And the big-deficit nations are locked in a downward economic spiral.

The euro has bought itself some time, at a huge cost. And yet little has been done to fix the causes of the crisis. Read more here-http://www.bloomberg.com/news/2010-08-16/debt-virus-spreads-after-make-believe-recovery-commentary-by-matthew-lynn.html

-Double-Dip Recession in U.K. Is Possible, Outgoing Budget Chief Budd Says. Read more here-http://www.bloomberg.com/news/2010-08-16/budd-says-u-k-economy-faces-the-possibility-of-a-double-dip-recession.html

-Economy is on a knife-edge, warn Bank of England policymakers. Britain’s economy is teetering on a knife edge, with “substantial” risks of a relapse balanced against signs of “gathering momentum” in the recovery, according to minutes from the Bank of England’s August rate-setting meeting. Read more here-http://www.telegraph.co.uk/finance/economics/7953145/Economy-is-on-a-knife-edge-warn-Bank-of-England-policymakers.html

-Irish debt under fire on fresh bank jitters. Ireland’s borrowing costs have begun flashing warning signs again on fears the full damage from the country’s banking crisis has yet to surface. Read more here-http://www.telegraph.co.uk/finance/economics/7940078/Irish-debt-under-fire-on-fresh-bank-jitters.html

-Tensions Rise in Greece as Austerity Measures Backfire. The austerity measures that were supposed to fix Greece’s problems are dragging down the country’s economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back. Read more here-http://www.spiegel.de/international/europe/0,1518,712511,00.html

ERIC SPROTT-FOOLED BY STIMULUS

-In the end, Keynesian stimulus ultimately fooled us all. It roped in the politicians of the richest countries and set them on an unsustainable course of debt issuance. Recent Keynesian stimulus has even managed to fool the sophisticated economic models designed by central banks.

The process of accounting for massive government spending ‘confuses’ the models into calculating a recovery trajectory when it doesn’t exist. The Bank of England confirmed this with its announced £3.5 million overhaul of its current model due to its inability to generate accurate inflation and recession forecasts.

Keynesian stimulus can’t be blamed for all our problems, but it would have been nice if our politicians hadn’t relied on it so blindly. Debt is debt is debt, after all. It doesn’t matter if it’s owed by governments or individuals.

It weighs on the institutions that issue too much of it, and the ensuing consequences of paying off the interest costs severely hinders governments’ ability to function properly. It suffices to say that we need a new economic plan a plan that doesn’t invite governments to print their way out of economic turmoil.

Keynesian theory enjoyed a tremendous run, but is now for all intents and purposes dead and now it’s time to pay for it. Literally. Read more here-http://www.sprott.com/Docs/MarketsataGlance/07_10%20Fooled%20by%20Stimulus.pdf

GULF OIL SPILL

-Scientists Say as Much as 79% of Oil Remains in Gulf of Mexico. A group of scientists says as much as 79 percent of BP Plc’s leaked oil remains in the Gulf of Mexico, challenging an Obama administration assessment that the crude is largely gone or rapidly disappearing. Read more here-http://www.bloomberg.com/news/2010-08-17/scientists-say-79-of-spilled-oil-may-remain-challenging-administration.html

-Gulf of Mexico `Dead Zone’ Grows as Spill Impact Is Studied. The Gulf of Mexico faces a renewed and enlarged threat to marine life: a low-oxygen “dead zone” about the size of Massachusetts, caused by chemical runoff into the Mississippi River that flows into the sea.

The dead zone, which occurs in Gulf waters in summer and is unrelated to BP Plc’s oil spill, covers an area twice as large as last year, according to a National Oceanic and Atmospheric Administration study released this week. The low-oxygen area this year is the fifth-largest since measurements began in 1985.

Aside from the dead zone, where shrimp and other sea life can’t survive, and the BP spill that dumped an estimated 4.1 million barrels of crude oil into the Gulf, there’s a looming threat of hurricanes. Meteorologists at the U.S. National Hurricane Center say a warming of the Atlantic indicates the storm season could be one of the most active on record. Read more here-http://www.bloomberg.com/news/2010-08-12/crude-marred-gulf-of-mexico-s-dead-zone-grows-as-spill-impact-is-studied.html

-Gulf Oil Spill Brings Concerns about Skin, Breathing Troubles and Cancer. Residents of the U.S. Gulf Coast and crews cleaning up the BP Plc oil spill that dumped 4.9 million barrels of oil into the water may suffer long-term health problems, including breathing difficulties, skin ailments, mental health effects and cancer, researchers said.

Doctors should watch for symptoms such as headaches, dizziness, respiratory trouble and chest pain, said investigators from the University of California, San Francisco, and the Natural Resources Defense Council. Physicians should ask where their patients live and work to determine their potential health risk from the disaster, the researchers said. Read more here-http://www.bloomberg.com/news/2010-08-16/gulf-oil-spill-may-have-long-term-consequences-on-health-researchers-say.html

REAL ESTATE

-Housing stuck in the basement. The National Association of Home Builders housing market index was at 22 in May, 16 in June, 14 in July and now 13 in August. Moreover, the forward-looking NAHB index essentially guaranteed that we will be on the hook for another round soft housing data ahead.

At 13, the NAHB index is now at the low-water mark for the year and the worst result since the economy was detonating in April 2009. Buyer traffic is barely showing a pulse even with the bond market working so hard to take mortgage rates to record lows the subindex remained at 10 and is just three points away from matching an all-time low.

Sales expectations sank to 18 from 21, well off the nearby high of 27posted last May ahead of the tax goodie expiry date, and at its lowest level since March 2009 (pre-dating the green-shoot era).

To put the NAHB into some context, in expansions it averages 55.5. In recessions, it averages 25.0. And today, it is sitting at 13.0. Draw your own conclusions on what we should label the cycle we are in. David Rosenberg-Gluskin/Sheff

-US Homeowner Confidence Drops in Second Quarter. U.S. homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom, real estate website Zillow.com said on Thursday.

Nevertheless, a significant number of homeowners said they planned to put their home up for sale in the next six months if they saw signs of a real estate market turnaround. Homeowners were more pessimistic about the short-term future of home values in their local market than they had been in the previous three quarters, according to the Zillow Second Quarter Homeowner Confidence Survey. Read more here-http://www.cnbc.com/id/38653757

-U.S. Home Resales Due for New Low, Citigroup Says: Chart of the Day. Read more here-http://www.bloomberg.com/news/2010-08-13/u-s-home-resales-due-for-new-low-citigroup-says-chart-of-the-day.html

-Housing Starts in U.S. Increased Less Than Forecast in July. Work began on fewer homes than forecast in July and building permits fell to the lowest level in more than a year, indicating little evidence of a rebound in U.S. construction following an expired tax credit. Read more here-http://www.bloomberg.com/news/2010-08-17/housing-starts-in-u-s-increased-less-than-economists-forecast-last-month.html

-U.S. Homebuilder Confidence Unexpectedly Drops to Lowest Since March 2009. Read more here-http://www.bloomberg.com/news/2010-08-16/u-s-homebuilder-confidence-unexpectedly-drops-to-lowest-level-since-2009.html

-Michael Carliner: Your House Might Be Underwater for Years. The housing market has usually led the U.S. economy into and out of recessions. It certainly led us into the latest slump. The same can’t be said of the recovery. If anything, housing today is stifling economic expansion. Read more here-http://www.bloomberg.com/news/2010-08-16/your-house-might-be-underwater-for-years-commentary-by-michael-carliner.html

-Debts Rise, and Go Unpaid, as Bust Erodes Home Equity. During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. Read more here-http://www.nytimes.com/2010/08/12/business/12debt.html?_r=4

-U.S. Treasury, Mortgage-Lenders Aim to Keep Government Role in Housing Fix. The Obama administration, looking to overhaul the U.S. mortgage-finance system, gathered support from lenders and the real estate industry for reducing, without ending, the government’s role in insuring loans. Read more here-http://www.bloomberg.com/news/2010-08-18/u-s-treasury-morgage-lenders-seek-to-keep-government-role-in-housing-fix.html

-Pimco’s Gross Urges `Full Nationalization’ of Housing Finance. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the mortgage- finance system as the Obama administration plots the revival of a market that was at the center of the 2008 credit crisis.

“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said today at a U.S. Treasury Department conference in Washington. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.” Read more here-http://www.bloomberg.com/news/2010-08-17/geithner-says-fannie-mae-freddie-mac-need-overhaul-to-reduce-u-s-role.html

-London House-Price Decline Wipes Out Gains From 2010 Rally, Rightmove Says. Read more here-http://www.bloomberg.com/news/2010-08-15/london-house-price-drop-wipes-out-gains-from-2010-rally-rightmove-says.html

The Goldbugg Report – August 24th, 2010
Posted by Worldwide Precious Metals on Tuesday, August 24, 2010

The Week in Review – August 20th, 2010

August 20, 2010

There was much celebration this week (though it turned out to be short-lived) when the DOW turned positive for the year once again. Since no one in the media seems to be bringing it up and we feel that you should have all the facts, here is the data for precious metals: gold turned positive for the year on March 1^st and has remained there since, silver turned positive for the year on March 28^thand has remained there since, the only time platinum was negative for the year was 5 days in early February and palladium has remained positive for the year since February 15^th.

Fidelity released the results of a survey Friday that showed that a record number of US workers are using their retirement accounts to make it through the economic downturn. 401k loans and hardship withdrawals are both on the rise. Consumer Bankruptcies are up 21 percent from last year

New claims for unemployment broke through the 500,000 level this past week. Individuals who are claiming benefits under the Emergency Unemployment Compensation provision since they exhausted their benefits have now reached over 4.7 million, 60.5% higher than the same measure in 2009. Small business owners are still holding off on hiring as the economic and regulatory uncertainties continue to weigh on their revenues.

California will once again run out of cash in October, perhaps leading to the issuance of IOUs once again. The state has begun limiting operation hours of government offices in an effort to save as much cash as they can.

Germany’s recovery, which helped boost the GDP figure for all of the Eurozone last week may slow down in the second half of the year according to the German Finance Ministry. According to the ministry, “economic momentum will likely be considerably less strong in the second half of the year than in the first.”

Russia intends to switch on Iran’s first nuclear power plant Saturday making Iran the first Middle East country to produce atomic energy. Tensions are running high in the region as animosity between Iran and Israel runs deep. Once the facility is operational, military action against it will become extraordinarily dangerous due to risk of radiation fallout. In further Mid-East news, the final US combat troops are pulling out of Iran’s neighboring country, Iraq.

The euro and the yen both traded basically sideways against the dollar this week. As the printing presses accelerate the printing of money, the dollar may begin to decline against both of those currencies once again.

Mortgage rates set another record low for the ninth week in a row, but that still does not appear to have helped the housing market at all. Home sales continue to lag and one fourth of all renters now say that they will never buy a home. According to a report from Zillow.com, one third of all homeowners in the US still think that the housing market has not hit bottom yet and that the worst is yet to come. As the current administration discusses how to fix Fannie and Freddie, two of the largest mortgage financers in the US, consumer confidence in the housing market continues to plummet.

Crude oil remains bound in the mid-$70 a barrel range, seemingly trapped there by gloomy economic news for the week.

Friday to Friday Close

	August 13th	August 20th	Net Change
Gold	$1214.00	$1229.00	15.00 + 1.24%
Silver	$18.10	$17.96	(0.14) – 0.77%
Platinum	$1525.00	$1514.00	(11.00) – 0.72%
Palladium	$475.00	$476.00	1.00 + 0.21%

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

	Gold	Silver
Support	1220/1200/1180	17.80/17.50/17.25
Resistance	1235/1250/1265	18.40/18.60/19.25

	Platinum	Palladium
Support	1500/1475/1450	470/460/440
Resistance	1530/1550/1600	490/500/520

Volatility should be expected to continue. Economic data continues to point to a stalling recovery. Consumers continue to hoard their cash and the long hoped for housing recovery does not look like it will be appearing on the horizon any time soon. Economist and former banker Alasdair Macleod, in a commentary titled “Gold manipulation: Central banks are now in deep trouble” believes demand for physical metals is outpacing the ability of bullion banks to deliver. Savvy investors in precious metals have been purchasing product as price dips occur to hold for the long term, which Mr. Macleod refers to in his commentary as “hoarding”. This results in a reduction in the supply of product available not only for investors to purchase but for bullion banks, which have sold paper representations of those products, to deliver when their customers request physical delivery. A shortage in market supply of a product typically leads to one thing: an upward explosion in the price. As economic uncertainties continue to mount, and fiat currencies deteriorate as governments fire up the printing presses again to create paper money out of thin air, investment demand for precious metals as a “safe haven” is increasing. Taking advantage of price dips at these levels to accumulate more metals for your portfolio may be an extremely wise move in the face of growing economic and geo-political uncertainty. 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 – August 20th, 2010
Posted by Worldwide Precious Metals on Friday, August 20, 2010

The Goldbugg Report – August 17th, 2010

August 17, 2010

-Peter Schiff: The golden decade. Read more

- China the world’s No. 1 gold producer and No. 2 gold consumer is encouraging gold investing by its rapidly growing middle class, and will likely have to increase imports to meet this new demand. See whole article

-James Turk: Is silver ready to move higher?

GOLD

-Frank Holmes: Ready, Set, Gold! Best Months Are Just Ahead. Global economic conditions are now favorable for gold as a safe-haven investment. The U.S., Western Europe and Japan are close to buckling under the weight of their sovereign debt loads, government budget deficits remain large and persistent and, as a result, faith in major paper currencies is low.

On top of this, China the world’s No. 1 gold producer and No. 2 gold consumer is encouraging gold investing by its rapidly growing middle class, and will likely have to increase imports to meet this new demand.

If history is any guide, gold is about to get even more attractive because we are heading into the fall and winter gift-giving season. This is the time of year that gold jewelers typically do their biggest business.

The clear trend can be seen on the seasonality chart for spot gold. In a typical year, the September price rises 2.5 percent above the August price. And to make the case even more compelling, the gold price has risen in 17 of the 21 Septembers since 1989, by far the best success ratio of any month of the year. In September 2009, the gold price jumped nearly 6 percent, well above the long-term average.

Based on the long-term record, this may be a good time for investors to consider establishing or adding to a gold or gold-stock position in advance of seasonal demand growth. Historical patterns may be a useful guide and improve the chances for investment success, but of course, there are no guarantees that the fall of 2010 will follow the well-established trend. Read more here-http://www.321gold.com/editorials/holmes/holmes081010.html and http://news.goldseek.com/GoldSeek/1281365291.php and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109485&sn=Detail&pid=33

-Gold and silver are in primary bull markets with years of upside still ahead. After all, gold and silver are the original money with 5,000 years of history. Nothing else even comes close. Larry LaBorde-Read more here-http://www.321gold.com/editorials/laborde/laborde080610.html

-I have a $1,375 target on gold this year; it’s a forecast I put out at the beginning of 2010. I’m still very comfortable with that forecast. We still have a long way to go before the end of the year. The fact that gold prices are still high compared to historical standards means that we’ve had an opportunity to sell off multiple times in recent months.

Yet, we’ve always managed to find gold buyers on dips, and we’re still hovering around $1,200. I think the sellers had their chance to drive down the price of gold and they’re out. The 5% decline that we’ve seen in the gold price was not met by increased selling pressure it was met by buyers looking for a cheap way to play the yellow metal. That $1,375 is still very much achievable this year. John Licata-Read more here-http://www.theaureport.com/pub/na/7023

-Precious metals are best performing assets. Precious metals such as gold were the best performing asset class of the first half of the year, according to research by Lloyds TSB. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/7935121/Precious-metals-are-best-performing-assets.html

-Goldman Goes For Gold: “Gold Market Poised For A Rally As US Real Rates Head Lower”. Read more here-http://www.zerohedge.com/article/goldman-goes-goo-goo-gold-gold-market-poised-rally-us-real-rates-head-lower

-Gene Arensberg: Chinese put under the gold price. Read more here-http://www.gata.org/node/8905

-Gold’s upward path will be volatile but direction and magnitude are assured Nichols. As investors get used to current gold prices so increased demand from India and China likely to see prices rise significantly higher. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109595&sn=Detail&pid=33

-The Indian gold jewelry love affair and its global significance. Unlike the West, Indians see gold jewelry as an investment and insurance against hard times, while the West sees it purely as decoration. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109581&sn=Detail&pid=33

-China pushes for gold; India follows suit. Hot on China’s heels, India’s Central bank is mulling over a proposal to allow banks to trade in gold. If cleared, the move will only strengthen the validity of the bull case in gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109472&sn=Detail&pid=33

-Christopher Barker: China opens the floodgates for gold and silver. Read more here-http://www.gata.org/node/8895

-John Hathaway, manager of the $1.4 billion Tocqueville Gold Fund, interview with Barron’s called “The Golden Mean.” Read more here-http://webreprints.djreprints.com/2467711363988.pdf

-’Committee to Save the World’ is wrecking fiat currencies, John Hathaway tells KWN. Listen here-http://www.gata.org/node/8908

-Richard Russell-Fiat money in retreat all over the world. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/8/11_Richard_Russell_-_Fiat_Money_In_Retreat_All_Over_The_World.html

-Richard Russell Slams Robert Prechter, Praises Gold, Tells Readers To Get Out Of Stocks. Read more here-http://www.zerohedge.com/article/richard-russell-slams-robert-prechter-praises-gold-tells-readers-get-out-stocks

-Darryl Robert Schoon: Hedging Chaos with Gold. Read more here-http://www.321gold.com/editorials/schoon/schoon080510.html

-Peter Schiff: The golden decade. Read more here-http://www.321gold.com/editorials/schiff/schiff080910a.html

-Ned Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/aug092010.html

-David Levenstein: The Fundamentals Driving the Gold Price have not Changed. Read more here-http://www.kitco.com/ind/Levenstein/aug092010.html

-CBGA gold sales minimal as IMF sales continue. The BIS activity serves to strengthen gold’s role as a non-fiat currency and the IMF programme could be completed this year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109370&sn=Detail&pid=33 and http://www.gata.org/node/8897

-Gold Holdings Decline Isn’t Signaling `Big Exit’: Chart of the Day. Read more here-http://www.bloomberg.com/news/2010-08-09/gold-holdings-decline-isn-t-signaling-big-exit-chart-of-the-day.html

-Gold to Gain, Revive Inverse Link With Dollar: Chart of the Day. Read more here-http://www.bloomberg.com/news/2010-08-06/gold-to-gain-revive-inverse-link-with-dollar-chart-of-the-day.html

-Good thing Iran hasn’t the wit to buy gold and take delivery. Iran announced plans Monday to get rid of its dollar and euro reserves in response to the latest United Nations sanctions over its contested nuclear program. Read more here-http://www.gata.org/node/8907

-Gold council CEO helps The Economist put investors to sleep. Read more here-http://www.gata.org/node/8900

-If you can fractionally reserve gold,1 ounce is worth 40, 50, or 100. Read more here-http://www.gata.org/node/8893

-Real gold or paper gold which do you own? Read more here-http://www.gata.org/node/8894

-Hinde Capital On Whether GLD Is A New CDO In Disguise. Read more here-http://www.zerohedge.com/article/hinde-capital-whether-gld-new-cdo-disguise

-Murray Pollitt: When it comes to gold, The Economist and FT are like Pravda. Read more here-http://www.gata.org/node/8909