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The Goldbugg Report – September 28th, 2010

September 28, 2010

-“Fiat money has no place to go but gold.” Alan Greenspan

-This year gold has shifted from being a commodity towards being a currency. David Rosenberg

-$2,500 Gold Could Easily Result in $178.50 Silver Here’s Why. Read more here

GOLD

-“Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.” Alan Greenspan

-“Fiat money has no place to go but gold.” Alan Greenspan

-This year gold has shifted from being a commodity towards being a currency. David Rosenberg-Gluskin/Sheff

-Establishment economist Sinai: Fed’s code means ‘buy gold’. The Federal Reserve’s statement yesterday that inflation is below levels consistent with the central bank’s mandate for price stability means it’s time to buy gold, said Allen Sinai, chief global economist at Decision Economics Inc. in New York.

“That’s code for ‘we don’t want to go the way of Japan so we’re going to print money,’” Sinai said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “You gotta buy gold when those two central banks are doing what they’re doing.” Read more here-http://www.gata.org/node/9050

-Greenspan’s Warning About Gold Echoes After Fed Speaks. Read more here-http://www.nysun.com/editorials/greenspans-warning-about-gold-echoes-in/87088/

-This week The Central Bank of the Russian Federation reported purchasing 300,000 ounces of gold bullion for their reserves in August. Year-to-date they’ve purchased 3.1 million ounces a hair over 96 tonnes. I’m sure China is socking away gold as well, except they aren’t advertising the fact. Ed Steer-Casey Research

-David Levenstein: Central bank buying boosts gold. Central banks continued to add to their holdings over the course of last week helping to support the price of the yellow metal as it continues to break to new highs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=111489&sn=Detail&pid=33

-Adrian Douglas: Central banks don’t tout gold sales anymore. Read more here-http://www.gata.org/node/9043

-It is worth remembering that in the gold bull market of the 1970s when gold rose 24 fold or by 2,300% in 9 years. Gold rose 49.7% in 1972, 73.5% in 1973 and by 60.1% in 1974. In the final phase of the bull market in 1979, gold surged 140% in one year. Gold’s recent rise has been tame and gradual by comparison. Goldcore

-Jeffrey Nichols, managing director of American Precious Metals Advisors, sees gold hitting $1,500 in the first half of 2011, or possibly even before the end of this year. “Not only will prices move substantially higher in the months ahead, but the uptrend still has years to go with gold very likely reaching $2,000 and eventually $3,000 or even $5,000 before the gold-price cycle shifts into reverse,” Nichols said.

“However, I also expect continued high gold-price volatility with big corrections along the way, so much so that some observers will prematurely declare the bull market over long before its time,” he said. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=111490&sn=Detail&pid=34 and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=111268&sn=Detail&pid=33

-“Behold gold on the verge of a powerful breakout. Gold is not an inflation hedge, but rather a monetary system failure hedge. Gold is not a dead asset, but rather the ultimate form of money. Gold is not an investment without yield, but rather a store of value serving as ballast for the global banking system. Each round of stimulus, bond redemption, bank aid, and annual government deficit lifts the gold price potential another $1000, and the silver price another $20.” Jim Willie-Read more here-http://news.goldseek.com/GoldenJackass/1284667200.php

-Gold has again broken out to new highs and silver is on the cusp of doing so as well. Unfortunately more than 95% of the pundits were not on board; they believed it was going lower. The current rally that has just begun will last at least through February and perhaps through June before there is any meaningful correction.

By that time we could be looking at $3,000. It is anyone’s guess as to how high it is going, but one thing is for sure, it is going higher. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1284913496.php and http://news.goldseek.com/InternationalForecaster/1285163182.php

-What makes the gold story so interesting is that bullion has so many different correlations with inflation, with the dollar, with interest rates, with political uncertainty and it also has different faces. This year, for example, gold has shifted from being a commodity towards being a currency the classic role as a monetary metal that is no government’s liability.

This year, there are three events have catapulted gold into currency status, and they all involve attempts by governments around the globe to devalue their own currencies or at least jeopardize the sanctity of the central bank balance sheet:

1. The ECB’s decision to allow non-investment grade bonds as collateral on its balance sheet.

2. The Fed’s decision not to allow, as was planned, an unwinding of its pregnant balance sheet with obvious implications for the growth rate in the monetary base.

3. The decision by the Japanese government to unilaterally intervene in the foreign exchange to reverse the yen’s strength.

Nobody wants a strong currency, and nobody, outside of a few small countries, wants higher interest rates, and now, we have rising U.S.-Chinese trade tensions. Greek bond yields remain at punitive levels and are currently pricing some probability of default.

In addition, Ireland seems to be experiencing intense financial difficulties that have compelled the ECB to step in for support. The Mideast peace talks don’t seem to be going anywhere. The U.S. political backdrop is one of intense uncertainty and the most likely scenario post-November 2nd is one of gridlock. How can gold not thrive in this environment?

The other day, we were asked what would turn us bullish? The assumption of course is that we aren’t bullish on anything. Well, go back and look at my track record and you will find that we have been gold bulls now with near consistency for the better part of the past decade. David Rosenberg-Gluskin/Sheff

-Jeff Clark: How High Will Gold Go This Fall? The gold price has been hitting ever-new records over the past couple weeks, now closing in on the $1,300 mark. Some gold followers are saying this is extremely bullish for the near-term price since it broke so decisively through its June 28th high of $1,261. If they’re right, how high might this particular surge go?

While the endgame for gold is far off in my opinion, it’s worth looking at short-term surges, especially if you’re trying to determine to buy at a particular level. Plus, it’s just darn fun. I looked at all major surges in the gold price since 2001.

What constituted a “surge,” in my opinion? Any large jump or uptrend that’s clearly visible on an annual chart. So instead of looking at yearly gains or seasonal tendencies, I simply measured the percent gain of all big upswings that were the most obvious, regardless of when they occurred. I put the findings to a chart.

You can see there haven’t been that many large price advances, about one annually until last year. You’ll also notice the biggest “surge” this year is comparatively small. In fact, you have to go back to mid-2001 to find one that didn’t advance at least 20%. Meaning, we may very well be in for a bigger surge yet this year.

The average of all surges in the gold price since 2001 is 23.5%. If we hit the average, gold would spike to $1,428 in the current run-up. Note that I measured from the bottom of the surges, not the breakout point; the bottom I used in our case was $1,157 on July 28.

If our current surge were to match the 35.5% biggie, gold would hit $1,567. A 20.8% advance (the smallest of those greater than 20%) would take it to $1,397. With these numbers, Bud Conrad’s call for $1,350 gold by year-end would be met and surpassed.

The only caveat I’d point out is that we logged three surges last year, the only time that occurred in the current bull market. On that basis, it’s certainly possible we could be due for a breather this year and have thus seen our biggest advance. But given the current global economic and monetary circumstances, I wouldn’t place a bet on that.

A survey of 29 analysts by Bloomberg a couple weeks ago reported they see gold averaging $1,500 in 2011 and most analysts tend to make conservative projections. Note that there were always small pullbacks in the time periods I looked at; it was never a straight line. So the recent minor drawdown was typical of what occurred during these surges.

Also, there were always corrections or at least periods of consolidation after the surge and before the next big upswing. Regardless of what gold does over the next few months, I think 20%+ surges will continue throughout this bull market, with the occasional 30% punch.

And a doubling of the gold price in a matter of months is also likely in our future, a sure sign of the Mania phase. Gold surged 128.5% from October 8, 1979, to January 21, 1980. A similar vault today would have the price jumping from, say, $2,400, to $5,484 in less than four months. Yes, I think that’s entirely possible and perhaps probable.

How high will gold ultimately go? I look at it this way. The sovereign debt crisis in Europe isn’t over. The sovereign debt crisis in the U.S. hasn’t started. We will almost certainly see more quantitative easing (i.e., money printing). We have artificially low interest rates. The U.S. dollar is basically at the same level it was two years ago.

We have no official inflation and certainly no big inflation. Less than 5% of U.S. citizens own any form of gold. Central banks are widely expected to be net buyers of gold again this year. Investment demand for gold is still only 32% of all uses of gold, a far cry from the 54% level reached in 1979. I could go on, but you get the idea.

The only way you can benefit from these surges is to be long gold. If you haven’t been a part of one, I guarantee you it’s a lot of fun. Gold is more important than that, of course; it’s your personal safe-haven asset. Buy on pullbacks, slowly increasing your holdings so that what you own makes a difference in your portfolio, both for asset protection and profit potential. And then, hang on. Read more here-http://www.caseyresearch.com/editorial/3686?ppref=DLC192ED0910C

-Jim Roger: Gold bull market has a long way to go. Global commodities investor Jim Rogers says gold’s rally and record prices are a sign that money printing is starting again and the gold bull run is far from over. “The US has been giving the signal that it is going to print more money and Japan has recently said they are going to print more money what is happening is that money printing is starting again and the market knows it,”

A noted commodities guru, Rogers said that a bubble will form one day for gold but it won’t be any time soon. Rogers recounted that a few months ago when speaking to a room full of high-end money managers, they were asked how many of them owned gold. “Seventy-five per cent of the people had never owned gold, or silver.

So you can see most people still do not own gold. For most people in the world gold is still an unknown entity,” said Rogers, Chairman of Rogers Holdings. During gold’s hysterical phase, which Rogers said could take place in 5 to 7 years; everyone will be buying the yellow metal, he said.

In the interim, Rogers said we will see more Asian banks buying gold, citing Bangladesh’s recent purchase of 10 tonnes of the IMF gold. “It is not the way people are supposed to invest but they see something moving and they all want to jump on.

The gold bull market has a long way to go, all commodities have a long way to go in the end we will end up with a hysterical bubble, at which point I hope I am smart enough to sell, but that is years away,” he said. Rogers said he normally advises to buy when prices are going down. “For somebody who owns no gold, I would say go ahead and buy some silver.

If you desperately need to buy gold it is better to buy things when they are going down not when they are racing high,” he said. However, he added that everyone should own some gold as insurance if for nothing else. Rogers said that more money can be made in silver than gold at the current prices.

“Gold is at all-time high and silver is still 60 per cent below its all-time high,” he said. He added that there is more money to be made in agriculture than silver or gold. “There is going to be a lot of money made in commodities yet, if people do their homework,” he said. Read more here-http://www.kitco.com/reports/KitcoNews20100917DC.html

-Jim Sinclair: Three solid fellows present their view on the future of the price of Gold. Alf Field: $4,250-$10,000-Read more here-http://www.24hgold.com/english/news-gold-silver-gold-price-objective.aspx?contributor=Alf+Field&article=1440499960G10020&redirect=False Harry Schultz: $6,000-Read more here-http://www.moneynews.com/StreetTalk/harry-shultz-deflation-hyperinflation/2010/06/11/id/361725?s=al&promo_code=A0D6-1 Martin Armstrong: $5,000-Read more here-http://www.businessinsider.com/martin-armstrong-gold-headed-to-5000-and-beyond-2009-11

-Gold price at $1,500 by year-end, not a crazy statement Harmony Gold CEO. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=111543&sn=Detail&pid=34

-Gold projected to stay high for years, hit $1,400 in 2011. Read more here- http://www.ctv.ca/generic/generated/static/business/article1721181.html

-Jim Rickards of Omnis gives his views on the Chinese yuan, and forecasts that gold will rise to $5,000 per ounce as the US dollar collapses. Watch more here-http://www.cnbc.com/id/15840232?video=1592641242&play=1

-Chuck Jeannes, CEO of Goldcorp, the second biggest gold producer in the world, stated during an interview at the Denver Gold Forum that the gold price will reach a level of $1,500 in the coming years. Read more here-http://goldmoney.com/gold-research/goldcorp-ceo-jeannes-gold-on-the-way-up-to-1500.html

-Richard Russell: “There’s No Fever Like Gold Fever”. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/17_Richard_Russell_-_Theres_No_Fever_Like_Gold_Fever.html

-Marc Faber says gold prices not expensive. Dr. Doom still bullish on gold bullion. Gold’s rise to a fresh record won endorsement from financial advisor Marc Faber, who said the rally in bullion prices didn’t appear excessive in view of the inflationary backdrop and ongoing bias of the world’s monetary authorities towards weak currencies.

Faber, known as Dr. Doom for his bearish call on U.S. stocks shortly before the crash of October 1987, said he would continue to be a buyer of bullion at current levels. “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble,” Faber told a CLSA Investors’ Forum 2010 in Hong Kong. Read more here-http://www.marketwatch.com/story/story/print?guid=662E647E-C258-11DF-BA89-00212804637C

-Deutsche Bank: Why gold will continue higher. Read more here-http://jsmineset.com/wp-content/uploads/2010/09/comm_special_1009201.pdf

-Gold Can Keep Setting Records, Kleinwort Benson Tells Clients. Read more here-http://www.businessweek.com/news/2010-09-22/gold-can-keep-setting-records-kleinwort-benson-tells-clients.html

-Aden Sisters: Gold is on the move. Read more here-http://www.321gold.com/editorials/aden/aden092010.html

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1284944400.php

-Brett Arends: The 10 biggest myths about gold. 1. “Gold is overvalued.” How can anyone know this? Nobody even knows what gold is worth, so it’s impossible to say with any confidence that it’s overvalued (or undervalued, for that matter). Some perfectly intelligent people, such as Dylan Grice, a strategist at SG Securities, argue that when compared to the ballooning money supply, gold is still low by historic standards.

And even if gold is in a bubble today, it may have a long way to go. As I’ve pointed out earlier this year, as our accompanying chart shows, at a comparable stage Nasdaq (1998) and real estate (2003) still had a couple of years to run. Read more here-http://www.gata.org/node/9024

-Dan Norcini: Gold is the battle for economic supremacy. Read more here-http://www.gata.org/node/9053

-Haynes, Norcini, Arensberg on weekly wrapup at King World News. Listen here-http://www.gata.org/node/9028

-Gene Arensberg: Gold in uncharted waters as silver breaks out. Read more here-http://www.gata.org/node/9037 and http://news.goldseek.com/GoldSeek/1284989931.php

-Eric Sprott talks on mining stocks and currency market manipulation. Listen here-http://www.gata.org/node/9029

-GoldSeek Radio interviews GATA’s Fitts on unreliability of ETFs. Read more here-http://www.gata.org/node/9047

-Bill Buckler Discusses The Last Price Standing Of “True Money”, Answers The Only Question Relevant To Gold Bugs. Read more here-http://www.zerohedge.com/article/bill-buckler-discusses-last-price-standing-true-money-answers-only-question-relevant-gold-bu

-Adrian Douglas: More forensic evidence of gold and silver price manipulation. Read more here-http://www.gata.org/node/9049

-Alasdair Macleod: Inflection point for gold and the price suppression scheme. Read more here-http://www.gata.org/node/9044

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,650 the silver price would be $20.63

Gold to silver ratio at 70 to 1 with gold at $1,650 the silver price would be $23.57

Gold to silver ratio at 60 to 1 with gold at $1,650 the silver price would be $27.50

Gold to silver ratio at 50 to 1 with gold at $1,650 the silver price would be $33.00

Gold to silver ratio at 40 to 1 with gold at $1,650 the silver price would be $41.25

Gold to silver ratio at 30 to 1 with gold at $1,650 the silver price would be $55.00

Gold to silver ratio at 20 to 1 with gold at $1,650 the silver price would be $82.50

Gold to silver ratio at 15 to 1 with gold at $1,650 the silver price would be $110.00

-”I suspect silver’s underperformance has now run its course and we can expect the white metal to outperform gold over the next five to ten years. For one thing, a number of new end uses for silver are likely to boost industrial demand while investment demand for silver will continue to (increase due to) many of the same forces benefitting gold.” Jeff Nichols-Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=111268&sn=Detail&pid=33

-Silver price to rise “substantially” Hecla CEO. President and Chief Executive Phillips Baker also told Reuters that demand for silver is starting to rise after the recession, and he expects it to grow by more than 6 percent a year as the global economy expands.

“I have the view it is going to go up substantially and I certainly would not be surprised to see $25 to $30 (within a year),” Baker said in an interview on the sidelines of the Denver Gold Forum industry gathering. “Silver continues to trade with gold,” he said. “There’s this idea of ‘poor man’s gold.’ There’s quite a bit of movement in the silver price that will happen as a result of that.” Read more here-http://af.reuters.com/article/commoditiesNews/idAFN2116553920100921

-Commerzbank’s Weinberg Sees Silver ‘Outperforming’ Gold. Eugen Weinberg, an analyst at Commerzbank AG, talks about the outlook for commodities including gold and silver. Watch video here-http://www.bloomberg.com/news/2010-09-20/commerzbank-s-weinberg-sees-silver-outperforming-gold-video.html

-$2,500 Gold Could Easily Result in $178.50 Silver Here’s Why. Read more here-http://news.silverseek.com/SilverSeek/1284915551.php

-How China Will Drive Silver to $250. Read more here-http://www.moneymorning.com/publishersseries/Silver_PSSIL02101.pdf

-Jeffrey Lewis: Swapping Gold for Silver Has Historical Merit. Read more here-http://news.silverseek.com/SilverSeek/1284910695.php

-David Morgan interview on the silver bull market. Read more here-http://www.theaureport.com/pub/na/7390 and http://news.silverseek.com/SilverInvestor/1284909990.php

-Don’t trade yourself out, Turk warns precious metals investors. Listen here-http://www.gata.org/node/9052

-Silver to $30, perhaps in a few weeks, Turk tells King World News. Read more here-http://www.gata.org/node/9048

-Silver to explode at any moment, Turk tells King World News. Read more here-http://www.gata.org/node/9035 and http://www.gata.org/node/9023

-James Turk: The battle for $21 silver begins. There is a battle beginning as silver approaches $21, its highest price in 30-years. There is a lot at stake. Those who are short silver don’t want their losses to become any bigger than they already are. On the other side of the trade, everyone who is long silver wants to see silver appreciate to a fair market value.

This new battle beginning as silver nears $21 is no different than those that have been fought many times over the past decade. When a resistance level is reached, the shorts have repeatedly ‘circled the wagons’ in an attempt to keep silver from climbing higher. They will probably do it again.

Nevertheless, given that silver has risen from $4.03 early this decade to last Friday’s close of $20.79, it is obvious that the shorts have not been successful over the long-term. But market battles are fought day-to-day and even hour-to-hour. Plenty can happen in the short-term to cause one to take their eye off-the-ball, but don’t let it happen. Instead always focus on the long-term, and here the picture remains very bullish, as is clear from the following chart.

Technically, silver has nearly completed a huge accumulation pattern highlighted by the ‘head-and-shoulders’ pattern formed over three years. Silver is now approaching the breakout moment that I have been anticipating since April 1st when I wrote that silver looks ready to soar, or even earlier than that when I wrote in my outlook for 2010 that “We need to start thinking about silver hurdling above $50.

If it doesn’t happen in 2010, this important event which is unimaginable to many will I expect happen in 2011.” So the important breakout that we have been waiting for months is at hand. When silver finally hurdles above $21, expect the momentum from new buying that will come into the market to take silver much higher in the months ahead. Notwithstanding the tremendous price appreciation it has achieved this decade, the bull market in silver has hardly begun. Read more here-http://www.fgmr.com/battle-for-usd-21-silver-begins.html and http://www.gata.org/node/9031

-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1284913733.php

-Jordan Roy-Byrne: Gold-Silver ratio. Read more here-http://news.silverseek.com/SilverSeek/1285111344.php

-Silver looks ready to rip. At last Friday’s close, an ounce of gold was worth 61 times that of the equivalent measure of silver. Compare that to the 19th century ratios set by the US and France of gold being fixed at around 15 times the value of silver. In 2007, the ratio was 50:1.

The last big run for silver coincided with the huge surge in gold prices in 1979 and 1980. Silver’s high in 1978 was $US6.31/oz, then it went to $US34.45/oz in 1979 and burst out to soar to $US48.70/oz in 1980, but collapsing (along with gold) the next year, back to $US16.29/oz.

But here’s the thing: even at its maximum in 1980, the silver-gold ratio was 37:1. That suggests that, in this bull market for precious metals, silver is still lagging substantially with the concomitant potential for catching up to its historical relationship with the yellow metal.

All investors have to do is wait for the US to start its money printing presses again the only option that Washington has if it needs a new phase of stimulus. Then watch the precious metals with all that extra, and increasingly depreciated, paper money flying around. Read more here-http://www.theaustralian.com.au/business/mining-energy/silver-looks-ready-to-rip/story-e6frg9ex-1225926785632

-Silver starts to get some of the investor spotlight. Read more here-http://www.theglobeandmail.com/globe-investor/investment-ideas/silver-starts-to-get-some-of-the-investor-spotlight/article1717860/

CHART OF THE WEEK-QUOTES-QUICK HITS

-Alternate Inflation Data. The latest annualized rate is 8.50%. The chart below includes an alternate look at inflation without the calculation modifications the 1980s and 1990s (Data from www.shadowstats.com). Read more here-http://dshort.com/inflation/inflation-update.html

-We are in either a deflationary or disinflationary world; as today’s CPI data for Canada would attest to, coming on the heels of the tepid U.S. price data last Friday. David Rosenberg-Gluskin/Sheff

-It’s early days yet, but it would seem as though the U.S. economy remains very sluggish as we head towards the third-quarter finish line. David Rosenberg-Gluskin/Sheff

-So, the recession ended 15-months ago go tell that to the 15mln unemployed Americans and the 42% share of the unemployed looking for a job fruitlessly for at least six months. David Rosenberg-Gluskin/Sheff

-Everyone has this view that growth in the U.S. will merely be slow but that there will be no double dip; however, no one seems to entertain the notion that all we may still be in a recessionary state. David Rosenberg-Gluskin/Sheff

-You pointed out that FDR worked out the WPA at lunch one day and put Americans to work, paying them to build the Golden Gate Bridge, while Obama is mailing Americans 99 weeks of unemployment checks the modern soup line. Well, it’s worse than that. Think about it: FDR borrowed that money, mostly from Americans, and sent it to American workers who bought American goods.

Today Obama is borrowing money from China and sending it to Americans entitled to 99 weeks of no-work-pay, I mean unemployment insurance, and they are taking it over to Wal-Mart and sending it to Chinese workers. Go figure. David Rosenberg-Gluskin/Sheff-Sent to David from a reader

-We are at a point where so many people have fallen below any acceptable level of income that half the country doesn’t pay any tax. Even with record use of food stamps and stepped-up jobless insurance benefits, the number of folks living below the so-called poverty line jumped 10% last year an apparent economic recovery year to 43.6 million people.

So, we have 1 in 6 Americans either under or unemployed and another 1 in 7 who live in poverty and somehow we have a legion of economists and strategists who see what we are in some typical recession-recovery cycle on our hands.

Just read the editorial of the current Economist for how mainstream the “muddle through” view has become downside risks are widely seen as marginal because we have never seen a real “double-dip” recession before. David Rosenberg-Gluskin/Sheff

-Bill Simon, CEO of Wal-Mart’s U.S. business, at a Goldman Sachs conference last week, on behavior at a Walmart store around midnight at the end of a month. “The paycheck cycle we’ve talked about before remains extreme.

It is our responsibility to figure out how to sell in that environment, adjusting pack sizes, large pack at sizes the beginning of the month, small pack sizes at the end of the month. And to figure out how to deal with what is an ever-increasing amount of transactions being paid for with government assistance.

“And you need not go further than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when electronic government electronic benefits cards get activated and then the checkout starts and occurs.

And our sales for those first few hours on the first of the month are substantially and significantly higher. “And if you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they’ve been waiting for it. Otherwise, we are open 24 hours come at 5 a.m., come at 7 a.m., come at 10 a.m. But if you are there at midnight, you are there for a reason.” Read more here-http://www.financialarmageddon.com/2010/09/the-paycheck-cycle.html

-U.S. Loses No. 1 to Brazil-China-India Market in Investor Poll. Read more here-http://www.bloomberg.com/news/2010-09-21/u-s-loses-no-1-to-brazil-china-india-market-in-global-poll-on-investing.html

-Obama Loses U.S. Investor in Global Poll With Approval Abroad. More than three-quarters of U.S. investors view Obama as anti-business and are pessimistic about his policies, while a majority outside the U.S. holds a more favorable view, a Bloomberg survey shows. Read more here-http://www.bloomberg.com/news/2010-09-22/obama-loses-u-s-investor-in-global-poll-as-majority-abroad-favor-policies.html

-UK Proposes All Paychecks Go to the State First. The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer. Read more here-http://www.cnbc.com/id/39265847

-Cameron Raids Dormant U.K. Accounts as Minister Attacks Banks. A law passed in 2008 under Gordon Brown’s Labour government allows the government to use money from dormant bank and building-society accounts “for social or environmental purposes.”

An account is dormant if the holder has made no transactions over a period of 15 years. The British Bankers’ Association, a lobby group, estimates that about 400 million pounds ($610 million) is unclaimed in bank accounts. Read more here-http://www.bloomberg.com/news/2010-07-18/cameron-raids-dormant-u-k-accounts-while-minister-attacks-rip-off-banks.html

-Bill Gates Tops Forbes 400 Ranking of Richest Americans With $54 Billion. Bill Gates, the co-founder of Microsoft Corp., remains the richest American with estimated assets of $54 billion, according to Forbes magazine’s annual ranking of the 400 wealthiest Americans.

Warren Buffett, the chief executive officer of Berkshire Hathaway Inc., ranked second in the U.S. with $45 billion. Gates, 54, and Buffett, 80, were Nos. 1 and 2 last year. The number of list members whose wealth declined this year was 85 compared with 314 in 2009, while wealth increased for 217 members.

The total worth of the 400 rose by 8 percent to $1.37 trillion, still below the 2008 total of $1.57 trillion. “They’ve recovered, but we’re still so far off from 2008,” Luisa Kroll, global wealth editor for Forbes, said in a telephone interview.

Facebook Inc. CEO Mark Zuckerberg, 26, who was tied for No. 35 on the list, saw his wealth jump 245 percent to $6.9 billion, the largest percentage increase of anyone on the list. “Very few are at an all-time high, with the exception of how phenomenally well Facebook is doing,” said Kroll, who is based in New York. Read more here-http://www.bloomberg.com/news/2010-09-22/bill-gates-tops-forbes-400-ranking-of-richest-americans-with-54-billion.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

-This may be difficult for some people to comprehend, but there are many other avenues to build wealth outside of the stock market. David Rosenberg-Gluskin/Sheff

-Pink Diamond most expensive to be auctioned in Canada. It’s pink and about the size of a Chiclet. But it’s going to cost some buyer millions of dollars. The auction of an extremely rare pink diamond has caught the attention of global collectors, being billed as the most expensive diamond auctioned in Canada.

The auction value of the diamond has been placed anywhere from $2.5 million to $3 million. “It’s interesting to hold something so valuable and tiny in your hands, that in your whole lifetime you would never earn what this is worth,” says Duncan Parker, the president of the Canadian Gemological Association, who was holding the gem earlier. “This is really extraordinary stuff.”

Parker and Kashif Kahn, the chief operating officer of Toronto based Circa Auctions are holed up at the Park Hyatt Hotel in Toronto on a Tuesday afternoon. The two are previewing the diamond, along with millions of dollars worth of other gemstones in advance of the auction at the hotel on Oct 3.

Outside two surly and armed security officers stand guard. The theme today is clearly pink. The suite, designed by Sarah Richardson is pink. The tiny macaroons on the table are shocking Barbie pink. The diamond itself is a pretty rose pink. Kahn cups it in the palm of his hand and hands it off to a reporter. “Take a look, it’s really beautiful.”

It is. The gem has the intense glow that some collector will pay dearly for. Pink diamonds have always been fashionable, but celebrity endorsement has made them even more desirable. Carla Bruni-Sarkozy, France’s first lady, sports a pink diamond engagement ring. So does Posh Spice Victoria Beckham. Ben Affleck proposed to Jennifer Lopez with a six carat one.

In Hong Kong last December, the world record price per carat was set with the sale of a 5 carat $10.8 million pink diamond. That diamond was appraised as internally flawless. The Toronto diamond is of lesser quality, down a few notches at Vs2, meaning it has very slight inclusions that are not visible to the naked eye.

The Hong Kong price meanwhile, broke the previous per carat record for a 7.03 carat blue diamond purchased by Hong Kong property baron Joseph Lau for $10.5 million. “In times of economic uncertainty, diamonds have shared certain characteristics with gold,” says Ari Levy, portfolio manager and vice-president of TD Asset Management.

“It is a store of value and a hedge against inflation that people turn to.” The attention has been on the gold market as the precious metal hit a new record on Tuesday. But for some investors, diamonds have become the new gold. The market took a hit during the recession last year, but is slowly bouncing back.

In what analysts see as a sign of recovery, Toronto based luxury retailer and miner Harry Winston, earned $16.5 million (U.S.) in the second quarter of 2010, compared with a second quarter loss of $24.5 million in the same quarter of 2009. “Shortages in rough diamond supply coupled with the improving world economy sustained higher prices,” said the jeweler.

Analysts say the buyer for the pink diamond will likely come from Asia, or the Middle East. The sultan of Brunei is said to have the largest collection of pink diamonds. The diamonds are extremely rare and most, such as the Toronto stone come from the Argyle mine in Australia.

No one knows exactly what combination of conditions create pink diamonds, but the Argyle mine is slated to close in several years, which should make them even rarer, says gemologist Parker.The current stone to be auctioned is owned by an unnamed Canadian dealer. “The buyer could also come from Toronto, there are a lot of high net worth clients here,” says Kahn.

“These are the people who are buying for the future, and are choosing perhaps between buying a Picasso, or a gemstone.” In Canada, Kahn says the most expensive diamond auctioned so far has been in the $250,000 range. If this sells next week, it will almost certainly be a record.

While the auction value is in the $2.5 million to $3 million range, auctioneers expect that ceiling to be broken. The stone has been appraised with a retail value (if you had bought it in a store, and not wholesale) of between $8 to $12 million.

Analysts say retail jewellery isn’t necessarily the best place to store your wealth. A diamond bought in a jewelry store could be worth considerably less once you walk out the door. But Kahn says coloured gemstones because of their exceeding rarity are an exception. This is Kahn’s first auction in his home town despite being in business for 10 years, and holding sales in New York, London and China.

“It is a bit of a risk. But we wanted to bring it home. We have a great deal of diversity in Canada, and with online bidding, you can be anywhere today,” he says. The purchase also includes “full naming rights” to the diamond. “You could name it after yourself, like the Hope diamond,” says Kahn.

The most likely fate for the diamond will be that it will end up in a safe somewhere after it is purchased, says Kahn. “That’s what usually happens. But I hope someone gets to wear it and enjoy it. It really is special.” Read more here-http://www.thestar.com/printarticle/864560 and http://www.diamonds.net/news/NewsItem.aspx?ArticleID=32635

QE2

-Fed Prepared to Ease Further to Revive Economy. The Federal Reserve said it’s willing to ease monetary policy further to boost the economy and lower unemployment while refraining today from expanding its holdings of securities.

“The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Federal Open Market Committee said today in a statement in Washington.

The Fed reiterated that it would keep the benchmark lending rate in a range of zero to 0.25 percent “for an extended period.” Policy makers said the pace of recovery and job growth have “slowed in recent months.” The committee also said inflation is “currently at levels somewhat below” what officials judge to be consistent with price stability. Read more here-http://www.bloomberg.com/news/2010-09-21/fed-says-it-s-prepared-to-ease-further-refrains-from-new-asset-purchases.html

-Fed’s Concern Over Inflation Broadens Rationale for More Easing. The Federal Reserve moved closer to a second wave of unconventional monetary easing and said for the first time that too-low inflation, in addition to sluggish growth, would warrant taking action. Read more here-http://www.bloomberg.com/news/2010-09-22/fed-s-concern-over-inflation-broadens-rationale-for-more-easing.html

-Dollar sinks and gold soars as Fed signals it wants to stoke inflation. Read more here-http://www.gata.org/node/9046

-Fed’s mission is deception, Jim Rickards tells King World News. Listen here-http://www.gata.org/node/9042

-Here is a back-of-an-envelope guess by David Greenlaw at Morgan Stanley on what the Fed can expect from a second blitz of bond purchases, or `Shock & Awe’ as he calls it. If Ben Bernanke does a further $2 trillion (on top of the $1.7 trillion already in the bag) the yield on 10-year US Treasuries will drop 50 basis points to around 2.2pc.

GDP growth will be 0.3pc higher than otherwise in 2011 and 0.4pc higher in 2012. The unemployment rate will be 0.3pc lower in 2011 and 0.5pc lower in 2012 (in other words drop from 9.6pc to 9.1pc, ceteris paribus).

That looks like trivial returns for a colossal adventure into the unknown, with risks of dollar flight and mounting Chinese suspicions that the US intends to default on its external debts by debasement. Read more here-http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100007647/qe2-in-round-trillions/

HARRY SCHULTZ AND JAMES TURK WARN OF HYPERINFLATION

-Exit Harry Schultz, pursued by a bear? Veteran gold bug is now calling sudden hyperinflation. A famous veteran gold bug, who called the Crash of 2008, is now calling for sudden hyperinflation. But he warns he may not be around to comment on it. Read more here-http://www.marketwatch.com/story/story/print?guid=E87C3BF0-C153-11DF-BA89-00212804637C

-James Turk: They are printing too much money. There is too much money being printed. No rocket science is needed to reach that conclusion. The markets are giving us a clear message. I have been warning about hyperinflation since March 2, 2009 when I wrote that the dollar was on the cusp of hyperinflation.

I noted that “the federal government has embarked on a course of runaway spending, and it is runaway government spending that causes runaway inflation”, which if left uncontrolled leads to hyperinflation. The trend has not changed for the better. Read more here-http://www.fgmr.com/they-are-printing-too-much-money.html

JAMES TURK-THE U.S. DOLLAR IS READY TO PLUMMET

-The US dollar is staring over the edge of the precipice and is ready to plummet. Rather than hand a dollar a lifeline, the FOMC in its announcement yesterday pushed the dollar further over the edge. The FOMC made clear that it is only a matter of time before the Federal Reserve starts pumping again.

So immediately after the FOMC announcement, the dollar fell and the precious metals rose in anticipation of the next round(s) of dollar debasement to come from the Fed’s “quantitative easing” policy. On June 7th the US Dollar Index’s bear market rally stopped at 88.41. It closed Tuesday in New York at 80.44, a 9.0% decline in less than four months.

Yesterday’s decline also put the Dollar Index below its 200-day moving average, another important indication that the trend for the dollar has turned lower. The dollar is renewing its long-term downtrend, as we see in the following chart. Traders can sell short the US Dollar Index here, but there is a better opportunity for your trading capital. Buy gold and silver. Read more here-http://www.fgmr.com/us-dollar-is-ready-to-plummet.html and http://www.gata.org/node/9054

THE RECESSION IS OVER?

-Warren Buffett to CNBC: “We’re Still In a Recession”. Read more here-http://www.cnbc.com/id/39320992

-Longest U.S. Slump Since 1930s Ended in June 2009, Group Says. The worst U.S. recession since the Great Depression ended in June 2009, the National Bureau of Economic Research said today, as a slowdown in economic growth raises the possibility of another slump. Read more here-http://www.bloomberg.com/news/2010-09-20/u-s-recession-ended-in-june-2009-was-longest-since-wwii-nber-panel-says.html and http://money.cnn.com/2010/09/20/news/economy/recession_over/index.htm

-By now, based on when the recession ended, we should be at a new high in real GDP (in fact, back to 1947, real GDP is up 4.5% in the first year of recovery). That has happened in every other cycle in the post WWII including the 1992 and 2002 periods where recoveries were tepid but not that tepid to prevent real output from attaining new all-time peaks. But as things now stand, real GDP is still 1.3% lower now than it was at the end of 2007 (in fact, getting back to that old peak will likely take another year at the very least). David Rosenberg-Gluskin/Sheff

-Well, the National Bureau of Economic Research (NBER) made it official this week, and told us what Statistics Canada apparently knew back in April the recession ended in mid-2009. The equity market rejoiced, which itself is amusing since supposedly the stock market is a discounting mechanism, but it goes to show that old news sells well.

At the same time, there goes our “single-scoop” theory and the same bulls that told us how all we would get was a soft landing heading into 2008 are telling the masses that double-dips never happen. Just remember this: the NBER also told us some years back that the prior recession ended in November 2001.

Yet because we had a limbless recovery one hand and one leg perhaps the bull market in stocks and bear market in bonds was delayed for a year and a half back. And this recovery, with its sub 1% pace of real final sales, goes down as the weakest on record.

So, the recession technically ended 15 months ago; tell that to the 15 million unemployed and the 42% share of these ranks that have been looking for a job fruitlessly for at least six months. David Rosenberg-Gluskin/Sheff

DEBT-DEFICIT

-US Government ‘hiding true amount of debt’. The actual figure of the US’ national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited by the New York Post.

“The Government is lying about the amount of debt. It is engaging in Enron accounting,” said Laurence Kotlikoff, an economist at Boston University and co-author of The Coming Generational Storm: What You Need to Know about America’s Economic Future. Mr. Kotlikoff says the debt is actually $US200 trillion. Read more here-http://www.news.com.au/business/breaking-news/us-government-hiding-true-amount-of-debt/story-e6frfkur-1225926567256

-U.S. Federal Debt Sanity Check. Read more here-http://dshort.com/articles/2010/federal-debt-sanity-check.html

-Death to deficits by ‘a thousand cuts’. Read more here-http://money.cnn.com/2010/09/21/news/economy/spending_cuts_budget/index.htm

-Debt, Taxes and Politics. Read more here-http://dshort.com/articles/2010/debt-to-gdp-and-taxation.html

U.S. HOUSEHOLD WORTH FALLS-DELEVERAGE BY 57 BILLION

-Household Worth in U.S. Fell in Second Quarter. Household wealth in the U.S. fell 2.8 percent in the second quarter as share prices were depressed by the European debt crisis, marking a setback for Americans’ efforts to repair finances battered by the recession.

Net worth for households and non-profit groups declined by $1.5 trillion to $53.5 trillion, according to the Federal Reserve’s Flow of Funds report issued today in Washington. The decline was the first since March 2009. Home values rose because of a tax credit that has since expired.

The Standard & Poor’s 500 Index dropped 12 percent during the three months ended June 30, erasing gains from the previous quarter. While stock indexes have climbed this quarter, renewed signs of weakness in housing and unemployment near a 26-year high may prompt Americans to increase their savings, holding back the economic recovery.

“Households are being very frugal in what they spend and allocating more of their income to paying off debt,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “Over time, consumers need to work themselves into a better financial position and that’s not going to happen overnight.”

The decline in wealth wiped out the first quarter’s $1.4 trillion gain, leaving households 19 percent short of the $65.9 trillion peak in the second quarter of 2007, before the recession began. Net worth bottomed at $48.3 trillion in the first quarter of 2009, when the economy contracted at a 4.9 percent annual pace. Read more here-http://www.bloomberg.com/news/2010-09-17/household-worth-in-u-s-fell-1-5-trillion-in-second-quarter-on-equities.html

-Households deleveraged by $57 billion in Q2. This was the 7th quarter in a row in which they cut their mortgage, consumer and bank debt. Despite these efforts, household net worth still fell $1.5 trillion in the first contraction since the first quarter of 2009. Over the past three years, household net worth has plunged $12.5 trillion equivalent to a full year’s worth GDP.

The problem in Q2 was the sharp $1.2 trillion slide in equity-related asset values. If not for the shrewd move into bonds, there would have been another $4 trillion hit to the net worth line last quarter.

Household net worth relative to disposable income, at 472%, is well off the 635% peak of the last cycle and is at the same level today it was three decades ago when the savings rate was 10%. In other words, the frugal move to 6% from near-zero so far in this post-bubble credit collapse is merely a resting stop. David Rosenberg-Gluskin/Sheff

-Chart of the week: American Households Just Slashed Their Debt At A Record Pace. We all know the American government is spending more and consumers are spending less, but the level of deleveraging in the household sector has picked up pace significantly, according to the Federal Reserve’s flow of funds report (via Zero Hedge).

Approximately $300 billion in household debt was paid down in Q2 2010, according to the report. This is the 9th quarterly decline in a row in household debt, and was at an annual rate of 2.25%. The severity of the debt-slashing hit a new record.

Household wealth fell by $1.5 trillion overall in Q2. That’s government borrowing in purple, and negative household borrowing in blue. Read more here-http://www.businessinsider.com/chart-of-the-day-household-borrowing-2010-9

Source: chartoftheday.com

JOBS

-Payrolls Decrease in 36 U.S. States, Led by Michigan. Payrolls dropped in 36 U.S. states in August, led by Michigan, indicating the labor market will take time to rebound from the worst recession since the 1930s. Employers in Michigan cut 50,300 jobs last month, the biggest drop since January 2009, figures from the Labor Department showed today in Washington.

Texas and California rounded out the three states with the biggest job losses. Joblessness climbed in 27 states, with Nevada reaching a record 14.4 percent rate, the highest in the nation. Read more here-http://www.bloomberg.com/news/2010-09-21/payrolls-decrease-in-36-u-s-states-in-sign-labor-recovery-will-take-time.html

-Vedran Vuk: Hours, Not Jobs Key to Adjusted Unemployment Numbers. Ever since the crisis began, analysts have adjusted unemployment by adding part-time workers. By including involuntary part-time workers to unemployment, the rate becomes 15.3%. This is an important statistic to follow however, only if we can put it in context.

Few analysts examine the same rate during the boom years. Without doing so, the analysis compares apples to oranges. A closer look at the data makes the stat less significant, but it also reveals more about the unemployment situation. Read more here-http://www.caseyresearch.com/displayCdd.php?id=537

-Hamish McRae: America isn’t working and the rest of the world should be alarmed. Economic Life: There are deep-seated concerns that the US workforce has too long a tail of less-skilled people doing jobs that can be done abroad by workers on lower wages. Read more here-http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-america-isnt-working-and-the-rest-of-the-world-should-be-alarmed-2081579.html

SIX MORE U.S. BANKS FAIL

-Regulators close 6 banks in Ga, NJ, Ohio, Wis. Regulators shut down 3 Georgia banks, 1 each in NJ, Ohio, Wis; makes 125 US failures this year. Read more here-http://finance.yahoo.com/news/Regulators-close-6-banks-in-apf-2563556515.html?x=0&sec=topStories&pos=3&asset=&ccode and http://www.bloomberg.com/news/2010-09-18/six-u-s-banks-fail-as-georgia-lender-community-southern-acquires-three.html

STOCK MARKET

-Wall Street ‘casino’ spooks small American investors. Michael McCaslin is wary of investing his retirement funds in Wall Street. Its volatility and cryptic trading techniques make him feel lost and unsafe, he says. “I tried to watch the market over the past couple of years, and you’re just lost. I look at the market now and it’s like Las Vegas, it’s a gamble,” the 65-year-old pensioner said.

“Wall Street is, in my view, a bunch of greedy people who control a lot of money with large investment companies who can manipulate the market,” he says. “I don’t have that ability, I am at the mercy of these people and with their automatic trading and the other things they can take advantage of, I don’t know what can happen to the market because, you know, it can happen in milliseconds with the automatic trading,” he said. Read more here-http://www.breitbart.com/article.php?id=CNG.df8f68b7c98bb38203c92dcfff053dbe.e1&show_article=1

-Today’s chart illustrates rallies that followed massive bear markets. For today’s chart, a ‘massive’ bear market is defined as a decline of greater than 50%. Since the Dow’s inception in 1896, there have been only three bear markets whereby the Dow declined more than 50% (early 1930s, late 1930s until early 1940s, and during the very recent financial crisis).

Today’s chart also adds the rally that followed the dot-com bust during which the Nasdaq declined 78%. The current Dow rally has followed a path that is fairly similar to that of post-massive bear market rallies.

The initial surge of the current rally lasted nearly 300 trading days and has been trading flat/choppy ever since. If the current rally were to continue to follow the post-massive bear market rally pattern, the current choppy phase would continue for another 200+ trading days. Read more here-http://www.chartoftheday.com/20100917.htm?T

Source: chartoftheday.com

REAL ESTATE

-The American Dream of Home Ownership Has Become a Nightmare. Read more here-http://politics.usnews.com/opinion/mzuckerman/articles/2010/09/23/the-american-dream-of-home-ownership-has-become-a-nightmare.html

-U.S. Home Prices Fell 3.3% in July From Year Earlier. U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market. Read more here-http://www.bloomberg.com/news/2010-09-22/home-prices-in-u-s-fell-3-3-in-july-from-year-earlier-fhfa-index-shows.html

-The housing recession isn’t over. Read more here-http://money.cnn.com/2010/09/20/news/economy/thebuzz/index.htm

-Losses from Fannie Mae, Freddie Mac seizures may near $400 billion. Federal Housing Finance Agency is seeking billions in repayment from banks that sold bad loans to the mortgage giants to help offset taxpayer losses, but some financial institutions are balking. Read more here-http://www.latimes.com/business/la-fi-fannie-freddie-20100916,0,7104511,print.story

GEOPOLITICAL

-Significant Developments in Terror Threats Since 9/11, Officials Say. Napolitano, Mueller, Leiter Discuss Increased Tempo of Attacks Against U.S. The nation’s top counterterrorism officials were blunt. The threat from within of Americans willing to commit terrorist acts is growing.

FBI Director Robert S. Mueller III told a congressional hearing today that a spike in recent terrorism cases is direct evidence of the evolving threat. “Groups affiliated with al Qaeda are now actively targeting the United States and looking to use Americans or Westerners who are able to remain undetected by heightened security measures,” Mueller said.

“It appears domestic extremism and radicalization appears to have become more pronounced based on the number of disruptions and incidents.” Mueller appeared before the Senate Homeland Security and Government Affairs committee along with Department of Homeland Security Secretary Janet Napolitano and National Counterterrorism Chief Michael Leiter.

“Homegrown terrorists represent a new and changing facet of the terrorist threat.” Napolitano said, “To be clear, by homegrown, I mean terrorist operatives who are U.S. persons, and who were radicalized in the United States.” The officials all pointed to a series of recent incidents that show that al Qaeda, its affiliates and associates were more active than ever.

“During the past year our nation has dealt with the most significant developments in the terrorist threat to the Homeland since 9/11,” Leiter told the committee. “The attack threats are now more complex, and the diverse array of threats tests our ability to respond, and makes it difficult to predict where the next attack may come.

The attacks cited included: The disruption of a plot to bomb the New York City subway by Najibullah Zazi, a naturalized U.S. citizen, last September. The attack at Ft Hood Texas by gunman Army Maj. Nidal Hassan which resulted in 13 people killed and over 30 wounded.

The attempted Christmas Day bombing of Northwest Airlines flight 253 by alleged al Qaeda in the Arabian Peninsula operative Umar Farouk Abdulmutallab. The averted May 1 bombing in Times Square by Faisal Shahzad. Read more here-http://abcnews.go.com/print?id=11699198 and http://www.washingtonpost.com/wp-dyn/content/article/2010/09/22/AR2010092203807_pf.html

-President Ahmedinejad Threatens U.S. With War ‘Without Boundaries’. Read more here-http://abcnews.go.com/print?id=11689305

The Goldbugg Report – September 28th, 2010
Posted by Worldwide Precious Metals on Tuesday, September 28, 2010

The Week in Review – September 24th, 2010

September 24, 2010

Gold continued to hit new record highs this week, moving above $1,300 an ounce on Friday morning. Silver is also now at 30 year highs. Aaron Regent, president and CEO of Barrick Gold (the world’s largest producer of gold) said Thursday “There are a lot of price supportive factors, which should support the price of gold and encourage it to go higher.”

The August durable goods number was much lower than expected, posting its largest decline in a year.

On Wednesday Bogan Associates, an investment firm in Boston, released a report that expressed serious concerns over the operation of Exchange Traded Funds or ETFs. Harold Bradley, Chief Investment Officer of the Kauffman Foundation said this of ETFs: “These are like unregulated futures contracts because of their unmitigated open interest.” He was apparently referring to an example in the Bogan report regarding the SPDR S&P Retail ETF. According to Andrew Bogan, “In this extreme example, the ETF operator holds only about 17 percent of the shares that people most likely believe they are buying when they buy XRT in their account. The remaining stock is implicitly promised by short-sellers through their prime brokers if authorized participants wanted to redeem more than 17 percent of the shares owned.”

President Obama is losing another member of his economic team and this time it is Larry Summers. One CNBC commentator compared his exit to football, saying “if you’re the head coach of the team, and you think you’re team is going to win the game, are you going to announce your retirement at half time? I don’t think so.”

New US claims for unemployment benefits rose again last week. Analysts had forecast no change in claims. The previous week’s data was revised upward as well and the number of people on emergency benefits also increased for the week ended September 4^th.

The Fed’s FOMC statement on Tuesday did nothing to reassure investors. There were little details about a second round of Quantitative Easing, and their focus actually seemed to be mainly on inflation. In a statement regarding the meeting the Fed said “The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

Political maneuvering is in full swing now with both the House and Senate announcing that they would not vote on an extension to the Bush tax cuts until after the November mid-term elections. It is widely viewed that allowing the tax cuts to expire, which is apparently the wish of the current Democrat controlled congress, would be horrible for the economy. The Democrats have now neatly side-stepped the issue by refusing to vote before the elections. The tactic may backfire on them however as it simply sends a signal to the people of the US that they intend to vote in a manner that would reduce their chances for re-election if the vote was held prior to the elections.

Existing home sales rose last month, but it was not enough to keep the figures from being the second worst monthly figures in more than 10 years. July’s figures were upwardly revised, keeping July as the worst month for existing home sales in 15 years.

Concerns remain high in Europe over sovereign debt in both Ireland and Portugal and one analyst said that another bailout of Greece will need to be done within the next three years.

The euro hit its highest level against the dollar since April this week and the yen’s drop against the dollar after Japanese direct intervention into the currency market last week was short lived. The resumption of the yen’s upward climb against the dollar has led to speculation that Japan may make further interventions in the near future.

The threat of a tropical storm possibly entering the Gulf kept oil prices in the mid-$70 range despite weaker than expected economic data that many felt would drive the price down.

Japan has added its name to the list of countries whose trade relations with China are becoming tense. China is not being shy about its pursuit of resources outside of the country, and those resources they are looking to acquire include precious metals.

Friday to Friday Close

	September 17th	September 24th	Net Change
Gold	$1276.00	$1297.00	21.00 + 1.65%
Silver	$20.80	$21.42	0.62 + 2.98%
Platinum	$1615.00	$1641.00	26.00 + 1.61%
Palladium	$545.00	$559.00	14.00 + 2.57%

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

	Gold	Silver
Support	1275/1250/1220	21.00/20.75/20.50
Resistance	1300/1320/1350	21.50/22.00/22.50

	Platinum	Palladium
Support	1600/1575/1550	550/525/500
Resistance	1650/1700/1750	565/575/600

Volatility should be expected to continue. In a special memo to retail dealers we issued this week, we quoted James Turk, a consultant to the Gold Anti-Trust Action Committee, as saying (in an interview with Eric King of King World News) with regards to silver: “I think there is a possibility that the $30 level could be reached rather quickly, perhaps in just a few weeks, if the upside explosion we’ve been talking about this past couple of months continues to follow my expectations.” Today Mr. Turk spoke with Eric King again and had this to say: “As I’ve been saying all along, it’s extraordinarily rare for markets to set up this way. I can only think of a few occasions in my 35 years of trading when the precious metals have been poised to blast off and this is one of them.” Investor interest in precious metals is on the rise and most analysts think that the prices have much further to go to the upside. Keep your wits about you, your eyes and ears on the news, and most of all, do not panic. If these analysts are correct about the upside movement of precious metals prices, getting out of this market now, or staying out of it if you have not yet invested, may keep you from taking advantage of what may be an even more dramatic explosion to the upside in precious metals prices than we’ve already seen. 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 – September 24th, 2010
Posted by Worldwide Precious Metals on Friday, September 24, 2010

The Goldbugg Report – September 21st, 2010

September 21, 2010

-Jim Sinclair and his Million Dollar bet on $1650 Gold by January

-Fed out to defend Deflation, http://www.marketwatch.com/story/fed-says-prepared-to-ease-as-rates-held-2010-09-21?dist=afterbell

-Silver and Gold breaking records this week!

GOLD

-Despite decades of being called derisive names by Wall Street and the cable media stars, gold is showing no sign of resigning its role as a safe haven. David Galland-Casey Research-Read more here-http://www.caseyresearch.com/displayCdd.php?id=536

-“Gold is the place to be,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “Investors are very concerned that all the money that central banks around the world are printing is out of control. Gold is the only way to preserve your wealth.”

“Gold is rapidly becoming the currency of choice,” Cohen of Capitol Commodity Services said. The metal may surge to $1,600 next year as the dollar extends a slump against major currencies, including the yen and euro, he said. Bloomberg.com

-“Gold is at a stage where people are just looking for an excuse to buy it,” said Tom Winmill, who helps manage $120 million at the Midas Fund in New York. “Gold is just another tool for capital appreciation. Keep an eye on the creation of new money, and that will tell you how much further gold has to go.” The metal will rise to $1,400 this year and $1,500 next year, Winmill said. Bloomberg

-Many emails have come in saying there is no way gold can go to $1650 by January. My response to those people is you are WRONG, it can. Many emails have come in saying the dollar is a safe haven and that I am wrong, it will never see .7200 and lower.

My response to those people is you are WRONG, it can. Many were offended for some reason when I drew the comparison between now and 1979. My response to those people is you are WRONG, the comparison is valid. Jim Sinclair

-Bubble? My behind! Soros should take a side trip to Dubai and make his statement at the gold store as he is trampled by those that want a currency devoid of liabilities. Jim Sinclair

-Once again, gold has asserted itself as a monetary metal a currency that is no government’s liability and a hedge against these recurring concerns over the integrity of the global monetary system. David Rosenberg-Gluskin/Sheff

-Gold averaged roughly +15% per year for nearly a decade. The last twelve months we saw this more than double. Silver was stuck at $5 for years. Now it’s pushing on $20. This next Phase Two will be a delight. Stay in the market somehow whether you are trading or investing or both. Do not miss what’s coming next. Our December futures gold forecast is $1,325-$1,375. Silver goes to $25-$26 and should be followed by $30.18. Roger Wiegand-Read more here-http://www.kitco.com/ind/Wieg_cor/roger_sept132010.html

-John Embry: Largest gold swap ever almost escapes notice. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2010/MPLID_082710_pg283Emb.pdf

-Chart of the week: Stocks For The Long Run? Not So Much. You probably already knew that stocks are down for the decade, but here’s what you might not have realized: every other asset class you can imagine is up during the same time period. That includes not only fixed income, but commodities and even real estate. David Rosenberg of Gluskin-Sheff provides the classic chart. Read more here-http://www.businessinsider.com/chart-of-the-day-10-year-returns-by-asset-class-2010-9

-Ben Davies: Gold Will Outperform Many Fold. At face value it would appear that money velocity is falling and central bank balance sheets have expanded dramatically in the last few year. The reality is a surfeit of credit money has found its way into financial assets. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/15_Ben_Davies_-_Gold_Will_Outperform_Many_Fold.html and http://www.gata.org/node/9013

-Adam Hamilton: Big Autumn Gold Rally. Gold enjoyed a strong August after emerging out of its late-July seasonal lows. But interestingly last month’s bullish action was probably just the beginning of gold’s newest rally. A whole host of bullish seasonal, sentimental, and technical factors are converging that ought to catapult gold much higher in the coming months.

Today gold’s 200-day moving average is near $1165. To stretch 25% above it and enter the greedy realm of overbought, gold would have to hit $1456. And realize that as gold marches higher in the coming months, this 200dma baseline will gradually rise as well. By December as the autumn gold rally winds down, seeing gold overbought at 1.25x its 200dma could very well be at a price around $1500.

So in a pure technical sense, gold is looking very bullish today. Despite being near all-time nominal highs, it isn’t overextended at all. $1200+ gold is the new norm, first seen in December 2009 and enjoyed continuously on average since early May. Gold is entering autumn near the bottom of its relative trading range, not far above its 200dma. It will take a lot of buying, and the resulting rallying, to drive this metal back into the overbought territory at the top of its relative range.

In real inflation-adjusted terms, January 1980’s all-time gold high was around $2400 in today’s dollars. So gold isn’t even close to a new real high yet. But few think in real terms, so the headline nominal price is all that matters psychologically. And gold is right on the verge of heading into new all-time-record-high territory in nominal terms. It first hit $1256 in mid-June, so anything materially above this will represent new all-time highs. Traders and the media love new highs.

The $1300 gold coming soon is going to be big mainstream financial news. $1400 will be even bigger. And when we hit $1500, this nice round number will make record gold highs mainstream general news. Realize all this gold excitement will be multiplying at a time when individual investors remain scared of the stock markets and cowering on the sidelines in record amounts of cash (literally trillions of dollars). If even a small fraction of that starts chasing gold, we’ll see a massive spike well beyond the usual big-autumn-rally standards. Read more here-http://www.321gold.com/editorials/hamilton/hamilton091010.html

-Hathaway Says Gold Bull Run At Midway Point. The way fund manager John Hathaway sees it, gold may be only halfway through its bull run. The metal is likely to remain supported by worries that government policies will continue to devalue paper currencies, he said Monday during the two-day inaugural Internet-based Kitco Metals eConference.

“We view gold as being in a secular bull market,” Hathaway said. “The biggest issue out there is paper assets and the lack of trustworthiness of governments both on this side of the Atlantic and elsewhere. At some point, it seems to us, there will be serious devaluation of all paper currencies.”

Thus, he said, investors are increasingly turning to gold. “We don’t see this changing any time soon,” he said. In fact, during his presentation, Hathaway displayed a graphic showing the four stages of a bull market. And, he said, gold is currently at the midpoint between Stages 2 and 3.

“We’re right in the middle,” he said. “We’ve gone through Stage 2 where gold has finally made it to the front pages (of newspapers). And that, of course, has attracted money flows. We’re now set for a much more rapid increase both in the gold price and in the appreciation of gold shares as momentum investors get into the space.”

The initial stage of a bull market is interest from value investors or contrarian investors when the price is at a bottom. In fact, Hathaway said, Tocqueville’s interest in gold began in 1998 when the metal was “the Rodney Dangerfield of investment ideas.” He was referring to the comedian whose punch line is that he gets no respect.

The second stage of a bull run comes when growth investors enter the market and there is an inflow of funds as the price of gold continues to rise, his graphic said. The third, and next stage to come, of the bull market will be interest from momentum-based investors, Hathaway said.

The fourth and final stage will occur when investors are buying gold and mining shares at such a frenzied pace that “irrational exuberance” is the result, his graphic said. Hathaway described this scenario as a “silly season when everybody and his brother is talking about their favorite gold stocks, just as they were talking about Internet stocks back in 2000” before a bubble burst in the technology sector.

“Frankly, we have a long way to go before we see that kind of craziness,” Hathaway said. Levels of public debt are accelerating, Hathaway said, and this will continue if the economy does not “miraculously” grow solidly for three to five years.

Meanwhile, the countries that supply goods to the U.S. economy have a small exposure to gold in their reserves. “There is no doubt in my mind that they view this as a problem and they will be gradually adding to their gold holdings, whether it’s in the form of official holdings or unofficial,” Hathaway said.

Overall, the supply/demand picture for gold remains favourable, he said. “The big change in the supply/demand picture is the investment demand has become more and more powerful at the same time that mine supply is stagnant or even declining,” Hathaway said.

Meanwhile, there are negative real interest rates in the U.S., in which rates are below the level of inflation. “So there is really no penalty for anyone to have gold,” Hathaway said. “They’re not missing out on any sort of return for holding liquid assets.”

Gold in particular has more upside potential since it is a relatively small market, with total capitalization of mining companies only $300 billion or so, a speck compared to total worldwide equity assets in the trillions, the fund manager said.

“Physical gold is equally small,” perhaps $2 trillion, Hathaway said. “So it doesn’t take a big movement of financial assets into gold to have a dynamic impact on the gold price. We think that the upside potential from here is substantial and it’s not too late to make an allocation to gold and gold shares.” Read more here-http://www.kitco.com/reports/KitcoNews20100913AS_hathaway.html

-Martin Murenbeeld’s nine reasons to invest in gold. With a recent survey of analysts suggesting $1500 gold next year, gold guru Martin Murenbeeld gives nine bullish arguments for the yellow metal. Read more here-http://www.321gold.com/editorials/holmes/holmes091310.html and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=111107&sn=Detail&pid=33

-Gold May Reach $1,300 an Ounce After Rally to Record: Technical Analysis. Gold may climb to $1,300 an ounce in the next several weeks after rallying to a record, according to technical analysis by Commerzbank AG. “According to a cycle which we have been following since late 2008, the $1,300 region should be reached by the first week of October,” Axel Rudolph, a technical strategist at Commerzbank in London, said in a report.

“From there at least a minor correction lower toward the $1,250 region should be seen before another up leg takes the precious metal to our medium- term upside target at $1,390/$1,400 in the first half of 2011.” Read more here-http://www.bloomberg.com/news/2010-09-16/gold-may-reach-1-300-an-ounce-after-rally-to-record-technical-analysis.html

-GFMS Sees Gold Prices “Comfortably Above” $1,300 By Year’s End. Read more here-http://www.kitco.com/reports/KitcoNews20100914DeC_GFMS.html and http://www.reuters.com/article/idUSTRE68D3NH20100914?loomia_ow=t0:s0:a49:g43:r2:c0.068966:b37338932:z0 and http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=111239&sn=Detail&pid=33

-Holmes Does Not See A ‘Bubble’ In Gold. Read more here-http://www.kitco.com/reports/KitcoNews20100913AS_Frank.html

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1284470707.php

-Greenspan’s Warning on Gold. Alan Greenspan spoke at the Council on Foreign Relations earlier today, and what was his advice? That central bankers should be doing what these columns, among others, have been rattling on about, namely that they should be paying attention to gold.

“Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs. Read more here-http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/ and http://www.gata.org/node/9019

-Adrian Douglas: Atlas just shrugged. Read more here-http://www.gata.org/node/9022

-Christian Bullish On Gold But Looks To Dispel Myths. Read more here-http://www.kitco.com/reports/KitcoNews20100913AS_Christian.html

-Gold Holds Value Free From Default Risk Faber. Read more here-http://www.kitco.com/reports/KitcoNews20100913AS_faber.html

-Gold’s Rise Dependent On How Low US Dollar Will Go: Ron Paul. Read more here-http://www.kitco.com/reports/KitcoNews20100913DC.html

-Longer-Term Technical Charts Favor Gold Market Bulls. Read more here-http://www.kitco.com/reports/KitcoNews20100914JW_Update1.html

-’Gold is the best asset class to be in’. After a 10-year bull run, conventional wisdom says it’s too late to join the party. Is it different this time? Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7995084/Gold-is-the-best-asset-class-to-be-in.html

-Central Banks Leading New Gold Rush. Read more here-http://www.forbes.com/2010/09/10/barrick-gold-mining-markets-china-india_print.html

-Bangladesh buys 10 tonnes of IMF gold for $403m. The IMF said it sold 10 tonnes of gold to Bangladesh at Tuesday’s market price as part of its ongoing program to sell 403.3 tonnes. Read more here-http://www.gata.org/node/8994 and http://www.bloomberg.com/news/2010-09-10/imf-sells-10-tons-gold-to-bangladesh-sales-to-central-banks-now-222-tons.html

-Is Bank of Thailand buying gold on the sly? Read more here-http://www.gata.org/node/9002

-AngloGold hustles to close gold hedges. Read more here-http://www.gata.org/node/9009

-Soros warns on gold rally, says nothing safe. Read more here-http://www.reuters.com/article/idUSTRE68E33K20100915

-The Truth About Gold and Silver ETFs. Read more here-http://www.thestreet.com/story/10856739/1/the-truth-about-gold-and-silver-etfs.html

-Interview with GATA’s Murphy: Ultimately Don Quixote will triumph. Read more here-http://www.gata.org/node/8998

-Stewart Thompson: Gold’s controllers want it higher now. Read more here-http://www.gata.org/node/9005

-Gold fever strikes mom and pop prospectors in US West. Read more here- http://www.reuters.com/article/idUSTRE68D5ON20100914 and http://www.gata.org/node/9012