Newsroom

The World Financial Report – May 29th, 2012

May 29, 2012

Gold
Silver
Charts of the Week-Quotes-Quick Hits
RareColoredDiamonds.com
Sovereign Debt
U.S. Debt-Deficit
Real Estate

GOLD

-Frank Holmes: This Is The Ultimate Bullish Presentation For Gold. Read more here-http://read.bi/KA4IsR

-Frank Holmes: How Gold Demand Remains Resilient. Read more here-http://bit.ly/M0QWDc

-Frank Holmes: Gold: The World’s Friend for 5,000 Years. Read more here-http://bit.ly/LwPRGs

-BofA Technical Analyst: Gold Is Set For A Rally, Could Go As High As $3,000. The technical analysis team at Bank of America Merrill Lynch thinks a month’s long decline in gold is coming to an end. Here’s an excerpt from a note by Mary Ann Bartels and Stephen Suttmeier. Gold has pulled back to test support at $1550-1500. This support is holding, which sets up gold for a rally. The downtrend line from the August/ September highs provides initial resistance near $1700. Chart resistances are near $1800 and $1900-1925. Our longer-term view remains that gold is in a secular bull market with upside potential to $2000-2300 to as high as $3000 in coming years. Read more here-http://read.bi/KdmiHx

-Agnico CEO Calls for $3,000+ Gold for the First Time Ever. When asked where the price of gold will be 24 months from now Boyd responded, “We actually did a little pool this week when we were at a mining conference. My number was over $3,000. I’ve never been at the $3,000+ number, ever, in 27 years. But I just see the underlying conditions not being addressed. And I see an inability to address them given what we’ve seen in some of the recent elections in Europe.

I don’t think that attitude is any different anywhere else in the world. So politicians will have less willingness to actually make the tough decisions to sort this mess out. They will go with what would appear to be the easier route which is to try to stimulate growth through fiscal and liquidity measures, which ultimately is going to be good for gold.” Read more here-http://bit.ly/KtZejo

-Gold remains in a long-term uptrend although that uptrend is being tested at current levels. The chart does not show that gold is in a bubble, as some love to claim. If there is a bubble it is in debt and derivatives and the still over-leveraged banking sector. Gold is a small market. At current prices all the gold in the world is worth only about $7.5 trillion, compared to $200 trillion of stocks and bonds worldwide and a $700 trillion plus global derivatives market. To put things further in perspective, the Facebook IPO is estimated to be over $100 billion. The world’s largest gold company, Barrick Gold, has a market cap of around $37 billion. One of them produces nothing. David Chapman

-At some point the stage will be set (if it isn’t already) for an unbelievably explosive rally to the upside in metals. I think, given how stretched everything has become, that day is close, but that could mean a matter of weeks or it could be a few days. We can’t know, nor do we need to. The point isn’t to predict when, it is to recognize the moment when it occurs and have a plan about what to do. Bill Fleckenstein

-”It is vitally important for your financial well-being to be able to determine which path central banks are currently pursuing. For the moment, they have allowed the market forces of deflation to take hold. However, past history clearly signals to investors that it is only a matter of time before economic conditions deteriorate to the point where governments return to their inexorable pursuit of inflation. The point here is to understand where we are in the cycle of inflation and deflation and then to invest accordingly.” Michael Pento

-Gold cheaper in real terms now than it was at $400, says Wits Gold Chairman Adam Fleming. Watch more here-http://www.gata.org/node/11404

-Egon von Greyerz: Customer Shocked “Allocated” Gold Not in Swiss Bank. “We are stressing to investors to take their gold out of the banking system, not only because there are runs on banks that will continue, but the risk of being in the banking system is major. So you should take the additional step of not just owning physical gold, but also owning it outside of the banking system.

We (just) had an example of a client moving a substantial amount (of gold) from a Swiss bank to our vaults, and we found out the bank didn’t have the gold. This was supposed to be allocated gold, but the bank didn’t have it. We didn’t understand why there was a delay (in our vaults receiving the gold), but eventually we found out why there was a delay (the bank didn’t have the gold).

It’s absolutely amazing, but not surprising. This confirms what I’ve always thought. Not only should you not have gold in banks or even unallocated gold, but even allocated gold. It seems that some banks don’t even possess that. So the risk of having gold in the banking system is major.” Read more here-http://bit.ly/KNanh9

-John Embry: Banks Are Loaning Out “Allocated” Gold. “It was an interesting interview with Egon von Greyerz that you had on KWN in the last couple of days. I know him quite well and I can tell you I have the highest regard for him. He was talking about the man that went to his Swiss bank to get his allocated gold out, and they couldn’t give him the gold because the bank didn’t have it. What he didn’t mention in his interview is that when the customer finally got his gold, it was 2011 minted bars.

This made no sense because he had been holding the allocated gold for years. That’s just another example that even the allocated gold in the banking system has probably been loaned out. Many of these customers will wake up one day and realize they entrusted their gold to the wrong people.” Read more here-http://bit.ly/JwjxDq

-GoldMoney’s James Turk interviews Sprott’s Embry on gold’s bullish future. Watch more here-http://www.gata.org/node/11391

-James Turk: Only one defense against fiat currency dump it for gold. Read more here-http://www.gata.org/node/11410

-Greg Canavan: The physical gold market from the weak to the strong. Read more here-http://www.gata.org/node/11390

-Lawrence Williams: Gold an investment for the long term. Ignore the bumps and peaks. Historically gold is perhaps the only store of wealth that has stood the test of time. Politicians and bankers may manipulate the markets short term, but long term gold has always held it value. Read more here-http://bit.ly/KBSlwe

-Embargoes push Iran into remonetizing gold. Turkish gold sales to Iran in March soared over 30 times and gold companies said Iranians were turning to gold for savings and possibly trade as Western sanctions tighten. Read more here-http://www.gata.org/node/11384

-Peter Brimelow: Gold bushwhacks bears, Is a central bank buying? Read more here-http://www.gata.org/node/11396

-Clive Maund: Gold Market Update. Read more here-http://bit.ly/JuapKG

-Don Coxe: Most Incredible Opportunity Investors Will Ever See. Read more here-http://bit.ly/KlysO7

-Ben Davies: The Gold & Silver Liquidation is Over. Read more here-http://bit.ly/Kweb68

-Gerald Celente: The “Golden” Days Are Just Ahead & A New Cycle. “A lot of people are saying that, ‘The Gold bubble has burst,’ and I’m not one that believes that. I’m a trends forecaster and my forecast is gold will continue to rise. It may go down short-term, but long-term I’m bullish. And I don’t speculate in gold, I buy gold.”

I’m in gold long-term. This is a totally different scenario than it was before (in the 70s). (What we have seen) is a lot of hedge funds, financiers and speculators which have made bad bets in other fields (assets), are pulling out of gold to cover those bets. And it is in the best interest of the central banks, worldwide, to keep suppressing the price of gold because of the banks runs.

If I lived in Greece and I had two nickels to rub together, they wouldn’t be in a bank. All of the smart money is leaving Greece. It’s moving out of Spain, Portugal, it’s moving out of these countries. So, to me, the ‘Golden Days’ are just ahead.” Read more here-http://bit.ly/KBY2zT

-Caesar Bryan: Global Investors Are Frightened At This Point. Read more here-http://bit.ly/MuO3L0

-Nigel Farage: We Are on the Edge of a Total Social Breakdown. Read more here-http://bit.ly/JfYD5h

-J.S. Kim: Fear and panic are banks’ weapons against gold and silver. Read more here-http://www.gata.org/node/11377

-Gene Arensberg: Trading data indicates bottom for monetary metals. Read more here-http://www.gata.org/node/11400

-Peter Grandich’s presentation at the New York Hard Assets Conference. Read more here-http://www.gata.org/node/11380

-Eric Sprott’s NY conference speech cites market manipulation, credits GATA. Read more here-http://www.gata.org/node/11397

-Eric Sprott: Governments Frightened of Panic Liquidation Event. Read more here-http://bit.ly/Kvq9wS

-Rick Ackerman covers CMRE conference featuring Sinclair and Vieira. Read more here-http://www.gata.org/node/11399

-Campaign urges Britain to restore its gold reserves. Read more here-http://www.gata.org/node/11392

-Alasdair Macleod details the mechanics of gold price suppression. Read more here-http://www.gata.org/node/11394

-Brett Heath: Paper gold and silver Ponzi exposed. Read more here-http://www.gata.org/node/11383

-Doug Casey: Precious metals market manipulation? Read more here-http://www.gata.org/node/11381

-Jesse’s Cafe Americain dismisses Doug Casey’s ‘canard.’ Read more here-http://www.gata.org/node/11389

-GATA Chairman Murphy’s presentation to Las Vegas Moneyshow. Read more here-http://www.gata.org/node/11378

-Bill Murphy: JPM, Facebook, gold, and the potential for a titanic financial market event. Read more here-http://www.gata.org/node/11395

-Bill Murphy: Another ‘Midas’ commentary posted at GoldSeek. Read more here-http://www.gata.org/node/11407

-Resource Clips interviews GATA Chairman Murphy and Canada’s National Post reprints it. Read more here-http://www.gata.org/node/11402

-Andy Borowitz on the phoniness of the financial markets. Read more here-http://www.gata.org/node/11388

SILVER

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

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

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

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

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

Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00

Gold to silver ratio at 40 to 1 with gold at $2,500 the silver price would be $62.50

Gold to silver ratio at 30 to 1 with gold at $2,500 the silver price would be $83.33

Gold to silver ratio at 20 to 1 with gold at $2,500 the silver price would be $125.00

Gold to silver ratio at 15 to 1 with gold at $2,500 the silver price would be $166.67

-James Turk: Important Chart Suggests Massive Move for Silver & Gold. KWN asked Turk what readers should expect during the traditionally weak summer months. Here is how Turk responded: “It sometimes can be a factor, but seasonal patterns don’t always work. Last year was a good example. After their correction in the spring, both gold and silver moved higher. In fact, gold made its high price for last year during the summer.

I think this summer is shaping up to be a repeat of last year, with solid strength in both gold and silver. But in contrast to last year, I expect that the precious metals will keep climbing until year-end. The reason of course is that the underlying fundamental factors that have been driving gold and silver higher for more than a decade remain bullish. If anything, they get more bullish by the day.

The bank runs here in Europe are just one example of people looking for a safe-haven for their money, and the precious metals are of course the best safe-haven because they do not have counterparty risk. They enable you to take your wealth out of the system, which is what needs to be done because the slow-motion train wreck that is the global financial system is picking up speed.

So the long-term trend for gold and silver remains bullish. You and I have discussed many times how important it is to stay with the major trend. We have often quoted Jesse Livermore’s wise advice in this regard. The other thing you and I have done is regularly compare silver to Apple to highlight silver’s upside potential. To illustrate this point for KWN readers, I’ve prepared the following chart which shows that upside potential.

What I have done is overlaid the silver price on Apple’s share price, but lagged silver by 40 months. The purpose is to show the big correction in Apple back in 2007-2009 and compare it to silver’s present correction, which is the area I have circled. Who, back then, would have thought shares of Apple would climb from $80 to over $600? When the strength of a major bull market is viewed this way, my long-term target of $400 for silver looks quite reasonable.

More importantly, I think the underlying fundamentals also make that target reasonable. My point is that major bull market trends always go further than anyone can possibly foresee. So my recommendation remains unchanged. Everyone should continue accumulating gold and silver on a regular cost-averaging program. Silver’s bull market is just like Apple’s, meaning that we can expect to be surprised by how high silver climbs in a few years time.” Read more here-http://bit.ly/KvUvh6

-Clive Maund: Silver Market Update. Read more here-http://bit.ly/MFufag

-Hubert Moolman: Dramatic Turnaround For Silver? Read more here-http://bit.ly/Ke09XX

-Chris Thompson: Opportunity knocks in silver. Read more here-http://bit.ly/JDiNdq

-Silver a great business to be in for the next 50 years at least. Hecla Mining CEO, Phil Baker, says it’s hard to envision silver mines being able to keep up with demand while the use of silver in various forms of technology is growing significantly. Read more here-http://bit.ly/JofAiH

-Dr. Jeffrey Lewis: Will Precious Metal Premiums One Day Trump the Spot Price? Read more here-http://bit.ly/JqdKxK

-Leonard Melman: The People Have Spoken and Precious Metals Will Soar. Read more here-http://bit.ly/MDg59A

-Peter Cooper: Hold on for eurobonds, JP Morgan and euro money printing to boost gold and silver prices. Read more here-http://bit.ly/JfGG73

-Missouri lawmakers debate U.S. gold, silver coins use as legal tender. Missouri may be the second state, after Utah, to authorize the use of gold and silver coins or special “sound-money depositories” to pay debts to state government. Read more here-http://bit.ly/LfBtww

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: Gold Has Worldwide, Year-Round Appeal. Frank Holmes recently gave a monster presentation that included over 70 charts supporting his bullish call on gold. Here’s one of the more informal charts that captures the idea that gold is loved across cultures. Read more here-http://read.bi/KEeHQ1

www.chartoftheday.com

-”JP Morgan has 10 times to 15 times the risk of a regular hedge fund.” Nassim Taleb

-Going Over U.S. ‘Fiscal Cliff’ May Mean Recession: CBO. The U.S. economy will probably tip back into recession next year if Congress doesn’t address an impending “fiscal cliff,” the Congressional Budget Office said. The nonpartisan agency said in a report today that the economy would contract at an annual rate of 1.3 percent in the first half of 2013 if lawmakers allow the George W. Bush-era tax cuts to expire as scheduled and don’t head off $1.2 trillion in government spending cuts set to begin taking effect in January. Read more here-http://bloom.bg/JEfynu

-Congress staring over edge of ‘fiscal cliff’. Lawmakers face budget dilemma. For Congress, the outlines of the pending fiscal crisis are clear: Don’t do a thing, and watch the economy slip into a double-dip recession early next year. Or cancel the looming tax increases and spending cuts, watch the deficit rise, and push the government ever closer to a European-style debt crisis. Read more here-http://bit.ly/KySItQ

-Richard Russell: Stay In Cash, Something, Something ‘BIG’ Is Heading Our Way. Stay in cash, because I intuit that something BIG is heading our way. After all these years following markets, sometimes I have the feeling that I’ve seen everything. But not this time. Hey, would you believe the Dow could go down 14 out of 16 sessions, and people would still be complacent?

There are so many potentially bearish scenarios in the wind that my head is spinning. Last night, I noted that the Dow futures were down 55 points. I can’t remember ever seeing a series like this in my lifetime. As a loyal American, I’d feel better if people were scared out of their wits. What’s it going to take to scare people the Dow going down to 4000? Read more here-http://bit.ly/KAjqzS

-Peter Schiff: The Housing Bust Was Just A Preview For The Coming Catastrophe. As the curtain eventually falls on the drama unfolding in Europe, the world will refocus its attention on the more spectacular events in the U.S. The sovereign debt crisis that is now playing out in Europe will cross the Atlantic, and when it opens here The Real Crash may indeed finally begin. The average American will have a front row seat but will hardly enjoy the show. Read more here-http://read.bi/JOZz6H

-John Williams: The U.S. Recovery Is an Illusion. Read more here-http://bit.ly/KQTzs6

-China doesn’t trust Wall Street to handle its Treasury bond orders. China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government, according to documents viewed by Reuters. The relationship means the People’s Bank of China buys U.S. debt using a different method than any other central bank in the world. The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions. Read more here-http://reut.rs/JzBD6H

-Iranian Minister Predicts Oil Price Rise With Sanctions. Iranian Economy Minister Shamseddin Hosseini said international oil prices will rise under sanctions designed to persuade the Persian Gulf nation to abandon its nuclear program. Oil prices might go as high as $160 per barrel if the European Union goes ahead with a July 1 embargo, Hosseini told CNN. Read more here-http://bloom.bg/L7IFuT

-Goldman: Why Oil Prices Are Heading Higher. Read more here-http://read.bi/KpQD0U

-Infographic: Everything You Need To Know About The Keystone XL Pipeline. Read more here-http://read.bi/KPuoDz

-Shale Glut Means $1-a-Gallon Savings at the Pump. Chad Porter wants to run his 18-wheeler trucks on frozen natural gas along a highway that crosses Canada’s Rocky mountains even before the world’s longest chain of refueling stations gets built to keep them fueled. The chief operating officer of oil services company Ferus Inc. bought two vehicles to test liquefied natural gas and reckons switching from diesel may cut 22 percent from his fuel bill, or about $1 a gallon. Read more here-http://bloom.bg/JLKVNu

-The Little Known Story Of How ExxonMobil Seized $300 Million From Hugo Chavez. Read more here-http://read.bi/KVhvrP

-Here’s The Big Jeff Gundlach Presentation That Brought Down The House At A Conference Last Week. Read more here-http://read.bi/KeG1F7

-JPMorgan unit has $100 billion in risky bonds. The unit at the centre of JPMorgan Chase’s $2 billion trading loss has built up positions totalling more than $100 billion in asset-backed securities and structured products the complex, risky bonds at the centre of the financial crisis in 2008. Read more here-http://www.gata.org/node/11382

-When Jamie Dimon First Saw The Horrible Trading Positions, He Couldn’t Breathe And Started Getting Sick. When he saw the positions he couldn’t breathe and it made him feel queasy, according to the WSJ report, citing sources familiar with the matter. What’s more is Dimon, who had a reputation for being one of the best risk managers, couldn’t sleep very well the nights following that meeting. The report said he would wake up very early and exercise in an effort to fight off anxiety and tried to maintain a business-as-usual appearance while at the office. Read more here-http://read.bi/KDR36g

-I Was In The Room When Boaz Weinstein Revealed His Trade That Creamed JPMorgan. Read more here-http://read.bi/LqY2Ov

-Here’s The Inside Story Of What Happened On The Facebook IPO. Read more here-http://read.bi/Lp5tFN

-Facebook at $22 Seen in Europe’s Structured Warrants. Facebook Inc. may fall more than 42 percent below its initial public offering price by the end of the year, according to bets by structured-product investors. Read more here-http://bloom.bg/KflcJW

-Apple’s Cook top-paid US CEO in 2011: report. Apple chief executive Tim Cook topped the list of the best-paid CEOs in the US in 2011 thanks to stock options that put him more than $300 million above his next rival, a Wall Street Journal survey showed. Read more here-http://yhoo.it/JzVx18

-Apple still dominates world’s top brands: study. Apple has maintained its place as the world’s most valuable brand over the past year, leading a group of technology-related companies that dominate the top 10, according to a study published. Read more here-http://reut.rs/K9hqSA

-Half of Detroit’s Streetlights May Go Out as City Shrinks. Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating nearly half its streetlights. As it is, 40 percent of the 88,000 streetlights are broken and the city, whose finances are to be overseen by an appointed board, can’t afford to fix them. Mayor Dave Bing’s plan would create an authority to borrow $160 million to upgrade and reduce the number of streetlights to 46,000. Maintenance would be contracted out, saving the city $10 million a year. Read more here-http://bloom.bg/KWrAop

-Here’s What Happened When This Canadian Tried To Pay A $114,000 Student Loan In Cash. Read more here-http://read.bi/LrkOWw

-Babe Ruth’s 1920s Jersey Sells for World Record $4.42 Million. Babe Ruth’s earliest-known jersey has sold at auction for $4.42 million, a record for an item of sports memorabilia. A New York Yankees cap worn by Ruth in at least one game during the early 1930s fetched $537,278, while the Super Bowl ring won by former New York Giants’ linebacker Lawrence Taylor following the 1990 National Football League season went for a bid of $230,401. Read more here-http://bloom.bg/Jq7NSQ

-Poisoning Kills More Americans Than Car Crashes, Report Says. Read more here-http://bloom.bg/JNNr5L

-NYC’s First Million Dollar Parking Spot to Hit Market. Read more here-http://bit.ly/L8KRSN

-New York penthouse sells for a record $90 million. An unnamed buyer paid more than $90 million for a Midtown Manhattan penthouse, the highest price ever paid for a New York apartment, according to the building’s developer. Read more here-http://cnnmon.ie/JTvtv1

-Tokyo Opens World’s Tallest Tower to About 200,000 People. The Tokyo Skytree, twice as tall as the Eiffel Tower, and its surrounding retail and office complex opened today with thousands queuing in the rain for a first look at the 143 billion yen ($1.8 billion) development. Read more here-http://bloom.bg/K4q4kV

-Australia Tops OECD Better Life Index, Leading Norway, U.S. Australia is the world’s happiest nation based on criteria including income, jobs, housing and health, the Organization for Economic Cooperation and Development said. Australia led Norway and the U.S., the Paris-based group’s Better Life Index showed, when each of 11 categories surveyed in 36 nations is given equal weight. Read more here-http://bloom.bg/JNsg3M

RARECOLOREDDIAMONDS.COM

-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s Diamond is a 0.89 Carat Radiant Cut Fancy Green Diamond. Harold Seigel-See video of the Featured Diamond here-http://bit.ly/Jqe0cV

“There are no new mines being found around the world right now. There is a consensus in the market, predicting a significant growth of the diamond pricing because of this imbalance between supply and demand.” Alain Vandenborre, co-founder of The Singapore FreePort

-Global demand for rough diamonds may climb at an annual average of more than 6 percent in the 10 years ending 2020, exceeding growth in supply, according to Bain & Co., a consulting firm based in Boston. China may surpass the U.S. as the world’s largest market by the end of 2015 as consumption increases by 25 percent a year, according to the Antwerp World Diamond Center in February. Bloomberg

-Diamonds Are ‘Great Safe Haven,’ Landau Says. Alan Landau, chief executive officer of Novel Asset Management, talks about investment opportunities in diamonds. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” Watch more here-http://bloom.bg/KxngtB

-For the Rich, Diamonds are the New Stocks. New studies show that the wealthy are pulling back from stocks and stashing more of their money into real estate, art and even diamonds. A recent survey from Harrison Group and American Express Publishing found that the wealthy have cut back their allocations to stocks dramatically since the economic crisis.

In 2007, the top one percent invested 76 percent of their savings into stocks and financial investments. Now, it’s closer to 46 percent. That may not sound like an important drop. But the wealthiest one percent own more than half of the individually held stocks in the U.S. When they stop buying, it matters. So what are the wealthy doing with their money?

Increasingly, they’re looking for hard assets, collectibles and real-estate. Just consider the headlines from the past week. Two trophy apartments in Manhattan sold for more than $50 million. This week Sotheby’s sold $108 million worth of collectible jewelry in Geneva.

The chart-topper was a the $9.7 million sale of the Beau Sancy diamond, a 34.98 carat diamond that was first worn by Marie de Medici in 1610 at her coronation as Queen Consort of Henry IV. Wealth experts say that while diamonds, mansions, art and wine may not appreciate as quickly as stocks, these less liquid assets are also unlikely to crash in value as quickly. And wearing the Beau Sancy or looking at a Picasso on the wall is a lot more pleasurable than watching the ticker. Read more here-http://bit.ly/K9wJsz

-Diamond-Seller Choksi Takes on World With Bollywood. Diamonds are more attractive for investors because they don’t take up much space and demand is outstripping supply, Choksi said. Prices of top-quality gems climbed 22 percent in 2011, the biggest advance since at least 2006, according to the Rapaport Diamond Trade Index.

The index calculates the average price for the top 25 best-quality 1-carat diamonds. A carat is equal to a fifth of a gram. Gold rose 10 percent last year. Global demand for diamonds will increase by an average of 6.4 percent a year to almost 247 million carats by 2020, while output may rise an annual 2.8 percent to 175 million carats, Bain said in a report in December. Read more here-http://bloom.bg/J9vk4m

-See Diana DeGarmo’s Engagement Ring. For his surprise proposal on American Idol Wednesday night, Ace Young selected an 18-karat yellow gold, platinum and diamond engagement ring to present to long-time girlfriend Diana DeGarmo. Her favorite thing is a sunflower and she loves yellow, so one of our dear friends helped me put together a ring that has a yellow diamond, a gold band and two smaller diamonds on the side that are clear, so it’s like a sunflower.” Read more here-http://bit.ly/LtG0i3

SOVEREIGN DEBT

-This Is The New Conventional Wisdom On Greece. It’s clear from reading various analyst/strategist notes, and listening to investors that a new conventional wisdom is starting to harden on Greece. The next Greek election is basically a referendum on the Euro. Germany/France have given Greece an ultimatum: If you don’t elect a pro-Europe guy, then you’re out. Read more here-http://read.bi/KgjMip

-War-Gaming Greek Euro Exit Shows Hazards in 46-Hour Weekend. Greece may have only a 46-hour window of opportunity should it need to plot a route out of the euro. That’s how much time the country’s leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday’s market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.

Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn’t manage its public finances. Read more here-http://bloom.bg/KwuC0w

-How Greece Leaves The Euro In 8 Incredibly Simple Steps. Read more here-http://read.bi/LqxHA4

1. The authorities declare ‘force majeure’ and default on their external debt.

2. Immediately, all existing bank deposits are ‘frozen’. A bank holiday is declared in which only limited amounts of money may be withdrawn from the domestic banking system.

3. Capital controls are imposed and the vast majority of banks are nationalized or taken under government control. Foreign transfers of money out of the country are restricted.

4. A new currency is announced and all existing bank deposits are redenominated in the new currency at a devalued rate of say around 50% to 60% (or enough to bring the country theoretically into a current account surplus).

5. The new currency is allowed to float.

6. All existing debts and claims are redenominated in the new currency: both government and private sector. Wages, pensions and benefits are paid in the new currency.

7. The old currency is phased out as the official medium of exchange within the country’s border.

8. All local prices are posted in the new exchange rate. There is no reference to the old or other exchange rate such as the US dollar within the economy.

-Euro Zone Officials Agree to Prepare for Greek Exit Scenario. Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency. Read more here-http://bit.ly/KohcHW

-European Banks Unprepared for Greek Exit From Euro. Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro. Read more here-http://bloom.bg/KM1zrp

-CIC’s Jin Says Others May Follow If Greece Leaves Euro. Jin Liqun, chairman of China Investment Corp.’s supervisory board, said European authorities have shown a “lack of leadership” on the euro area’s debt crisis and other countries may leave if Greece exits the single currency bloc. “Ever since the debt crisis broke out, there has never been a master plan for a resolution.” “The core members of the monetary union certainly have to keep an eye out for possible copycats should the Greeks be allowed to escape from the crisis unscathed.” Read more here-http://bloom.bg/Kx3n69

-The Greek Government Will Run Out Of Cash In A Few Weeks, And Is Drawing Up Emergency Measures. The next tranche of Greek aid remains up in the air, and tax collections running vastly below expectations, so Greece is urgently trying to come up with a solution to fund itself as it sees its cash pile rapidly dwindling. Read more here-http://read.bi/L6YV1L

-Even More Greeks Are Avoiding Paying Taxes. Greeks are notoriously reluctant to pay taxes, but even those that do are holding off at the moment until they are sure their country stays in the euro zone. Read more here-http://bit.ly/KdXltV

-Greeks See Euro Zone Exit Risks as ‘Empty Threats.’ In a land of ancient myths, modern Greeks have created some of their own about their near-bankrupt country’s future as an integral part of a Europe that will never kick them out. They believe that Europe will simply cast them loose, despite growing signs that Greece is heading for the exit from the single currency and towards the economic and social catastrophe that would follow. Read more here-http://bit.ly/KIlbNl

-Secret Central Bank Aid Props Up Greek Banks. There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100 billion or so of emergency liquidity provided by the country’s central bank approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug. Read more here-http://bit.ly/JB4yaj and http://www.gata.org/node/11403

-Global banks see market rally on Greek exit. Major global banks are advising clients to prepare for a stock market rally and a resurgence of the euro if Greece is forced out of monetary union, betting that world authorities will flood the international system with liquidity. Read more here-http://tgr.ph/LXUtlq

-Germans Afraid of Greek Anger Avoid Vacations in Blow to Economy. German taxi driver Rudolf Kugel, who says he’s visited Greece more times than he can count, won’t be going again anytime soon to the Mediterranean sunspot because he’s concerned about the reaction of local people. “They hold Germans responsible for all their misery,” said the 62-year-old from near Stuttgart. “You want to go on holiday to have a comfortable break, not to be lynched.” Read more here-http://bloom.bg/JngRDd

-Euro austerity example Ireland ‘may need second bailout.’ Ireland, seen as the eurozone’s “poster child” for implementing austerity, could require a second bailout, economists warned. Read more here-http://tgr.ph/Mrnetv

U.S. DEBT-DEFICIT

-Ezra Klein: The Next Debt Ceiling Fight Could Be As Big As Lehman, And Change The Way World Markets See America. Watch more here-http://read.bi/KCyEH0

-Real federal deficit dwarfs official tally. The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds. Under those accounting practices, the government ran red ink last year equal to $42,054 per household nearly four times the official number reported under unique rules set by Congress. A U.S. household’s median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books. Key findings:

•Social Security had the biggest financial slide. The government would need $22.2 trillion today, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That’s $9.5 trillion more than was needed in 2004.

•Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.

•Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts. Read more here-http://usat.ly/KVO3SB

-Firefighters Lose as Rising Pensions Spur Broken Promises. It has been more than 20 years since Gilbert McLaughlin ran the fire department in Providence, Rhode Island. Yet the former chief stands to be the biggest loser as the capital of the smallest U.S. state flirts with insolvency.

McLaughlin, 75, is the highest paid of Providence’s 3,000 retired workers, collecting a $196,813 pension this year, the result of yearly 6 percent cost-of-living increases the city once bestowed on firefighters and police. Lawmakers, facing a $1 billion deficit and squeezed for cash, ended the automatic raises and capped annual payouts. Now retirees such as Gillie, as he is known, won’t see their pay outs double every 12 years.

“No one ever did the math on this,” Paul Doughty, head of the firefighters union, said in an interview in his office above the bar at the Firefighters Memorial Hall in Providence. “I don’t think anyone had any idea that if Gillie lived to 100, he’d be making $700,000.” Read more here-http://bloom.bg/JKZy33

-$12,984 Increase in Debt Per Household Since First 2011 Bipartisan Spending Deal. The White House and the congressional leaders of both parties in Congress have begun manoeuvring this week over the issue of the federal debt and what to do when the government hits the latest statutory limit on that debt $16.394 trillion which Congress and the president agreed to when they cut a deal on the debt limit last August. The federal debt is currently $15.709 trillion, or about $685 billion below the limit. Read more here-http://bit.ly/JUxacy

-Americans still relying on credit cards to get by. The economy may be growing again, but many Americans are still in a cash crunch. In the past year, 40% of low- and middle-income households used credit cards to pay for basic living expenses, such as rent or mortgage bills, groceries, utilities, or insurance, according to survey released by think tank Demos. Read more here-http://cnnmon.ie/LqTJmi

-Many households have a negative net worth, study finds. About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren’t backed by collateral so not including car loans than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. Read more here-http://usat.ly/KP9JUX

REAL ESTATE

-Purchases of New Homes in U.S. Rose More Than Forecast in April. Demand for new U.S. homes increased more than forecast in April as low prices and mortgage interest rates drew buyers.

Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported in Washington. Read more here-http://bloom.bg/Mny69f

-Sales of Existing Homes in U.S. Rise as Market Stabilizes. Sales of existing U.S. homes rose in April, driven by broad-based gains in demand that signal the market is stabilizing. Purchases, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate, figures from the National Association of Realtors showed in Washington. The median price jumped by the most in six years. Read more here-http://bloom.bg/JNKBOi

-Huge Spike in Home Prices Is Not Real. The median price of an existing home that sold in April of this year was $177,400, an increase of just over ten percent from a year ago. That is the biggest price jump since January of 2006. The difference between now and then, though, is the 2006 price jump was real, this latest spike is not. Read more here-http://bit.ly/MitFg0

The World Financial Report – May 29th, 2012
Posted by Worldwide Precious Metals on Tuesday, May 29, 2012

The World Financial Report – May 22nd, 2012

GOLD

-Your Greatest Enemy Is Your Emotions. Your greatest enemy now is your emotions. In fact it is the only tool that can be used against you. If you have not taken margin your worst case scenario is the pain of quoting. I have suggested at various times since $248 gold that you dig a hole, jump in and pull a rock over your head. Each time I did I was derided thoroughly by the shorts.

Each time I did the price of gold went significantly higher. The price of gold is going much higher. The problems that give gold its reason to go higher are growing, not waning. The entire thesis for gold is illustrated by the three Skiers posted on the weekend. There is no political will for the results of an EU break up. There is no way the Fed is going austere as the austerity is exploding in the face of Europe politically.

There has been no decline in the amount of notional value of OTC derivatives outstanding. If you think Morgan is the only derivative problem out there you are quite wrong. Stay the course, stop looking every few minutes, and quiet your emotions. Gold will trade at and above $2111 after this reaction is completed. Jim Sinclair

-Grandich, Sinclair do hand-holding for monetary metals investors. Read more here-http://www.gata.org/node/11376

-Gold is trading at its lowest levels since December, but Morgan Stanley analysts say gold’s bull market “is not over” and that they are buyers of the metal at current prices. The recent sell-off in prices is “consistent with distressed selling and long liquidation,” but they think prices will recover in the coming weeks. They say the factors that have supported gold remain in place: the European sovereign debt crisis and low interest rates. They also note that the low level of speculative net-length in the CFTC reports is a positive sign. Read more here-http://bit.ly/KgLtpM

-Egon von Greyerz: Gold what correction? Read more here-http://www.gata.org/node/11352

-Gold Pullback Presents Opportunity in the Long Run. If you have a long-term time horizon, the Fast Money at CNBC pros consider the current weakness to be an opportunity. “What I think we’re seeing right now is the decline squeezing some big players out of their positions,” says trader Guy Adami. However, he sees the growing uncertainty and the ‘race to debase’ as two powerful bullish catalysts. “A year from now, I expect gold will be trading north of $2000,” he says. Trader Steve Grasso is also positioned for upside. “I’m long Gold” he says, “and I’m not selling my position.” Read more here-http://bit.ly/JCzggz

-Gold ‘going to $3,000′. Markets are repeating the downturns of 2010 and 2011, and it is time to search for safety, Gluskin Sheff’s David Rosenberg tells James Mackintosh, FT investment editor. That means gold eventually reaching $3,000 an ounce. Watch more here-http://on.ft.com/IO0TnZ

-Miners will need $3,000 gold price to be profitable, WGC head says. Sharp increases in mining costs mean gold will need to reach $3,000 an ounce in five years for the industry to stay profitable, World Gold Council chief executive Aram Shishmanian said. Miners currently needed a gold price of $1,300 to survive, Shishmanian said, but faced steep rises in mining costs, along with the cost of dividends and host nation taxes. “If this continues for the next five years the gold price needs to be at least $3,000 just to stay in the business,” he said. However, he was optimistic sustained demand would drive prices higher over the long term. Read more here-http://www.gata.org/node/11367

-Gold must stay above US$1500 to sustain the gold industry Holland. Gold Fields CEO, Nick Holland believes that gold’s fundamentals remain intact and that patient investors will be rewarded. Read more here-http://bit.ly/JzMmhW

-Gold Trades $2000 by Year’s End: Eric Sprott. Sprott is a hedge fund manager who’s long precious metals and mining stocks and he has no intention of changing that strategy anytime soon. Despite the sharp decline in gold, he tells us by year’s end his price target for gold is $2000.

“We’re seeing statistics on physical gold purchases that argue very strongly for the price of gold to go up,” he says on CNBC’s Halftime Report. In other words, Sprott believes there are plenty of buyers in the market. For example, “Exports of gold from Hong Kong into mainland China went up 600% year over year in the month of March. And that’s not just a one month phenomenon.” “In the last 9 months China has been buying massive amounts of gold,” Sprott says.

Also, Sprott points to gold’s historical performance. “Gold was the investment of the last decade,” he says. “It blew away almost any other investment you could have made.” Although he concedes gold is currently ‘in a funk’ he expects sooner rather than later, gold to resume its march higher. Read more here-http://bit.ly/LeUWzy

-Alasdair Macleod: Gold bugs will be vindicated. Alasdair Macleod argues that when the debt trap is sprung on profligate governments, not just their bonds but their currencies too will be wrecked, and “gold bugs will be vindicated.” Read more here-http://www.gata.org/node/11354

-Ben Davies: 3rd LTRO Coming & Fed to Power Up Swap Lines. Gold bearish sentiment is becoming extreme and with solid physical demand we are not over-thinking the market here. We are in a big range call it 1550-1850. Moves lower will be short lived. Gold mining costs are really $1250 to $1350 and this is the ultimate floor in market. Talk of $1,000 gold is only applicable if all assets collapse in deflationary fall out. In such scenario remember your purchasing power is what is important not nominal prices. Read more here-http://bit.ly/K2qoO5

-Adam Hamilton: Gold Bull Climaxes. Gold has had a rough time lately, grinding relentlessly lower. Such technical weakness has naturally spawned increasingly bearish psychology. This has led to a fringe view growing in popularity that gold’s mighty secular bull has already given up its ghost. If these new-bear arguments are correct, gold’s secular bull had to peak last August. But was that latest topping gold-bull-climax worthy? Not even close.

The bottom line is gold’s latest secular bull almost certainly didn’t climax last summer. Such major bulls need an extreme psychological event to end them. And it comes in the form of a popular speculative mania and vertical parabolic ascent. While gold was indeed overbought last August, the resulting topping looked absolutely nothing like the previous gold-bull climax of several decades ago.

And if gold’s bull isn’t over, then gold is destined to power to new all-time highs sooner or later. And once that inevitable recovery gets rolling, capital will flood back into this metal and the stocks of the companies that bring it to market. So if you can stand strong as a contrarian and fight the popular fear gold’s latest correction spawned, there is a vast smorgasbord of incredible bargains in the precious-metals realm. Read more here-http://bit.ly/J9bivt

-Leeb: This is Why World Markets are Incredibly Unstable. We are in a real mess and it cannot be sorted out in any meaningful way. It’s a matter of when people wake up and start fleeing towards gold. I assure you that five years from now, when you look at this period (in gold), it won’t look like anything on the chart.

But living through this kind of pain is very difficult because you see how it’s going to work out, but you don’t see the exact timing. “You may see a situation where gold is at $1,400, and then two months later it’s at $2,500. That’s just one of many possible scenarios. We don’t know the bottom for sure right now, but one thing is certain, you are going to see new highs in gold. Investors just need to hang in there.

So you are going to have a massive move in real assets, there is no doubt about that. If investors step back and look at this from a longer-term perspective, they will realize that politicians feel the only way out of this mess is to print more money. After the money printing will come the inflation. It will be higher inflation than anything we’ve seen in the post-World War II period and it will send gold, silver and all commodities skyrocketing. But I can’t deny it, this is an incredibly painful transition.” Read more here-http://bit.ly/JRTgtC

-Richard Russell: The Next Sure Thing. I consider gold outside my regular investments. I don’t trade bullion. I hold it as a unit of wealth. I know that one hundred years from now, bullion will possess purchasing power. The dollar? I don’t know. I do know that the history of every fiat currency is a descent into worthlessness. No fiat money has ever survived.

Verdict be Out of all stocks and be very patient. I don’t like the undertone of this market one bit; I think the stock market is under subtle and quiet distribution. Holding any stocks over time will be a loser so it’s simple don’t hold them; stay in cash and gold coins until I think of something better. Read more here-http://bit.ly/Jbp37F

-John Embry: This is One of the Greatest Statements of All-Time. “What they want to do is keep it (gold) in a range. Right now that range is $1,550 to $1,900. Can it go below $1,550? Sure, in the short-run it could. But the fact is the big move coming from these levels is going to be to the upside. Trying to pick a bottom is always a difficult thing to do. Put it this way, you’re a lot closer to a significant bottom than you are to a top.” Read more here-http://bit.ly/KGuCik

-Caesar Bryan: What Investors Need to Know About Gold & the Mining Shares. “You know we’ve seen these type of corrections in this gold bull market before. This reminds me a little bit of 2008, in the sense that there was this selling of quality assets across the board, in an effort to raise dollars.”

The background of all of this has been the possible disruption in the eurozone by Greece exiting the euro or some other type of credit event taking place. On top of that it is a seasonally weak period for gold. There were issues in India on the physical off-take (because of the tax).

Also, as the dollar has gained strength, the knee-jerk reaction is for gold to come down. As gold has breached key technical’s, you’ve had traders selling and shorting more. The fundamental story for gold has not changed, and if it has, it has changed for the better. There is simply too much debt, both here and in Europe. In this environment of too much debt, you are faced with defaults on one hand or money printing and inflation on the other. Both scenarios are positive for gold, but we have to endure these sharp pullbacks. Read more here-http://bit.ly/JsKohk

-James Turk: Expect Tremendous Chaos, Europe Deteriorating Rapidly. My opinion is that holding physical gold, with no counterparty risk, and continuing to accumulate more on dips, is how savvy investors are positioning themselves. The same logic also applies to silver. Right now, the gold market is in the middle of a battle between the paper traders and the holders of physical metal.

We are seeing huge Chinese import stats for physical gold and robust demand elsewhere for physical metal. So gold will eventually win this battle, just like it has for more than a decade. The reason gold will prevail is there are oceans of paper money swirling around, but so little physical gold. Read more here-http://bit.ly/JtDR82

-Gold bull run set for 12th consecutive year, WGC. Read more here-http://reut.rs/ILPzoF

-China May Surpass India as Biggest Gold Market, WGC Says. Gold demand in China may surge as much as 30 percent this year as rising incomes boost consumption, helping the country topple India as the world’s largest bullion market on an annual basis, according to the World Gold Council. Read more here-http://bloom.bg/JxKBlx

-Why Morgan Stanley believes gold may hit $2,175 in 2013. Read more here-http://bit.ly/JbrYDX

-While the buying power of fiat money has fallen by 96% under America’s greatest failure (the Fed), the buying power of Gold has increased 700%. This equals the ‘invisible’ robbing of the Poor and Middle Class by the Fed. Let me give you an example of the difference between average wages in paper fiat over time, compared with equivalent ounces of Gold. Jsmineset.com

-Average wages in 1959 were $5,016 or 143oz of Gold

-Average wages in 1977 were $15,000 or 120oz of Gold

-Average wages in 1999 were $28,970 or 104oz of Gold

-Average wages in 2008 were $41,335 or 53oz of Gold

-Brodsky and Quaintance: Central banks aim to redistribute gold and push it way up. Read more here-http://www.gata.org/node/11373

-Commodity Online withdraws IMF gold purchase report. Read more here-http://www.gata.org/node/11366 and http://www.gata.org/node/11357

-Germans fret about their foreign gold reserves. Germany has gold reserves of just under 3,400 tons, the second-largest reserves in the world after the United States. Much of that is in the safekeeping of central banks outside Germany, especially in the US Federal Reserve in New York. One would think that with such a valuable stash, worth around E133 billion ($170 billion), the German government would want to keep a close eye on its whereabouts. But now a bizarre dispute has broken out between German institutions over how closely the reserves should be checked. Read more here-http://www.gata.org/node/11370

-German Parliament wants accounting of gold reserves; Bundesbank resisting. Read more here-http://www.gata.org/node/11362

-Stoferle, Macleod discuss clamor for gold reserve repatriation. Listen here-http://www.gata.org/node/11368

-Japanese pension fund buys gold but only the ETF kind. Read more here-http://www.gata.org/node/11375

-FT’s Gillian Tett provides the rationale for gold price suppression. Read more here-http://www.gata.org/node/11351

-Yukon gold rush isn’t slowing but watershed raises concerns. Read more here-http://www.gata.org/node/11356

-Proactive Investors interviews GATA Chairman Murphy. Listen here-http://www.gata.org/node/11369

-Pat Heller: U.S. govt. agency is specifically authorized to rig gold market. Read more here-http://www.gata.org/node/11361

-MineWeb: Indian government aims to ‘throttle’ gold demand. Read more here-http://www.gata.org/node/11358

-Peter Grandich renews offer of million-dollar bet on gold’s reaching $2,000 before $1,000. Read more here-http://www.gata.org/node/11372

-Rare gold coin may fetch up to $4 million at Georgia auction. Read more here-http://fxn.ws/Jh0BIF