Gold World News Flash |
- International Forecaster June 2010 (#9) - Gold, Silver, Economy + More
- The Big Guns of August
- Peter Grandich Hunts for Treasures Beyond Gold's Glare
- Gold and the Flight to Safety
- Silver Market Update
- LNB Bancorp: Safe and Cheap
- Heads, Shoulders, Knees & Toes: A Warning Sign for Investors?
- Rosenberg: Sub-2% Long Term Bond Yields
- Significant Factors Impacting Financials – ETFs to Consider
- Things
- Daily Dispatch: Beware the Bloodsuckers
- Gold, Stocks, Currencies
- Gold Wealth. How's Your Accounting?
- GLD Up Another 136,928 Troy Ounces of Gold
- LGMR: Gold Adds 12% for Q2 as S&P Drops 11%, Forex "Echoes 2008" Meltdown
- Gold 06-30
- Become a Big Bank, Ignore The Law
- Space Helmets on Captain Video
- Grandich Interview in The Gold Report
- Where to Find the Best Deals in Physical Gold
- In The News Today
- Markets Make A Definitive Statement
- Crude Oil Testing $75.50 Support, Gold Inches Higher on Safe Haven Appeal
- It's the Debt, Stupid – Bill Gross Edition
- Five Reasons a Double-Dip Recession Could Happen
- Zero Hedge: Was AIG manipulating the precious metals markets?
- Market Meltdown and Metal Missiles - SPX, Gold, Silver and Oil
- Mortgage Horror Stories: The U.S. Housing Industry Will Never Recover If Qualified People Can't Get A Home Loan
- Was AIG, In Addition To Being The Riskiest Company In The World, Also A Precious Metals Manipulator?
- Socialist Pigs
- Calpers and Risk: Together Forever?
- Budgeting Casualty
- Consume Now, Pay Later
- The CDS Wolfpack Is Now Coming After France... China
- Gold Daily Chart
- AIG's Cassano: Poster Child for Compensation Problems
- Simple Sovereignty vs. Double Sovereignty: The Holy Grail Of Solvency
- Gold Price is Range Bounded, When One Side or the Other Weakens 'twill Spring a Long Way
- Where's the Gold!
- Flight to Crisis?
- Explaining Derivatives, And Goldman's Dominance Thereof, In Four Simple Charts
- Bond King Bill Gross: It's every nation for itself
- Rick Rule: Gold stock investors could make a fortune in the next 5 years
- WEDNESDAY Market Excerpts
- The CBO Issues Most Dire Warning On US Budget Yet, Warns US Debt Will "Swiftly Be Pushed To Unsustainable Levels"
- Bob Chapman: We Are Entering Our Final Journey
- Jim Rogers: The best precious metals to buy today
| International Forecaster June 2010 (#9) - Gold, Silver, Economy + More Posted: 01 Jul 2010 03:11 AM PDT The Fed Chairman Ben Bernanke tells us the American recovery is struggling because of European austerity. Does he really expect us to believe that? There is no question austerity in Europe will lead to a deflationary depression. Unemployment will rise quickly, which means major cuts in government spending and lessened revenues. Beside the public those affected the most will be towns, cities and states, many of which are on the edge of insolvency surprisingly even in Germany.
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| Posted: 01 Jul 2010 02:55 AM PDT One month after Austria lost its heir presumptive to an anarchist's bullet, its bonds finally got round to dumping almost 10% of their value, says Ferguson's data. The guns of August were already being loaded, in other words, by the time the sovereign bond market took fright. Austrian debt would stand more than 23% lower by Christmas, and the Hapsburg Empire wouldn't exist five years from there. Still, US Treasury buyers have nothing to fear today, of course. Just look how low yields are.
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| Peter Grandich Hunts for Treasures Beyond Gold's Glare Posted: 01 Jul 2010 02:25 AM PDT The foundation of my bullishness on gold has been a few key points I've hammered home. Two of the main ones used to be big negatives for gold. It wasn't that many years ago that central banks were net sellers of gold. After the Washington Agreement, they started to measure their sales, and they've actually become net buyers in recent years. So one key bullish factor was the fact that a group that had been a major seller no longer was.
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| Posted: 01 Jul 2010 01:15 AM PDT Eventually investors will realize the finances of the U.S. have reached the point of no return. This will coincide with a loss of confidence that will spur a sell-off in the dollar and bonds. In reality, a revaluation of the dollar is pretty much our only option. This is negative for bonds. All of the capital that blindly fled to bonds will go to gold, which will fuel a rally that will be amazing.
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| Posted: 30 Jun 2010 06:49 PM PDT
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| Posted: 30 Jun 2010 06:45 PM PDT LNBB) was the first one in the series and was published some weeks ago. I want to emphasize the need to update the stock price information to current levels for all the posts in the series. I still have a position in LNBB, but it is not one of the largest. There are some unbelievable opportunities in the sector consequence of the uncertainty on the new bank regulation. Enjoy. As a consequence of analyzing the prospects of the financial sector, I came across some potentially interesting investments. I’ll mention some of them but, given that banks are complex to analyze, the emphasizes will be on breadth over depth. If they capture your interest, we can go into more detail in a future post. I would appreciate readers’ comments, because local knowledge can be critical when investing in banks. Complete Story »
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| Heads, Shoulders, Knees & Toes: A Warning Sign for Investors? Posted: 30 Jun 2010 06:37 PM PDT Andy Zaky submits: While my readers know me best for my fundamental analysis and earnings forecasts, I will from time to time address overarching technical or fundamental issues in the broader market when I feel those problems can no longer be ignored. For example, in late April I mentioned to Philip Elmer-Dewitt (see here) that excessive unmitigated risk taking by fund managers as expressed by the ISEE index, the high call-to-put ratio on the CBOE, and the endless bid in the bond market would likely lead to a catastrophic sell-off in May. It was becoming increasingly clear that the European Sovereign debt crisis would eventually manifest itself in a brutal U.S. correction as the credit default swap market was nearly pricing in a default on Greece, Spain, Portugal, Italy and Ireland’s sovereign debt. Complete Story »
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| Rosenberg: Sub-2% Long Term Bond Yields Posted: 30 Jun 2010 05:30 PM PDT Edward Harrison submits:
Complete Story »
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| Significant Factors Impacting Financials – ETFs to Consider Posted: 30 Jun 2010 05:25 PM PDT Dan Pritch submits: Financial ETFs have been among the most volatile sectors over the past few years, with the sector swinging from near complete collapse to euphoria over year over year comps for earnings (any positive earnings announcement compared to a year ago multi-billion dollar loss looks great). With the the investment banks, especially, able to borrow from the Fed (taxpayers) at near 0% and lend it at 6% or invest it at an even higher rate [Goldman Sachs (GS) went an entire quarter without a single losing day on trading operations], it’s no wonder that investors were piling into Financials. More recently however, there’s still constant tinkering and probably a Part Deux to FinReg, the housing market’s a mess, unemployment is going nowhere fast and the Euro has only taken a breather from its likely implosion, so Financials are still very likely to move in a rapidly volatile fashion; the question is which way. While mortgage rates are amazing low (current rates are at an all-time low in fact), it’s evident that buyers are questioning whether it’s even worth buying at any rate. Rates could go even lower rendering a rush into the market now futile, and people are starting to learn about restraint and frugality in the New Normal. Also, as is usual, both sides of the political spectrum are at the extreme on the Financial Regulation Reform Bill. Some say it’s going to destroy competitiveness in the US financial sector while others say it’s toothless and will be business as usual. Complete Story »
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| Posted: 30 Jun 2010 05:20 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here June 30, 2010 05:38 PM Before we close for the holidays and return July 5th: While the S & P 500 has broken below the* H & S neckline, The DJIA hasn’t but is close. It also has given a MACD sell signal. Keeping in mind July and August are gold’s most two seasonally weak time frames, I’m quite please to see gold build a base here. The fact that it’s quite above it’s 200-Day M.A. also makes me okay with some more sideways action. Risk is $1,185 and upside $1,300+ for the next couple of months. [LIST] [*]GATA gently slaps Tokyo Rose (most deservedly). [*]Very good article [*]UN says good bye to the U.S. Dollar [*]Watching Rome burn [*]Grandich comments on ADV in The Prospector [*]After the close today, EVG announced drill results. While I’ve not had a chance to talk to the company, my first take is we now know we”re in the neighborhood of a big...
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| Daily Dispatch: Beware the Bloodsuckers Posted: 30 Jun 2010 05:20 PM PDT June 30, 2010 | www.CaseyResearch.com Beware the Bloodsuckers Dear Reader, There may be some deeper societal significance to it than is immediately apparent, but for whatever reason, vampires are once again back in vogue. Why, it’s gotten to the point where one can hardly turn around without bumping into a bloodsucker. In fact, driving down the road yesterday, a young teen from what might be called a troubled family here in town all but jumped into the road in front of me. Priding myself on being a generally courteous driver, I politely stomped on the brakes versus, say, running him down. In appreciation, and I exaggerate not at all, he actually turned in my direction, bared his teeth, and hissed loudly. As I looked at him incredulously, I found myself wondering if he was an especially ardent fan of the genre or perhaps a future serial killer. But I mostly felt sorry for him; the hardscrabble economy he’...
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| Posted: 30 Jun 2010 05:20 PM PDT +FASTMKT>>FOCUS Hello All, We had quite a day on Tuesday. Gold started out getting smashed, then recovered. The recovery may have been due in part to the Stock Indices crashing. Even with a $20 recovery from its lows, I expect we’ll see lower prices in the (near) future. I was surprised to see the Gold recover without taking out the rest of the stops (arrows pointing at the lows of the bars) that hang in a row just below the market, down to about the 1212.1 area. In the short term, it’s going to take some real strong new (panic) buying to move it up much further than Monday’s highs of 1246.0. One thing that comes to mind might be some anticipation or result of the Unemployment Report on Friday. (Gold chart below) The S&P took a real dump on Tuesday. Closing near its lows, I expect one more bump down, to clear out any sell stops below Tuesday, and then a short term recovery back toward its moving averages. The S&P cleared out long term...
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| Gold Wealth. How's Your Accounting? Posted: 30 Jun 2010 05:20 PM PDT Stewart Thomson email: [EMAIL="s2p3t4@sympatico.ca"]s2p3t4@sympatico.ca[/EMAIL] June 29, 2010 1. On my website, I have the key headlines piped in from some of the most important information sources. I urge all subscribers to study those headlines daily. Jim Rogers is there this morning saying "I'm short a large Western financial institution that everybody thinks is terrific". You know my statement made years ago that all the banks are bankrupt, but the mark to model accounting is hiding that fact, as the banksters work with the Gman to hand the trillions of failed OTC derivatives bets to the taxpayers to baghold. The risk of bank and stk mkt closures isn't gone. It's growing. I think the odds are high that not just one closure, but waves of closures are coming. The banks/mkts close, then re-open. Then the banksters price more trillions of OTCDs at mkt, and the system is closed down again, and again, and again. Each time the Gman prints up a new rou...
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| GLD Up Another 136,928 Troy Ounces of Gold Posted: 30 Jun 2010 05:19 PM PDT The gold price fell a bit as the dollar rallied during Far East and early London trading yesterday. But, by 9:30 a.m. in New York yesterday morning, gold was only down four or five dollars. Then, just before the London p.m. gold fix, gold got whacked for about $11 to it's low of the day of $1,226.40 spot. The low was set right at the London p.m. gold fix... no surprise there, dear reader. From that low, it recovered almost $20... before the buyer disappeared... or a not-for-profit seller showed up. I suspect the latter. Gold finished the trading day up a few dollars from Monday's close. Volume was huge... which was to be expected, since it was the last trading day for the June contract. Silver fell... and then rose... as the dollar stabilized 40 basis points higher around 4:30 a.m. Eastern time. Silver also got hit after 9:30 a.m. in New York... and made its low of the day [$18.38 spot] somewhere between 10 and 11:00 a.m. Eastern time. However...
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| LGMR: Gold Adds 12% for Q2 as S&P Drops 11%, Forex "Echoes 2008" Meltdown Posted: 30 Jun 2010 05:19 PM PDT London Gold Market Report from Adrian Ash BullionVault 08:00 ET, Weds 30 June Gold Adds 12% for Q2 as S&P Drops 11%, Forex "Echoes 2008" Meltdown THE PRICE OF BOTH gold and silver bullion ticked higher from yesterday's sell-off early in London on Wednesday, rising as Asian stocks caught up with Wall Street's sharp losses but European shares rallied. Recording an AM London Gold Fix of $1240.50 per ounce, gold stood almost 12% higher in Dollar terms for the second quarter of 2010. Fixing at $18.74 per ounce today, silver stood 7.0% above the end of March. New York's S&P 500 stock index ended Tuesday 11% down for the second quarter. "The yellow metal firmly established itself as a reservable currency in the second quarter," says a note from Japanese metal conglomerate Mitsui's London team, "benefiting greatly as the sovereign debt crisis in Europe came to a head." Gold has now recorded seven quarterly gains on the run, Mitsui notes, outrunning both ...
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| Posted: 30 Jun 2010 05:19 PM PDT courtesy of DailyFX.com June 30, 2010 07:42 AM Gold may be attempting to carve out a top. Objectives remain at 1276 and 1300. 1276 is where wave v would equal wave i (1050-1147). 1300 is where wave c of v would equal wave a of v (the rally from 1050 is a diagonal, consisting of 3 wave movements) and where wave v equals 61.8% of waves i through iii. Trading below 1216 would signal that a top is probably in place....
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| Become a Big Bank, Ignore The Law Posted: 30 Jun 2010 05:19 PM PDT Market Ticker - Karl Denninger View original article June 30, 2010 05:02 AM I guess it's not enough to rip off municipalities and be the funding source for drug cartels in Mexico who shoot people (including police officers), right? [INDENT] When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman, Société Générale, Deutsche Bank and Merrill Lynch — over any irregularities with most of the mortgage securities it insured in the precrisis years. But after the Securities and Exchange Commission's civil fraud suit filed in April against Goldman for possibly misrepresenting a mortgage deal to investors, A.I.G. executives and shareholders are asking whether A.I.G. may have been misled by Goldman into insuring mortgage deals that the bank and others may have known were flawed. [/INDENT] Absolutely correct. If you're a big bank, when thing...
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| Space Helmets on Captain Video Posted: 30 Jun 2010 05:19 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here June 30, 2010 03:58 AM Another tin-foil hat new member No matter what the mortally wounded gold perma-bears say and the media that continues to ignore how wrong they’ve been, just remember this [url]http://www.grandich.com/[/url] grandich.com...
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| Grandich Interview in The Gold Report Posted: 30 Jun 2010 05:19 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here June 30, 2010 03:07 AM Please note the interview took place on June 21, 2010 [url]http://www.grandich.com/[/url] grandich.com...
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| Where to Find the Best Deals in Physical Gold Posted: 30 Jun 2010 05:19 PM PDT By Jeff Clark, Editor for Casey Research When gold breached the $1,000/oz mark this February, the mass media were full of reports of unprecedented coin demand and long wait times for bullion buyers. You couldn't open the paper without seeing a piece about the gold rush. Although the press has now set gold aside for hotter stories, I can tell you demand for gold coins continues at unprecedented levels worldwide, and production is still struggling to keep up. Take a look at these recent reports: ***Sales of the Austrian Philharmonic gold coin soared 544% in the first two months of 2009 (vs. the same period the year before), with production at the country’s mint running quadruple its usual volume. ***The demand for Krugerrands is at its highest level since 1986. The South African refinery recently doubled production of blank gold coins to 20,000 ounces per week. ***China, now the fastest-growing market for gold, saw 2008 sales (measured in dollars) rise b...
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| Posted: 30 Jun 2010 05:19 PM PDT View the original post at jsmineset.com... June 29, 2010 03:56 PM "It is the common fate of the indolent to see their rights become prey to the active. The conditions upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime, and the punishment of his guilt." –John Philpot Curran – (1750-1814) Irish Orator, Statesman, Judge – Date: July 10, 1790 – Source: Speech, Dublin, July 10, 1790 Jim Sinclair’s Commentary How to relax after a long day in Gold and Forex, narrated by [url]www.DrVino.com[/url]. Jim Sinclair’s Commentary If you feel comfortable being in the US dollar you would feel comfortable in Chernobyl. The virtual reserve currency to come cannot survive as a huge index of world fiat paper unless it is tied to gold in the manner I have reviewed with you many times. The virtual world currency reserve will be tied to gold, not a...
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| Markets Make A Definitive Statement Posted: 30 Jun 2010 05:19 PM PDT View the original post at jsmineset.com... June 29, 2010 04:02 PM Dear CIGAs, Equity markets are sharply lower, the Euro is sharply lower, commodities are under significant pressure. Gold opens lower and recovers $16 from the low to be up on the day. 1. The type on inflation being discounted by Gold requires business activity to be putrid. 2. This type of inflation is hyperinflation, which is a currency event, not an economic demand phenomenon. 3. Rather than a singular currency loss of confidence igniting hyperinflation, it will be all Western currencies moving against each other with intolerable to business volatility. 4. All Western governments will practice QE to infinity, as we return to credit market problems. The statement of the G20 and Prince Charles cutting down on caterers is all smoke and MOPE. 5. Gold is NOT a commodity. 6. Gold is a currency 7. Gold is the currency of choice. 8. Gold is going to becoming the reserve asset of choice by central...
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| Crude Oil Testing $75.50 Support, Gold Inches Higher on Safe Haven Appeal Posted: 30 Jun 2010 05:19 PM PDT courtesy of DailyFX.com June 29, 2010 07:15 PM Crude oil buckled under the pressure of plummeting stock markets, but the commodity remains well above key support near $69.50, and the May lows near $64.00. Prices are near initial support at $75.50; whether this level holds or not will be decided by the fate of broader financial markets. Commodities - Energy Crude Oil Testing $75.50 Support Crude Oil (WTI) $77.58 -$0.26 -0.34% Crude oil got slammed in Tuesday’s session, spurred by plummeting stock markets around the world. The S&P 500 declined 3.1%, while the VIX, a measure of expected volatility, spiked 18% to settle over 34. The benchmark U.S. stock index broke down to the lowest levels since November of 2009. Given this backdrop, it was little surprise that crude oil buckled under the pressure. The commodity shed 3%, sending prices briefly under the key $75.50 support level before rebounding slightly. We have been writing about the inherent stren...
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| It's the Debt, Stupid – Bill Gross Edition Posted: 30 Jun 2010 04:53 PM PDT Edward Harrison submits:
But they are wrong. 2008 was not 1992 and 2010 is not 1994. I know the Clintonites controlling economic policy in the Administration want to believe that. But it is simply a false analogy. Stimulus alone will not work because the U.S. private sector needs a debt restructuring. Too much consumption has been pulled forward and financed by too much debt. The result a horrible misallocation of productive investment to which we are now awakening. That necessarily means lower economic growth and lower income growth going forward – a situation which makes many debt contracts of yesteryear uneconomic. Debtors are simply too indebted to take on more. Complete Story »
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| Five Reasons a Double-Dip Recession Could Happen Posted: 30 Jun 2010 04:28 PM PDT Rick Newman submits: Most economists still think the odds of a relapse are low, but the listless economy is starting to resemble a moribund patient who doesn't respond to conventional treatment. The government has transfused trillions of dollars of aid into the economy, defibrillated the banking sector, subsidized housing for millions, and propped up other sectors, like autos. Yet hiring is far weaker than it should be, stocks have tumbled, consumers are depressed, and skeptics are predicting a dreaded double-dip recession. Here's why it could happen: The stock market boom might have been artificial. After a steep plunge in 2008 and early 2009, stocks began an epic rebound in March 2009, rising about 83 percent over the next 13 months. In the traditional view, rising stocks are a leading indicator that ultimately helps pull the broader economy out of recession. So the rally seemed like a preview of a healthy recovery. But it's also possible that something else was going on. Beginning in March of last year, the Federal Reserve began an enormous program to buy mortgage-backed securities in order to help stabilize the housing market. The Fed ultimately injected about $1.2 trillion of capital into securities markets, which by some accounts is the largest "buy" program ever. The investors who sold the Fed all those mortgage-backed securities suddenly had cash they needed to invest in something else, and some of that money found its way to the stock market. Complete Story »
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| Zero Hedge: Was AIG manipulating the precious metals markets? Posted: 30 Jun 2010 04:26 PM PDT 12:20a ET Thursday, July 1, 2010 Dear Friend of GATA and Gold (and Silver): Zero Hedge's pseudonymous Tyler Durden a few hours ago produced an AIG document suggesting that the rogue insurance firm and derivatives issuer was manipulating the precious metals market. This will require more review and analysis but the Zero Hedge commentary is headlined "Was AIG, in Addition to Being the Riskiest Company in the World, also a Precious Metals Manipulator?" and you can find it here: http://www.zerohedge.com/article/was-aig-addition-being-riskiest-company... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth Join GATA here: New Orleans Investment Conference * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php
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| Market Meltdown and Metal Missiles - SPX, Gold, Silver and Oil Posted: 30 Jun 2010 04:18 PM PDT What a nutty week for the equities market! The bleeding has not led up with almost 2 weeks of straight selling. Also we are seeing oil break down with a rather large bear flag and if that happens, which it looks like it will...
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| Posted: 30 Jun 2010 04:13 PM PDT
This point was beautifully illustrated recently by one of our readers named John.... I was just turned down for a home loan. My credit score is 799, my wife's 804. We had $40,000.00 to put down, which was almost 30%. BUT! Our bank turned down our application! Why? They required us to have 6 months "operating expenses" in the bank after all closing costs were covered. They came up with an arbitrary number on their own, based on our bills and such. We had that amount and more on top of our closing monies. Then why were we denied the loan? Several thousand dollars were from "cash" and the bank required that "cash" be in the bank for at least 60 days or they wouldn't consider it fluid funding. Needless to say we didn't make the closing date and are hiring an attorney to avoid being sued (by the seller). A reader named distressedinbham on another website had an even more frustrating experience trying to get a home loan modification.... I am self-employed, have been all my life and have owned a home for 30 years. When I started my Loan Modification process in August of 09 I WAS NOT behind on any payments. I sent full documentation, over 150 pages, with the things they needed to verify my income. I am now 2 payments behind and I am getting nowhere. They keep flipping me between Loss Mitigation and Imminent Default, back and fourth month end month out. I made a habit of calling every week, then every two weeks just to be sure all was moving forward. From the middle of November I was told my file was with the underwriter and it would only be 30-60 days. I began automatically updating my income verification, verification that I still resided at the property and an updated 4506-T every month. In the middle of April a rep finally told me I was not in the loan modification process. In fact, that I had been denied on March 2. Keep in mind, I'm talking to these people every 2 weeks. She did a financial interview and sent me a new packet so that I could start all over, resubmitting all the documentation yet again. She told me she was my Account Manager. I completed the packet, called with a question (2 weeks later - over a week to receive the packet and another few days to complete it and gather all my documents again) and learned that my "Account Manager" was on maternity leave and I now didn't have an account manager. Also, I was told that I had received the incorrect packet...it was the old version rather than the updated version. She asked me to fax four or five pieces of information in the hopes it would, quote, "jump start my file back into the process" and said she we send me another packet. That was mid April. Here we sit, 2-1/2 months later, I have still not received anything in writing about my rejection. And, though I've now had people tell me on three separate occasions that I would receive a new packet, it has yet to show up on my door step. I asked several times why my application was denied and the answer I finally got last week was that it was because I was DELIQUENT in my payments. Call me crazy but I thought that was the whole point??!! I almost hired a third party but am so hesitant to take that step. Every time I get on the phone with them it takes an hour out of my day and I am usually so upset I find it difficult to work, so I just don't call. I'm going to sit back and regroup and decide what I need to do next. The truth is that scenes such as these are being repeated over and over again across the United States right now. Scott Stern, the CEO of Lenders One, says that a lot has changed since 2007.... "Lending standards have tightened dramatically between 2007 and 2009." In an attempt to avoid the mistakes of the housing bubble, the mortgage industry has now created a situation where standards are so tight that the entire industry is freezing up. In May, sales of new homes in the United States dropped to the lowest level ever recorded. To be more exact, new home sales dropped 32.7 percent to a seasonally adjusted annual rate of 300,000. Keep in mind that a "normal" level for new homes sales is an annual rate of about 800,000. New homes have never sold this slowly ever since the U.S. Commerce Department began tracking this data back in 1963. Now, a lot of the drop in new home sales has to do with other factors, but certainly the fact that people are having such a hard time getting approved for loans is playing a role. If large numbers of qualified people are getting turned down for mortgages that is going to suck a lot of money out of the marketplace. And without enough qualified buyers, the U.S. housing industry is simply not going to recover. But it isn't just a lack of qualified buyers that is the problem. The truth is that the U.S. real estate market is a complete and total disaster right now and there is every indication that things are going to get even worse. So what does all of this mean? It means that it is going to remain very difficult to sell homes. It means that prices are going to continue to come down. It means that real estate agents will continue to suffer and there will continue to be high unemployment in the construction industry. In fact, every industry that is highly dependent on the U.S. housing market is likely to continue to feel a lot of pain for a long time to come. So do you have a mortgage horror story to share? If so, please feel free to leave it in a comment below.....
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| Was AIG, In Addition To Being The Riskiest Company In The World, Also A Precious Metals Manipulator? Posted: 30 Jun 2010 03:46 PM PDT
A little under two years ago, there was a big debate in the precious metals community, in which two groups of individuals were arguing for and against possible silver market manipulation, via arbing the COMEX and the OTC. On one hand you had such distinguished economists/bloggers as Mish (here and here) and Jon Nadler of Kitco (here) claiming there is no such thing as a COMEX-OTC arb because markets are ultimately efficient, and the second a trade is effected in one market, it implicitly affects all other markets, making spread arbing, and thus "manipulation" impossible. On the other hand, you had C.Loeb making precisely the opposite argument (here). After a brief flare up, the debate died down, with a partial win acceded to Nadler, who ended the debate with the following rhetorical statement: "Also, by the way, why not NAME the sinister manipulative banks in question? Why not ask them outright as to the motives behind their positions (or better yet, who their clients were) and whether or not they acted in a "willfully nefarious" manner? Conclusion: One can take any database and make it suit their conspiracy argument. That, however, does not make for proof of any kind." In other words, Mr. Nadler was asking for a bank to confirm it was arbing the COMEX-OTC spread, which in turn would unwind his defense argument, and lend credence to the claim that some players, due to their massive scale or otherwise, succeed in manipulating the silver (or gold) market by profitably spreading the legs of the trade in two completely different markets and arbing this spread. For the longest time people looked exclusively at JPMorgan for clues. Boy, were they wrong... and are they about to be surprised that in addition to almost blowing up the world, AIG FP has admitted that it itself, as the defacto risk mastodon and suicide bomber under Joe Cassano, with "$426 billion in total on and off balance sheet risk equivalent delta," was precisely just this spread manipulator. But don't take our word for it. Take AIG's. Presenting exhibit A: AIG production document FRBNY-TOWNS-R1-210712 (pp 34-35) - highlight ours.
Oh, so the arb does exist... There are about 249,999 other pages we need to go through to find additional supporting and incriminating evidence to this formerly Strictly Confidential Internal Risk Analysis, but a very relevant question at this point for Mr Nadler is: now that you have your confirmatory smoking gun, does that change your thesis? And a much more critical question for the gentlemen at the COMEX: just how was the world's arguably biggest trader at the time, AIG-FP, arbing your market and the OTC, and just how much of this falls under the confines of "legal"? And, lastly, maybe the most critical question - who inherited these positions, who unwound them, and, if no unwind occurred, who is currently in possession of AIG-FP's "large exposure in the Comex vs OTC arbitrage trades"?
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| Posted: 30 Jun 2010 03:42 PM PDT Capitalism produces. Socialism distributes. The two systems do not coexist comfortably with one another. In fact, they are inimical. Some of the most celebrated champions of socialism have coined terms like "greedy capitalist" or "capitalist pig." By implication, a socialist is neither greedy nor a pig. But economic history suggests that socialists are just as porcine as their capitalist counterparts...maybe even more so. One need only look to the recent goings on in Australia, your editor's country of birth, for a glimpse into the real world outcomes of this ideological struggle. Kevin Rudd was last week ousted from Prime Ministership after a botched attempt to impose a "super profits" tax on the most productive sector of the Australian economy - the mighty mining sector. We provided a few details in Thursday's issue: "The story is a classic 'producer vs. parasite' tale...Rudd, like any other socialist bully would do, attempted to sell the tax to the Australian public under the familiar 'fair share' slogan. "'The infrastructure needs of this state are vast and on the existing tax base cannot be funded,' Rudd told Australian reporters while on a recent visit to Western Australia, the nation's largest mining state. 'We say the sector of the economy most able to share a greater part of the burden for funding our infrastructure needs for the future is in fact our most profitable mining companies.' "If this sounds like thinly veiled Marxist rhetoric," we remarked, "that's because it is. As the founder of that ill fated, though persistently insidious ideology himself famously noted: 'From each according to his ability, to each according to his need.'" One might be forgiven for thinking that, after Rudd's spectacular political decapitation, replacement Prime Minister, Julia Gillard, would think twice before trying to kill the goose laying all of Australia's golden eggs. Alas, it was out with one parasite, in with another. Ms. Gillard is certainly aware of the research released by the Western Australia Chamber of Commerce and Industry that suggests the "super profits" tax, as it stands, would have erased $4.4 billion and 17,000 jobs from the West Australian economy next year - before the tax was even scheduled to be implemented in 2012. The study further predicts the cost to the state's economy would have risen each year to total $60 billion and 100,000 jobs lost by 2020. And yet...Gilliard revealed her parasitic DNA within hours of nabbing the Prime Minister's post. "I want to make sure Australians get a fair share of our mineral wealth," she declared, "But we want to genuinely negotiate..." Gillard is widely expected to push for a slightly diluted version of the "super profits" tax. "I am throwing open the door to the mining industry," she said just last week, "and I ask that in return, the mining industry throws open its mind." As warm and fuzzy as those sentiments may be, the fact remains that such featherweight idealisms invariably end up weighing a stone...and that is a burden the strongest, most able members of society are usually expected to shoulder. But theft is still theft...even if it is watered down a tad. Don't expect the industrialists to take her play-nice politico-doublespeak lying down. Although he welcomed the new leadership's change of tack, Atlas Iron chief executive, David Flanagan, was unequivocal in his assertion that tax must be axed. "We've been screaming blue murder to anyone who will listen about what the problems are with this tax," he told The Australian this week. Australians have been getting a pretty "fair share" of the local mineral wealth for some time now anyway. Those who risked their capital and bought even a single share of BHP Billiton, Rio Tinto, Fortescue Metals, Atlas Iron et al., were richly rewarded over the past decade as the geologic and geographic blessings of the "Lucky Country" and, more importantly, the efforts and initiative of its mining companies, paid off handsomely. (Of course, China and India's voracious appetite didn't hurt, either.) In addition to capital appreciation and regular dividends for shareholders, ordinary, working Australians have also exacted what might be seen as a "fair share" of the local resource wealth. Through compulsory contributions to Australia's Superannuation Fund - a scheme not entirely dissimilar to America's Social Security, though decidedly healthier...at this point, anyway - working Australians have a large, indirect holding in the nation's mining giants. Working Australians, therefore, saw the value of their retirement savings appreciate, more or less, alongside the rise and rise of the very companies the "super profits" tax sought to penalize. [Those same workers, not coincidentally, were among the first to see the value of their retirement nest egg shrink as the share prices of the nation's mining companies collapsed after the proposed tax was first run up the national flagpole.] Of course, all this is to say nothing of the tens of thousands of hard-working individuals who actually spend their days and nights thousands of feet below Australia's rusty red surface actually digging the stuff up...and the carpenters, plumbers and electricians who build and service lodgings to house them...and the local businesses that profit from an influx of workers to the region...ect., etc., etc... (Not to mention the exorbitant taxes each and every link in this value chain already pay!) After all, a barrel of oil or a ton of coal is worth nothing until it is first brought to market. Invariably, that process takes an immense amount of capital, the expertise to extract said resources and the gumption to actually get one's hands dirty doing the job. At the end of the day, those who deserved a "fair share" of the resource wealth got exactly what they deserved: a share commensurate to the effort they put in. By contrast, those who don't work, don't pay into Superannuation, don't build or service mining towns in some way, don't risk their capital by investing in those "conspicuously productive" companies; those who don't actually contribute anything to the process of bringing the product to market at all, get exactly what they deserve: nothing. People seem to think that just because they have an emu and a big red kangaroo on their passport they are somehow entitled to a bounty of riches...riches someone else must earn for them, no less. They define a "fair share" as a Divine Right handed down to them the moment they were born - coincidentally - in a resource rich land. People of such a mind should consider asking how their poor brothers and sisters are faring in Venezuela, or Mexico, or Iran, or Nigeria or, for that matter, just about anywhere else on the African continent. These lands all enjoy an abundance of natural riches...and an abundance of government involvement in "distributing" the profits. And yet, curiously enough, the people living under these supposedly benevolent regimes are among the most repressed and impoverished on earth. Hmmm... Socialist maxims may score high marks for eloquence and pathos; but they score very low marks for economic wisdom. Capitalism produces. Socialism distributes. Without capitalism, socialism cannot function. In other words; socialism needs capitalism. Intriguingly, the inverse is not also true. Capitalism has no need of socialism whatsoever. Capitalism distributes wealth by creating opportunity, forged in the crucible of open competition. Capitalism amasses the capital that invests in the enterprises that enable others to advance their financial conditions. Capitalism does not confiscate wealth and redistribute it. Capitalism multiplies wealth...and in the process redistributes opportunity. Of course, productivity and wealth creation does not come from penalizing the most productive members of society. It comes from standing aside and allowing them to do what they do best, be that excavating minerals, building cars or growing bananas. Left alone, the free market operates as a kind of evolutionary arms race. Companies compete to offer the same product at a better price, or a better product at the same price. Those that cannot keep pace eventually whither and die. Through this "survival of the fittest" process, prices are over time driven down and the quality of goods and services forced higher. In this fashion, those at the lower end of the socio-economic spectrum benefit most from the toils of companies competing to capture their business. And, the best part is that nobody has to steal a penny to pay for it. The "capitalist pigs" will finance the whole operation themselves...if only the safety-net socialists would get out of the way and let them. Cheers, Joel Bowman
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| Calpers and Risk: Together Forever? Posted: 30 Jun 2010 03:35 PM PDT
Kit Roane of Fortune reports, Calpers and risk: Together forever? (HT: Bill Tufts):
Will Calpers follow Wisconsin and other pension funds leveraging up their portfolios? In a world where pension funds will be lucky to obtain 5% annual return, there is simply no way they will attain that magic 8% investment return without taking on more risk.
Kohler is too nice. I think the majority of funds of hedge funds will shut down their operations in the next three years. In a deflationary world, fees matter even more, and they'd better be really good at picking alpha managers if they're going to be charging 1 & 10 on top of the 2 & 20. Even if they are good at picking winners, most investors will balk at paying an extra layer of fees. Finally, I leave you with some excellent Bloomberg interviews that appeared in the last 24 hours. You will have to click on the links to watch, but trust me, they're all worth listening to, especially the first one with Lakshman Achutan, managing director of the Economic Cycle Research Institute (click on links to watch): Achuthan Expects Downturn in Global Economic Growth: Video Xie Says China's Economy to Slow on Wage Inflation: Video
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| Posted: 30 Jun 2010 03:29 PM PDT Peter Orszag fell on his sword last week. Barack Obama's budget director left after disagreeing with Obama's tax pledge. 'Read my lips,' the chief executive might have said; no new taxes for people earning less than $250,000. Mr. Orszag hastened to distort the record: "I want to emphasize that it would be inaccurate to say that I have told the president personally that I'm leaving because of concerns about our fiscal policies," he said in his exit interview. Mr. Orszag can't seem to put a simple sentence together. But he can count. According to the last census results, there were 1.7 million households in America with incomes of $250,000 or more. Even if you took an additional $250,000 in tax from each one of them, raising the effective rate on many of them to nearly 150% of income, it you would still have a trillion-dollar deficit. There is no way the rich alone are going to be able to shoulder America's growing debt burden. "Peter feels strongly that this is a pledge that has to be broken..." said an administration source. Mr. Orszag is only the latest OMB casualty of modern debt financing. The first came a quarter century ago next month. David Stockman was the "propeller head" of the early '80s. He could count too. When the Reagan team refused to raise taxes to close the deficit gap, Stockman moved on. He quit on August 1st, 1985 and went on to write his memoir: "The Triumph of Politics; why the Reagan Revolution failed." Stockman was right. Politics prevented the Reagan administration from getting control of deficits. If the Reagan administration had been in the oil business at the time, it might have invented deep water drilling. Instead, one of the Reaganites' signal contributions was to liberate America's conservatives from their hatred of deficits. The Republicans didn't know it at the time, but their innovation would later prove disastrous. But Reagan was able to increase federal debt without causing a breakdown in federal finances. When interest rates were falling from 15% to 3% it was hard to go broke. Almost no matter how much debt you had, you could refinance at lower rates. Which gave the rest of the world the wrong idea. It seemed like you could borrow forever. Alas, all good things...and bad things...come to an end. Borrowing in the private sector peaked out in 2007. Since then it has been downhill. Of course, the lesson was lost on the feds. They've got their economists, their theories, and their elections. As you know, people come to think what they must think when they must think it. The Europeans have their backs to the wall. In front of them is the bond market - unwilling to extend more credit. They have to believe that cost-cutting is the way forward. So far, practically every government in Europe has promised to take a sharp knife to fat public budgets. Since we've been back in Europe, almost every headline takes up the story. "Brutal cuts... "Budgets slashed... "Pain...suffering...belt-tightening..." All in the name of austerity! But what can you do when you can't borrow any more money? On Monday, it looked like the gods were against them too. Greece announced a new borrowing campaign and the Parthenon got struck by lightning. Zeus will only put up with so much. Poor Ireland, too, is in bad shape. The Irish have been good sports about it. They've embarked on one of the most aggressive cost-cutting campaigns in the Old World. But do you think lenders are pleased? Nope. They've actually forced up Irish sovereign debt yields. And now, investors are wondering: what next? How much 'austerity' can governments deliver? How much is enough? And what happens to stocks while the world is de-leveraging? The Dow fell more than 240 points yesterday. If the stock market looks ahead, as the experts say, what is it looking at? We don't know. But if it opens its eyes at all it will see that actually the world isn't de-leveraging. Not yet. The US is still borrowing heavily. Its borrowers show no sign of fatigue. Meanwhile, the G-20 meeting ended with a call to trim public debt. But no one said 'now!' That's what they bond market says...when it has had enough. And for the moment, governments are still adding to their debts in anticipation of lowering them when the economy picks up. But wait...what makes them think the economy is getting better? Aren't we headed to a 'double-dip recession?' Uh huh. And if the economy goes down again...won't unemployment go up? Maybe to around 12% this time? Uh huh. And won't tax receipts go down? Uh huh. And won't public spending go up - with more unemployment compensation, food stamps, and counter-cyclical social spending? Uh huh. And won't deficits actually grow larger, not smaller? Uh huh. Which brings us back to the aforementioned David Stockman, Ronald Reagan's director of the Office of Management and Budget. Stockman gave a speech last October in which he predicted that the economy would not 'recover' as promised...and that the budget deficit, then about $1.5 trillion, would grow to as much as $2 trillion per year. Stockman may be right again. And more thoughts... "Ireland is a mess," began a colleague. "Just drive down the street. You'll see houses for sale everywhere. And there are unfinished housing developments. And empty offices too. "The funny thing is that prices have not fallen. That's the government's contribution to this problem. They've made it worse by taking in all the bad property debt into one very bad bank, backed by the government. This has meant that the lenders, builders and developers have not had to own up to their mistakes. There's been no rush to sell...and few desperate sellers, because the worst of them can effectively refinance through the government's bad bank. "Of course, it means that the property market can't correct itself either. "Everybody's happy when prices are going up. But when prices are going down they don't seem to have the stomach for it. So, they do everything they can to stop it. Of course, it creates this zombie situation, where the market can't correct itself. It can't clear. Because prices aren't allowed to fall. So people who have money don't want to buy. And people who don't have money can't sell. "And what can we do about it? "Nothing...so let's go down to Henry Downes and have a shot of whisky." We were in Ireland for a meeting of the minds of our Bonner Family Office. This is a project unlike anything else your editor has ever been involved in - very long-term investing for the benefit of future generations. Interested readers are invited to read more about it here. Regards, Bill Bonner
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| Posted: 30 Jun 2010 03:15 PM PDT Say it ain't so Wen Jiabao! In the last week market are telling us that investors have changed their minds. Instead of pricing a second half recovery in the global economy, they're now pricing in a recession (in the stock market) and a Depression (in the bond market). What gives? As PIMCO bond guru Bill Gross points out in his latest missive, stocks are reflecting what he calls the "New Normal." It's a long period of lower than average economic growth, household and business and even public sector deleveraging, re-regulation (less leveraging in the financial sector), and de-globalisation. It's actually the last point that interests us most - that the end of artificially cheap capital and cheap energy is straining all the connections (trade, finance, and logistic) formed during the last thirty years. Contractions can be painful when you're giving birth to a new world order, or so we've heard. Gross makes several other worthy points. One is that debt is no longer productive in boosting living standards. When it was, households were happy to borrow and so were businesses. But each addition dollar of new debt taken on in the economy is producing less and less real growth. Indeed, each additional dollar taken on is going, at least part of it, to service previously borrowed money. Unhealthy. He also makes a great point about what "bringing forward" consumption does in the long run. "Consumption when brought forward must be financed, and that financing is a two-way bargain between borrower and creditor. When debt levels become too high, lenders balk and even lenders of last resort - the sovereigns, the central banks, the supranational agencies - approach limits beyond which private enterprise's productivity itself is threatened." We appear to have reached those limits. Or that is the proposition investors are weighing up. Oh, and about Wen Jiabao. His comments, reported here in the Australian, appear to have spooked anyone who was worried that China's policymakers are trying to reign in the country's growth. Wen said in a speech that the Chinese government will, "maintain the continuity and stability of economic policies, while making them more targeted and effective...China's economy is currently developing in the direction envisaged by the macroeconomic adjustment and control policies." Actually, we're not sure what means at all. But we'll take it to mean that Chinese authorities are worried about inflation and a real estate bubble and will try to restrain bank lending through high reserve requirements and other measures. That is exactly the kind of news markets don't want to hear when "aggregate demand" is so weak in North America and Europe. And earlier today China's Federation of Logistics and Planning reported that manufacturing activity in June still expanded, but slower than May's rate. It was down from 53.9 to 52.1. This came a day after the U.S. Conference Board revised its China growth indicator. Again, the more we learn about these indicators and how they're compiled, they less convinced we are they actually tell you what's going on, or that they're even accurate. The compilation of statistics in a complex economy is essentially an act of statistical hubris. But the important point is that Chian woes are compounding the worries of Australian investors who must now wonder whether it's a good time to buy resource stocks. By the way, this is why we're convinced the underlying case for a resource super profits tax - that there are super profits to tax - will be have changed quite a bit by this time next year. Before our one day sabbatical to write the latest edition of the Australian Wealth Gameplan, we promised to take Rory Robertson and Michael Pascoe to task for being so wrong about gold. But since we're busily preparing to debate Rory Robertson on Tuesday night in Sydney and tell him why he's so wrong about house prices, our colleague Greg Canavan stepped into the crease last night and hit Pascoe for six. "First, let's kick off with an update on gold," Greg wrote to readers of his Sound Money.Sound Investments report. "Michael Pascoe wrote an article on Monday in The Age and SMH quoting Macquarie's Rory Robertson saying that gold is in a bubble. As contrarians this sort of stuff is music to our ears. "Apparently Robertson thinks that most people are buying gold simply because it is going up. While no doubt some traders are playing the momentum game, the vast majority buy gold because it is a time-honoured protector of wealth. "Only those ignorant of financial history disparage gold with bravado. Take this piece of ignorance for example:
"To many people this is a very persuasive argument against gold and we have heard it trotted out for years. But it is so wrong it's not funny. Especially coming from a financial professional. "No anchor, no benchmark for valuation? Gold is the benchmark. Its value doesn't change. What changes is the value of the various fiat currencies gold is measured against. It is the error and habit of the media that gold is quoted in terms of US dollars. US dollars should be quoted in terms of gold. That is, one US dollar can now buy you 1/1245th of an ounce of gold, compared to 1/35th of an ounce back in the early 1970's when the US was last on some sort of gold standard. "And like the paper notes in your wallet (cash) gold has no running yield. So what? Gold is money and money in its purest form has no yield. Yield is the reward or enticement for you to part with your cash and give it to a bank. At this point it ceases to become yours. It is a liability of the bank. "Gold is no one else's liability. It has no counterparty risk. It therefore generates no yield. It's simple when you think about it. Why is that so hard for seemingly intelligent people to understand?" Good question! Dan Denning
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| The CDS Wolfpack Is Now Coming After France... China Posted: 30 Jun 2010 02:11 PM PDT
A month ago, Sarkozy was pissed that Merkel had dared to take the initiative over him and to ban naked CDS trading. Being a stubborn reactionary, this action only prolonged his inevitable decision to do the same (because politicians, being the wise Ph.D's they are, realize fully all the nuances of screwing around with the financial ecosystem). However, looking at this week's DTCC data, we have a feeling he may accelerate his decision to join the CDS-ban team. With a total of 456 million in net notional derisking, France was the top entity in which protection was sought in the past week. In a very quiet week, where the 5th most active name did not even make it past the $100 mm threshold, France was more than double the number two sovereign - Mexico (we are unclear if this is some sort of contrarian move to the Yuan reval, which Goldman was pitching as MXN positive, which means traders likely hedged by loading up on Mexican CDS). But what is probably most notable, is the sudden and dramatic appearance of China in the top 3rd position. Welcome China! And after tonight's surprise PMI miss and the resulting market drubbing, we are confident within a week or two, China will promptly become a mainstay of the top 3, and will quickly rise to the top position, where it rightfully belongs. We are also confident those perennial Eastern European underdogs, Romania and Bulgaria will shyly make an entrance in the top 10 next week. Some interesting action was also seen on the rerisking end, where Italy saw a whopping $1 billion+ in bearish positions get unwound. This is probably the single biggest weekly sov rerisking we have seen in months. Nonetheless, without any concrete news out of the boot, we assume this is merely profit taking after numerous week of consistent derisking. Greece, which nobody cares about, continues to see rerisking, which however in light of this week's new record wides in 5 Year CDS, was somewhat unexpected. Not shown on the table, but certainly in need of noting, was our very own state of California, which with 377 million in net derisking, was the 3rd most shorted entity of all. Is the last bastion of "all is well" propaganda about to fall?
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| Posted: 30 Jun 2010 01:35 PM PDT | ||||
| AIG's Cassano: Poster Child for Compensation Problems Posted: 30 Jun 2010 11:56 AM PDT John Lounsbury submits: Joseph J. Cassano, head of what was formerly an obscure 400 employee division of American International Group (AIG) with main offices in London, called AIG Financial Products (AIG-FP), testified today before the FCIC (Financial Crisis Inquiry Commission). Complete Story »
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| Simple Sovereignty vs. Double Sovereignty: The Holy Grail Of Solvency Posted: 30 Jun 2010 11:45 AM PDT Stuart Staines submits: My previous letter was all about crunching the numbers on US government debt and seeking to achieve a better understanding of all those complex and sometimes misleading extrapolations that accompany it. My conclusion was that this hysteria surrounding the rise of US government debt levels appeared to be considerably disconnected with reality and I suggested instead that you consider long duration US treasury securities as an investment. This month I was hoping to explain why this conclusion did not apply to all countries and explain why. Talk about timing. Since then, hell has broken loose for the Club Med countries and the short Euro suggestion I was about to share is like offering you flood insurance after a tsunami has transformed your home into some underwater attraction for scuba diving tourists. Too late to offer the flood insurance trade, the European Union ship is sinking with the Euro sinking even faster, the question now is whether there are any life boats. Comparing debt levels across countries based on debt/GDP and deficit/GDP ratios is a useless exercise if you have not initially recognized which countries enjoy double sovereignty and which only simple sovereignty. There are major differences between these two groups and any comparison that does not consider their level of sovereignty is bound to produce useless conclusions. The rules that apply to sovereign nations issuing debt in their own sovereign currency (double sovereignty) and operating under flexible exchange rates do not abide to the same rules and constraints than those who don’t (simple sovereignty). Complete Story »
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| Gold Price is Range Bounded, When One Side or the Other Weakens 'twill Spring a Long Way Posted: 30 Jun 2010 11:31 AM PDT Gold Price Close Today : 1243.50Change: 3.80 or 0.3%Silver Price Close Today : 18.594Change 7.7 cents or 0.4%Platinum Price Close Today: 1537.30Change: -4.20 or -0.3%Palladium Price Close Today:... This is a summary only. Visit GOLDPRICE.ORG for the full article, gold price charts in ounces grams and kilos in 23 national currencies, and more!
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| Posted: 30 Jun 2010 10:53 AM PDT Where's the Gold! June 30th, 2010 Gold, the precious metal most often thought of as money, is in short supply. In fact, the existing above ground horde is so small one has to question whether it is realistic to think of it as having a serious role as money in the future. The fact is there just isn't enough of it and - once institutional and private investors realize that the supply is so disarmingly, and alarmingly, insignificant - prices will go parabolic. Which Countries Own Gold? The top 8 countries owning gold via their central banks are the United States, with 8,133.5 tons, followed in descending order by Germany, Italy, France, China, Switzerland, Japan and the Netherlands. None of these countries formally back their currency with this precious metal so why do they possess such substantial quantities? One can only speculate but it is probably because of their continuing belief that gold is 'real money' compared to the coloured paper and numeric symbols on computer screens that are the ultimate in 'make believe'. How Much Does the IMF Own? The International Monetary Fund (IMF) owns the third highest quantity of gold with close to 3,000 tons, after selling some 200 tons from its inventory earlier this year, and is making an increasing fuss over its desire to lead in forming a new international currency based on its (SDR's) Special Drawing Rights. What Quantity do the Various Gold ETFs Supposedly Own? The most significant non-governmental holders of gold are the relatively new Exchange Traded Funds (ETFs). These gold bullion ETFs are sold through stock exchanges and can be bought (and sold) by retail investors through their stock broker like most common stocks. In aggregate, these bullion ETF's ostensibly own more than 1,856 tons of gold, enough to rank them as the sixth largest holders of gold bullion. To What Extent Are the Various Gold ETFs' Holdings Backed By Physical Gold? Unfortunately, the rapid growth of the bullion ETFs raise questions concerning exactly how much of their holdings are backed by metal in a vault and how much is just another version of 'paper gold'. ETFs Lack Operational Transparency Complexity and opacity of their organizational structures and operating procedures leave many questions unanswered. Their prospectuses merely add to the fog. Most ETFs are layered organizations acting as trusts and repositories coupled with unclear practices concerning audits, segregation and allocation of the metals, unknown location of vaults and where the metals are sourced, and no clarity as to what extent the metals are leased or owned outright. What is the Value of Gold's Above Ground Inventory? The total value of all the gold that exists in the world is roughly US $5 trillion at today's price and, in terms of physical size, represents a cube measuring 66.5 feet. That's not that much from either perspective. What is the Value of the World's Annual Gold Production? The world's annual gold production totals US $73 billion (and silver only US $10.3 billion) at today's price. Compare that with the projected United States budgetary deficit for fiscal year 2010 of US $1.6 trillion, the official U.S. accumulated debt of US $13 trillion and unfunded contingent future liabilities and obligations of well over US $100 trillion and one realizes just how infinitesimal such production is. In addition, in spite of a 400 % rise in the price of gold over the past ten years, annual production has not been growing which has prompted some analysts to conclude that 'peak gold' is now, in fact, a reality, much like the scarcity of new oil supplies. Phantom Gold? COMEX (Commodities Exchange) based in New York and the LME (London Metals Exchange) based in the UK are the two principal markets for trading gold futures contracts. Frequently the volumes of trades which take place here are cited as evidence that there is plenty of metal available to easily satisfy all central bank, industrial and investor demand but is that really the case? Associated bullion bank depository warehouse vaults are seemingly as opaque in their reports as are bullion ETF's. Use of a variety of vague terms to describe the status of holdings such as 'Registered' and 'Eligible' are part of the problem. Central banks are similarly guilty of obfuscation by using terms such as 'Bullion Reserve', 'Custodial Bullion Reserve' and 'Deep Storage' gold. Paper Gold The central point to be derived from an examination of futures trading in gold is that it is principally a paper trading exercise. It is the ultimate in 'paper gold' in that less than one percent of trades are settled by taking delivery of the metal. Since most traders are more than prepared to be paid out in cash, the metals exchanges have good reason not to hold an inventory of the metal since it isn't needed for the settlement of trades. Token Gold Unfortunately, most people not directly involved in the business assume that the vast quantities of paper traded on the COMEX and LME is a proxy for the real deal...gold bullion. Trades are not, and apparently never have been, backed by the physical metal except in relative token fashion. Some analysts may consider this reality an attempt at deception. This writer takes no position on the issue, except to state, unequivocally, that the metals exchanges do not possess any meaningful inventory of gold bullion. Where's the Gold!? "Where's the Gold?" is a valid question for all of us who consider ourselves investors in the precious metals sector whether we own bullion and take possession or not or whether we invest only in precious metals mining companies. All of us need to ponder the same question if for no other reason than to question our prospects for future capital appreciation. Parabolic Gold This writer contends that, given the relative scarcity of gold and silver bullion supply, prices will go parabolic once institutional and private investors realize supply is disarmingly insignificant. Also refer to my previous article on the future parabolic rise in the price of gold as posted on munKNEE.com at: http://www.munknee.com/2010/06/gold-...-good-reasons/ Arnold Bock Arnold Bock is a Canadian living abroad retired from a career in government. He has a substantial background in partisan politics and public policy development as well as in project and program management within the public sector. http://www.24hgold.com/english/news-...redirect=False
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| Posted: 30 Jun 2010 10:29 AM PDT The US economic recovery is a fairy tale... WE'RE NOT THE FIRST to say it, but we have said it repeatedly, writes Eric Fry in The Daily Reckoning. The US economic recovery is a myth...a fairy tale. The more enthusiastically the Wall Street rah-rahs proclaimed the start of a new growth phase, the more emphatically your editors pooh-poohed the idea. "The non-recovery seems to be gathering momentum," we observed from California in the March 2 edition of the Daily Reckoning. "Almost every day we receive fresh evidence of economic non-growth and non-vitality. "The economy does manage to get out of bed every morning. Some folks applaud this fact and declare, 'Aha! A recovery!' Other folks...observe that the economy usually crawls right back into bed after brushing its teeth. We see no recovery. We see a coach potato with a very bright smile...an economy that still lacks essential qualities like jobs, corporate revenue growth and credit. The visible effects of this widespread malaise are...well...widespread." Falling prices tell us that the private sector de-leveraging is continuing. These processes take time, dear reader. Rome wasn't built in a day, and neither did it burn to the ground overnight. Likewise, the vast American economy does not improve or degrade all at once. Even in the midst of difficult conditions, for example, some facets of the economy manage to flourish. On the other hand, isolated instances of economic growth should not be confused with resurgent national prosperity. Sure, a few government agencies in Washington and a few financial firms in New York may have resumed hiring. But that doesn't mean General Motors can sell a car...or that home prices will rebound from their depressed levels. In fact, General Motors can't sell a car...and home prices are not rebounding from their depressed levels. "For US home and auto buyers it's 1983 again," observes Eric Janszen of iTulip.com. "New home sales fell to an annual pace of 300,000 units this May, the lowest yearly unit volume since 1983...An optimist might conclude that home sales are thus only as bad as in 1983, except that the economy was only one quarter the size of today's, [which means that] this post-recession housing market contraction is proportionally four times worse than the housing downturn that occurred at the end of the early 1980s recessions." Slowly but surely, therefore, investors are beginning to realize that America's economy recovery may be less robust than advertised. This week, the Conference Board's disclosed that its Consumer Confidence Index for June tumbled to 52.9 from 62.7 in May. The stock market did not greet this news warmly, as the Dow Jones Industrial Average dropped 268 points – falling below 10,000 to within a whisker of a new 9-month low. The Dow has fallen 428 points, or 4.2%, in the past four days. Most overseas markets also slumped Tuesday. The Shanghai Composite Index fell 4.3% to a 14-month low. Britain's FTSE 100 fell 3.1%, Germany's DAX index dropped 3.3%, and France's CAC-40 fell 4%. Meanwhile, a "flight to safety" pushed the yield on 10-year Treasury notes below 3 percent for the first time in since April 2009, when the financial markets were still in crisis mode. Bond yields and share prices do not usually tank when economic conditions are improving. Maybe this time is different...Probably it is not. Ready to buy gold...?
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| Explaining Derivatives, And Goldman's Dominance Thereof, In Four Simple Charts Posted: 30 Jun 2010 10:27 AM PDT
Attached are several charts used to explain to confused politicians all they need to know about the biggest ponzi scheme market ever created (synthetic derivatives), how these derivatives are created, how the leverage attributed to just one asset can result in infinite amplification of risk, and how Goldman is in the very middle of a web which encompasses tens if not hundreds of trillions in derivative counterparty exposure with virtually every single other financial company in the world. Amplification: this explains how you take a small pool of assets (in this case mortgages) and increase the bettable risk almost to infinity courtesy of synthetic products like CDOs which are nothing but side bets with an unlimited cap on the total risk exposure. The original mortgage is cut up into tranches, which are subsequentlly split up into CDOs, whereby risk can be held, sold off, or side-betted via CDS (which is what AIG would be doing by selling CDS on milions of assorted CDO tranches). In the example below the Glacier Funding CDO 2006-4A C has an original value of $15 million which trough CDO-intermediated amplification, or process in which bits and pieces of it are repakcaged in various synthetic afterproducts, ends up being $85 million. In theory there is no limit to what the total amplified value could be, as synthetic products by definition are created out of thin air, and just need a willing buyer and seller.
Deal Creation: For those who have not spent hours poring over the Abacus org chart, this is a summary of how a traditional CDO was structured and subsequently insured (incidentally, this is not the infamous "John Paulson" Abacus deal for which Goldman is currently being sued). Of particular note here is the box in the lower left, the CDS issuers, AIG, TCW and GSC, who were the dumb money, or those infamously collecting pennies before the housing crash steamroller. As the chart shows, they were collecting $3 million a year in CDS payments, and stood on the hook for $1.8 billion in case the CDO collapsed, or specifically if the underlying reference assets stopped generating enough cash through specific attachment levels.
Leverage: here are the key counterparties on the hook for just the above deal, Abacus 2004-1. No surprise, the biggest counterparty, with total downside loss is AIG, at $1.76 billion. The running annual CDS premium payment? $2.1 million. As the exhibit notes, in the end "Goldman negotiated $800 million from AIG." Other losers included TCW and GSC, and Abacus itself via secondary market holders.
Counterparties: The money chart, this shows who Goldman's key derivative counterparties were as of June 2008. While oddly enough AIG is not on this chart (potentially as this is pro forma for the bailout), it shows just what a great web of interconnected synthetic exposure derivatives create. As of this snapshot, Goldman had $20 trillion in notional counterparty exposure. This number has since ballooned. It also shows that the collapse of any individual actor in this maze would very likely result in the collapse of the entire financial system. While we do not know whether the notional depicted is gross or net, we are comfortable that the $2 trillion in Interest Rate Product counterparty exposure between Goldman and JPM and RBS (for example) would be sufficient to blow up either of these parties should the interest rate complex move violently in a direction and amplitude presumed impossible by either firm's VaR models. We are amused to note that Blue Mountain, a hedge fund, has $590 billion in counterparty exposure to Goldman yet no discount window access. Same goes for Citadel in Equity Products, which incidentally we learn is Goldman's largest counterparty in this category. In the very much maligned Commodity Product category, Goldman's key counterparties are Morgan Stanley with $96 billion, Barclays with $69 billion and Tempo Master with $55 billion, etc. So next time you wonder who aside from JPMorgan is writing all those synthetic gold shorts out of thin air, now you will know. Yet the most notable take home from this chart is that courtesy of its extensive network, Goldman knows full well just how every single bank and hedge fund is positioned, and can easily make prop trading decision based simply on counterparty exposure (Goldman tracks every single trade inception, transfer and novation with all its counterparties to know up to the minute who owns what). Welcome to completely legal frontrunning.
via FCIC
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| Bond King Bill Gross: It's every nation for itself Posted: 30 Jun 2010 09:46 AM PDT From Pragmatic Capitalism: As always Mr. Gross’ monthly outlook is a must read: It is this lack of global aggregate demand – resulting from too much debt in parts of the global economy and not enough in others – that is the essence of the problem, which only economists with names beginning in R seem to understand (there is no R in PIMCO no matter how much I want to extend the metaphor, and yes, Paul _Rugman fits the description as well!). If policymakers could act in unison and... Read full article... More from Bill Gross: Bond King Gross: Do not invest in the U.S. Bond King Bill Gross is dumping U.S. bonds Bond King Gross: Interest rates will soar from Obamacare
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| Rick Rule: Gold stock investors could make a fortune in the next 5 years Posted: 30 Jun 2010 09:41 AM PDT From Mineweb: Traders in small gold stocks should be licking their lips with anticipation at the prospects for the next five years. But, those with a view to capitalizing on the gold price alone should stick to the metal itself. Speaking on Mineweb.com's Gold Weekly Podcast, Global Resource Investments founder, Rick Rule, says "the volatility we are going to experience in the sector is going to be absolutely spectacular," and as a result trading opportunities are going to abound... Read full article... More on gold stocks: Keep your eye on gold mining stocks This gold mining stock could be ready to take off Mining stock expert preparing for "big buying opportunity" soon
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| Posted: 30 Jun 2010 09:41 AM PDT Gold edges higher, ends quarter up 11.7% The COMEX August gold futures contract closed up $3.50 Wednesday at $1245.90, trading between $1235.10 and $1248.80 June 30, p.m. excerpts: see full news, 24-hr newswire… June 30th's audio MarketMinute
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| Posted: 30 Jun 2010 09:28 AM PDT
In its just released Long-Term Budget Outlook, the CBO has come out with the most dire warnings on the US projected debt to date. In summary, the healthcare spending and the Social Security will consume an increasing portion of the budget and will push the national debt up sharply unless lawmakers act, CBO Director Douglas Elmendorf warned. "CBO projects, the aging of the population and the rising cost of health care will cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 16 percent of GDP 25 years from now if current laws are not changed." While this does not sound too dramatic, the way it is attained is with the following ludicrous assumptions (which Paul Krugman would certainly call perfectly normal): "government spending on everything other than the major mandatory health care programs, Social Security, and interest on federal debt—activities such as national defense and a wide variety of domestic programs—would decline to the lowest percentage of GDP since before World War II." Good luck with that. In the more realistic, alternative fiscal scenario, the CBO observes, that "with significantly lower revenues and higher outlays, debt would reach 87 percent of GDP by 2020, CBO projects. After that, the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2025 and would reach 185 percent in 2035." The CBO's conclusion is a nightmare to each and every hard-core Keynesian fundamentalist (you know who you are): "the sooner that long-term changes to spending and revenues are agreed on, and the sooner they are carried out once the economic weakness ends, the smaller will be the damage to the economy from growing federal debt. Earlier action would require more sacrifices by earlier generations to benefit future generations, but it would also permit smaller or more gradual changes and would give people more time to adjust to them." The summary critical presentation from the Congressional Budget Office (the full one with a lot of useless charts can be found here). This is very apropos as the US will likely never againhave a budget again so long as the current administration is in place. The Long-Term Budget Outlook Recently, the federal government has been recording the largest budget deficits, as a share of the economy, since the end of World War II. As a result of those deficits, the amount of federal debt held by the public has surged. At the end of 2008, that debt equaled 40 percent of the nation’s annual economic output (as measured by gross domestic product, or GDP), a little above the 40 year average of 36 percent. Since then, large budget deficits have caused debt held by the public to shoot upward; the Congressional Budget Office (CBO) projects that federal debt will reach 62 percent of GDP by the end of this year—the highest percentage since shortly after World War II. The sharp rise in debt stems partly from lower tax revenues and higher federal spending related to the recent severe recession and turmoil in financial markets. However, the growing debt also reflects an imbalance between spending and revenues that predated those economic developments. As the economy recovers and the policies adopted to counteract the recession and the financial turmoil phase out, budget deficits will probably decline markedly in the next few years. But over the long term, the budget outlook is daunting. The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services for many years (although the magnitude of that gap is very uncertain). Without significant changes in government policy, those factors will boost federal outlays sharply relative to GDP in coming decades under any plausible assumptions about future trends in the economy, demographics, and health care costs. The Outlook for Major Health Care Programs and Social Security CBO projects that if current laws do not change, federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter. Those projections include all of the effects of the recently enacted health care legislation, which is expected to increase federal spending in the next 10 years and for most of the following decade. By 2030, however, that legislation will slightly reduce federal spending for health care if all of its provisions are fully implemented, CBO projects. That reduction in the level of spending in 2030 yields lower projections of health care spending in the longer term—even though, owing to the great uncertainties involved in projecting such spending many decades in the future, enactment of the legislation did not cause CBO to change its estimates of longer term growth rates for spending on the government’s health care programs. Under current law, spending on Social Security is also projected to rise over time as a share of GDP, albeit much less dramatically. CBO projects that Social Security spending will increase from less than 5 percent of GDP today to about 6 percent in 2030 and then stabilize at roughly that level. All told, CBO projects, the aging of the population and the rising cost of health care will cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 16 percent of GDP 25 years from now if current laws are not changed. (By comparison, spending on all of the federal government’s programs and activities, excluding interest payments on debt, has averaged 18.5 percent of GDP over the past 40 years.) To put U.S. fiscal policy on a sustainable path, lawmakers would have to substantially reduce the growth in outlays for those programs relative to the amounts that CBO is projecting—or else match that growth with equivalent declines in other federal spending, corresponding increases in federal revenues, or some combination of the two. Alternative Long-Term Scenarios In this report, CBO presents the long-term budget picture under two scenarios that embody different assumptions about future policies governing federal revenues and spending. Budget projections grow increasingly uncertain as they extend farther into the future, so this report focuses largely on the next 25 years. However, because considerable interest exists in the longer-term outlook, figures showing projections through 2080 and associated data are available in Appendix A of the report, and associated data are available on CBO’s Web site (www.cbo.gov). The first long-term budget scenario used in this analysis, the extended baseline scenario, adheres closely to current law. It incorporates CBO’s current estimate of the impact of the recently enacted health care legislation on revenues and mandatory spending. (That estimate is unchanged from the one that CBO and the staff of the Joint Committee on Taxation published in March, when the legislation was being considered.) Under this scenario, the expiration of most of the tax cuts enacted in 2001 and 2003, the growing reach of the alternative minimum tax, and the way in which the tax system interacts with economic growth would result in steadily higher average tax rates. Those rising rates, combined with the tax provisions of the recent health care legislation, would push total revenues to 23 percent of GDP by 2035—much higher than has typically been seen in recent decades—and to larger percentages thereafter. At the same time, government spending on everything other than the major mandatory health care programs, Social Security, and interest on federal debt—activities such as national defense and a wide variety of domestic programs—would decline to the lowest percentage of GDP since before World War II. That significant increase in revenues and decrease in the relative importance of other spending would offset much—though not all—of the rise in spending on health care programs and Social Security. As a result, debt would increase from its already high levels relative to GDP, as would the required interest payments on that debt. Federal debt held by the public would grow from an estimated 62 percent of GDP this year to about 80 percent by 2035. Interest payments, which absorb federal resources that could otherwise be used to pay for government services, currently amount to more than 1 percent of GDP; under this scenario, they would rise to 4 percent of GDP (or one-sixth of federal revenues) by 2035. The budget outlook is much bleaker under the alternative fiscal scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. In this scenario, CBO assumed that Medicare’s payment rates for physicians would gradually increase (which would not happen under current law) and that several policies enacted in the recent health care legislation that would restrain growth in health care spending would not continue in effect after 2020. In addition, under the alternative scenario, spending on activities other than the major mandatory health care programs, Social Security, and interest would fall below the average level of the past 40 years relative to GDP, though not as low as under the extended baseline scenario. More important, CBO assumed for this scenario that most of the provisions of the 2001 and 2003 tax cuts would be extended, that the reach of the alternative minimum tax would be kept close to its historical extent, and that over the longer run, tax law would evolve further so that revenues would remain at about 19 percent of GDP, near their historical average. Under that combination of policy assumptions, federal debt would grow much more rapidly than under the extended-baseline scenario. With significantly lower revenues and higher outlays, debt would reach 87 percent of GDP by 2020, CBO projects. After that, the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2025 and would reach 185 percent in 2035. Neither of those scenarios represents a prediction by CBO of what policies will be in effect during the next several decades. The policies adopted in coming years will surely differ from those assumed for the scenarios. (And even if the assumed policies were adopted, their economic and budgetary consequences would certainly differ from those projected in this report.) Nevertheless, these projections, encompassing two very different sets of policy assumptions, provide a clear indication of the serious nature of the fiscal challenge facing the nation. The Impact of Growing Deficits and Debt In fact, CBO’s projections understate the severity of the long-term budget problem because they do not incorporate the significant negative effects that accumulating substantial amounts of additional federal debt would have on the economy:
Keeping deficits and debt from growing to unsustainable levels would require raising revenues as a percentage of GDP significantly above past levels, reducing outlays sharply relative to CBO’s projections, or some combination of those approaches. Making such changes while economic activity and employment remain well below their potential levels would probably slow the economic recovery. However, the sooner that long-term changes to spending and revenues are agreed on, and the sooner they are carried out once the economic weakness ends, the smaller will be the damage to the economy from growing federal debt. Earlier action would require more sacrifices by earlier generations to benefit future generations, but it would also permit smaller or more gradual changes and would give people more time to adjust to them.
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| Bob Chapman: We Are Entering Our Final Journey Posted: 30 Jun 2010 09:26 AM PDT (snippet) We are now entering the next to last phase of our journey. The wanton creation of wealth, inflation and perhaps hyperinflation, which will rob you of your assets. A stealth attack on what you have left by the people who control your government. Such monetary creation is the only way these people can keep the game going. They know it won't last, but they proceed anyway. For awhile they'll keep the multitudes at bay with extended unemployment and food stamps, but that will fade in time for lack of financial control, as the system begins to break down. You already see all fiat currencies under fire, as is sovereign debt. Can it get any worse? Of course it can, and it will. Implosion is the word everyone is going to discover and understand. An event that cannot be hidden by zero interest rates and endless supplies of money and credit. That word implosion will describe what will happen as a result in the machinations of the Federal Reserve. Now that you have seen a glimpse of your future we will move on to the deteriorating world that we now live in. CNBC and the mainline media tells us all is well irrespective of a failing recovery, climbing unemployment, which has just recently been assisted by trillions of dollars in stimulus. The question is what comes next? More of the same, of course. There is no other avenue to pursue even though Mr. Bernanke knows such stimulus is not going to get the desired results. These players behind the scenes know history. They know what we know. They depend on 98% of the people not discovering what they and we know, and that is where this is all headed. The important people in Wall Street, banking, insurance and in transnational corporations know, but they are not about to tell you. The market doesn't like what it sees, but it knows it cannot do much about it. Americans are fighting back as millions have not made mortgage payments for a year and are living for free in their homes. As an antidote Washington is now considering charging them rent, something they should have done four years ago. If you add in the disaster that is commercial real estate, personal and corporate debt, and sovereign debt, you have an insolvable problem that can only end in great grief. The choice to expose Greece's weaknesses from behind the scenes looks to be a fatal mistake. The elitists never envisioned the firestorm that the exposure has led too. Greece is about to explode, not because of the reduced socialist benefits, but because the people are finally realizing that they and others have been taken for a ride by the bankers and others behind the scenes and from within their own government. Discovery by the Greek people and others is not something the illuminists expected. They now are forced again to expedite their programs - when they have to do that they make mistakes, often-big mistakes, which gives us pursuers an advantage we could never hoped to have had. After their latest mistakes the bankers are scrambling to preserve the current system. It is not to be. There are far to many who now know what they are up too. 
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| Jim Rogers: The best precious metals to buy today Posted: 30 Jun 2010 09:16 AM PDT From Market Folly: ... In his recent slew of interviews, Rogers has proclaimed that he is fond of gold and still owns it. However, he is not buying more nor is he selling. In the end, he actually thinks gold will be a bubble in the distant future. For some reason he tosses out the year 2019 as his estimate, and it seems he thinks gold's reign will last a decade or so. He thinks this bubble top is a ways off because governments have been debasing their currencies at a rapid rate. Historically, he points out, this has always led to higher prices for real assets and he thinks this time will be no different. Speaking on the subject of gold, Rogers says that... Read full article (with video)... More from Jim Rogers: Jim Rogers: Inflation data is a lie Jim Rogers: The U.S. should be worried about this Jim Rogers: Now is the time to buy silver and natural gas
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Gold gained 2.5% in June to end the second quarter up almost 12%. "Uncertainty is going to play into the hands of gold," said Richard Ross, technical analyst at Auerbach Grayson. "Gold should continue to be an over performer in the second half of the year … as investors look for alternatives to currencies, the bullish argument for gold is intact." Gold has had an impressive run in 2010, setting records on May 12, June 8 and again on June 18. "The pullbacks are very shallow are buyers are stepping in, regardless of price," said Ross…| You are subscribed to email updates from Gold World News Flash To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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