Gold World News Flash

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• The Secret Second-Best Asset of the Last Decade
• Gold Rush
• Crude Postures for a Breakout but Gold Needs Momentum for Record Highs
• Technical Targets for Gold, Silver & the Gold Stocks
• The Most Significant $10 of Your Life
• Ireland breaks up Anglo Irish as EMU debt jitters return
• Still Profiting from Deepwater Drilling
• Hourly Action In Gold From Trader Dan
• False Choice: Yield vs. Safety
• Special Invitation to Vancouver Conference on September 15, 2010
• Searching for Yield: At Any Cost?
• Little White Lies
• Brien Lundin: Gold Revival
• Sell U.S. Real Estate, Buy Physical Gold and Physical Silver
• Why a US Treasury Bond Bubble Unquestionably Exists
• Gold Daily RSI Above 70
• Treasury Bills - The New Opium: Jim Rickards
• LGMR: Gold Slips from Near-Record But Favored by Rates as Silver Breaks $20
• Strapping In For The Big Move
• Gold and Silver Alert – The Final Battle?
• Trading Silver for Gold
• GoldSeek.com Radio Gold Nugget: Arch Crawford & Chris Waltzek
• Nevada Sunrise Gold Corporation: Drilling to Begin at Golden Arrow
• Technical Targets for Gold, Silver & the Gold Stocks
• Gold Revival
• Burning the Economic Toast
• QE2 Beats QT1 Hands Down
• Precious Metals Equity Index Form a Triple Top, What’s Next?
• Jim's Mailbox
• Life during the Inflation of 1923
• Just Another Hyperinflation Post
• Inflation Protection With Hershey's Kisses
• Resistance at 4,700
• Nevada Gold Exploration Company with $6M Market Cap and $12M JV-Option to Begin Drilling Soon
• The New Wave of Financial Advisors
• To The President: URGENT
• Guest Post: Retailers - Reality Check Time
• Is a university degree obsolete? Hyperinflation in University costs:
• Gold Seeker Closing Report: Gold Falls Slightly While Silver Climbs to a New 30 Month High
• Bubble: 64 Million Vacant Properties In China

The Secret Second-Best Asset of the Last Decade Posted: 08 Sep 2010 07:18 PM PDT By Dr. Steve Sjuggerud Wednesday, September 8, 2010 "Steve, where do you find all these weird investing ideas?" I hear that all the time… Rare gold coins, tax certificates, virtual banks, timberland investments… You name it, I'm not afraid of it. If I can easily understand the risks and I can easily understand how great a deal it is, then I'm interested. If you're just sticking with stocks, you're missing out. You'd be surprised at what has performed really well over the last decade… I'll tell you today. But first, where do I find these ideas? I look hard for them! Seriously… It really started for me in the late 1990s, when all the "normal" investing ideas were terribly overpriced. Stocks were a terrible deal. I didn't think they'd do well over the next decade. So I started looking for assets that had performed well the last time stocks went into a bear market. My "template" was the decade of the 1970s… As you probably know, gol...

Gold Rush Posted: 08 Sep 2010 07:18 PM PDT Date: 09/08/2010 Buy Gold Bullion Buying Gold Bars Gold Price Gold Sovereigns & Krugerrands California Dreaming 160 years since the first global gold bullion rush, the industry is braced for a second. As demand continues to outstrip supply, could things get just as messy for the average prospector? To a typical gold bullion investor today, the date January 24, 1848 may not mean a great deal. But this was the day on which gold was first discovered in Coloma, California, bringing an estimated 300,000 flocking from as far as China and Australia to join in the hunt for the yellow metal. Today, the global gold market is very different. Mining produces relatively little of the world's supply, and instead of risking life and limb, investors can buy at the click of a computer mouse. But despite the illusion of stability, the gold market is teetering on the brink of something very big. Supply is dwindling, and if demand increases as insiders predict, the next gold rush could dwarf those...

Crude Postures for a Breakout but Gold Needs Momentum for Record Highs Posted: 08 Sep 2010 07:18 PM PDT courtesy of DailyFX.com September 08, 2010 12:01 PM Once again, we are left to qualify the sincerity of investor sentiment. Wednesday’s session brought a clear advance in the appetite for risk; but considering the lack of a distinct trend for equities, crude and even progress on gold, it seems traders are still waiting. North American Commodity Update Commodities - Energy A Bounce in Risk Appetite Leads to the First Oil Advance in Four Days but Conviction Clearly Lacking Crude Oil (LS Nymex) - $73.79 // -$0.51 // -0.68% US-based crude advanced for the first time in four sessions. Volatility from Wednesday’s session was more or less in line with the previous three active trading days (not saying much considering price action was distorted by holiday conditions). Yet, there was a distinct contrast to draw in that there was at least a consistent advance for the commodity through the close. Despite this appreciation, though, the commodity actually retains the ...

Technical Targets for Gold, Silver & the Gold Stocks Posted: 08 Sep 2010 07:18 PM PDT The precious metals sector is at an important juncture. Let’s take a look at the potential upside targets. First lets start with Gold. Gold has formed a bullish cup and handle pattern, which is more bullish than usual due to the handle being formed at a higher level than usual. The pattern projects to $1450. Initial support is $1235-$1240 followed by $1225. Note that volatility is low. This is bullish coming into a potential breakout as it means momentum can be added to the breakout in the form of rising volatility. Also, note the ratios at the bottom. Gold in real terms isn’t as strong as it was and this bodes well for the more leveraged plays. Silver of course is one of the leveraged plays on Gold. Silver has also formed a cup and handle pattern, which targets $24. Note the ratios at the bottom of the chart. Against foreign currencies, Silver has already broken to a new bull market high and Silver is breaking to the upside against Gold. As long as Sil...

The Most Significant $10 of Your Life Posted: 08 Sep 2010 07:18 PM PDT www.preciousmetalstockreview.com September 8, 2010 The Golden battle lines are drawn and the first day was a bloody one. The forward line for the bulls are drawn at $1,254, while the forward line for the bears is now $1,263. It’s nary a $10 difference, that on any other day would not concern myself, nor the large interests currently in the thick of battle. But for now, that very narrow range is in the midst of being attacked hard and fast. This mornings gyrations were nerve racking, but held on the upper and lower ends. Right now long term positions are likely best held, while short term positions should have tight stops. I expect this trading range to be broken shortly and this may very well end up being the years most profitable trade if it’s played correctly. There are several methods to trade this move, some risky, some safer. Personally I like to mix it up with stocks or ETF’s as well as options to leverage the move an...

Ireland breaks up Anglo Irish as EMU debt jitters return Posted: 08 Sep 2010 07:17 PM PDT September 08, 2010 10:42 AM - Ireland is to break up the nationalised lender Anglo Irish Bank, hoping to end a disastrous saga that has shattered confidence in Irish finance. Read the full article at the Telegraph......

Still Profiting from Deepwater Drilling Posted: 08 Sep 2010 07:17 PM PDT Not long ago, I interviewed Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production Company. We discussed his role at Chevron, where he runs energy exploration and development in the vast Atlantic Basin. We also discussed Mr. Moshiri's views on what Mexico needs to do to breathe new life into its oil industry. In this portion of the interview, Mr. Moshiri and I discuss what's going on 6,000 miles south of the U.S., offshore Brazil. There, over the past couple of years, we've learned about gigantic oil resources, buried many miles under the deepwater seabed. To date, the most prolific oil-bearing locales offshore Brazil are in the "pre-salt" zones of the Campos and Santos Basins. Looking forward, there are many more basins left to explore along the Brazilian coastline. In short, the future for energy development is bright down in Brazil. Here's more of my discussion with Mr. Moshiri. BWK: There's news coming out of Brazil almost every week, from Petro...

Hourly Action In Gold From Trader Dan Posted: 08 Sep 2010 07:17 PM PDT View the original post at jsmineset.com... September 08, 2010 09:47 AM Dear CIGAs, A short note to silver fans – silver priced in Euro terms set a brand new lifetime high today at its London Fix coming in at 15.7551 euros. Click chart to enlarge today's hourly action in Gold in PDF format with commentary from Trader Dan Norcini ...

False Choice: Yield vs. Safety Posted: 08 Sep 2010 07:17 PM PDT The 5 min. Forecast September 08, 2010 12:22 PM by Addison Wiggin [LIST] [*] Why ordinarily sane investors ditch a 3.7% yield for one of less than 3%… and a much better solution [*] Bailing out Goldman, Citi, etc., now exceeds the cost of defeating Hitler, Tojo, etc. [*] Squeezing the taxpayer twice: The ugly truth about Washington’s latest “infrastructure” spending plan [*] The business that’s recession proof (if highly cyclical) [*] Readers ponder Form 1099 horror… and suggest guerrilla tactics to fight it [/LIST] Question: Given a choice, which would you rather buy? [INDENT] A. A blue-chip company’s 10-year corporate debt yielding 2.95% B. The same company’s stock, with a dividend yield of 3.68% [/INDENT] If you answered “A,” then you must have a really bad feeling about where the stock market’s going. But such is life in late 2010. S&P 500 di...

Special Invitation to Vancouver Conference on September 15, 2010 Posted: 08 Sep 2010 07:17 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! September 08, 2010 01:10 PM A special invitation to readers here has been extended by the #1 Junior Resource Newsletter, Hard Rock Advisory to a special one-day conference in Vancouver next Wednesday, September 15th. All you have to do is go to this link and note you’re a Grandich Letter reader and you’re in. I’m told Silver Quest Resources is among several companies presenting in addition to the speakers. The Coffin Brothers are worth it alone but you will also have other well-known speakers and a select group of resource companies. I believe the seating is limited and they’re doing me a favor by allowing readers to attend so register ASAP! [url]http://www.grandich.com/[/url] grandich.com...

Searching for Yield: At Any Cost? Posted: 08 Sep 2010 07:17 PM PDT September 08, 2010 In an environment with historically low interest rates, fixed income investors have been pouring money into longer-duration securities, substituting 3 and 6 month T-Bills with 10-year Treasures or bond funds. To an extent, this should not be so surprising: the Federal Reserve’s (the Fed) extraordinary monetary policies have resulted in extremely low yields at the short end of the yield curve. Investors seeking yield have been forced out the yield curve or into increasingly risky investments in an attempt to gain higher investment returns. However, this is not a strategy without risks, both at the individual investor level and for the economy as a whole. Are the Fed’s monetary policies, combined with the government’s decision to issue increasing levels of longer duration debt, having the unintended consequence of stoking the fire for further financial stress? While many observers focus on the increased risks associated with ...

Little White Lies Posted: 08 Sep 2010 07:17 PM PDT AJS Investments Rue du Bac 210 Lyon, France Website: www.stockmarketbarometer.net E-mail: [EMAIL="anthonyjstills@gmail.com"]anthonyjstills@gmail.com[/EMAIL] SPECIAL REPORT September 09, 2010 “Pure truth, like pure gold, has been found unfit for circulation because men have discovered that it is far more convenient to adulterate the truth than to refine themselves.” - Charles Caleb Colton I very seldom write for general consumption but given the amount of misinformation, i.e. lies, being spoon fed to the investing public, I feel the urge to speak out. You’ll have to excuse me if the niceties of the English language sometimes escape me, but I guess I’m more into function than form. The subject of my disgruntlement is specifically the Dow and generally how it is presented to the public. I remember hearing the ma...

Brien Lundin: Gold Revival Posted: 08 Sep 2010 07:17 PM PDT Source: Karen Roche of The Gold Report 09/08/2010 What do politics have to do with precious metals? A lot, according to Brien Lundin, who writes Gold Newsletter. In this exclusive interview with The Gold Report, Brien reveals how the November elections will be pivotal to gold and why President Obama's policies could provide a big boost to the yellow metal. He also shares some of his favorite producers in the sector. The Gold Report: Recent reports are signaling that consumer confidence and sentiment are up and that the balance sheets of U.S. corporations are stronger. Yet, gold is going up at the same time. What's happening with the gold market right now? Brien Lundin: It's a bit deceiving that some sentiment surveys show what appear to be dramatic increases because they're still at very low levels, historically, and have been for months and even years. A sentiment index goes up a couple points compared to the previous month and it makes for headlines in the financial...

Sell U.S. Real Estate, Buy Physical Gold and Physical Silver Posted: 08 Sep 2010 07:17 PM PDT Reality is the great antidote of hope. Whenever my colleagues and friends ask me for my global economic outlook, by the time I’m done, they always provide a cheeky response about the depressing nature of my outlook. However, the outlook doesn’t have to be depressing at all for those willing to face reality and take a proactive stance. As a realist, if the outlook calls for great pessimism, then great pessimism is what I will necessarily convey, even if it is not what the people want to hear. Though I’m an optimist at heart (as any entrepreneur will tell you, one has to be an optimist to survive as an entrepreneur), I separate this inherent personality trait of mine from the realism of my wealth-consulting persona. When providing wealth management consultations, anything but realism will harm your clients. The wealth management industry is full of optimists, not realists. An optimist will tell you that the market outlook is the best in a decade (in any ...

Why a US Treasury Bond Bubble Unquestionably Exists Posted: 08 Sep 2010 07:17 PM PDT I hate using the term “boom-bust” to describe a period of capital market appreciation and then collapse, for the use of this term is very deceptive to the reality of economic conditions. Intentionally or not, using this term helps to brainwash the masses into believing the agenda of the Keynesian economists that an economic “boom” is occurring when in fact massive price distortions only create the illusion of “prosperity” when none exists. When we hear the term “boom”, most of us associate economic prosperity with its use. When we hear the word “bust”, most of us associate this term with the end of economic prosperity. The Great Deception that occurs, of course, is that there can be no “bust” when there was no “boom” to begin with. The use of the “boom/bust” term to describe a period of rapid price appreciation and then decline is every bit as problematic as the current media us...

Gold Daily RSI Above 70 Posted: 08 Sep 2010 07:17 PM PDT courtesy of DailyFX.com September 08, 2010 08:42 AM Daily Bars Prepared by Jamie Saettele Gold is closing in on its all-time high. A move to a new high would negate the bearish implications from the impulsive decline and set sights on round figures such as 1300, 1400, 1500, etc. Daily RSI has entered overbought territory for the first time since early May (the top was not until late June). Watch the top of the channel for resistance in the event of a move to a new high. Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday evenings), technical analysis of currency crosseson Wednesday and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to [EMAIL="jsaettele@dailyfx.com"]jsaettele@dailyfx.com[/EMAIL]....

Treasury Bills - The New Opium: Jim Rickards Posted: 08 Sep 2010 07:17 PM PDT The precious metals market were open on Monday... but not in North America. From the gold and silver charts from Monday [the red lines] below, you can see that nothing much happens when the American bullion banks aren't trading... either in New York, or on the Globex trading system in the overseas markets. Tuesday trading was a bit more exciting... and even though gold didn't do much of anything in Far East trading... selling pressure showed up around 9:30 a.m. in London. That pressure reached a selling climax just before lunch, when gold hit its low of the day [slightly under $1,244 spot]. From that point, it was onward and every upward... with gold gaining about $17 by 8:50 a.m. Eastern time in New York. That was pretty much its high of the day [$1,260.90 spot] before trading sideways to down for the rest of the Tuesday session. Silver was under selling pressure right from the open in Far East trading on Tuesday morning... and managed to recover ...

LGMR: Gold Slips from Near-Record But Favored by Rates as Silver Breaks $20 Posted: 08 Sep 2010 07:17 PM PDT London Gold Market Report from Adrian Ash BullionVault 08:55 ET, Weds 8 Sept Gold Slips from Near-Record But "Favored" by Rates & Liquidity as Silver Breaks $20/Oz THE PRICE OF GOLD peaked within 0.4% of June's all-time high for Dollar investors on Wednesday morning, before slipping $7 an ounce from $1262 at the start of Wall Street trading. European stock markets rallied from an earlier drop, but Asian stock markets extended yesterday's loss, holding the MSCI World Index one-third below its peak of autumn 2007. Silver today recorded a London Fix of $20.02 an ounce – its highest since March 2008 – while crude oil held above $74 per barrel. Gold bullion this morning hit its third-ever highest London Fix at $1258. "Until either real interest rates start to rise or liquidity declines, we believe that gold's investment case remains intact," writes Walter de Wet at Standard Bank in his Commodities Focus today. Measuring global liquidity as the US Feder...

Strapping In For The Big Move Posted: 08 Sep 2010 07:17 PM PDT Author: Jim Sinclair View the original post at jsmineset.com... September 07, 2010 06:28 PM Dear CIGAs, Now that expectations for Gold at very significant prices are being offered by various rational sources, there is one thing you can be sure of. That one thing is $1650. I am getting many emails asking how it is possible for the gold price to reach $1650 by early January. I suspect these are far out in time, out of the money call option buyers that have done exactly what I have warned against. That is the using of options with an investment outlook. Options are speculations that you never hold past the half way to expiry point, but instead switch to further out months if you believe in what you are doing. Those that pre-offer gold cannot trade it at $1650 in January because of the short time versus the big moves. They clearly have never experienced the gold run in late 1979 and early 1980. I will stand with what I have said for nearly 10 years. Gold will trade at $1650...

Gold and Silver Alert – The Final Battle? Posted: 08 Sep 2010 07:17 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! September 08, 2010 06:14 AM Despite all the predictions of gold’s demise and numerous perma bears rants accompanied by many in the media, gold and silver stand today at the threshold of major breakouts. Already this morning we’ve seen multiple bear raids in hopes of preventing the breakout. They know if they fail we can see a major run up in both metals. I believe the results for the gold and silver bears shall be the same as it was for the Zulu tribe (Bill Murphy is Michael Caine). [url]http://www.grandich.com/[/url] grandich.com...

Trading Silver for Gold Posted: 08 Sep 2010 07:02 PM PDT I just got to thinking last night on how I could best take advantage of trading silver for gold. It occurred to me the following. If I have 20 oz of silver that I paid $14 each and I wanted to trade some of that silver for some gold today I could technically get gold today at a very low price compared to spot. Say i wanted to buy 1/4 oz of gold today using the money from silver i bought at $14 it would go as follows 1/4 oz gold today (Krugerrand)= $345.48 In order to buy that 1/4 oz of gold today I would need to sell about 18 oz of the silver I paid $14 of. Remember though that I only paid $14/ oz so technically ($14 x 18=$252) I would only be paying for an oz of gold today with that silver at the rate of $1,008/oz Maybe im doing the wrong math here but it seems like a no brainer to switch some of the silver i bought at $14 into some gold

GoldSeek.com Radio Gold Nugget: Arch Crawford & Chris Waltzek Posted: 08 Sep 2010 07:00 PM PDT GoldSeek.com Radio Gold Nugget: Arch Crawford & Chris Waltzek

Nevada Sunrise Gold Corporation: Drilling to Begin at Golden Arrow Posted: 08 Sep 2010 06:11 PM PDT Nevada Sunrise Gold Corp. ("Nevada Sunrise", or the "Company") (TSX VENTURE:NEV - NVSGF.PK) is pleased to announce that it has been advised by Animas Resources Ltd., which is earning an interest in the Golden Arrow and Kinsley Mountain Properties, that drilling is scheduled to begin mid-September, 2010, on the Golden Arrow Property, Nye County, Nevada. The drill program consists of 16 reverse-circulation (RC) drill holes for a total of 14,000 feet plus 4 diamond core drill holes for a total of 4,000 feet. These holes will test numerous untested exploration targets.

Technical Targets for Gold, Silver & the Gold Stocks Posted: 08 Sep 2010 06:06 PM PDT The precious metals sector is at an important juncture. Let's take a look at the potential upside targets. First let's start with Gold. Gold has formed a bullish cup and handle pattern, which is more bullish than usual due to the handle being formed at a higher level than usual. The pattern projects to $1450. Initial support is $1235-$1240 followed by $1225.

Gold Revival Posted: 08 Sep 2010 06:04 PM PDT What do politics have to do with precious metals? A lot, according to Brien Lundin, who writes Gold Newsletter. In this exclusive interview with The Gold Report, Brien reveals how the November elections will be pivotal to gold and why President Obama's policies could provide a big boost to the yellow metal.

Burning the Economic Toast Posted: 08 Sep 2010 06:02 PM PDT Even though I have been drinking so that my speech is slurred after testing some crazy idea that I could drink away my utter horror at the death and dying of the US dollar and economy, history is, on the other hand, being made crystal clear that when a country is so idiotic as to ignore its own Constitutional requirement that money be only made of silver and gold...

QE2 Beats QT1 Hands Down Posted: 08 Sep 2010 05:47 PM PDT Kocherlakota didn’t drop any bombshells (as an inflation guy I note that his forecast of 1.5%-2% inflation next year represents almost a doubling from current levels and is higher than the market’s 0.9% implied 2011 inflation rate, but the real question is what happens after that), but the Beige Book was surprisingly downbeat. It declared that Fed banks saw “widespread signs of a deceleration,” with home sales “very low” or “declining” in most districts and “sluggish in general” consumer lending. As I had expected, the markets mostly ignored the Beige Book, and stocks clocked another very low-volume day. However, they racked up gains as investors – I guess – decided that the failure of nations in the periphery of Europe was old news. The S&P gained 0.6% while the 10y Treasury note sold off to 2.65%. (However, the VIX didn’t drop very much even with the stock market back near four-month highs, so there seems to be someone out there who is concerned.) Stories continue to circulate about how European regulators are still finding new documents concerning Greece’s debt. On the other side of Europe, Anglo Irish Bank Corp is to be split into a “good bank” and a “bad bank.” Complete Story »

Precious Metals Equity Index Form a Triple Top, What’s Next? Posted: 08 Sep 2010 05:31 PM PDT I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold. Below are my explanation and charts of what I think is unfolding. HUI – Gold Bugs Index This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down. It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place. UUP – US Dollar ETF The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall. GLD – Gold Bullion ETF The chart of gold has identical patterns no matter if it's this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move. The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off. With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit. Mid-Week Precious Metals Trading Report: In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down. Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction. I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at:www.TheGoldAndOilGuy.com Chris Vermeulen

Jim's Mailbox Posted: 08 Sep 2010 05:30 PM PDT Jim, Greece is back in the news for its debt concealment. What a convoluted mess they've made. Regards, CIGA Black Swan Dear Black Swan, OTC derivatives are easy to get into and sometimes impossible to get out of. I don't think Greece is so dumb as to think they could pull the wool over the world's eyes after being caught with their derivatives down. They are stuck in some convoluted crap paper. The price of exiting would probably hit the deficit more than their overboard Federal spending. Regards, Jim EU Probes Hidden Greek Deals as 400% Yield Gap Shows Doubt By Alan Katz and Elisa Martinuzzi – Sep 8, 2010 7:27 AM ET Four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn't disclosed the full details of secret financial transactions it used to conceal debt. "We have not seen the real documents," Walter Radermacher, head of the European Union's statistics agency Eurostat, said in a Sept. 2 interview in his Luxembourg office. Eurostat first requested the contracts in February. Radermacher vows new toughness when officials from his staff head to Greece this month to come up with a "solid estimate" of the total value of debt hidden by the opaque contracts. "This is a new era," he said. Greece is the only euro country that lied about using these complex swap contracts after Eurostat told countries to report them in 2008, Radermacher, 58, said. It also likely signed a greater number of individual agreements than any other euro member, based on information it has provided to Eurostat, he said. Greece's debt was 115.1 percent of its total economic output last year, second among the 16 counties that share the euro, behind Italy's 115.8 percent. More…

Life during the Inflation of 1923 Posted: 08 Sep 2010 05:30 PM PDT

Just Another Hyperinflation Post Posted: 08 Sep 2010 05:11 PM PDT Hyperinflation talk has come to the forefront once again (thanks to a few recent articles), and being my #2 (of 2) topic here at FOFOA, I have a small but relevant offering for you. This is a compilation of a few posts from a recent discussion I had on another forum. The subject was hyperinflation and the deflationists that emphatically say it is impossible here. And the question was asked, What

Inflation Protection With Hershey's Kisses Posted: 08 Sep 2010 05:07 PM PDT Brian Polino submits: Warren Buffett has proclaimed over the years that See’s Candy is one of the best businesses in Berkshire Hathaway’s (BRK.B) portfolio. Over time, See’s has been able to raise the prices on its chocolate every year while continually growing consumer demand. In the same light, the $10.5 billion market-cap confectionary giant, The Hershey Company (HSY), offers the same inflation protection. Hershey’s principal operations and markets are located in the United States. The total percentage of consolidated net sales outside the United States was 14.3%, 14.4% for 2009 and 2008, respectively. Some of the company’s most popular owned brands include Hershey’s, Reese’s, Kisses, Ice Breakers, Breath Savers, and Twizzlers. In addition, Hershey also licenses and sells the following popular brands: KitKat, Jolly Rancher, York, Milk Duds, and Almond Joy. Recently, Hershey’s bottom line has been both declining and highly sporadic, which is fully reflected in their 5-year compound growth rate of negative 5.14% in Net Income. In February 2007, Hershey announced a three-year supply chain transformation program in addition to other realignment charges. Total pre-tax charges amounted to $629.1 million, and the program was essentially complete as of December 31, 2009. Total pre-tax costs per year were approximately $99.1 million, $130 million, and $400 million, for 2009, 2008, and 2007, respectively. In addition to subpar operating results, these one-time charges coupled with the economic recession, amounted to a rough patch for Hershey. However, now earnings per share are increasing year-over-year for the past three years and returning to pre-recession levels. An interesting fact: In 2009, sales to the McLane Company, a subsidiary of Berkshire Hathaway and one of the largest wholesale distributors in the United States, amounted to approximately 27% of Hershey’s total net sales. McLane Company is the primary distributer of the company’s products to Wal-Mart Stores (WMT). By deduction, Wal-Mart is an essential customer of Hershey, and Hershey’s economic success is highly correlated to that of Wal-Mart’s and thus to the consumer. Moreover, the short-term appreciation outlook for their stock price is limited as their now higher P/E already includes a slight premium reflected in the price. However, the longer-term investor may benefit from Hershey’s increased earnings over time and may justify the purchase of the stock at a slight premium. When the American consumer rebounds, so should Hershey. Coupled effective growth restructuring and Hershey’s price increases, the stock could see substantially new highs. The company also maintains a Standard and Poor’s long-term debt rating grade of A, which illuminates the company’s strong earning power and financial structure. The company’s pension fund is a little underfunded with $942 million in assets and $957 million in obligations; however, that appears to be a liability Hershey’s Board has made a priority to change. Consequently, with a P/E of 22, long-term buyers may see respectable potential in Hershey’s stock in the coming decade. Disclosure: The author has no positions in HSY or WMT but is long BRK.B. Complete Story »

Resistance at 4,700 Posted: 08 Sep 2010 05:04 PM PDT Last week we released a video to Daily Reckoning readers that was my weekly market update sent to my subscribers in Slipstream and Swarm. In it I was very bearish about the immediate future of the market because the ASX 200 had fallen below the key level of 4,400. The market has since recovered in a blistering rally that has taken the ASX 200 back up towards 4600. So the question has to be asked. Was I wrong to be bearish? And now that the market has behaved this way, should I now be bullish? ASX/200 Enters the Sell Zone Click here to enlarge Source: Slipstream Trader Have a close look at the chart above. Even open it in a window beside this article so you can refer back and forth without too much effort. You can see that I have traced out two ranges as key to the ongoing trading in the ASX 200. Basically what we can see in the chart is that there has been a large distribution of price formed between 4,400 and 4,900 since October last year (between the solid blue lines in the chart). Since May this year we have been tracing out another lower distribution between 4,200 and 4,600 (the solid red lines in the chart). The lower range is, of course, related to the upper range. It is in effect a trading range around the lows of the upper distribution as the market tries to work out whether price will return to the upper range or fall over and begin trending down. The key levels to watch in all of this are the Points of control (POC) of the structure which is the midpoints of the two ranges (I.e. 4,700 and 4,400 which are the dotted lines in the chart) The sell zone that I have traced out in the chart is between 4,550 and 4,700. These levels are based on the 200-day moving average and the POC of the upper distribution. My subscribers know that I created that sell zone in early July before the market traded up to 4,600 in early August and then fell over to 4,313 a couple of weeks ago. This is why we were selling stock short when the market reached the sell zone in early August. It is trading the edges of the distribution that will make you money because you have the mean reversion towards the point of control working in your favour to put you in the money quickly. Also you only have to risk a small amount to find out if you are wrong. Therefore the risk/reward is very good. The reason I got excited when the market traded under 4,400 a few weeks ago was that the probabilities increase that the market will trade to the other side of the distribution once the price trades under the POC. But this area is not the area where you want to be putting trades on because the risk is too high and the potential reward too small. You have either placed your bets at the edge of the range and have taken profit near the midpoint, as we had in Slipstream, or you are going to find it very difficult to make money. If you look at the chart again you can see that the "false break" of the POC at 4,400 that occurred a few weeks ago sent the warning signal that the buying pressure was still present when it turned and closed above 4,400 on the 30th of August and also closed back above its 10-day Moving Average. ASX 200 daily chart Click here to enlarge Source: Slipstream Trader I have reproduced the ASX 200 chart for you with a series of ellipses showing every time the price had moved through its point of control. You can see from this chart that over the past year we saw that once the market had penetrated its POC it traded quickly to the other side of the range in 5 out of 7 occurrences. But it must be noted that the price can be volatile in the centre of the range and can make it a difficult place to trade. It is much safer to trade the edges of the range once a false break has been confirmed. So where does that leave us now? The short and intermediate trend have turned up now that the 10-day MA is above the 35-day MA but it has to be said that we are firmly stuck in a range at present and so these trending indicators have less predictive ability. The larger distribution's POC of 4,700 is a clear line in the sand for this market. If the market can trade and hold above this level then I would throw in the towel on my bearish stance and become bullish. Until that occurs I believe 4,700 will prove to be very stiff resistance. If this market does manage to poke its nose above 4,622 in the next week or so I will be waiting for a reversal signal to begin shorting this market aggressively. The 4,200-4600 range is still the current range and the Point of Control of 4,400 will be revisited before long in my view, therefore shorting the market above the extremity of the current range is a great risk/reward trade. The main reason for this is that a failure below 4,200 will not only spell the end of the 4200-4600 range but also the larger 4,500-4,900 range. This is the moment when stale bulls that have been holding on to bad positions for the past year will finally capitulate and the market could be a lot lower very quickly. Shorting the market around 4,600-4,700 is a low risk/ very high reward trade. Of course it will only be once the short and intermediate trends turn down again that the conviction on the trade will increase exponentially. It must be remembered that we are about to enter the worst period of the year for US equity markets seasonally from 11th September on. Also large Fund Managers have only just returned from summer holidays in America and the current rally has been on very light volume. European debt problems are beginning to resurface again, gold is breaking out to new highs and the Yen is at 15 year highs and continuing to rally. Most other markets are signalling that big investors are preparing for the US to re-enter a recession. The equity market will wake up one day and I reckon it will be within the next 2-4 weeks. Murray Dawes Editor, Slipstream Trader for The Daily Reckoning Australia Similar Posts: S&P 500 Heading Towards Some Major Long Term Resistance Levels S&P/ASX 200 Clears Resistance Line The US Dollar Showing Signs of Life Profiting From the Copper Indecision Looking at WPL and Oil Side by Side

Nevada Gold Exploration Company with $6M Market Cap and $12M JV-Option to Begin Drilling Soon Posted: 08 Sep 2010 04:56 PM PDT Nevada Sunrise Gold Corp. may have been slowed down temporarily by going public during the market downdraft in 2008 into 2009. But the company is now pushing ahead with up to $12 million in exploration work commitments at two of their excellent projects by their JV-option partner. Nevada Sunrise is following a very similar JV strategy as AuEx, with JV partners spending OPM to earn ownership in projects while shifting the burden of exploration risk from the company. The Company benefits by retaining a significant interest and seeing its projects develop without having to raise the initial millions of dollars to do so, thus protecting its share structure, share capital. With Golden Arrow and Kinsley Mountain now moving forward, I believe this is the start to a new, exciting period for Nevada Sunrise Gold, and I look forward to seeing it continue to develop!

The New Wave of Financial Advisors Posted: 08 Sep 2010 04:44 PM PDT My guest on Hedge Fund Radio this week is Lee O’Dwyer, a portfolio manager at 5T Wealth Management in the sunny climes of Napa, California. Lee is at the vanguard of a new wave of financial advisors sweeping the nation that is leading the way for individual investors during these difficult times, when everyone is seeking the “new normal”. O’Dwyer is cherry picking for his clients the best money management techniques that have evolved over the last 30 years, and discarding the dross. 5T Wealth Management is offering sophisticated hedge fund management trading and risk control techniques, that until now, have only been available to the big boys, and making them available to the retail investor. Their goal is to achieve absolute returns at all times and strive for every trade to be profitable. Relative performance benchmarked to an arbitrary index, such as the S&P 500, has been consigned to the dustbin of history. We are all traders now, whether we realize it or not. Buy and hold is dead. Unlike your past broker, Lee does not expect you to pay him a big bonus and take him out to lunch because he lost only 10% when an index dropped 20%. To avail yourself of O’Dwyer’s considerable talents you need only open a custody account at a major house like Fidelity, Goldman Sachs, or Morgan Stanley. You then sign a third person limited power of attorney that enables 5T to execute trades on your behalf, but not withdraw any funds. As you can log into your account online at anytime, transparency is total and complete. The positions are there in all their glory for you to view and analyze at any time, for better or for worse. There are no black boxes, homemade account statements, or a “need to know” basis. The arrangement gives many individual investors all the security they deserve in the wake of the ugliness thrown up by the unfortunate Madoff affair. For all of this, Lee charges the 1% management fee and the 20% performance bonus that is standard in the hedge fund community. A “high watermark” means that bonuses are only paid out on new net increases in asset values. This makes double dipping in a volatile market impossible. SEC rules limit 5T to accepting only accounts with a minimum size of $750,000 from investors with $1.5 million in liquid assets. The new financial reform act will stair step annual income requirements from $200,000 a year now, to $300,000 and $400,000 down the road. Lee employs a global long/short macro strategy that scours the world for only the cream of investment opportunities. Long term, he likes commodities (CU), food (DBA), (CORN), water (PHO), other resource plays, and precious metals (GLD), (SLV). He is enamored with the currencies of the commodity producing countries like Canada (FXC) and Australia (FXA). He is very bullish on emerging markets, like the BRIC’s, as well as other new entrants such as Indonesia (IDX), Turkey (TUR), Chile (ECH), and Poland (EPOL). On the short side, he is adamant that the 30 year Treasury bond (TBT) is reaching the end of an epochal bubble. Lee also thinks that rapidly deteriorating fundamentals and a coming demographic nightmare demand that the Japanese yen (YCS) is headed for a generational fall. In the US O’Dwyer likes technology, energy, and commodity plays, but doesn’t expect much from the main indexes for the coming decade. Lee hales from England where he obtained a degrees from the University of Wales, focusing on international relations, economics, and accounting. He immigrated to the US in 1993 where he joined a major US hedge fund, learning every corner of the alternative investment business from the ground up. In 2007, he moved on to 5T Wealth Management, an SEC registered investment advisor based just outside San Francisco. During the 2008 financial crisis, Lee limited his maximum draw down to 15% when the S&P 500 crashed 58%. He quickly earned back losses during the rebound that followed, much to the delight of his investors. As a result, 5T Wealth Management is rapidly attracting new investors, and today boasts $110 million in assets under management. You can learn more about Lee O’Dwyer and 5T Wealth Management by visiting his website at http://www.5twealth.com/ . To listen to my interview with Lee O’Dwyer in full on Hedge Fund Radio, and to gain a glimpse into the future of retail asset management, please click on this link at http://www.madhedgefundtrader.com/september-2-2010-lee-odwyer.html and hit the “PLAY” arrow. To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

To The President: URGENT Posted: 08 Sep 2010 04:15 PM PDT From The Daily Capitalist TO THE PRESIDENT: URGENT The President White House Washington, D.C. 20500 Dear President Obama: I observed with some concern a photo of you and your glum economic team in the White House Rose Garden during your September 3 address on the jobs report. I am aware that you are gravely concerned about the economy and the employment situation. Understandably so since your policies of fiscal and monetary stimulus have failed to create economic growth or employment. Yet despite such failures you advocate more of the same remedies in the face of their failure. On Labor Day you announced new spending of $50 billion on infrastructure construction to create "jobs". This is in addition to the American Recovery and Reinvestment Act commitment of $499 billion for similar projects. According to your web site, Recovery.gov, only $296 billion of that amount has been spent so why do we need more? Yet the economy is stagnant, if not declining, unemployment is high and going higher, and credit is still largely unavailable to most American businesses even if they were willing to borrow. Home buyer credits have failed to stop the decline in home prices and Cash for Clunkers has had no lasting effect on the auto or appliance industries. I suggest that since existing policies have failed to revive the economy, your Administration should try something different. I offer you several innovative policies that would actually speed a recovery and lead to higher employment. The problems that we need to quickly solve are: High unemployment. Declining output. Credit freeze. Surplus of housing and commercial real estate. High private debt load. High federal debt. Until the economy starts growing again, these problems will persist. Unless we understand the causes of our problems, solutions are not easy. Because you place great emphasis on "what works" rather than economic theory, I will get to the specific issues straightaway. Here are some guiding principles for "what works": Economies can repair themselves without a lot of government help. History has proven this time and again. Government interference in the repair process can hinder recovery or even make things worse. Government spending is very inefficient. Individuals can make better choices about what to do with their money than the government. Economic growth only comes from private enterprise. The corollary of this is that government can only spend money, not make money. Since government produces nothing, then real growth and real jobs can only come from private enterprise. If government spending is inefficient and if economic growth comes only from the private sector, then taking vast amounts of money out of private hands and putting it into government hands will hinder growth. Government spending to revive an economy has failed wherever and whenever it has been tried. More legislation increases uncertainty for businesses, making them reluctant to expand (called "regime uncertainty" in economic terms). With these time-tested guiding principles in mind, here are some specific policies that you should immediately implement to allow the economy to quickly recover. They will "work." Fix the Banks Cure the credit freeze by eliminating policies that cover up the fact that many of our banks are financially unsound. These policies generally relate to how banks value the assets that secure real estate loans, primarily commercial real estate (CRE) loans. These policies allow banks to overvalue their loan assets. These policies include "mark-to-make-believe" (rather than "mark to market") and "extend and pretend" each of which allow banks to maintain a fiction. If the actual values of these loans were realized, banks would be required to foreclose on these bad assets. By getting these loans off their books, they would be able to recapitalize and become  financial sound. Why is this important? It is the only way to restore credit to small- and medium-sized businesses and resolve the oversupply of CRE. Big businesses have plenty of credit from the big money center banks. It's the regional and local banks which finance the rest of us that are in trouble. We have just gone through the world's biggest financial bubble. During this bubble, projects that made no sense but for the cheap Fed money and the false appearance of paper prosperity, were hugely over-produced. Now that the bubble has burst, we are in the mopping up stage of recovery. Banks are reluctant to extend credit because they are unsure of their financial future. The longer banks hold on to these malinvestments, their balance sheets will remain clogged up, and credit will remain restricted. Yes, more banks will go out of business; the process is never pretty but it is necessary. It is important to keep in mind that until this done, millions of unemployed Americans will stay jobless longer. Bring Back the RTC If you allow banks to fail as did President Bush I (mostly S&Ls actually), then there will be many foreclosed CRE projects that will need to be liquidated by the FDIC. Alan Greenspan, then Fed chairman, for all his faults did the right thing by urging the creation of the Resolution Trust Corporation, a separate entity whose function was to liquidate S&Ls and sell off the foreclosed assets from failed institutions. It actually worked pretty well and a huge slug of bad real estate, mostly apartments, were sold off to investors. The investors got great deals, but, more importantly, the economy recovered sooner. The RTC dealt with 747 S&Ls with total assets of $394 billion (according to the Wikipedia article). According to the latest FDIC report there are 829 "problem" banks with $403 billion in assets as of Q2 2010. It is conceivable that this idea would work again. Stop Passing Laws Surveys reveal that the number one problem for business is uncertainty created by the government. They have been hit with an onslaught of complex legislation the consequences of which they don't understand. This is called "regime uncertainty" in economic terms. The truth is, according to the surveys, that even if credit was available, businesses aren't borrowing because they don't know what the government will do to them next. Consider that three major pieces of legislation have been passed during your administration: the American Recovery and Reinvestment Act, the health care bill, and the Dodd-Frank financial overhaul bill. Further, they are uncertain if taxes on them will be raised. No new laws are required to allow the economy to recover. I urge you to speak to business and tell them that we Americans trust their ability to drive our economy, and that your Administration will enact no new laws that will create greater burdens on their ability to expand, borrow, hire, and reap profits. Stop Useless Spending While your Administration has gamely tried to convince us that you have created jobs, we know that is fiction. The CBO report and claims by prominent economists have no credible evidence that any real jobs were created. If it were the case that government could create jobs then there would be no need for the private sector. Of course you know well that history has proven that policy to be a disaster. Only private enterprise can create a real job. Having the government pay people to work is not a "job" in the same sense as a job in the private sector. When a business hires an employee, it is because somewhere down the line consumers want the end product of his or her productivity. The job created by the business is generated by economic activity until consumers decide otherwise. If the government pays someone to do something, it isn't generated by economic activity. When the money stops, the job stops. That has been the case of all of fiscal stimulus spending. While someone is earning money from the government, the money to pay him or her comes from taxes, which ultimately can only be generated from private enterprise. If the government takes money out of the economy to pay people to do things it wants done rather than let the economic forces of private enterprise work, then businesses who create real jobs will have less money with which to expand their businesses. You should consider what the person from whom the money was taxed was going to do with the money. It would aid recovery to let private enterprise keep their money. Encourage Saving Rather Than Spending With historically high debt loads, job uncertainty, a lack of retirement funds, and declining home values, is it not reasonable for people to increase savings? Urging people to spend at this time runs counter to people's innate sense to take care of themselves. While people are trying to repair their financial condition after the housing and credit bubble, urging more spending is reckless advice. People are rightly using their common sense. There are two substantial benefits to saving. It allows families to reduce their debt burdens. Once they pay down their debts, they will be more willing to spend without the fear that they will end up homeless. Saving also creates the new capital that will be required for businesses when they decide to expand. It is not as if the Fed can just print dollars to create wealth and capital; wealth can only come from savings. Policies that encourage spending such as Cash for Clunkers or home buyer credits or various tax credits for government-favored projects only encourage spending and thus reduce savings. Furthermore, they appear to have no lasting economic impact. Don't Raise Taxes In light of the detriment to the economy of giving the government more of our earnings right now, an increase in taxes would be harmful to a recovery. While we face a serious deficit in the federal budget, the only way to pay down national debt is to have a vigorous growing economy and a reduction of government spending. With the right policies put in place, lower taxes would help create economic growth. Raise Interest Rates Fed policies to expand the money supply to create inflation will eventually succeed. Thus they are planting the seeds for perpetual stagnation and inflation. To prevent this new disaster, the Fed should immediately raise the Fed Funds rate and stop new attempts at quantitative easing. This will have an immediate positive impact. First, it will encourage saving as people seek higher, safer returns on their capital. Second, it will unmask malinvested projects, clear away the burden of their related debt load, and allow capital to be redirected to profitable ventures. Third, it will prevent the rise of inflation which robs savers of their wealth. Fourth, it will prevent the creation of a new destructive stagflationary cycle.  Fifth, as in the Volcker era, greater savings and low inflation will eventually lead to new economic growth and higher employment. I strongly urge you to adopt these innovative solutions to solve our nation's desperate economic problems. Sincerely, Dr. Jeffrey Harding

Guest Post: Retailers - Reality Check Time Posted: 08 Sep 2010 04:14 PM PDT Submitted by Jim Quinn of The Burning Platform Retailers - Reality Check Time Having worked for a big box retailer for 14 years, I understand the dynamics of a high growth rollout of stores as a key to increasing market share and profits. Some of the best retail names in the US have practiced the identical strategy of concentrating many stores in each market to drive the small competitors out of business. This strategy worked wonders for Lowes, Wal-Mart, Target and Kohl’s during the early part of this decade. The combination of solid same store sales and opening new stores is a fantastic combination during good times. The results actually make the CEOs of these companies think they are brilliant. Their store expansion models based on rosy assumptions are followed like they can’t go wrong. What these CEOs didn’t realize was that their expansion plans were based on lies and frauds. If they had advisors who could give them a reality check, they could have avoided the massive downsizing that awaits them. Their hubris didn’t leave room for a reality check. The population of the US has grown from 281 million in 2000 to approximately 308 million today. We’ve had a 10% population increase in 10 years. Consumer expenditures have grown from $6.7 trillion in 2000 to $10.3 trillion today. This is a 54% increase over the course of the decade. Amazingly, real average weekly earnings have only gone up by 6% in the last decade. The chart below tells the story that retail CEOs have been ignoring for a decade. Consumer credit has advanced from $1.5 trillion in 2000 to $2.4 trillion today. This 60% increase in consumer debt has allowed workers who have barely increased their earnings to spend like they made a lot more money. This debt fueled consumption binge led major retailers to expand in order to keep up with the delusional consumers.    Retail America has run directly into a brick wall. Below are charts detailing the expansion history of four of the most admired retailers in America. Lowes grew their store count from 600 to 1,700 over the course of the decade, a 183% increase. Wal-Mart grew their store count from 4,000 to 8,500, a 113% increase. Target grew their store count from 1,000 to 1,750, a 75% increase. Kohl’s grew their store count from 300 to 1,050, a 250% increase. Same store sales are the true measure of a retailer’s health. When comp store sales are +5% or better, retailers make substantial profits and confidently build new stores. As the charts below clearly show, comp store sales have been in a substantial downtrend since 2006. The new stores that have been built in existing markets are over cannibalizing their existing stores. Lowes has 500 more stores today than it had in 2005, $4 billion more sales, and $1 billion less profits. Target has 340 more stores today than it had in 2005, $12 billion more sales, and the same profit. Kohl’s has 240 more stores than it had in 2006, $1.6 billion more sales, and $100 million less profit. Only Wal-Mart has kept the profits flowing, mostly due to its international expansion. The tough times have only just begun for these retailers. The American consumer is still heavily indebted. Much of the retail spending in the last decade came from mortgage equity withdrawals. Using your home as an ATM is history. Home equity is at an all-time low and 25% of homeowners are underwater. Home prices are destined to fall another 20%. There are 15 million people unemployed. Consumer expenditures still account for 70% of GDP. In order for the US economy to achieve equilibrium, consumer spending will need to regress back to 65% of GDP. This will require an annual reduction in consumer spending of $800 billion. The CEOs of these retailers have not grasped the implications of this coming adjustment in our consumer society. There are three major errors that have been committed by every retailer in America. They failed to recognize that the spending per household was 30% over inflated due to debt financed demand. They then extrapolated the spending per household using a 5% to 10% growth rate. Lastly, they ignored the fact that their competitors had the same strategy. There are 1.5 million retail establishments in the US. Thousands of these stores are going out of business every year. Lowes, Wal-Mart, Target, and Kohl’s have yet to recognize their predicament. They are still blinded by their hubris. The point of recognition will occur within the next year. Each of these retailers will be closing hundreds of underperforming stores in the next two years. Time for a reality check.

Is a university degree obsolete? Hyperinflation in University costs: Posted: 08 Sep 2010 04:11 PM PDT

Gold Seeker Closing Report: Gold Falls Slightly While Silver Climbs to a New 30 Month High Posted: 08 Sep 2010 04:00 PM PDT Gold saw slight gains in Asia and London before it fell back off in early New York trade to $1253.55 and then jumped up to a new session high of $1262.25 by about 9:40AM EST, but it then chopped its way back lower into the close and ended with a loss of 0.12%. Silver climbed to as high as $20.138 by about 8:30AM EST before it also fell back off, but it still ended with a gain of 0.71% and closed at a new 30 month high.

Bubble: 64 Million Vacant Properties In China Posted: 08 Sep 2010 03:58 PM PDT Xiao Wan bought a 65-square-metre apartment near the North fourth ring road in Beijing last year. He couldn't even recall clearly the room layout but remembered it was the first decent enough apartment that he found fairly affordable. He hastily signed the purchasing documents, but has never lived there and does not plan to. The 27-year-old lives with his friend near the third ring road in China's capital city. He bought the apartment as an investment, which so far is panning out. "I bought it for Rmb15,000 ($2,214) per-square-metre; it now can be sold at Rmb25,000," he said. "It's good just having it." Wan is not alone. Many homebuyers nowadays in China consider their property assets as part of their long-term savings plan, as well as a hedge against inflation. Why property? China's tightly run financial system leaves only three places for its zealous savers to put their money. Bank deposits are one option. But they yield 2.25%, less than the 3.1% rise in May's consumer price inflation. The equity markets are a second choice. But stocks have been performing poorly; Shanghai's benchmark index was one of the world's worst performers in the first half of 2010. (And the bond market is underdeveloped.) Even with its high transaction costs and manic price moves, property has become the preferred investment choice for everyone from young married couples to middle-aged factory workers trying to ensure their retirement. Recent statistics show that there are about 64 million apartments and houses that have remained empty during the past six months, according to Chinese media reports.  More Here..

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