saveyourassetsfirst3 |
- Rio Tinto: Undervalued At Current Earnings Levels
- Trichet Exits On A Low Note
- 25 Ways To Invest In Silver
- Zynga Vs. Electronic Arts + Activision Blizzard
- Amine Bouchentouf: Junior Miners Offer Bigger Bang For The Buck Than ETFs
- Gold Bullion vs Gold Coin
- Gold, DAX and Dollar Still Pointing to Sharply Lower Prices
- Gold Accepted as Collateral by LCH.Clearnet; ECB and BoE Likely to Keep Rates Ultra Loose
- Load Up On Gold and Silver as Bernanke Dives Off the Deep End
- The first major European bank has officially collapsed
- Top economists agree: This is not a recession... It's a depression
- Sudan's government promoting gold mining
- How to protect yourself from an electronic bank crash
- Physical silver running out because its spot price does not reflect true investment demand
- Quick trade on the SLV/SVM & GLD MACD
- India and China Lead Gold Rush
- India, China lead gold rush
- How gold confiscation could happen and what you can do about it: David Ganz
- Lehrman's five-step plan for getting back to a gold standard
- Kitco tax case a test of zealous enforcement
- FDIC Board to Consider Volcker Rule at Oct. 11 Meeting
- Michael Lewis Slams Wall Street, Leadership Deficit: Interview
- Is gold on the cusp of a rise to unheard of levels? - John Embry
- Greece Might Stay in Euro-land Even If They Default
- Gold & Silver Market Morning, October 6, 2011
- Gold Price Volatility Has Jumped – And How!
- LISTEN: Bob Chapman on Gold and Silver
- Gold and Silver Meeting - Madrid 2011
- Why Gold Isn’t $2000 yet…
- Golden Secrets (IV) The Chinese Imperial Gold
| Rio Tinto: Undervalued At Current Earnings Levels Posted: 06 Oct 2011 06:14 AM PDT By Russ Kaplan: This latest Market downturn has added another mining company to our recommended list, Rio Tinto (RIO). RioTinto is a British company with operations around the world in around 100 countries, although its major holdings are in Australia and North America. It produces a variety of minerals such as copper, gold, coal, diamonds, boron, etc. The company is also known for its cutting-edge research and development, world-class safety programs, ethical environmental and community practices, with a focus on constant innovation and improvement. RioTinto also supplies half the world's refined borates, minerals that are used in daily life and essential to modern living. You will find borates in fertilizer,detergents (remember Borax), fiber glass, glass and flame retardants (used as a liquid mixture that is sprayed onto surfaces like clothing), plastic, etc. Even during a recession and bad weather conditions (yes, even Australia has been experiencing weather problems this year) Rio Tinto has Complete Story » |
| Posted: 06 Oct 2011 06:03 AM PDT By MarketPulse FX: By Dean Popplewell Higher than expected euro inflation numbers last week should prevent, the departing Trichet from overseeing an ECB rate cut this morning. The market expects policy makers to extend the provision of the unlimited, fixed-rate funding timeframe into next year, providing a further six-month LTRO, with an outside possibility that a one-year LTRO is also announced. The futures odds are 50% for a rate cut. Despite the bumbling cohesive actions of policy makers since they took "real" ownership of euro sovereign concerns this week, if the ECB disappoints and leaves rates unchanged, markets are likely to increase their pricing of default risk. The whiplash effect will rid most of this weeks risk earnings and again promote the dollar and yen strength. An ease would likely support risk currencies more than the EUR itself. An aggressive ECB cut would not directly address the underlying drivers of European stress.The market Complete Story » |
| Posted: 06 Oct 2011 05:55 AM PDT By Jarred Cummans: Now that Q4 is underway, investors are scrambling to find the right asset class for this rocky environment. Last quarter wreaked havoc on a number of investments and portfolios alike, as the global economy seems to be on a downward spiral. Given the current environment, various investors have flocked to their favorite safe havens to wait out the storm. Gold is perhaps the most popular safe haven in troubled markets, though its actual use as a metal is relatively low. As such, there has been much speculation over whether or not the metal is overvalued, scaring a number investors out of gold and into another precious metal, silver. Silver has become an increasingly popular safe haven option as it comes with a cheaper price tag and a laundry list of practical uses in comparison to its sister precious metal. But gold's main attraction has been its astronomical returns over the Complete Story » |
| Zynga Vs. Electronic Arts + Activision Blizzard Posted: 06 Oct 2011 05:51 AM PDT By Intelligent Speculator: If you know gaming at all, you might think that I'm absolutely crazy for even asking the question. Maybe so. Zynga (ZYNG) is however scheduled to turn public this year at a valuation of around $20 billion. That is almost to the dollar what Activision (ATVI) and EA (ERTS) are currently worth. That gives us a great opportunity to compare very different companies. When you consider the two giants and the fact that Zynga did not exist just a few years ago, it's difficult to understand how this question could even be asked. Could Electronic Arts and Activision Blizzard Be The Next Blockbuster?Having a dominant position in a big market but being too slow to adapt to new platforms. That is what happened to Blockbuster when it failed to adapt quickly enough to compete with Netflix (NFLX). Is the same about to happen to Electronic Arts Complete Story » |
| Amine Bouchentouf: Junior Miners Offer Bigger Bang For The Buck Than ETFs Posted: 06 Oct 2011 05:38 AM PDT By The Gold Report: Despite the recent pullback in metals prices, Amine Bouchentouf still believes that precious metals and mining stocks offer investors the best way to profit from the unfolding global economic mess. In this exclusive interview with The Gold Report, he talks about a range of mining stocks that can offer investors the type of diversification and upside potential needed in today's rocky market environment and highlights several favorites. The Gold Report: Thank you for joining us today. You wrote "Commodities for Dummies" and are a partner in Commodities Investors LLC, an advisory firm. What is your reaction to the spectacular run-up in metals' prices and recent pullback in the last few weeks? Where are we headed from here? Amine Bouchentouf: We have to put things in perspective. Let's not forget that gold has been one of the top performing commodities over the last five years, and even over the last year. Complete Story » |
| Posted: 06 Oct 2011 04:56 AM PDT Any thoughts which is better to own 1 oz gold bullion or 1 oz gold coin? PAMP Suisse 1 oz vs 1 oz Canadian Maple Leaf? What would be better to hold if there is a depression? |
| Gold, DAX and Dollar Still Pointing to Sharply Lower Prices Posted: 06 Oct 2011 02:03 AM PDT The past month has been a wild ride for both equity and commodity traders around the globe. Novice traders have had their heads handed to them and their investment accounts drained. When fear, uncertainty and volatility are running high, some of the best opportunities become available to those who know what to look for. These market conditions force you to focus and strive for perfection in finding low risk entry setups and to also actively managing positions with laser focus because within hours a winning trade can turn into a losing trade. Looking back on the daily charts of the dollar, SP500, gold, and also the overseas markets it looks as though we are nearing a market bottom. I say NEARING because I think investments need more time for the current selling pressure and bearish sentiment to run its course, which could take another few weeks and possibly a few month before truly bottoming. Let's take a quick look at some charts… SPY 30 Minute Chart Looking Back 2 Months As you can see below price action has been wild. But for subscribers to my newsletter it has been a fun and exciting time having pocketed over 40% return from August 1st – up until today. The point of this chart is to show you the basic market phases (Impulse, Uncertainty, and Corrective). Understanding how to identify each phase using momentum, price action, volume analysis and market sentiment is crucial for success in today's volatile market. Once mastered you can trade virtually any investment with a high level of confidence, though I recommend mastering 3-4 investments at most and just trading those full time with pinpoint accuracy. Through my newsletter members learn exactly how to read the market and manage positions from my daily video market analysis, intraday updates, trade alerts and trading tips. As you can see below I am anticipating weakness in the market over the next few days. Once those levels are reached or if the charts start hinting that a reversal back down is imminent I will be ready to take action using an inverse leveraged ETF.
Gold 30 Minutes Chart Looking Back 2 Months This chart will piss some people off for sure… but the chart to me is still pointing to lower prices at this time. Until we get a breakout above the upper resistance level I am not bullish on gold. Keep in mind that during strong selloffs in the stock market almost all investment drop together (gold, silver, oil, stocks).
German DAX Daily Chart Looking Back 3 years This chart shows the long term chart of the DAX which I think is giving us some insight to a global market bottom in the coming months. You will notice I painted the phases over the chart and where I feel the market is trading and where it is headed looking forward.
Dollar Index Daily Chart Looking Back 3 Years The dollar also shows us three years for price action. If this strong rally continues in the dollar we will see lower stock and commodity prices for a few more months.
Trend Trading Idea Conclusion: In short, I feel we have some very exciting times ahead along with huge potential trades starting to unfold. While I don't want the market to collapse I will admit I prefer trading the short side of the market because fear is easier to trade than greed, not to mention prices drop much quicker than they rise… I'm sure you like making money fast also… J I can email you my bi weekly reports and videos by joining my free newsletter here: www.GoldAndOilGuy.com Chris Vermeulen |
| Gold Accepted as Collateral by LCH.Clearnet; ECB and BoE Likely to Keep Rates Ultra Loose Posted: 06 Oct 2011 01:56 AM PDT |
| Load Up On Gold and Silver as Bernanke Dives Off the Deep End Posted: 06 Oct 2011 01:53 AM PDT Why we see $150 Silver and $5,000 Gold ahead! |
| The first major European bank has officially collapsed Posted: 06 Oct 2011 01:23 AM PDT From The Economic Collapse: And so it begins. The first major European bank bailout of 2011 has now happened. French/Belgian banking giant Dexia has failed, and both governments have pledged to participate in a rescue plan. But Dexia will not be the last major European bank to fail. Even now, governments all over Europe are feverishly developing plans to bail out major national banks in the event that the current financial crisis goes from bad to worse. Instead of learning the lessons of 2008, most major European banks have continued to pile up huge mountains of debt, leverage, and risk. Now the bill for that stupidity is about to be passed on to the taxpayers of those nations. But with most nations in Europe already drowning in debt, are... Read full article... More on the euro crisis: Why European leaders are making a terrible mistake The ridiculous euro news that stopped today's rally in its tracks Porter Stansberry's crisis update: This is what will happen next |
| Top economists agree: This is not a recession... It's a depression Posted: 06 Oct 2011 01:20 AM PDT From Washington's Blog: Reuters notes: You know it's grim when the prevailing debate among economists and historians is whether the world economy faces the "Great" depression of the 1930s or the "Long" depression of the 1870s. ... But now "depression" is very much back in the mainstream lexicon as the small economic bounce from the deep global recession of 2008/09 fades rapidly after little more than two years and Europe's bank and sovereign debt crisis intensifies... Read full article... More on the economy: Top employment firm: Worst job cuts in two years coming Don't worry about the fall in gold... This is what you should be watching instead Forget yesterday's Fed announcement... This could be the worst economic news of the week |
| Sudan's government promoting gold mining Posted: 06 Oct 2011 01:00 AM PDT Sudan's government must urgently find new sources of revenue, after South Sudan became independent from the north on July 9. Most crude oil resources are located in the south, which has proved a good ... |
| How to protect yourself from an electronic bank crash Posted: 06 Oct 2011 12:47 AM PDT From Economic Policy Journal: I just had a long discussion with a top level computer programmer. Her bottom line view is that the banking computer system is very fragile. She said that because of all the mergers, the systems just barely talk to one another. She said that despite the fact that she does most of her banking online, she still has a paper copy of all her transactions sent to her by mail. She advises that everyone should do so, even if the bank charges for such paper back up. If your banks system goes down, you may need the paper back up. She calls a major crash, "the loss of organizational memory." Your paper records could be the only thing that could protect you in such a situation. She points out that... Read full article... More on protecting your wealth: Four reasons to store some gold overseas immediately Doug Casey: Four steps to building and keeping long-term wealth Doc Eifrig: Start taking advantage of the world's most powerful wealth-building secrets |
| Physical silver running out because its spot price does not reflect true investment demand Posted: 06 Oct 2011 12:44 AM PDT However, the snap back for silver prices now has the capacity to be sensational, and far beyond the mini-spike in the first few months of this year from $30 to almost $50 again. So those who go seeking out physical silver to buy at current prices are going to be very well rewarded and soon, not in 31 years! |
| Quick trade on the SLV/SVM & GLD MACD Posted: 06 Oct 2011 12:31 AM PDT Anyone looking to scalp a few pennies LONG, anything above the $30.35-30.99 on SLV could be decent on a small rally today. If not, we go down. ECB printing another $1trillion does not hurt us. BE quick on the keys! Newsflow is intense these days and directions change very quickly.  SVM is also looking interesting. It is hitting the MA and has broke a decent trend line. There ill be a battle here today especially if POS turns up.  GLD is also looking like the MACD is ready to turn up and the formation allows for this. Place your bets! And watch out for the employment numbers tomorrow!   |
| India and China Lead Gold Rush Posted: 05 Oct 2011 09:09 PM PDT ¤ Yesterday in Gold and SilverVery shortly after I hit the 'send' button on my Wednesday column, about twenty-five dollars got carved off the gold price...with the Wednesday low of the day [just under $1,600 spot] coming at the London a.m. gold fix which occurred around 10:30 a.m. British Summer Time, or 5:30 a.m. Eastern. From that low, gold rose in fits and starts until shortly before lunch in New York. Then a somewhat more serious buyer showed up...and gold was up more than thirty bucks in just over an hour...before trading mostly sideways into the close of electronic trading at 5:15 p.m. Eastern. The spot gold price finished up $18.40 on the day. Net volume wasn't overly heavy...around 145,000 shares...and down sharply from Tuesday's big volume day.
As I mentioned in yesterday's column, silver was down about fifty cents by the time that London opened for trading yesterday morning...and then got smacked at the same time as the gold price. In an hour and a half, the usual suspects had taken the silver price down another $1.25...with the low coming at the same time as gold...the London a.m. gold fix. The subsequent rally had a little more force behind it than gold's...but you can tell from the silver chart that every time the price got a little to exuberant to the upside, there was a willing seller there to nip that in the bud. Silver's high of the day came at the same moment as gold's high...around 1:10 p.m. in New York...shortly before Comex trading ended. There was little price activity in the New York Access Market that followed. Silver finished up 28 cents on the day...and net volume was around 48,000 contracts...which wasn't a lot lower than the big down-day volume that silver had on Tuesday.
The gold stocks hovered around unchanged for the first fifteen minutes after the equity markets opened in New York yesterday morning...and then away they went to the upside. The buy-the-dip crowd was out in some force. The HUI finished up a solid 4.44%...making up for all of Tuesday's losses...and then some.
The same can be said for the silver stocks. They were on fire yesterday...with a lot of the juniors doing particularly well. But, with the odd exception, they were all up pretty big on the day. Nick Laird's Silver Sentiment Index was up a chunky 6.11%.
(Click on image to enlarge) The CME Daily Delivery Report showed that 25 gold, along with 25 silver contracts, were posted for delivery on Friday. The link to this action is here. Neither GLD nor SLV reported any changes yesterday. It's been a while since we've had any word about what's happening over at Switzerland's Zürcher Kantonalbank. It appears that they've changed their reporting period from weekly to monthly. So, from September 9th to September 30th, they've added 138,607 troy ounces of gold and a very chunky 4,587,934 troy ounces of silver. As always, I thank Carl Loeb for these numbers. They had a pretty good day over at the U.S. Mint on Wednesday. They sold 6,000 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and another 225,000 silver eagles. Month-to-date, which is only three business days long at this point, gold eagles sales are 14,500 ounces, one-ounce 24K gold buffaloes are 5,000...along with 1,012,000 silver eagles. That's a pretty good start to what could be another blockbuster month for the U.S. Mint...and I hope you're getting your share at these bargain-basement prices. The Comex-approved depositories reported receiving 600,692 troy ounces of silver on Tuesday...and shipped 699,135 ounces out the door. The link to the action is here. Silver analyst Ted Butler posted his mid-week commentary to his paying subscribers yesterday...and here's a free paragraph... "[I took] a moment to revalue the world's above ground bullion inventory of silver and gold adjusted for the new prices. World silver bullion inventory of one billion ounces is now worth $30 billion, whereas gold world bullion inventory of 3 billion ounces in now valued at $4,900 billion [$4.9 trillion]. All the gold in the world is worth 163 times more than all the worlds silver bullion is worth, even though silver is much more rare than gold. I would suggest that is absurd and silver is destined to climb sharply in value, both on an absolute basis and relative to gold." I know that my bullion dealer continues to sell silver in huge amounts...and that's certain to continue while JPMorgan et al hold the price at this fire-sale price level. I'm delighted to report that I don't have that many stories for you today, which is always fine by me. That's a pretty good start to what could be another blockbuster month for the U.S. Mint...and I hope you're getting your share at these bargain-basement prices. Is gold on the cusp of a rise to unheard of levels? - John Embry. How gold confiscation could happen and what you can do about it: David Ganz. Kitco tax case a test of zealous enforcement. ¤ Critical ReadsSubscribeMichael Lewis Slams Wall Street, Leadership Deficit: InterviewMichael Lewis's "Boomerang: Travels in the New Third World" begins with Kyle Bass, a Texas hedge fund manager who's buying guns and gold bricks. Bass is also betting against European governments. It's a short, but very interesting interview...and I thank Washington state reader S.A. for bringing it to my attention. The link is here.  FDIC Board to Consider Volcker Rule at Oct. 11 MeetingThe Federal Deposit Insurance Corp. board is scheduled to consider a notice of proposed rulemaking on the Volcker rule to restrict proprietary trading by banks at a meeting next week. Discussion of the interagency rule, part of the FDIC's rulemaking under the Dodd-Frank Act, was included in the agenda for the Oct. 11 meeting that was released by the agency. Let's hope they enforce it. Amongst many other things, that would end proprietary trading by JPMorgan against its own clients in the gold and silver futures market. You've already read this 2-paragraph Bloomberg story from yesterday. Once again I thank Washington state reader S.A. for providing this story...and the link to the hard copy is here.  The Ticking Euro Bomb: How a Good Idea Became a TragedyBefore Germany's Horst Reichenbach had even stepped off the plane in Athens, the Greeks knew who was coming. He had already been given various unflattering nicknames in the Greek media, including "Third Reichenbach" and "Horst Wessel" -- a reference to the Nazi activist of that name who was posthumously elevated to martyr status. The members of his 30-strong team, meanwhile, had been compared to Nazi regional leaders. The Greek crisis has revealed why the euro is the world's most dangerous currency. The euro was built on a foundation of debt and trickery, where economic principles were sacrificed to romantic political visions. The history of the common currency is the story of a good idea that turned into a tragedy of epic proportions. This is Part 1 of SPIEGEL's recent cover story on the history of the common currency. The remaining installments will be published in English on Thursday and Friday. If you have the time, this spiegel.de story is a must read. I thank Roy Stephens for sharing it with us...and the link is here.  'Whole Set of Options' - IMF Offers to Dramatically Expand Euro-Zone HelpWith the Greek economy failing to recover to the degree expected, plenty of officials and analysts this week have fretted about whether efforts currently in place to prop up the country will be sufficient. On Wednesday, the International Monetary Fund joined the chorus, offering to vastly increase its role in helping the euro zone put the brakes on the accelerating debt crisis. Borges also indicated that the IMF was prepared to change its role in ongoing efforts to get Europe's debt crisis under control. The IMF, he said, could step in to bond markets to help prevent Spain and Italy from succumbing to the crisis. "We have a whole set of options that could be put on the table to restore confidence in those countries," Borges said.  Kitco tax case a test of zealous enforcementWhen Revenue Quebec raided the offices of Montreal gold bullion dealer Kitco Metals Inc. in June, it alleged that a huge tax scam was under way. The allegation that the company had evaded GST and QST payments surprised many people [including this writer] in the gold trading industry, where Kitco had been a well-regarded dealer since its founding in 1977. But Revenue Quebec's actions didn't surprise accountants and tax lawyers who deal with the department on a regular basis. Over the past 18 months, they say, the Quebec government has been much more aggressive in trying to enforce sales tax collection – even to the extent of holding companies liable if their suppliers don't remit what they owe. Quebec provincial law has no effect on what happens in the rest of Canada...federally or provincially. This is an interesting read...and if these rules are being applied to Kitco, they could be equally applied to any other company that's registered in Quebec. So what's happening to Kitco should not be taken out of context. I thank Quebec reader Howard Brown for sending me this story out of the Tuesday edition of The Montreal Gazette...and the link is here.  Fund managers Pento, Leeb see money creation, inflation boosting metalsEric King sent me a couple of blogs yesterday. Both of them are contained in this GATA release from late last night...so I'll let Chris do the honours once again. The link is here.  Old Glory Mint CEO, Reed Larsen, Interviews James TurkReed sent me this 5:37 video interview he did with James Turk while he attended the Utah Monetary Summit early last week. I think it's worth your time...and the link to this youtube.com video is here.  Posted: 05 Oct 2011 09:09 PM PDT  Here's a story filed from Mumbai that showed up as a posting over at the Asia Times Online website early yesterday morning. Beijing becoming host to Asia's first automatic gold vending machine - in a continent where millions are yet to see the variety that spews paper cash and potato crisps - offers the latest indication of China and India being world's leading gold buyers, despite record fluctuating prices mid-September. Accounting for over 55% of global craving for the noble metal, India and China ensure gold remains a trusted refuge of investment in an ailing world economy, weakened further with the deepening debt crisis in Europe and United States. |
| How gold confiscation could happen and what you can do about it: David Ganz Posted: 05 Oct 2011 09:09 PM PDT  Writing for the Internet site of Centennial Precious Metals in Denver, USAGold.com, New York lawyer David L. Ganz, who specializes in precious metals and numismatic law, has produced a detailed and fascinating history of gold confiscation in the United Sates and commentary on the applicability of current U.S. law to gold ownership. This is another GATA release where Chris has already done extensive heavy lifting in the preamble, part of which appears in the above paragraph. So I'll leave the rest in his capable hands...and the link is here. |
| Lehrman's five-step plan for getting back to a gold standard Posted: 05 Oct 2011 09:09 PM PDT  Yesterday, thestreet.com gave industrialist, philanthropist, historian, and Reagan gold commission member Lewis E. Lehrman a few minutes to explain his five-step plan to return the United States and the world to a gold standard to eliminate currency market manipulation and volatility. It's a short clip that only runs 2:25...and is posted at the Lehrman Institute's The Gold Standard Now website. The link is here. |
| Kitco tax case a test of zealous enforcement Posted: 05 Oct 2011 09:09 PM PDT  When Revenue Quebec raided the offices of Montreal gold bullion dealer Kitco Metals Inc. in June, it alleged that a huge tax scam was under way. The allegation that the company had evaded GST and QST payments surprised many people [including this writer] in the gold trading industry, where Kitco had been a well-regarded dealer since its founding in 1977. But Revenue Quebec's actions didn't surprise accountants and tax lawyers who deal with the department on a regular basis. Over the past 18 months, they say, the Quebec government has been much more aggressive in trying to enforce sales tax collection – even to the extent of holding companies liable if their suppliers don't remit what they owe. |
| FDIC Board to Consider Volcker Rule at Oct. 11 Meeting Posted: 05 Oct 2011 09:09 PM PDT  The Federal Deposit Insurance Corp. board is scheduled to consider a notice of proposed rulemaking on the Volcker rule to restrict proprietary trading by banks at a meeting next week. Discussion of the interagency rule, part of the FDIC's rulemaking under the Dodd-Frank Act, was included in the agenda for the Oct. 11 meeting that was released by the agency. Let's hope they enforce it. Amongst many other things, that would end proprietary trading by JPMorgan against its own clients in the gold and silver futures market. |
| Michael Lewis Slams Wall Street, Leadership Deficit: Interview Posted: 05 Oct 2011 09:09 PM PDT  Michael Lewis's "Boomerang: Travels in the New Third World" begins with Kyle Bass, a Texas hedge fund manager who's buying guns and gold bricks. Bass is also betting against European governments. |
| Is gold on the cusp of a rise to unheard of levels? - John Embry Posted: 05 Oct 2011 09:09 PM PDT  This is an article that appeared on September 2nd in the Investment Digest of Canada. How I missed it, I don't know. It finally showed up in my inbox yesterday courtesy of Australian reader Wesley Legrand. It was obviously written before the August 22nd peak in the precious metals market...but it's a must read nonetheless. I spoke to John on the phone yesterday...and his October commentary is just about ready to be published as well...so I'll certainly keep an eye open for that. The link to his September commentary, posted over at the sprott.com website, is here. |
| Greece Might Stay in Euro-land Even If They Default Posted: 05 Oct 2011 09:00 PM PDT "Greece Default Would Leave German Taxpayers Facing Bills From 'Bad' Banks." Germany's bad banks, backed by the state to prevent the collapse of Hypo Real Estate Holding AG and WestLB AG during the credit crisis, would be the hardest hit in the event of a Greek default, leaving taxpayers to shoulder the bill a second time. As the biggest contributor to bailouts of Greece, Ireland and Portugal, Germany is trying to shield its own financial institutions from fallout from the sovereign debt crisis. "The specter of a Greek insolvency was raised this month by members of Chancellor Angela Merkel's coalition, when Economy Minister Philipp Roesler said there can be no "taboos" when considering action "to stabilize the Euro in the short term." The German government is considering a "Plan B" to help shield banks and insurers from losses if Greece defaults, three coalition officials said on September 9." "A Greek haircut or default will especially hit both state-owned bad banks," said Klaus Fleischer, a professor for banking and finance at the University of Applied Sciences in Munich. "Their bills are ultimately being paid by the German taxpayer. Private lenders have an advantage because their exposure is comparatively small." "Under Germany's financial stability act, bad banks were created to take over bad loans and risky assets to help shield lenders from losses that threatened their solvency. The bad bank, which is backed by the government, winds down the non-strategic assets while the lender focuses on its central operating business." "Greek 10-year bonds are trading about -60% below face value. By comparison, financial companies including Deutsche Bank, Commerzbank and Allianz SE (ALV) agreed in July to write-down the value of their Greek securities by an average 21% as part of a bond exchange and debt buyback program for the debt- stricken country. Some of the companies have made additional markdowns on their holdings." "On September 14, Germany joined France in signaling support for Greece with Merkel and French President Nicolas Sarkozy saying they're "convinced" Greece will stay in the Euro area. Merkel's coalition is showing a less united front, with Roesler's comments prompting the chancellor to warn against allowing a Greek default because of the risk of contagion for other Euro-area countries and recommend that "everybody should weigh their words very carefully," in a radio interview. Investors see a 94% chance Greece will default on its debt in the next five years, according to CMA, that compiles prices by dealers in privately negotiated credit-swaps market." Moves to protect the banks are being discussed as Germany's lower house, the Bundestag, prepares to vote September 29 on amendments to the European Financial Stability Facility as part of a revised Greece rescue program laid out on July 21. "With the EFSF we're trying to build a fire break," Michael Meister, the parliamentary finance spokesman for Merkel's Christian Democratic Union, said in Berlin on September 15. "If we don't succeed in extinguishing the fire, then we must seek to protect those neighboring states. "It's right to have a Plan B, especially as the market is increasingly convinced that it will be needed," said Michael Seufert, a banking analyst at NordLB in Hannover. "The banks will prepare themselves as well, developing cushions for absorbing write-downs if they need them because the chance of a haircut is getting bigger." "Unlike Germany, French lenders haven't set-up bad banks to hold their Greek investments. France has more to lose in a Greek default because most risks are held by its private lenders and markets are already concerned about them, Professor Fleischer said.' "A Greek default on its own would be manageable for Germany's listed banks," said Olaf Kayser, an analyst at Landesbank Baden-Wuerttemberg, who forecasts a haircut of about -60% in such a scenario. "It'll be painful for the banks if Greece's troubles spill over in the Euro area." -Aaron Kirchfeld, Nicholas Comfort, & Oliver Suess 9-20-11 Bloomberg.net         This posting includes an audio/video/photo media file: Download Now |
| Gold & Silver Market Morning, October 6, 2011 Posted: 05 Oct 2011 09:00 PM PDT |
| Gold Price Volatility Has Jumped – And How! Posted: 05 Oct 2011 08:57 PM PDT The Gold Price has suddenly become extremely volatile – as these three charts show... |
| LISTEN: Bob Chapman on Gold and Silver Posted: 05 Oct 2011 08:57 PM PDT Bob Chapman on the Discount Gold and Silver Trading Show form 10.5.11.
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| Gold and Silver Meeting - Madrid 2011 Posted: 05 Oct 2011 08:05 PM PDT The Gold and Silver Meeting Madrid 2011 will take place on Wednesday November 16th. It will deal with 'Gold, Silver and the economic future'. The third edition of Gold and Silver ... |
| Posted: 05 Oct 2011 07:29 PM PDT Gold Forecaster |
| Golden Secrets (IV) The Chinese Imperial Gold Posted: 05 Oct 2011 05:00 PM PDT |
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