Gold revs its engine and squeals down the track

Prices were stuck in a $50 trading range until the Fed sent the dollar reeling

By Myra P. Saefong, MarketWatch

June 27, 2008

 

SAN FRANCISCO (MarketWatch) -- The U.S. Federal Reserve gave gold the fuel it needed to restart its engine and the precious metal has already driven through the trading range barrier it's been stuck in for the past month. 

Gold futures had been trapped in a $50 trading range between $860 and $910 an ounce on the New York Mercantile Exchange since May 28. It climbed past $920 in electronic trading Thursday evening as the U.S. dollar slumped in reaction to the Fed's failure to signal urgency to raise rates to curb inflation.

On Wednesday, the Fed decided to hold short-term interest rates steady at 2%, but sharpened its focus on inflation, saying that the risks posed to the economy by upward pressure on prices have increased.

 

"Gold broke decisively out of the trading range that had constrained it as investors came to realize that the Federal Reserve won't be able to begin a rate-hike campaign until 2009," said Brien Lundin, editor of Gold Newsletter.

 

The Fed's policy statement essentially acknowledged the "trick box" the central bank is in -- "facing growing inflationary pressures, but unable to raise rates while economic conditions are so weak and with a national election so near," he said.

 

That combined with growing expectations that the European central bank will begin its own rate hikes well before the Fed can act to create a bearish environment for the U.S. dollar which in turn, provided a very bullish outlook for gold, he said.

 

"People are finally coming out of the fog and realizing that we're in a world of hurt and people are plain scared," said Dale Doelling, chief market technician at Trends In Commodities.

 

"Stocks are in the toilet, the dollar is getting hammered, oil is going through the roof, food commodities are in the stratosphere [so] there's only one solution," he said. "Buy gold! Buy silver! Buy them because they're the only defense against what's happening in all the other markets."

 

Fed Muck

 

The Fed's in quite a predicament as it tries to help improve the economy and most scenarios point to higher prices for gold, analysts said.

James Steel of HSBC says that record-high crude oil and dollar weakness are boosting gold prices. (June 27)

Fed Chairman Ben Bernanke is "caught between wilting growth and rising inflation," said Julian Phillips, an analyst at GoldForecaster.com. "With such toothless words against inflation, their rate-holding action told [everyone] that they can expect no interest rate support for the dollar in the foreseeable future." "This is positive for precious metals," he said.

Gold's value as a hedge against inflation -- especially as it pertains to a weakening dollar and rising oil prices -- helped lift prices for the metal to nearly $1,034 an ounce in mid-March, the highest futures price level ever recorded. 

And with ongoing concerns about inflation and a slowing economy, gold may be poised to return to record territory, analysts said.

"Inflation is a lot like toothpaste -- once it is out, it is very hard to get back into the tube," said David Beahm, a vice president at coin and precious metals retailer. And gold is a "tremendous hedge to both protect wealth during these inflationary periods and also generate positive investment returns when other asset classes decline in value."

The Fed's policy statement noted "two situations weighing on the economy: tight credit and the housing contraction -- that could be best addressed by an accommodative monetary stance," said Lundin. But at the same time, it noted just one, high energy prices that could be combated by a tighter monetary policy.

Crude prices climbed near a record $140 a barrel earlier this month and U.S. retail prices for regular gasoline stand near an all-time high above $4 a gallon.

"In short, they're damned if they do and damned if they don't," said Lundin. The Fed can only talk inflation down and talk the dollar up for now. "It won't be able to take any real, substantive action until after the fall elections."

Dollar Doom is Gold's Boom

Of course, at the root of the issue for gold is the dollar, Lundin said.

"Whatever developments drive the greenback will send gold in the opposite direction," he said.

The Fed can protect the U.S. dollar by sharply increasing rates, but that would sink the economy and make servicing our huge debt loads unmanageable, said Peter Spina, an analyst at GoldSeek.com. So the Fed "must keep rates low and keep liquidity in the system, which will ultimately lead to further debasement of the dollar's value," he said.

Protection for the dollar can really only come in the form of confidence or perception and then capital controls, he said.

Spina said he senses "increasing desperation" on the Fed's part and if the economy hasn't recovered as we enter 2009, "the confidence game could unwind quickly."

The Fed is "in a corner and the U.S. dollar is going to be a victim of their policies," Spina said. "It already has been punished harshly."  . . .

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. . . Gold is likely to regain $1,000 an ounce by the end of 2008 and work higher through 2009-2010, said John Hill, an analyst at Citigroup, in a research note.

DOW LOWEST IN 21 MONTHS

 

NEW YORK (CNNMoney.com) -- Gold prices jumped Thursday, rising back above the psychologically important $900 mark, on renewed fears about the health of the U.S. economy.

Gold for August delivery settled at $32.80 to 915.10 an ounce on the New York Mercantile Exchange. The precious metal hit an all-time intraday high of more than $1,030 an ounce back in mid-March.

"Weakness in the dollar has helped propel gold sharply higher today," said James Steel, an HSBC metals analyst in New York.

In addition to the dollar's decline, gold was supported by a surge in the price of oil and signs that the credit crisis is alive and well on Wall Street.

"I think the bottom is rather limited, given the dollar and credit concerns, plus high oil prices," he said.

Dollar weakness The dollar lost ground against the euro Thursday after the U.S. government reported that the nation's economy grew at a sluggish rate of 1% during the first quarter.

The euro rose to buy $1.5736 in afternoon trading, up from $1.5667 late Wednesday.

The greenback's weakness also stems from the Federal Reserve's decision Wednesday to hold interest rates steady at 2% as the central bank struggles to deal with a flattening economy coupled with rising prices.

The Fed's decision "signaled that inflation in near term is still uncertain," Steel said. That can drive gold prices higher because many investors see precious metals as a hedge against inflation.

Oil jumps T

The dollar's decline helped boost oil prices Thursday. Reports that Libya may cut oil production and that an OPEC official said crude could hit $170 a barrel this summer gave crude prices additional support.

Light, sweet crude for August delivery rose $3.65 to $138.20 a barrel on the New York Mercantile Exchange. The price climbed as high as $138.95 - a $4.40 gain and within $1 of the all-time intraday high of $139.89 - earlier in the session.

"To some extent, the gold market takes its cues from oil," Steel said. When oil rallies, gold tends to follow suit because oil is such a large component of commodities indices, he said.

Stocks swoon

Wall Street was battered Thursday afternoon, with the Dow industrials hitting its lowest intraday level in 21 months. The selloff was prompted by downgrades in the financial sector, the resurgence of credit concerns and the fallout from disappointing quarterly reports in the tech sector.

Gold often rallies when the stock market is in decline. "It is a traditional safe haven in periods of financial stress," Steel said.

Stocks came under pressure after Goldman Sachs cut its ratings on U.S. investment banks to "neutral'' from "attractive" because of continued deterioration of the banking industry and the prospect of a lengthy recovery. It also added Citigroup to its "conviction sell'' list.

Meanwhile, the stock market is digesting corporate results released late Wednesday from tech leaders Oracle and Research In Motion.

Oracle (ORCL, Fortune 500) easily beat Wall Street expectations for its fiscal fourth quarter results but the software maker gave more conservative guidance that disappointed investors.

BlackBerry maker Research in Motion (RIMM) missed its target and guided down its profit forecast for the quarter.

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"Dollar is going to get slammed again." 

 

By Pham-Duy Nguyen

June 26 (Bloomberg) -- Gold surged the most in 16 months on speculation the Federal Reserve won't rush to raise borrowing costs to curb inflation. Silver jumped the most since March.

The Fed yesterday kept its benchmark interest rate at 2 percent, even as policy makers acknowledged heightening inflationary expectations. An OPEC official said crude oil may reach $170 a barrel soon. Gold reached an all-time high of $1,033.90 an ounce in March as fuel, corn and other commodities soared and the dollar fell to a record against the euro.

``The Fed said that inflation is a major concern, but they're not going to do anything about it, which made gold go ballistic,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The dollar is going to get slammed again.''

Gold futures for August delivery jumped $31.10, or 3.5 percent, to $913.40 an ounce at 12:18 p.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain for a most-active contract since Feb. 21, 2007.

Silver futures for September delivery soared 75.3 cents, or 4.5 percent, to $17.36 an ounce. A close at that price would mark the biggest increase since March 5.

Before today, silver advanced 11 percent this year, while gold climbed 5.3 percent.

Traders trimmed bets on a rate increase in the next three months after the Fed's announcement yesterday. Interest-rate futures show a 26 percent chance the Fed will keep borrowing costs at 2 percent in September, compared with a 2 percent chance a week ago.

Iran Tensions

Chakib Khelil, Algeria's oil minister and the president of the Organization of Petroleum Exporting Countries, said in an interview on France 24 television that a conflict involving Iran might push oil prices over $200 and as high as $400.

Oil rose as much as 3.3 percent today to $138.95. The record was $139.89 on June 16. Iran has the second-biggest proved oil reserves and is OPEC's second-largest producer.

``Gold rose on the comments from OPEC,'' said Narayan Gopalakrishnan, a trader at MKS Finance, one of Switzerland's four bullion refiners.

Investors traditionally buy gold to hedge against a loss of purchasing power. Gold rallied 39 percent from Sept. 17 to March 17 as the Fed slashed rates from 5.25 percent after a housing slump and credit crisis threatened to push the U.S. economy into recession.

Analysts say the economy is too feeble for the Fed to raise rates any time soon. The U.S. gross domestic product expanded at an annual rate of 1 percent in the first quarter, capping the weakest six months of growth in five years.

Commodity Rally

The Reuters/Jefferies CRB Index of 19 raw materials rose to a record today and has gained 29 percent this year. In May, U.S. consumer costs climbed at an annual rate of 4.2 percent and wholesale prices rose 7.2 percent, according to data from the Labor Department.

``The Fed seems to have decided to protect growth by holding rates low and to accept the fact that this period of inflation is inevitable and unstoppable,'' said Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut. ``Inflation is the lesser of two evils. Investors will increase their positions in gold, and it's likely to continue upward.''

The Fed has been more aggressive in cutting rates and slower to raise borrowing costs than other central banks, eroding the value of the dollar, analysts said.

`Major Problem'

``The Fed's decision to not fight inflation is having a direct impact on gold prices along with many other commodities,'' said Tom Hartmann, an analyst at Altavista Worldwide Trading Inc. in Mission Viejo, California. ``Interest rates will not rise, though that would be a quick way to combat high commodity prices. The Europeans and other central banks seem keenly aware that inflation is a major problem.''

The European Central Bank has held its benchmark rate unchanged at 4 percent since June 2007. The Bank of England's key lending rate is at 5 percent.

Russia's oil funds may invest in gold, Moscow-based agency RIA Novosti said, citing a finance ministry official. Russia's Reserve Fund and the National Wellbeing Fund were worth a combined $161.9 billion on June 1. . . .

 

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Shanghai Gold Exchange Approves Membership of ANZ Bank

By Ginger Ding
26 Jun 2008 at 08:42 AM GMT-04:00

SHANGHAI (Interfax-China) -- ANZ Bank is to become one of only four foreign banks permitted to trade gold on the Shanghai Gold Exchange (SGE), after becoming an SGE member, ANZ announced Tuesday.

Alistair Bulloch, ANZ chief executive officer of North East Asia, said in the announcement that the SGE membership would help to position ANZ in both the commodity and financial markets of the Chinese economy.

"The gold trading approval strategically enhances ANZ's client servicing capacity and core bank status. This approval is a further step in ANZ's plan to become a leading foreign bank in China," Bulloch said.

According to ANZ's announcement, the SGE will only grant a total of five foreign banks membership at this stage. However, when reached by Interfax, Tong Gang, an official with SGE's press department, said there is no limit to the number of foreign banks that can be granted membership to the SGE, and that China will gradually open up its gold market.

HSBC Bank (China) Co. Ltd. (HSBC), Standard Chartered Bank (China) Ltd. and the Bank of Nova Scotia (Guangzhou Branch) became SGE members in February. They were able to trade gold on the SGE from June 5, 2008.

Aside from the above three banks, preliminary approvals to apply for SGE membership were granted to UBS AG and Societe Generale by the People's Bank of China (PBOC) last June. However, Tong told Interfax that neither UBS AG nor Societe Generale have applied for SGE membership yet.

ANZ is the only Australasian-based bank with both local and foreign currency commercial banking capabilities in China. It has fully-licensed foreign bank branches in Shanghai and Beijing.

In addition to its own branches, ANZ has a 19.9% stake in the Shanghai Rural Commercial Bank and a 20% stake in the Bank of Tianjin.

The SGE is the sole spot gold trading bourse in China. The most-traded AuT+D contracts on the SGE closed at RMB 195.82 ($28.51) per gram Tuesday, RMB 3.68 ($0.54) lower than the previous trading day.

 

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Warren Buffett, Billionaire Investor and World's Richest Man, Says He's Concerned About U.S. `Stagflation' 

 

By Josh P. Hamilton

June 25 (Bloomberg) -- Billionaire investor Warren Buffett says he's concerned about ``stagflation,'' or slowing in the U.S. economy while inflation accelerates.

``We're right in the middle of it right now,'' said Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc. in an interview on Bloomberg Television today. ``I think the `flation' part will heat up and I think the `stag' part will get worse.''

Buffett, the world's richest person, runs a company with a $72 billion stock portfolio and businesses ranging from candy to corporate jet leasing and insurance. He's said the U.S. housing slump has been a drag on Berkshire's earnings, adding today he's unsure when the economy will recover.

``It's not going to be tomorrow, it's not going to be next month, and may not even be next year,'' he said.

The U.S. economy will expand 1.4 percent in 2008, the weakest performance since 2001, according to a survey by Bloomberg. Federal Reserve Chairman Ben S. Bernanke said June 9 the risks of a ``substantial downturn'' in the economy have diminished and policy makers will ``strongly resist'' an increase in inflation expectations. Consumer prices rose 4.2 percent in the 12 months ended in May, the fastest pace since January.

Buffett, whose Berkshire is the second-largest shareholder of Anheuser-Busch Cos., declined to comment on InBev NV's $46.3 billion bid for the St. Louis-based brewer. He disavowed comments in the media attributed to him about whether he favors the offer.

Mistaken Identity

``I've been reported to be in St. Louis, I've been reported to be at dinner with August Busch IV," Buffett said referring to the chief executive officer of the brewer. ``There must be some guy in St. Louis that looks a lot like me, because I have not been in St. Louis since this started.''

Federal regulators may not need to step in to help Lehman Brothers Holdings Inc., the securities firm that lost about 62 percent of its market value this year, Buffett said.

``The fact that they intervened on Bear Stearns prevents them from needing to intervene on other large investment banks,'' Buffett said. ``The very act of the fire engine showing up when there was a fire means that other fires won't break out in this particular case.''

The second-largest underwriter of mortgage debt last year, Bear Stearns Cos. sold itself after an exodus of clients and lenders threatened to plunge the company into bankruptcy. New York-based JP Morgan Chase & Co. agreed in March to buy Bear Stearns with backing from the Fed.

Buffett also praised Barack Obama, the Democratic senator from Illinois running for president against Republican John McCain, an Arizona senator.

``He will have more concern for the people who don't get the lucky breaks in life like I've gotten,'' said Buffett, ranked the richest man by Forbes magazine.

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By Patrick Rial and Lynn Thomasson

June 24 (Bloomberg) -- Japanese stocks, Asian real estate and commodities are investors' best bets as faster inflation erodes returns in the rest of the world's markets, said investor Marc Faber, author of the Gloom, Boom & Doom Report.

``Demand for commodities and oil will not vanish.'' Faber said at a conference in Tokyo. ``The shift in demand that drove up commodity prices is not going to go away.''

Record prices for commodities have accelerated inflation around the world and lifted shares of raw material and energy producers. Oil more than doubled since the beginning of last year, while products including coal, rice and fertilizer also reached record highs in 2008.

Faber, who told investors to buy gold as the metal began a seven-year rally, predicted inflation may boost Japanese share prices and Asian property will benefit as more people gain access to mortgages.

 

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FDIC seeks to increase hiring to deal with anticipated bank failures

March 26, 2008

Federal regulators, anticipating a surge in troubled financial institutions, will boost by more than 60 percent the number of workers who handle bank failures.

The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007, following an uneventful stretch of more than two years. The last time the agency was hit hard with failures was during the 1990-91 recession, when 502 banks failed in three years.

Analysts see casualties rising but don't believe they will reach that level. Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years.

----

Call and speak to a Precious Metals Specialist at the Capital Gold Group to discuss how you can safeguard your long term savings in gold - 800-510-9594.

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17 June 2008

Mumbai: Iran has withdrawn around $75 billion from Europe after the European Union threatened sanctions on Iran, possibly targeting the oil and gas sectors, over Tehran's disputed nuclear program, an Iranian weekly said.

The Iranian move is aimed at preventing its assets from being blocked under new sanctions by western powers who have warned the world's fourth-largest oil exporter of more punitive measures if it rejects an economic incentives offer and presses on with sensitive nuclear work.

''Part of Iran's assets in European banks have been converted to gold and shares and another part has been transferred to Asian banks," the report quoted Mohsen Talaie, deputy foreign minister in charge of economic affairs, as saying.

"About $75 billion of Iran's foreign assets which were under threat of being blocked were wired back to Iran based on Ahmadinejad's order," the moderate Shahrvand-e Emrouz weekly said.

The report, however, did not specify the time period for the withdrawals, which it said were ordered by President Mahmoud Ahmadinejad.

Iran, meanwhile, ruled out suspending its uranium enrichment program despite the offer by six world powers of help in developing a civilian nuclear program if it stopped activities.

The offer, agreed last month by the US, Britain, Russia, China, Germany and France, is a revised version of one Tehran rejected two years ago.

EU diplomats have said the bloc would wait for Iran's reaction to the offer before deciding on an asset and funds freeze on Iran's biggest bank, state-owned Bank Melli.

Iran's foreign exchange reserves rose to more than $80 billion in April following windfall gains from record global oil prices.

Iran's rising foreign reserves have also been helped by its decision to shift away from the US dollar into other currencies as the dollar has weakened, say analysts.

The EU, unlike the US, has so far been cautious on punishing Iran because of deep business and energy ties.

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For weeks, frustrated investors of Lehman Brothers Holdings Inc. have been asking for Chief Executive Officer Richard S. Fuld Jr. to answer questions about the Wall Street firm's dismal performance lately.

On Monday, they got what they wanted as the publicity-averse Mr. Fuld led off Lehman's fiscal-second-quarter conference call, speaking for about 10 minutes. Lehman's net loss of $2.8 billion, or $5.14 a share, in line with its projection a week ago, is "totally unacceptable," he said.

The message from Mr. Fuld was clear: "This is my responsibility," he told analysts. "We've made a number of changes. It's now my job to make sure we execute them."

Despite investor concerns that Lehman is too small to survive, since it is the smallest of Wall Street's four major firms, Mr. Fuld insisted that Lehman still can "go it alone" without teaming up with a big bank.

Mr. Fuld and the firm he has led as CEO since 1993 had a lot riding on Monday's earnings announcement and conference call with analysts and investors. From the start of this year through Friday, Lehman's shares have fallen 61% amid concerns about the firm's financial outlook and candor about what is lurking on its books.

The problems culminated in last week's replacement of Joseph M. Gregory, a lifelong friend of Mr. Fuld, as his No. 2 and demotion of Erin Callan, Lehman's finance chief and the highest-ranking woman on Wall Street.

Ian Lowitt, who succeeded Ms. Callan as finance chief and had just a few days to get ready for his debut as Lehman's numbers guy, got off to a rocky start because his microphone was turned off. After that, he answered questions for over an hour.

Investors seemed generally pleased with the performance of Mr. Fuld, Mr. Lowitt and Bart McDade, Lehman's new president and chief operating officer. The firm's shares rose 3.5% during the conference call, which lasted about one hour and 45 minutes. In New York Stock Exchange 4 p.m. composite trading, Lehman was up 5.4%, or $1.39, at $27.20.

"It's hard to believe there are any questions left," said Bank of America analyst Michael Hecht. Mr. Fuld replied: "That's the way we feel."

Yet analysts and investors still are wondering if the future will bring even more painful write-downs for Lehman, despite Mr. Fuld's assurance that the firm's positions are "marked appropriately."

Several skeptical analysts also wondered how Lehman can pull off a promised return on equity in the midteens, vastly better than its 9% in the fiscal first quarter. ROE is a key barometer of profitability. Lehman said the midteens target is achievable because of growth in businesses such as investment banking and asset management.

Mr. Fuld has worked at Lehman since 1967 and is the personification of the firm. But time isn't on his side if he can't find a way to pull Lehman out of its funk. "This firm is known for its operating excellence," Mr. Fuld said. "Bart and I will restore that reputation."

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Jun 12 2008 3:37PM

The bigger picture for gold is well viewed on the weekly chart. The correction steps have dampened enthusiasm, but they have not changed the bull uptrend. The hyperbolic rise from last August to March has not seen any move below the $850 impulse high in November. Thus, the long-term bullish picture is intact. A retest of the May low at $855 is in progress. The US Dollar support is bizarre, given the astonishing persistent horrendous negative fundamentals that pervasively worsen with each passing month within the US Economy and US bank system.

In the entire financial world, the two biggest enemies are gold and US Treasurys, the trading instrument of the US Dollar. Given that the US banking officials are up against the wall right now, they will continue to inflate, and in doing so, they will work to bring down the long-term US TBond yield via direct monetization actions.

To be sure, a strong rise in the 10-year US Treasury yield well past 4% toward 5% and beyond would create forces for credit derivative explosions and the total ruin of the US and Western world banking systems.

The JPMorgan machinery has kept the long-term rates down far below prevailing price inflation levels. However, monetary inflation on an even grander scale, as is coming next, will be directed into US TBonds, regardless of price inflation. A profound irony, or conundrum, has been that long-term US TBond yields are a reflection of US Fed, Euro Central Bank, Bank of Japan, and Bank of England monetary inflation. The US Fed has cut the official interest rate several times. The market response has been to contradict. The US Fed has lost control.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics.

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Ten Phony Reasons To Sell Gold and Silver Now
Commentary by Roger Wiegand
Editor, TraderTracks Newsletter

Jun 11 2008 11:42AM

“The economy is in an inflationary recession denied by most central banks and in our market manipulation capitals of Washington and New York. Traders and investors need to pay attention to actual stats not those with a mainstream, Keynesian agenda. We find their goofy defense stunningly remarkable and replete with nonsense. . . .” - Traderrog

Keeping Score On Nonsense Is A Full Time Job

We should have been building a file on market reporting nonsense over the past few five years but it would have been a full time job and we don’t have the time. Instead of a librarians list, we summarize today some critical reasons as to why traders and investors should not give-up on gold and silver. We simply lost control while producing this list and wrote 20 instead of 10. This list took only 15 minutes and we do have time and space constraints.
 

• We had a credit crunch caused by derivatives but now it’s structurally contained and mostly over.  Greenspan’s give-away cash in the US spread to other nations through origination of derivatives. The contagion has only begun to spread and the 10% pittance of acknowledged bad paper allegedly managed at the banks leaves 90% lurking, hidden in banks’ balance sheets.
  
  
• The American banking system is sound as a dollar. Bear Stearns was a one time event. We are in the early stages of an enormous rolling bank-credit crash. Questions on Lehman Brothers have recently surfaced but the larger hidden mess is the regional banks holding portfolio majorities in real estate loans. Thousands of banks are at risk including construction loans failing next. Stress in banks has barely started. There will be thousands of bank failures.
  
  
• The U.S. Dollar has stopped selling, has formed a new base and will now rally. Technically, the dollar has mini-rallies on the way down to oblivion. Bernanke has only one card left to play and that is to keep printing dollars. His rate cutting bullets are near the end and he is cornered. Big financial players the world over are tossing out dollars and tiny business people on the street in foreign nations are refusing to take them at all. The Euro is the new choice; FOR NOW.
  
  
• Bond holders can breathe a sigh of relief as corporations are back on track to recovery. Bonds are the next contagion and prices are crashing everywhere. US paper is preparing to sink in price and rise in yield much to the chagrin of Benny and Hank. Corporates are being down-graded with new acceleration. Bond traders are now in charge of interest rates not Benny. Largely unnoticed is the impending failure of municipals as cities, towns and counties financially go under. You’ll know their end is near when fire, police and trash haulers are laid-off.
  
  
• The housing industry in the USA and other western nations had some overbuilding but new buyers have emerged and we are on the road to recovery. Some new buying has emerged in those states and regional locations most advanced in the housing downturn. This buying is primarily bottom-fishing to purchase at drastically reduced prices. These huge discounts must be acknowledged and acted upon in many more markets before the housing crunch is over. Meanwhile, foreclosures and walk-aways are accelerating at a faster pace dumping millions in new empty inventory on the markets driving prices down even faster. Builders enter bankruptcy at a faster pace and now some of the formerly well-financed national builders are in danger of failures, too. Housing is in a shambles and gets much worse until 2011-2012.
  
  
• Since the number of home buyers is slightly down, there is plenty of cheap mortgage money available. Lenders have been so burned-off in these nasty markets even those buyers with stellar credit are having difficulty finding a mortgage. Most are not looking to buy or take a loan and those that are suffer unusual scrutiny. The majority of prospective new buyers are simply waiting for lower prices ahead. This takes years not months to play out.
  
  
• The mortgage and housing industry had some tough times but things are fine and you can now buy their shares for some splendid gains. Countrywide, the largest mortgage originator in America formerly writing 20% of all loans is under investigation and is technically bankrupt. It remains to be seen if Bank of America will close on their purchase of Countrywide as this deal is fraught with immeasurable liability. The mortgage industry has lost thousands of jobs with more losses ahead.
  
  
• Consumers have some small unemployment issues but joblessness is only 5.5% and therefore is manageable.  The help wanted index is the lowest since the Truman Administration telling us jobs are not only scarce but nearly impossible to find. Michigan unemployment is officially just above 7% when in reality it’s more like 16-17% unemployed with thousands in more losses just ahead. Nationally, the posted unemployment rate is 5.5% but the true rate is 11-12% and rising fast. We forecast a 1930’s national jobless rate of 25% or WORSE WITHIN THREE YEARS.
  
  
• The global auto industry and more specifically the U.S. Big Three have plenty of cash and credit and are in the midst of reformation taking them back on track to new profits. Ford has $29 Billion in cash and is burning through it at a high rate. Their sales are in the tank with almost none of their products deemed desirable. Chrysler might go down faster with only $10 billion in cash on-hand, and new reports say GM is at risk to BK on a pile of valueless derivatives. Watch Toyota, the proxy for the global auto industry’s health. They are off -10% on new sales reports.
  
  
• Energy costs have gotten expensive but the top is in and crude oil is going back to $50 and gasoline is plentiful. Oil supplies are 2-3mm barrels per day short of demand. Gasoline will rise even faster even if oil stays static. Refinery bottlenecks guarantee this as crude is backing- up in transport ships waiting for refinery manufacturing. Iran has 18 ships waiting, fully loaded with sour crude, the most difficult to refine. Four larger supplying nations are avowed enemies of the US with declining production for several reasons. Oil is going to $150 this summer and $200 within 2-3 years. An Iran attack could temporarily seize-up the markets driving prices to the moon.
  
  
• The U.S. Government is sound as the dollar. Money supply is growing at a modest 2-3%.  The US Government is currently printing dollars (digitally) at a rate of 16-17%, which is simply not sustainable. Even if this rate were constant, (it is not) the dollar’s valuation would be cut nearly in half in one year. Over-burdened with social program costs’ and politicians pouring on the pork along with the forever war, there is zero chance the government’s credit can be maintained. We have seen new and open discussions telling us the credit of the largest economy is the world will be down-graded from AAA. This eventual down-grade makes all borrowing more costly in America.
  
  
• Inflation is contained and next year we might have to fight deflation. We have stagflation right now with insolvency on the horizon in several sectors of the global economy. Food and energy with some services are sky-rocketing with inflation while durable goods and expensive discretionary purchases are shelved with no savings, cash or credit available. Hyperinflation in our view is a sure thing.
  
  
• The highs are in for gold and silver. The market will be over-run with central bank gold selling should these markets get out of hand. Technically, we forecast gold at a minimum price of $2,960 with a probability of much higher prices. Silver is near $17 and $50 is a sure thing with our expectations of $176 to $256 within five years. Markets ebb and flow with cycles and profit-taking. Do not be fooled with hollow selling bearish news and threats by those who prefer gold sell-off to lower prices. Gold is the only real money in the world and its rally has barely begun. Also, keep in mind the adjusted for inflation gold and silver prices have farther to go.
  
  
• The USA Gross Domestic Product (GDP) is manageable and should be lessening this fall. America’s GDP is getting worse after lingering in the minus column near $55 Billion per month for some time. Latest news tells us GDP is now over -$60 Billion per month and worsening.
  
  
• The US Consumer Price Index shows no inflation with energy costs and CPI unchanged. The CPI is a rigged price and energy costs are flying higher. While these phony numbers can still move markets this is only because the media and the herd still attributes some value to them. Smart traders go immediately opposite jaw-boning speeches and government reported numbers. They are pure fiction.
  
  
• Food costs are up slightly but supplies are sound and we should manage without too much trouble. Grains and other foods are sinking in production as demand skyrockets. Rice prices are double, corn should exceed our forecast $7.48-$8.00 per bushel price and soybeans are doing the same thing. Wheat in the bins for immediate delivery is at shocking 40 year low in the face of unprecedented global demand. We fully expect grain rationing in the USA later this year or early next year. An overly hot summer will expand prices even more, which we forecast.
  
  
• The US Federal Deficit is manageable. Our national treasury and finances are way beyond any hope of covering all the costs. The budget is a joke, more expense is being piled on and social security is toast within 5-10 years, despite reports saying its ok until 2040. The war is super expensive and a broadening of the war seems probable. These bills will never be paid as there is no hope of paying even a tiny portion. Now the Federal Reserve has given itself new powers to COVER ALL THE GLOBAL INVESTMENT DERIVATIVE DISASTERS, WHICH ARE SO LARGE THEY ARE IMMEASUREABLE. THEY CLAIM THESE NEW POWERS TO SAVE THE BANKS.
  
  
• Retail Sales are soft but we think they have bottomed and the consumers buying power continues. Retailers are tanking with breath-taking speed. Hollowed out shopping centers are everywhere and several large restaurant chains are filing BK. There is no discretionary cash to eat out any more. The cheapest places to eat and buy stuff are McDonald’s and Wal-mart, which continue to do well as the others are disregarded.
  
  
• Durable goods orders are a little soft but by this fall we should be on the come-back trail for new orders. Durable goods are the worst sector for financial performance other than credit. Furniture, appliances, cars, and other non-essential toys are in the dumpster. The only sector on the upscale temporarily is television sets. This is because there is a major change-over to High-Definition Television and more importantly, families are shunning expensive forays to restaurants, movies, and malls. Nesting and savings are the growth industries.
  
  
• Consumer Confidence is a little worrisome but once some of these indicators recover so will the consumers. Consumer confidence is terrible. John Williams of Shadow Government Statistics, tells us “The Reuters/University of Michigan Sentiment measure fell by -4.5% month-to-month in May to the lowest level since 1980 and it collapsed to an annual contraction of -32.3%, the steepest annual downturn in the history of the series.” Not only is lack of confidence rising but new horror stories of hungry families losing homes hit the news with increasing frequency.
  

Statistical Market Manipulation Fine-Tuned

Government numbers dudes cranking out funny statistics have lots of tools at their disposal.

1. They have formulas in place that have been used regularly for years to control CPI, M-3 money growth and inflation. These are mandated to keep a lid on heavy government pension and social security obligations. Further, these phony stats imbue an all-is-well ambiance.
   
   
2. The jobs reports are so outlandish, jerking up and down with the wind and continuous re-adjustments, some reporters are now openly mocking them on big business television.
   
   
3. Construction is a huge US business and stats are difficult to define and prove. Consequently it’s fertile ground for openly lying on those unemployed. The largest jobs growth is in government for buying votes.

Be an independent thinker and focus on debt reduction, stock-piling of personal needs, and most of all get busy trading and investing in gold and silver. You will not be disappointed and could earn some splendid gains.

Spring Buying Cycle Has Arrived

Watch for new rallies in most all commodities markets in late August. We should see channelized mini-rallies in gold and silver this summer. The bloom is off the rose and the off-schedule, nasty “Sell-in-May-And-Go-Away” arrived. However, our summer forecast is a mild haircut in most stock shares including precious metals. The only action to prevent selling is our stunningly time-worthy Plunge Protection Team who had multiple recent failures to prop shares. Will they win during the June push-‘em-up event? We think with all the other market dangers they will prop their little hearts out and not permit the Dow and S&P 500 to get out of control.  In our newsletter, Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management.

Whatever you do, make a concerted effort to stay with the trend and hang onto your core holdings of preferred shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan and squirreled away. Big traders are always ready to buy on the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy. - Traderrog

Roger Wiegand is the Editor and Publisher of Trader Tracks Stocks, and Trader Tracks Futures and Commodities, both electronic newsletter publications for active traders. In addition, Roger writes a weekly column, “Rog’s Corner,” For J Taylor’s Gold and Technology Stocks Newsletter.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

Qatar's Top Selling English Daily Newspaper
Published Tuesday, 10 June, 2008; 06:18 AM Doha Time

DUBAI: Strong gold prices are unlikely to put the brakes on imports of the precious metal into Dubai, despite a recent fall in purchases by the Gulf Arab emirate known as “the City of Gold”, industry executives say.

Gold’s surge to multi-year highs earlier this year scared buyers in many parts of the world and pulled down Dubai’s first-quarter imports by 7.6% to 122 tonnes.

Last year, gold imports reached 559 tonnes on investors’ appetite for the metal, while exports hit 287 tonnes.

Dubai, the Gulf’s commercial hub, has the highest concentration of jewellery shops in the world, generating trade worth $35bn last year – 20% of the $173bn total global jewellery trade.

“Dubai will finish this year with the same level of gold imports we have seen last year regardless of the high volatile prices,” said Moaz Barakat, managing director of the World Gold Council in the Middle East, Turkey and Pakistan.

“Imports are not directly related to price only. You have other factors like exports and industry demand,” he said.

Spot gold powered to a record of $1,030.80 an ounce on March 17 on record-high crude oil, fears of inflation and expectations of more rate cuts in the US, making the metal more attractive as an alternative investment.

Gold has since fallen, but rose to a high of $900.30 an ounce on Friday on record oil prices and a dollar drop.

“On the jewellery side, buyers tend to adjust to prices quicker in this region, and on the investment side, when there is a bullish sentiment, you get investors pouring money into gold,” said Tawhid Abdullah, manager director of the Dubai Gold and Jewellery Group. – Reuters

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

Gold continues to rule firm on higher global cues

9 Jun, 2008, 1943 hrs IST, PTI

MUMBAI: Gold prices continued to rule firm for the third day on the bullion market on sustained buying by stockists in view of positive advices from Asian markets.

Silver also moved up on good industrial demand. In the Asian market, gold rose to its highest level in almost two weeks, moving above USD 900 per ounce as speculative buying picked up after oil hit a record high, lifting the metal's appeal as a hedge against inflation.