Results tagged “Gold Group” from Capital Gold Group, Inc.

Aug. 27 (Bloomberg) -- U.S. economic data are “alarming,” signaling the recovery is losing momentum, Mohamed A. El-Erian, Pacific Investment Management Co.’s chief executive officer, wrote in an opinion piece in the Washington Post.

Unemployment is high, consumer credit is shrinking and small companies are having trouble obtaining bank lines of credit, wrote El-Erian, who is also co-chief investment officer at Pimco, which runs the world’s largest bond fund. Increased government spending and additional debt purchases from the Federal Reserve are unlikely to spur a rebound, he wrote.

“Throughout the summer, data signals have become more alarming,” wrote El-Erian, who is based in Newport Beach, California. “Current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery.”

A U.S. report today will show gross domestic product grew at an annual pace of 1.4 percent in the second quarter, versus the 2.4 percent pace the government estimated last month, according to a Bloomberg News survey before the Commerce Department issues the figure. Fed Chairman Ben S. Bernanke is scheduled to speak today, raising speculation he will say the central bank is considering increasing its debt purchases to help keep borrowing costs low.

Home Values

Housing is waning and home values are set to fall further as foreclosures increase, El-Erian wrote in the article.

There is a need for tax reform, housing-finance reform, infrastructure investment, support for education, job retraining, removal of barriers to interstate competition and stronger social safety nets, he wrote.

Sovereign bonds are rallying globally as economists trim their growth forecasts and stocks tumble.

“The equity markets are again under pressure while yields on Treasury bonds have collapsed, reflecting that market’s growing concerns about the weak economic outlook,” El-Erian wrote.

Treasuries have returned 1.9 percent this month, and an index of sovereign bonds around the world gained 1.8 percent, according to Bank of America Merrill Lynch data. MSCI’s World Index of shares handed investors a 4.2 percent loss, after accounting for reinvested dividends.

Weekly Gain

U.S. 10-year notes headed for a fifth weekly gain, the longest run since February, pushing the yield down about half a percentage point during the period.

The notes fell today, pushing their yields up three basis points to 2.51 percent as of 10 a.m. in London, according to BGCantor Market Data. The 2.625 percent security due August 2020 fell8/32, or $2.50 per $1,000 face amount, to 101.

U.S. stocks fell yesterday, sending the Dow Jones Industrial Average to its first close below 10,000 in seven weeks, on concern manufacturing is slowing. The Standard & Poor’s 500 Index fell 0.8 percent and has now tumbled 14 percent from its 2010 high on April 23.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, cut his estimate for growth this quarter to a 2 percent annual pace. As recently as two weeks ago, he projected 4.6 percent.

Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, estimates a 2.3 percent rate of expansion, down from a June forecast of 4.1 percent.

Fed Purchases

The Fed plans to purchase about $18 billion of U.S. debt by the middle of September using the money from principal payments on its holdings of agency debt and agency mortgage-backed securities. Bernanke is scheduled to speak at a conference in Jackson Hole, Wyoming.

The central bank said following its Aug. 10 meeting that it would reinvest principal payments on mortgage assets it holds into long-term Treasuries after judging “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”

The record $239 billion Pimco Total Return Fund managed by Bill Gross returned 12.3 percent in the past year, beating 66 percent of its peers, according to data compiled by Bloomberg.

Pimco, which managed more than $1.1 trillion of assets as of June 30, according to its website, is a unit of Munich-based insurer Allianz SE.

from "The Economic Collapse" website

August 26, 2010

Sometimes there are things that are so shocking that you just do not want to report them unless they can be completely and totally documented.  Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works.  Not anymore. 

A paper entitled "Reserve Accumulation and International Monetary Stability" (http://www.imf.org/external/np/pp/eng/2010/041310.pdf) by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the "Bancor", and that a global central bank be established to administer that currency.  The report is dated April 13, 2010 and a full copy can be read here.  Unfortunately this is not hype and it is not a rumor.  This is a very serious proposal in an official document from one of the mega-powerful institutions that is actually running the world economy.  Anyone who follows the IMF knows that what the IMF wants, the IMF usually gets.  So could a global currency known as the "Bancor" be on the horizon?  That is now a legitimate question.

So where in the world did the name "Bancor" come from?  Well, it turns out that "Bancor" is the name of a hypothetical world currency unit once suggested by John Maynard Keynes.  Keynes was a world famous British economist who headed the World Banking Commission that created the IMF during the Breton Woods negotiations.

The Wikipedia entry for "Bancor" puts it this way....

The Bancor was a World Currency Unit of clearing that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system, but has not been implemented.

The IMF report referenced above proposed naming the coming world currency unit the "Bancor" in honor of Keynes.

So what about Special Drawing Rights (SDRs)?  Over the past couple of years, SDRs have been touted as the coming global currency.  Well, the report does envision making SDRs "the principal reserve asset" as we move towards a global currency unit....

"As a complement to a multi-polar system, or even—more ambitiously—its logical end point, a greater role could be considered for the SDR."

However, the report also acknowledges that SDRs do have some serious limitations.  Since the value of SDRs are closely tied to national currencies, anything affecting those currencies will affect SDRs as well.

Right now, SDRs are made up of a basket of currencies.  The following is a breakdown of the components of an SDR....

*U.S. Dollar (44 percent)

*Euro (34 percent)

*Yen (11 percent)

*Pound (11 percent)

The IMF report recognizes that moving to SDRs is only a partial move away from the U.S. dollar as the world reserve currency and urges the adoption of a currency unit that would be truly international.  The truth is that SDRs are clumsy and cumbersome.  For now, SDRs must still be reconverted back into a national currency before they can be used, and that really limits their usefulness according to the report....

"A limitation of the SDR as discussed previously is that it is not a currency. Both the SDR and SDR-denominated instruments need to be converted eventually to a national currency for most payments or interventions in foreign exchange markets, which adds to cumbersome use in transactions. And though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries."

So what is the answer?

Well, the IMF report believes that the adoption of a true global currency administered by a global central bank is the answer.

The authors of the report believe that it would be ideal if the "Bancor" would immediately be used as currency by many nations throughout the world, but they also acknowledge that a more "realistic" approach would be for the "Bancor" to circulate alongside national currencies at first....

"One option is for Bancor to be adopted by fiat as a common currency (like the euro was), an approach that would result immediately in widespread use and eliminate exchange rate volatility among adopters (comparable, for instance, to Cooper 1984, 2006 and the Economist, 1988). A somewhat less ambitious (and more realistic) option would be for bancor to circulate alongside national currencies, though it would need to be adopted by fiat by at least some (not necessarily systemic) countries in order for an exchange market to develop."

So who would print and administer the "Bancor"?

Well, a global central bank of course.  It would be something like the Federal Reserve, only completely outside the control of any particular national government....

"A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing."

In fact, at one point the IMF report specifically compares the proposed global central bank to the Federal Reserve....

"The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity."

So is that what we really need? 

A world currency administered by an international central bank modeled after the Federal Reserve?

Not at all.

As I have written about previously, the Federal Reserve has devalued the U.S. dollar by over 95 percent since it was created and the U.S. government has accumulated the largest debt in the history of the world under this system.

So now we want to impose such a system on the entire globe?

The truth is that a global currency (whether it be called the "Bancor" or given a different name entirely) would be a major blow to national sovereignty and would represent a major move towards global government. 

Considering how disastrous the Federal Reserve system and other central banking systems around the world have been, why would anyone suggest that we go to a global central banking system modeled after the Federal Reserve?

Let us hope that the "Bancor" never sees the light of day.

However, the truth is that there are some very powerful interests that are absolutely determined to create a global currency and a global central bank for the global economy that we now live in. 

It would be a major mistake to think that it can't happen.

NEW YORK (The Street) -- Gold prices were rallying past $1,230 an ounce Thursday as investors bought gold after more signs of a weak labor market.

Gold for December delivery was up $6 to $1,237.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,239.50 and as low as $1,229.50. The U.S. dollar index was down 0.05% to $82.18 while the euro was flat at $1.28 vs. the dollar. The spot gold price Thursday was also adding more than $6, according to Kitco's gold index.

Gold prices were rising after the Labor Department said weekly initial jobless claims for the week ended Aug. 14 rose to 500,000 last week, which underscored worries that the U.S. economic recovery was stalling out.

Gold prices had been flat before the news as relatively positive news out of the eurozone gave investors little impetus to buy gold as a safe haven asset.

Greece will be able to receive its next lump of financial aid and Bandesbank, the German federal bank, increased growth prospects in Germany for 2010 to 3% from 1.9%. The upgrade is in contrast to the European Central Bank's statement last week that strong growth within the European Union could not be sustained. Germany's producer prices also rose more than expected indicating demand for goods.

Gold prices settled above $1,231 an ounce Wednesday for the first time in more than six weeks, but were having a hard time picking up steam. Lack of volume and headline news was keeping gold in a lackluster trading range, which many analysts expect will remain for the rest of the summer.

Summer months typically are slow buying periods for gold as trading volume peters out and China and India consumers curb their gold jewelry buying. In the fall, festival and wedding seasons in Asia jumpstart customer demand.

Frank Holmes, CEO of U.S. Global Investors, said in a recent note that the "September price rises 2.5% above the August price," which would take prices past their intraday high of $1,264 an ounce.

Investors have been shoring up their gold positions recently. Nicholas Brooks, head of research and investment strategy for ETF Securities, says the firm's gold exchange-traded fund, ETFS Physical Gold Shares, the smallest physically backed gold ETF in the U.S., "saw nearly $100 million of inflows [last week] ... it does appear that investors are moving back pretty strongly into the physical gold [products] and we've seen continued inflows this week."

"Overall, the key driver of gold is going to be the sovereign risk issue and whether we are moving towards slower economic growth on sort of a 6-12 month view and I think the jury is still out on that."

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

17 August 2010, 4:24 p.m. EST
By Allen Sykora
Of Kitco News
 

(Kitco News) -- Worries about a fragile U.S. economy are likely to keep investors shifting toward gold and could push the metal to fresh record highs near the $1,300 area by year-end, analysts and traders say.

December gold futures early Tuesday peaked at $1,231.10 an ounce on the Comex division of the New York Mercantile Exchange, their strongest level since late June. They eventually settled $2.10 higher at $1,228.30 an ounce.

As of 3:36 p.m. EDT (1936 GMT), spot gold was 60 cents higher at $1,226.10.

Mike Daly, gold and silver specialist with PFGBest, looks for gold to “go much higher” than the record hit earlier this summer due to uncertain U.S. economic conditions and a still “fragile” environment in Europe, where sovereign-debt issues were a major focus earlier this year. The peak for a most-active Comex futures contract was $1,266.50 back in June.

“Economic numbers here, such as housing and jobs growth, have been very negative,” Daly said. “That is giving savvy investors globally a lack of confidence in fiat currencies. Most people right now, who have disposable income, are preferring to get into more tangible assets, primarily gold and silver, for a safer-haven investment.

“They see that gold and silver and precious metals in general have retained value better than most commodities over the last couple of years.”

Kevin Grady, a trader on the Comex floor with MF Global, cited continuing foreclosures are a harbinger of further support for gold, since it shows many Americans are still struggling amid weak economic conditions. In fact, with a federal-funds-rate target of zero to one-quarter percent, the Federal Reserve is essentially offering “free money” to banks with the hope lending will jump-start the economy, he said. Yet, many Americans are not able to borrow, unless they have a high credit rating and cash for large down payments.

 “And the people who have money are saving,” said Grady, who looks for $1,300 gold by January. “People are holding onto what they have.”

Meanwhile, government debt continues increasing.

“I think it's a slow grind, but gold should go much higher from here,” Grady concluded.

Michael Gross, broker and futures analyst with OptionSellers.com, described his company as “cautiously bullish” on gold on ideas that any economic recovery could be “spotty.” Still, the metal could experience “fits and starts” rather than moving up in a straight line. He figures gold could “modestly eclipse” the highs from June in the foreseeable future and later in the year potentially hit $1,275 or even push $1,300.

Further support may come from political uncertainties in the U.S., with congressional elections this fall, as well as debate among lawmakers on whether to continue some or all of the Bush Administration tax cuts due to expire at the end of the year. This could put some pressure on equities and prompt some movement into gold, Gross said.

“Uncertainty tends to be good for precious metals,” Gross said. “If people are not sure what to do with their money, they put it into gold. That seems to be the safe and conservative bet, and we expect that to continue in the second half of the year.”

Investors are “tired” of the uncertainty in which government or central-bank officials suggest improvement in the economy, with their comments followed by weak jobs data, Daly said.

“There is so much fear based on what is going on in Washington,” said Bob Haberkorn, senior market strategist with Lind-Waldock who also anticipates $1,300 gold yet this year. “You're getting new investors looking at gold and silver.”

Charles Nedoss, senior market strategist with Olympus Futures, looks for further U.S. dollar weakness, which in turn tends to support gold. Investors often buy the metal as a hedge against a softening greenback, plus a weak dollar makes commodities less expensive in other currencies and thus can boost demand.

Low market-set interest rates, as a result of a soft economy, may result in an eventual retest of the 80 area for the dollar index, Nedoss said. It currently stands just above 82.

“I just don't see that turning around,” said Nedoss, also anticipating $1,300 gold. “I think the economy is showing us now that it's fragile enough that it can't withstand higher rates.”

Seasonal Factors Could Provide Additional Support

While analysts describe macroeconomic conditions as favorable, the calendar is approaching the time of year when gold tends to get a seasonal boost.

“We're getting closer to the (autumn) wedding and festival season in India,” Daly said.  “That is normally a time when gold spikes a little bit.”

September and October tend to be strong months for silver and gold  alike, Haberkorn said. “Of all years, from an economic standpoint in this country and around the world, I think an upside move is more than warranted,” Haberkorn said.

Once the gift-giving season winds down in India, physical buying of gold often continues ahead of Christmas in Western nations and later the Chinese New Year.

Still, Gross cautioned that the economy will remain the key catalyst more-so than any seasonal tendencies. In recent years, gold has traded “almost exclusively” based on economic expectations, he said.

“I would expect that to continue,” Gross said. “Any physical (seasonal) support would certainly help gold, but we don't see that as the potential major price determinant for gold over the next several months.”

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

by Brett Arends
Friday, August 13, 2010

provided by

Could Wall Street be about to crash again?

This week's bone-rattlers may be making you wonder.

I don't make predictions. That's a sucker's game. And I'm certainly not doing so now.

But way too many people are way too complacent this summer. Here are 10 reasons to watch out.

1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not?

2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.

3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.

4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it's affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money.

5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. According to the Federal Reserve, total U.S. debt -- even excluding the financial sector -- is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it's fallen a mere 3% from last year's all-time peak, leaving it twice the level of a decade ago.

6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That's the lowest since the early 1980s -- when many women stayed at home through choice, driving the numbers down. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish?

(Today's bonus question: If a laid-off contractor with two kids, a mortgage and a car loan is working three night shifts a week at his local gas station, how many iPads can he buy for Christmas?)

7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above.

8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell.

9. We're looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen.

10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks. Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems (Nasdaq: CSCO - News) has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above.

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

by Alix Steel
08/16/10 - 08:45 AM EDT

NEW YORK (The Street) -- Gold prices were climbing Monday as persistent signs of a weakening global economic recovery reignited gold's appeal as a safe haven asset.

Gold for December delivery was adding $7.90 to $1,224.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,226.40 and as low as $1,216.20. The U.S. dollar index was slipping 0.47% to $82.53 while the euro was rallying 0.68% to $1.28 vs. the dollar. The spot gold price Monday was rising more than $10, according to Kitco's gold index.

Investors bought gold Monday on news that China surpasses Japan as the world's second largest economy after Japan's economy grew an annualized 0.4% in the second quarter vs. 5% in the first quarter. China is expected to grow this year at 10% with its nominal gross domestic product for the second quarter ramping up to $1.337 trillion.

The news only served to spook investors, however, and led them to dump risky stocks for the safety of gold. Many analysts are worried that China won't be able to sustain this explosive growth. Last week China's customs bureau said its trade surplus ballooned to an 18-month high as imports rose only 22.7%, well below expectations, as the country bought less. China has also taken steps in recent months to decrease the amount of money in circulation by requiring banks to hold more money in their reserves.

Reports that the Hindenburg Omen was triggered last week also served to scare investors into gold. The Dow Jones Industrial Average's triple digit free fall Thursday triggered a technical anomaly, the Hindenburg Omen, which can forecast a market crash. Although there are a lot more technical indicators and market conditions needed to create this perfect storm, the news generated enough buzz to increase gold's safety appeal.

"Despite the decline in economic optimism, metals are in a positive mood this morning with gold trading at a one-month high above $1220," says James Moore analyst at TheBullionDesk.com in his daily metals report. "Clearance of the $1,215-18 band could open the way to challenge resistance above at $1,244."

Gold prices have rallied 2% in August while the Dow Jones Industrial Average fell 1.5%. Investors might be forced to take profits in gold to cover losses in stocks. But if gold is able to break through and hold the $1,230 level, then many investors could buy gold for fear of missing another big rally.

Silver prices were adding 11 cents to $18.22 while copper was up 1 cent to $3.27.

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

8/13/10 -- Written by Eric Rosenbaum from New York.

NEW YORK (TheStreet) -- It may just be the summer doldrums, or the ominous occurrence of a Friday the 13 in mid-August, but the Hindenburg Omen -- a technical indicator of an impending stock market crash -- is suddenly as important a market mover as testimony from Federal Reserve chairman Ben Bernanke.

The blog Zero Hedge, writing in a vein that seems made for professional boxing or WWE pay-per-view event hype, describes the Hindenburg Omen as "Easily the most feared technical pattern in all of chartism (for the bullishly inclined). Those who know what it is, tend to have an atavistic reaction to its mere mention."


In case you hadn't heard, Thursday's action on the New York Stock Exchange registered a technical anomaly known as the Hindenburg Omen. Read: just like the doomed German airship, the markets are fated to crash and burn. Still worse, Wednesday's trading action almost sparked Hindenburg Omen conditions. It takes two Hindenburg Omen trading days within a 36 day window to trigger the end of life in the markets as we know it.

Writing on RealMoney.com, Rev Shark notes of the market voodoo that "the logic behind this ominous-sounding indicator is this: When there are internal inconsistencies in the market that are causing a simultaneously high level of new highs and new lows, a greater risk exists that the resulting confusion and uncertainty will cause market players to exit... When the herd is confused and moving in two different directions, internally that is going to cause some problems."

But first the facts. There was a correction in the markets this week, and the sell-off triggered the Hindenburg conditions. The Hindenburg Omen occurs when an unusually high number of companies in the New York Stock Exchange reach 52-week highs and lows at the same time. The proportion of  NYSE stock highs and lows must both exceed 2.2% of the total listed on the exchange. The Hindenburg Omen last occurred in October 2008, according to UBS data.

Additionally, the Hindenburg Omen is only valid in a rising market -- as measured by the NYSE composite rolling average over the past 10 weeks; the number of stocks at a 52-week high must not be more than twice those stocks at a 52-week low, and the Hindenburg set of apocalyptic conditions must occur twice in a 36 day period.

And that's not all. The Hindenburg Omen perfect storm must also include a negative measure in the NYSE McClellan Oscillator, a measure of market momentum. If it sounds like the flux capacitor of Back to the Future, you just don't know how to trade the charts.

The Hindenberg Omen does have a decent track record. A UBS strategist told Bloomberg that the Hindenburg Omen signaled itself seven times in 2008, before the S&P posted its biggest annual drop since the Great Depression. A confirmed Hindenburg Omen has occurred prior to every major stock market crash crash since 1985, according to various market sources with their finger on the panic button.

Jason Goepfert at Sentimentrader.com told RealMoney's Rev Shark that the Hindenburg Omen does have a fairly good track record of predicting weakness, especially when there are a cluster of such Omen days in a short time frame. The average return of the S&P 500 three months after the Omen is triggered is a loss of 2.6%, and the market was positive only 29% of the time.

In the mood for some more Hindenburg Omen doomsday numbers? The probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, according to historical data quoted on Benzinga. It usually takes place within 40 days of the first Hindenburg event. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%.

That said, there are plenty of Hindenburg false alarms, too -- and, for that reason, some analysts claim that it requires not just two, but between three and five Hindenburg events within a 14-day window to really send the signal to take the chips off the market table.

Anyone ready for a game of craps or roulette? Maybe we should just put all the money under the mattress at this rate and hope the Hindenburg doesn't crash over our houses.

Some fear that the Hindenburg Omen is a self-fulfilling prophecy. Convince enough investors that the Omen exists and they will start selling en masse, causing a market crash.

One can argue that regardless of the Hindenburg Omen or not, more accepted technical indicators are not looking particularly good, so any equity investor out there who isn't already cautious probably will watch their portfolio crash and burn.

Putting market voodoo aside for the moment, the Standard & Poor's 500 Index decline between Tuesday and Thursday was its largest since July 1. Federal Reserve chairman Ben Bernanke recently described the economic outlook as "unusually uncertain," and this week when the Fed decided to directly stimulate the economy for the first time in a year, it gave as a reason that growth "is likely to be more modest" than previously forecast.

These aren't exactly the type of comments that one would describe as fanning the flames of market paranoia, but they could add a little hot air to the zeppelin's ride.

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

Aug. 13 (Bloomberg) -- U.S. stocks fell for a fourth day, the longest losing streak for the Standard & Poor’s 500 Index in six weeks, after a retail-sales gauge unexpectedly fell. Oil slipped and Treasuries gained as inflation accelerated.

The S&P 500 retreated 0.4 percent to 1,079.25 at 4 p.m. New York time, bringing its weekly decline to 3.8 percent, the biggest loss for a five-day period since July 2. Ten-year Treasuries extended a third weekly rally, driving yields down to 2.70 percent. Oil declined to $77.01, the lowest price in a month. Spanish bonds fell and the extra yield investors demand for holding Greek debt instead of German bunds climbed to the most since May.

The decline in the sales data was tempered by a consumer confidence report that topped forecasts, while faster inflation prompted optimism that the Federal Reserve won’t be forced to fight falling prices. European equities slumped earlier as concern about sputtering growth in Greece and Spain overshadowed the fastest growth in the German economy in two decades.

“We in the market are coming to the realization, and we’re getting confirmation from the economic data, that we are having a slowdown,” said James Thorne, who oversees $2 billion as chief investment officer for equities at MTB Investment Advisors in Baltimore. “The market is guilty until proven innocent, and the charge is a double-dip recession.”

Economic Reports

Almost $2 trillion has been wiped from the value of global equities since the Fed said Aug. 10 that the pace of recovery in the world’s biggest economy will probably be “more modest” than forecast. European stocks rallied early in the day after Germany reported gross domestic product grew at the fastest pace in two decades.

The U.S. consumer-price index increased 0.3 percent, the most in a year and higher than the median forecast of economists surveyed by Bloomberg News. Commerce Department data showed retail sales excluding autos, gasoline and building materials unexpectedly fell 0.1 percent in July. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 69.6 following a reading of 67.8 in July that was the lowest since November. The gauge was forecast to rise to 69.

Ten-year note yields dropped 5 basis points, or 0.05 percentage point, to 2.70 percent. The yield was headed for a weekly drop of 12 basis points, according to Bloomberg generic data. The yield touched 2.6797 percent on Aug. 11, the lowest level since April 2009.

Retailers Decline

Retailers fell the most among 24 industries in the S&P 500, dragged lower by Nordstrom Inc., the department store chain with more than 100 locations, which slumped 7.2 percent after saying expenses increased in the second quarter. J.C. Penney Co. and Kohl’s Corp. retreated at least 3.2 percent.

The Dollar Index headed for a five-day gain that would break its longest string of weekly losses since 2004 as speculation the U.S. economic recovery is faltering spurred demand for the currency’s safety. The measure, which tracks the dollar against six major peers, advanced 0.3 percent, moving toward a 3.1 percent climb for the week. The greenback has gained against all 16 of its most-traded counterparts in the last five sessions.

The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 1 basis point to a mid- price of 108.23 basis points. The index, which typically falls as investor confidence improves, has climbed 4.1 basis points this week, the most since the five-day period ended July 2.

European Bonds

The yield on the 10-year German bund fell three basis points to 2.39 percent, after earlier sliding to 2.37 percent, the lowest since Bloomberg began compiling this data in 1989.

The premium investors demand to hold Greek 10-year bonds instead of German debt of similar maturity rose to 800 basis points for the first time since June 28. Spanish bond yields climbed six basis points to 4.24 percent.

Spanish banks borrowed a record 130.2 billion euros ($167.2 billion) from the European Central Bank in July as investors shun the indebted nation’s lenders.

The Thomson Reuters/Jefferies CRB Index of commodities has lost 2.2 percent in the last five days, the first weekly decline in six, dragged down by oil. Crude oil futures have fallen 6.4 percent since Aug. 6, the most since the week ended July 2.

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Aug. 11 (Bloomberg) -- Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010  Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

Double Our Taxes

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

$4 Trillion Bill

How can the fiscal gap be so enormous?

Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.

And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Worse Than Greece

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run.

This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14 percent of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.

Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”

(Laurence J. Kotlikoff is a professor of economics at Boston University)

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ECONOMIC RECOVERY IS SLOWING

By Kelly Bit and Stephen Kirkland

Aug. 6 (Bloomberg) -- Stocks and the dollar dropped and Treasuries rallied, sending the yield on the two-year note below 0.5 percent for the first time, as lower-than-estimated growth in company payrolls added to evidence the economic recovery is slowing. Gold extended the longest rally since November.

The Standard & Poor’s 500 Index lost 1.4 percent to 1,109.66 at 1:30 p.m. in New York, its biggest intraday drop since July 21. The Stoxx Europe 600 Index decreased 1.1 percent, reversing earlier gains. Two-year Treasury yields fell to as low as 0.4977 percent. The dollar slumped to an eight-month low against the yen and decreased against 12 of 16 major peers.

The S&P 500 trimmed its weekly advance to less than 1 percent after private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was revised lower. The data added to concern the world’s largest economy has been slow in recouping the 8.4 million jobs lost since the recession began in December 2007, preventing consumer spending from accelerating.

“The jobs data is the key variable right now to the improving economy and an important indicator to the market -- it’s mildly disappointing,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4.5 billion. “We’re just in a soft patch now. I just don’t expect to see strong improvement there until we get some of the larger macro issues behind us.”

GE, Home Depot

JPMorgan Chase & Co., International Business Machines Corp. and General Electric Co. led the drop in the Dow Jones Industrial Average, falling at least 1.9 percent each. All but two stocks fell in the 30-stock gauge, sending it down 142.66 points, or 1.3 percent, to 10,532.32.

Earlier gains in stocks this week came amid better-than- estimated earnings. Per-share profit for S&P 500 companies has grown by 53 percent from the previous year and has beaten estimates at 78 percent of companies that have reported since July 12.

The recovery in jobs “continues to be anemic growth -- more anemic than expected,” said Richard Sichel, who oversees $1.4 billion as chief investment officer at Philadelphia Trust Co. “The timing is interesting because we’re through earnings season and earnings was tremendous and propelled the market in the last few weeks. Now it’s let’s look at the economy -- what it is this morning, this is one of the A-list indicators and it’s disappointing.”

Canadian Stocks, Currency

Canadian stocks also declined on jobs data that trailed estimates. The S&P/TSX Composite Index lost 0.2 percent in Toronto. Canadian payrolls shrank by 9,300 jobs in July, the first drop this year, Statistics Canada said. Twenty-one of 22 economists in a Bloomberg survey had forecast a gain in employment.

The Canadian dollar weakened against all 16 major counterparts, losing 2.2 percent versus the Swiss franc and 1.9 percent against the yen.

U.S. Treasuries rallied after the jobs report on speculation that a stalled recovery may force the Federal Reserve to provide more stimulus. Bill Gross, founder and co- chief investment officer of Pacific Investment Management Co., said a plunge in the two-year yield indicates investors should buy longer-maturity securities.

The yield on the 10-year note decreased 8 basis points to 2.83 percent. The extra yield investors demand to hold 10-year notes instead of 2-year debt dropped six basis points to 231 basis points. It fell to 227.5 basis points on July 1, reflecting the flattest yield curve since October.

‘Fed Is on Hold’

“When you analyze that portion of the curve, it says the Fed is on hold for a long, long time,” Gross said today during a radio interview on “Bloomberg Surveillance” with Tom Keene.

The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.5 percent and has dropped 1.5 percent over the past five days as it heads for a ninth weekly drop, its longest run of declines since 2004. The dollar lost at least 0.6 percent versus the euro and Swiss franc and earlier fell to 85.02 yen, the lowest level since Nov. 27.

Currencies of major commodity producing nations retreated against the dollar, with the Canadian, Mexican, Brazilian, New Zealand and Australian currencies losing at least 0.2 percent.

Gold futures for December delivery rose 0.7 percent to $1,207.70 an ounce, an eight straight gain, on the Comex in New York. Earlier, gold reached $1,209, the highest level for a most-active contract since July 16.

All 19 industry groups in the Stoxx 600 declined, with Banco Santander SA and Nestle SA dropping more than 1.4 percent. Anheuser-Busch InBev NV slipped 3.9 percent, pacing brewing companies lower after wheat yesterday surged close to the highest level in almost two years.

Wheat Retreats

Wheat futures fell 4.8 percent to $7.625 a bushel in Chicago, the most since January, on speculation that farmers will boost acreage next year following Russia’s ban on grain exports amid its worst drought in at least 50 years.

U.S. wheat for September delivery has rallied 51 percent since the end of June amid concern supply in Russia will be constrained. The grain is trading at the highest premium over corn since April 2008 at export terminals in New Orleans, government data show.

China led gains in major emerging markets. The Shanghai Composite Index rose 1.4 percent as agricultural companies advanced after floods boosted food prices. The MSCI Emerging Market Index of 21 developing nations fell 0.2 percent, reversing an earlier gain.

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Since 2008 the number of bank failures has reached 269 and this doesn’t include consolidations done through the FDIC where bigger banks ate up smaller banks before they officially failed.   The FDIC is in a precarious situation.  The Deposit Insurance Fund (DIF) is technically speaking, broke.  They have added additional cash reserves by front loading premiums on surviving banks but this can only stunt the financial bleeding for so long.  The problems in the banking system run deep and many of the smaller regional banks are failing because of commercial real estate loans going bad. 

Here is the actual weekly trend of bank failures:

Source: FDIC

The trend is unmistakable.  The worse offending states are as follows:

Georgia:          40

Illinois:            34

Florida:           34

California:       27

These four states make up 50 percent of all bank failures since the crisis started.  The current policy and momentum seems to be with banks ignoring balance sheet problems until they are no longer able to hide the dirt.  The too big to fail banks have already been chosen by the government and the rest will need to deal with the new economic landscape.  The FDIC, the seal of confidence and strength dates back to the Great Depression:

It is a game of confidence that we have increased the actual amount of deposit insurance to $250,000 from $100,000 at a time when the actual insurance fund is negative.  You would think that something this problematic will cause for a sense of urgency but the government is giving the FDIC until 2020 to get this fixed:

“WASHINGTON (MNI ) – With the passage of the Dodd-Frank Act, the Federal Deposit Insurance Corp. will now have until the end of September 2020 to bring its reserve ratio to the statutory minimum of 1.35%, rather that 1.15%.

This is more than the eight years provided under the current Restoration Plan that would have given the FDIC only until the end of 2016 to bring its reserve ratio to 1.15%, an FDIC spokesman told Market News International Wednesday.

The latest projections presented at a Board meeting in June, indicated agency did not expect to meet that deadline.”

While the government gives the FDIC until 2020 to get their house in order, this is how the deposit insurance fund is looking:

This is the third consecutive quarter in the absolute red.  The banking system is starting to look like an imploding ponzi scheme and Wall Street is capitalizing on this vulnerability.  How?  If you were a big time investor would you invest in a too big to fail bank that may be performing poorly but has full government support or a smaller well run bank that has no support at all?  The incentive is not necessarily with the best performing and that is usually a staple of a well run capitalist system.  We are not operating in a capitalist system but a corporate oligarchy based on political connections between Wall Street and D.C.  This kind of system has been prevalent for decades now and crosses both political parties.

As the FDIC digs deeper into a hole, the number of problem institutions grows:

Keep in mind that the above list also fails to catch many of banks that do fail.  It isn’t exhaustive.  So even just looking at the above, we already have the 1,000 banks that will fail.  And the problem of course is how the current banking system is structured.  We have close to 8,000 FDIC insured banks but in reality, a very few control the bulk of the assets:

The top 4 banks of Bank of America, JP Morgan Chase, Wells Fargo, and Citibank make up 55 percent of all banking assets.  Then there is another tier of roughly 100 banks that eats up another 20 to 25 percent of assets.  So you have some 7,800 banks basically fighting for the remaining scraps.  The FDIC is in deep trouble going forward and this means we are in deep trouble.  The taxpayer is on the hook for the bill.  The U.S. Treasury already extended a lifeline of $500 billion to the FDIC “in case” they need the money.  Looking at the above data do you think they are going to use that lifeline?  It is only a matter of time.

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Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy.  Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly.  But this time around that is not the case.  The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.

The problem is debt.  Collectively, the U.S. government, the state governments, corporate America and American consumers have accumulated the biggest mountain of debt in the history of the world.  Our massive debt binge has financed our tremendous growth and prosperity over the last couple of decades, but now the day of reckoning is here.

And it is going to be painful.

The following are 20 reasons why the U.S. economy is dying and is simply not going to recover....

#1) Do you remember that massive wave of subprime mortgages that defaulted in 2007 and 2008 and caused the biggest financial crisis since the Great Depression?  Well, the "second wave" of mortgage defaults in on the way and there is simply no way that we are going to be able to avoid it.  A huge mountain of mortgages is going to reset starting in 2010, and once those mortgage payments go up there are once again going to be millons of people who simply cannot pay their mortgages.  The chart below reveals just how bad the second wave of adjustable rate mortgages is likely to be over the next several years....

#2) The Federal Housing Administration has announced plans to increase the amount of up-front cash paid by new borrowers and to require higher down payments from those with the poorest credit.  The Federal Housing Administration currently backs about 30 percent of all new home loans and about 20 percent of all new home refinancing loans.  Tighter standards are going to mean that less people will qualify for loans.  Less qualifiers means that there will be less buyers for homes.  Less buyers means that home prices are going to drop even more.

#3) It is getting really hard to find a job in the United States.  A total of 6,130,000 U.S. workers had been unemployed for 27 weeks or more in December 2009.  That was the most ever since the U.S. government started keeping track of this statistic in 1948.  In fact, it is more than double the 2,612,000 U.S. workers who were unemployed for a similar length of time in December 2008.  The reality is that once Americans lose their jobs they are increasingly finding it difficult to find new ones.  Just check out the chart below....

#4) In December, there were also 929,000 "discouraged" workers who are not counted as part of the labor force because they have "given up" looking for work.  That is the most since the U.S. government first started keeping track of discouraged workers in 1949.  Many Americans have simply given up and are now chronically unemployed.

#5) Some areas of the U.S. are already virtually in a state of depression.  The mayor of Detroit estimates that the real unemployment rate in his city is now somewhere around 50 percent.

#6) For decades, our leaders in Washington pushed us towards "a global economy" and told us it would be so good for us.  But there is a flip side.  Now workers in the U.S. must compete with workers all over the world, and our greedy corporations are free to pursue the cheapest labor available anywhere on the globe.  Millions of jobs have already been shipped out of the United States, and Princeton University economist Alan S. Blinder estimates that 22% to 29% of all current U.S. jobs will be offshorable within two decades.  The days when blue collar workers could live the American Dream are gone and they are not going to come back.   

#7) During the 2001 recession, the U.S. economy lost 2% of its jobs and it took four years to get them back. This time around the U.S. economy has lost more than 5% of its jobs and there is no sign that the bleeding of jobs is going to stop any time soon.

#8) All of this unemployment is putting severe stress on state unemployment funds.  At this point, 25 state unemployment insurance funds have gone broke and the Department of Labor estimates that 15 more state unemployment funds will likely go broke within two years and will need massive loans from the federal government just to keep going.

#9) 37 million Americans now receive food stamps, and the program is expanding at a pace of about 20,000 people a day.  The United States of America is very quickly becoming a socialist welfare state.

#10) The number of Americans who are going broke is staggering.  1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008.

#11) For decades, the fact that the U.S. dollar was the reserve currency of the world gave the U.S. financial system an unusual degree of stability.  But all of that is changing.  Foreign countries are increasingly turning away from the dollar to other currencies.  For example, Russia’s central bank announced on Wednesday that it had started buying Canadian dollars in a bid to diversify its foreign exchange reserves.

#12) The recent economic downturn has left some localities totally bankrupt.  For instance, Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern California's Orange County.

#13) The U.S. is facing a pension crisis of unprecedented magnitude.  Virtually all pension funds in the United States, both private and public, are massively underfunded.  With millions of Baby Boomers getting ready to retire, there is simply no way on earth that all of these obligations can be met.  Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management recently calculated the collective unfunded pension liability for all 50 U.S. states for Forbes magazine.  So what was the total?  3.2 trillion dollars.

#14) Social Security and Medicare expenses are wildly out of control.  Once again, with millions of Baby Boomers now at retirement age there is simply going to be no way to pay all of these retirees what they are owed.

#15) So will the U.S. government come to the rescue?  The U.S. has allowed the total federal debt to balloon by 50% since 2006 to $12.3 trillion.  The chart below is a bit outdated, but it does show the reckless expansion of U.S. government debt over the past several decades.  To get an idea of where we are now, just add at least 3 trillion dollars on to the top of the chart....

#16) So has the U.S. government learned anything from these mistakes?  No.  In fact, Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $2 trillion to pay its bills, a record increase that would allow the U.S. national debt to reach approximately $14.3 trillion.

#17) It is going to become even harder for the U.S. government to pay the bills now that tax receipts are falling through the floor.  U.S. corporate income tax receipts were down 55% in the year that ended on September 30th, 2009.

#18) So where will the U.S. government get the money?  From the Federal Reserve of course.  The Federal Reserve bought approximately 80 percent of all U.S. Treasury securities issued in 2009.  In other words, the U.S. government is now being financed by a massive Ponzi scheme.

#19) The reckless expansion of the money supply by the U.S. government and the Federal Reserve is going to end up destroying the U.S. dollar and the value of the remaining collective net worth of all Americans.  The more dollars there are, the less each individual dollar is worth.  In essence, inflation is like a hidden tax on each dollar that you own.  When they flood the economy with money, the value of the money you have in your bank accounts goes down.  The chart below shows the growth of the U.S. money supply.  Pay particular attention to the very end of the chart which shows what has been happening lately.  What do you think this is going to do to the value of the U.S. dollar?....

#20) When a nation practices evil, there is no way that it is going to be blessed in the long run.  The truth is that we have become a nation that is dripping with corruption and wickedness from the top to the bottom.  Unless this fundamentally changes, not even the most perfect economic policies in the world are going to do us any good.  In the end, you always reap what you sow.  The day of reckoning for the U.S. economy is here and it is not going to be pleasant.

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By Alix Steel, 08/02/10 - 09:49 AM EDT

NEW YORK (The Street) -- Gold prices were rallying Monday as bargain-hunting and technical buying pushed prices higher.

Gold for October delivery was up $3.50 to $1,185.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Monday has traded as high as $1,192.60 and as low as $1,175.40. The U.S. dollar index was slipping 0.41% to $81.20 while the euro rallied to $1.31 vs. the dollar. The gold spot price was adding more than $4, according to Kitco's gold index.

Investors were buying both gold and stocks on Monday as the trading mood turned bullish. U.S. stocks were following upbeat European markets as the eurozone's manufacturing purchasing managers index for July rose to 56.7, which was better-than-expected. The strong number offset news from China that its manufacturing activity slowed in July to the lowest level in 17 months.

Gold prices are still stuck in a tight trading range, and most analysts anticipate more of the same for the rest of the summer. On the one hand, better-than-expected corporate earnings and economic data are pushing investors to dump gold for stocks. Encouraging signs of a global economic recovery decrease gold's appeal as a safe haven asset.

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July 30 (Bloomberg) -- Gold rose for a third day on speculation that the biggest monthly drop since December will encourage investors to stock up on the precious metal as a haven.

The 5 percent price drop in July is the first monthly decline since March, and gold has fallen 6.5 percent from its June 21 record of $1,266.50 an ounce. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, have declined 1.5 percent this week, heading for the biggest weekly drop since April 2009.

“Gold is beginning to catch some traction,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The correction may have run its course and for longer-term holders, this may be a buying opportunity.”

Gold futures for December delivery rose $12.70, or 1.1 percent, to settle at $1,183.90 as of 1:47 p.m. on the Comex in New York, the biggest gain since July 13. The most-active contract ended the week down 0.3 percent.

The euro headed for the first monthly gain against the dollar since November. Gold also reached records last month in euros, British pounds and Swiss francs as investors sought a haven during Europe’s sovereign-debt crisis.

“We view the latest decline in the gold price as temporary,” analysts at Deutsche Bank AG said today in a report. “This weakness has been driven more by liquidation in net length among the investor community than a structural change in fundamentals.”

Concern for Deflation

Gold may be one of the best assets to own in a deflationary environment, said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

Federal Reserve Bank of St. Louis President James Bullard said yesterday that the U.S. economy may be headed into a deflationary period similar to the one that gripped Japan.

“It’s looking like deflation is more of a risk now than inflation,” Kaplan said. “In a deflationary period, gold will go down the least.”

The Fed has kept the benchmark interest rate between zero and 0.25 percent since December 2008 to spur growth, which fueled speculation that the economy will face rampant inflation as it emerges from the recession.

“Gold won’t fall out of bed under any scenario in the future,” Klopfenstein of Lind-Waldock said. “There are a lot of macro headwinds. Low rates will spark inflation down the line, once we get past deflation.”

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By Greg Robb

July 30, 2010, 10:44 a.m. EDT

WASHINGTON (MarketWatch) -- The U.S. economy lost momentum in the second quarter of the year, according to figures released Friday, which may raise concerns of an extended soft patch if not an outright contraction.

Real gross domestic product -- the inflation-adjusted, seasonally adjusted value of all goods and services produced in the United States -- rose at a 2.4% annualized rate in the second quarter, well below the average 4.4% increase over the last six months.

The 2.4% increase in GDP was close to the 2.5% expansion expected by economists surveyed by MarketWatch. However, the rate of expansion in the first quarter was revised up to a 3.7% rise compared with the prior estimate of a 2.7% increase. Read full government release.

Economists believe that the growth was fairly strong in April and May but hit a rough patch in June. So the economy is going into the second half of the year with little momentum.

"The post-recession rebound is history," said Bart van Ark, chief economist at the Conference Board.

"We don't foresee a double dip," he continued, "but we do expect growth to slow even more markedly" -- to what he pegged as a 1.6% annualized rate for the second half of the year.  

Investors initially reacted negatively to the report, with losses deepening in futures on the Dow Jones Industrial Average after the data were released.  

Bond investors, confident the coast remains clear as far as inflation goes, bought U.S. Treasurys as two-year note yields sank to record lows. 

Annual revisions released at the same time as the first estimate for second-quarter GDP show that the Great Recession was deeper than previously thought.

During the recession, real GDP decreased at a 2.8% average rate, down from the prior estimate of a 2.5% rate.

At the same time, the recovery, already one of the slowest, has been a bit slower. From the third quarter of 2009 to the first quarter, the economy grew at a 3.4% annual average rate, just below previous estimate of a 3.5% increase.

Although the increase in GDP in the quarter was not as strong as the first quarter, many of the details of the report were positive. Much of the deceleration was due to the trade sector. Consumer spending was only slightly weaker than the first quarter.

Now that the revisions have been released, the National Bureau of Economic Research may move to make a formal call on the end of the recession. Most economists think the recession ended in June 2009.

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The CBO's latest warning on the long-term deficit is scarier than ever.

Editorial, Sunday, June 28, 2009

THE CONGRESSIONAL Budget Office has a tough job: to provide America's lawmakers with a reality check on their tax and spending plans. Not surprisingly, the CBO's projections are not always received cheerfully. Both President Obama and leading congressional Democrats were less than thrilled when the CBO estimated that the costs of universal health coverage would be much higher than advertised. To be sure, projecting the cost of legislation involves making assumptions and constructing models that may or may not prove accurate 10 years down the road. Nonetheless, the CBO, with its tradition of scholarly independence, is the best available arbiter, and Congress must heed its numbers -- like them or not.

Now comes the CBO with yet more news of the sort that neither Capitol Hill nor the White House is likely to welcome: its freshly released report on the federal government's long-term financial situation. To put it bluntly, the fiscal policy of the United States is unsustainable. Debt is growing faster than gross domestic product. Under the CBO's most realistic scenario, the publicly held debt of the U.S. government will reach 82 percent of GDP by 2019 -- roughly double what it was in 2008. By 2026, spiraling interest payments would push the debt above its all-time peak (set just after World War II) of 113 percent of GDP. It would reach 200 percent of GDP in 2038.

This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says.

The CBO's new long-term forecast is considerably more pessimistic than the one it issued 18 months ago, mostly because of the recession, which has driven the budget deficit above 12 percent of GDP. But the report makes clear that the recent economic downturn did not cause the government's predicament and that the situation will not necessarily improve once the economy does. The principal cause of long-term fiscal distress is the aging of the U.S. population, coupled with rising health-care costs -- which, together, will drive spending on Medicare, Medicaid and Social Security to new heights. Unchecked, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by 2035 -- and to more than 17 percent of GDP by 2080.

Like his predecessors, Mr. Obama is aware of this issue. Like them, he has promised a plan to deal with it. And like them, he has not come up with anything credible yet. It's time for that to change.

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Gold, Little Changed, May Rise as Price Slump Attracts Buyers

by Nicholas Larkin and Pham-Duy Nguyen

July 28 (Bloomberg) -- Gold, little changed in New York, may gain as the lowest prices in almost three months spur demand.

Futures yesterday fell the most in more than three weeks, dropping as low as $1,160.80 an ounce, as a rally in global equities eroded demand for bullion as an alternative investment. Physical demand for gold from buyers in India, China and the wider Asian region was “very visible” as prices declined this week, UBS AG said today.

“From a risk-reward perspective, this level presents a buying opportunity,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. . . .

Yesterday and July 26 were the UBS sales desk’s strongest two days since January for selling to India by volume, analyst Edel Tully said today in an e-mailed report.

“The current decline in the gold price is probably only short-lived,” Eugen Weinberg, the head of commodity research with Commerzbank AG, wrote in a report yesterday. “There are some religious holidays from the end of August” in India, the world’s largest gold consumer, which may propel demand, he said.

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Houston Chronicle
by R.G. Ratcliffe and Jeannie Kever
Web Posted on www.MySanAntonio.com/Education: 07/15/2010 12:18 CDT

AUSTIN — Fearing unstable international financial markets and the possibility of high inflation, Texas’ higher education investment managers have bought more than $500 million in gold.

The purchases represent only 3 percent of the University of Texas Investment Management Co.’s $22.3 billion in investment funds, but it indicates how deeply the fund managers are concerned about the global financial future.

With the state’s endowment funds designed to generate a 5.1 percent distribution each year to the University of Texas and Texas A&M University, it’s rare for the investment managers to put large sums of money into a commodity whose value usually grows only through inflation.

“If there’s no inflation, that dollar today in gold a year from now should be worth a dollar, UTIMCO CEO Bruce Zimmerman told the University of Texas board of regents Wednesday. “If there is inflation, then a dollar of gold should be worth a dollar plus inflation,” he said.

“Recently we’ve added 3 percent ... of our portfolio, into gold as a protection against inflation, but even more as a lack of confidence in financial markets due to extraordinary government fiscal and monetary stimulus,” Zimmerman said.

“I wish I could tell you the future looked rosy. Unfortunately, that’s not our view. At best, we believe the future is uncertain.”

Two of Texas’ other large state investment funds, the Teacher Retirement System of Texas and the Permanent School Fund for the public schools, haven’t bought gold recently, according to spokesmen.

Other UTIMCO executives suggested the endowments have begun to recover from the staggering losses of 2008 and early 2009.

UTIMCO manages investments for all UT system schools and for the Permanent University Fund, which provides money to both UT and A&M. Its assets dropped by almost $3 billion, to $20.5 billion, in 2009.

It’s now back up to $22.3 billion.