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HOW WILL THE IMF SALE OF GOLD AFFECT THE PRICE OF GOLD?
US Stock Markets on Track for Historic Loss!
This is it my friends.
The DJII futures are down over 500 points.
If the Federal Reserve fails to take emergency action before the US opening tomorrow, you will see the DJII open down 1000 points as the public joins this professional panic.
Everything you see happening is what I’ve been writing about here for several years. It will be the catalyst that takes gold again above $887.50 and to $1650.
It is a better wager that the Fed will immediately drop rates by 1 full percentage point.
It is a slam dunk that all Western central banks will cut loose and flood the world with more liquidity than we’ve ever seen before. President Bush met with Chairman Bernanke today and they are discussing handing out money to every American to spend. Can you imagine the inflation in the future and they continue to drop money from helicopters?
If central banks fail to cause a torrent of liquidity from their unending check books then $450 trillion of derivatives will take us to the world of Mad Max.
Monetary inflation ALWAYS causes PRICE inflation even without strong business conditions.
Prices of hard and transportable assets rise regardless of business conditions.
All currencies fall and the stronger currency is the laggard in the race to the bottom.
I hate to be the bearer of bad news, but the US markets are sick and the Fed can't do anything to doctor up the inevitable downward spiral any longer.
In the past five trading days alone the Dow has lost over 500 points (4.4%). Meanwhile the NASDAQ has shed about 100 points (4%) and the S&P 500 has lost roughly 75 (5.5%).
Driving the whirlpool of destruction are major banks like CitiGroup...
...and Countrywide Financial...
This is bad folks. Real bad.
In the past twelve months, Citigroup shares have lost as much as 57%. And Countrywide has lost over 90% in market cap over the past year!
And listen, this isn't like PetSmart or Staples or Bed, Bath, and Beyond losing millions in market cap. No. These are the very banks in which US citizens keep their spending dollars losing hundreds of billions in market cap!
And the worst part is, John and Jane Regular have absolutely no clue what's going on. The depth of what most Americans know about the country's financial markets can be extended to only what they hear from snippets of Jim Cramer's Mad Money show. They'll be in for a surprise.
Last night China's Hang Seng index fell another 4.5% and European markets were off overall about 5% with the German DAXX and French CAC 40 leading the way with a 6.9% and 6.6% respective loss.
The US markets were closed for holiday today but Dow futures traded over 500 (4.5%) points lower. A bad sign for longs. A real bad sign. And tomorrow I think we could see a historic loss, which may one day be a part of what they'll call the stock market crash of 2008.
On top of the downward pressure from Asian and European markets that'll weigh down on stocks, Bank of America reports tomorrow. And I can't imagine that they'll have anything good to say.
Apple also reports tomorrow. I haven't talked to anyone who believes that they won't miss tomorrow.
From where we stand right now, I don't think a 750-point drop (about 6%) is out of the question for tomorrow. Of course, Tuesday's market activity will be largely influenced by tonight's world market trading. But if there's ever been a good time to be in gold ...it's right now.
I'm not trying to scare you. This is the way it is.
GOLD IS NOT TOO HIGH TO BUY NOW AND HERE’S WHY
With gold now above its record high price of $850, it's a good time to step back and ask: Do I still want to own it? Do I still want to buy it? Is gold still good value? The answer to all three questions is a resounding "yes."
...Still Good Value
Adjusting for inflation, it takes $2,208 today to equal the previous high of $850 reached in January 1980. Comparing gold to the Dow Jones Industrials Average is another useful measure to determine gold's value. Gold is overvalued when it takes only one ounce of gold to buy the DJIA. For example, in the 1930s one ounce of gold at $35 bought the DJIA, and it did so again in 1980 when an ounce of gold was $850. Though this ratio has fallen from over 40 ounces in 2000, it still takes 16 ounces of gold to buy the DJIA, meaning gold is still relatively good value.
...No Counterparty Risk
National currencies depend on the safety of the bank where you have your currency deposited. The Northern Rock crisis has highlighted that risk. National currencies have counterparty risk, but gold does not. As the subprime crisis continues to deepen, the absence of this risk more than offsets any interest income one earns on bank interest.
...Currencies Are Managed
All national currencies are managed by central banks. Some do a better job than others, but all national currencies without exception are being debased by inflation. In contrast, an ounce of gold preserves purchasing power. The following chart of the price of crude oil shows that an ounce of gold has essentially the same purchasing power today as any other time since 1945.
...Central Banks Losing Control
As well documented by the Gold Anti-Trust Action Committee (this research is available free at www.GATA.org), central banks have been intervening in the gold market. Consequently, the gold price is much lower than it would be had there been no intervention. Now that central banks are losing control, the gold price will move toward its free-market price, much like it did after central banks stopped intervening in the late 1960s.
...Monetary System Is Broken
Global imbalances from trade and capital flows have become so huge that colossal pools of "hot money" are constantly looking for a safe home. The movements of this hot money now dwarfs the flow of capital required for global trade and commerce, and has therefore become a destabilizing force. These imbalances did not occur under the classical gold standard, proving its efficacy. I therefore anticipate that in the not too distant future gold will once again be at centre of global commerce.
...Summary
All of the above factors will increase the demand for gold. This increased demand will cause gold's rate of exchange to national currencies to rise, meaning gold's price will rise. Therefore, gold should still be accumulated, month in and month out under a long-term savings plan. Instead of saving fiat currency, everyone should be saving sound money -- gold.
TAKE ADVANTAGE OF THE DIPS
There are many pundits who believe the price of gold and silver will experience a major correction in the near future. This is by itself a good contrarian indicator that prices will firm after a minor decline and then continue its bull run toward $1,000. It's inevitable because all of the fundamental factors that influence the price of gold are positive. The dollar continues its decline, global economic woes due to sub-prime lending problems continue to get worse, our largest financial institutions are extremely weak and the world's geopolitical crisis are increasing instead of declining. All of this is very positive for gold and silver. DO NOT BELIEVE WHAT YOU HEAR ON MAINSTREAN MEDIA. They simply are mouthpieces for a desperate government striving to delay the collapse sure to come in the near future. BUY GOLD AND SILVER BULLION and begin accumulating an investment grade portfolio of high quality coins. It is the best single way to protect your family's assets.
Fully Half of Credit Card Holders Could Fail to Repay.
A Double Whammy of Foreclosures and Credit Card Crunchies Could Be Mr. Banker’s Death Knell.
“Issuers of credit cards could normally expect the top 50% of their payers to provide the required cash flow keeping money moving with enough liquidity each month. This cash keeps those lenders in business. If this payment failure, we see looming in the next two quarters dies, the lenders are in very serious trouble. They will not have enough liquidity to manage the business of lending.” - Traderrog
Bank’s Denied Income Streams
The third whammy hits when consumers are denied more credit after failing to repay mortgages and credit cards. This effectively kills economic expansion. The next whack is the banks will no longer have any income. These lenders will be stuck with servicing major overhead on empty foreclosed homes and non-payment of billions in unpaid credit cards. Small business loans cannot be issued as this credit pool can sometimes be scarier than house lending. What can the banks do to earn income? They have little or, zero choices to make money to operate their banks in this deadened environment.
Big Bank Disasters Ahead
Let’s not forget the Federal Reserve and its representatives are composed of the largest international bank members who control the ability to set interest rates and print money. If these big boyz cave-in from the aforementioned problems, we are all in world of hurt. From the inception of the Federal Reserve in 1913 to the present, they have inflated away and destroyed 98% of the U.S. Dollar. Considering their current predicament, while letting the dollar crash, it appears they are determined to finish it off once and for all.
What happens when banks have no way to make money? What happens when the Chinese are pushed to the wall on our crappy bonds, notes and bills? Where is the pain level when the Chinese Central Bank says, okay, its time to pull the plug? We all know banks have FDIC insurance for the depositors covering a certain level of money on deposit. Know how much they cover? The
Arlington Institute’s John Peterson said, “The actual liquidity reserve of the ‘insurance’ that Americans view as their safety net is 1/100th (of) the actual exposure of outstanding deposits. The actual coverage ratio for the Bank Insurance Fund (BIF) fell below
1.25% in 2002, the same year that less stable credit practices were adopted by America’s leading banks.” Deposit insurance is no insurance.
Mr. Peterson further stated, “The funny part is that the Federal Government will be on holiday when all of this happens. There will be no one to put freeze actions and moratoria on actions. The only way you stop the cataclysm is to put together civil actions on deposit withdrawals.” He expects the credit card non-payment event to strike in December next month during the holidays.
Credit Crunchies Implode and Currency Disasters Magnify the Mess.
“Our skidding dollar is reported as a plus by Pollyanna analysts as this creates larger USA exports. What they are not addressing is the terrible losses imposed on foreign holders of dollars, bonds, notes and bills held by China, Japan and Middle Eastern oil producers. These people are not stupid and as Armageddon-Dollar-Day approaches they’ll seek dollar escape routes many of which are in play right now.” - Traderrog
Several new currency and banking approaches are being utilized. The obvious ones are those massive dollar holders are moving to Yen, Euros, Swiss Francs and the dollars of Canada, New Zealand and Australia. Canada and Australia are perceived to be the commodity (mining) dollar nations while Switzerland is the quality bank of last resort. In their 256 year history the Swiss have never defaulted. Who else can claim this?
Secondarily, and more importantly, this foreign U.S. dollar denominated cash is also buying USA companies in their entirety. One wag said all of America is for sale. In our view, the best buys of all for this cash horde are those valuable mine mineral reserves in the ground, crude oil and natural gas reserves, and very large expensive to build one-off buying opportunities in major port facilities, refineries, and similar valuable commercial installations and investments.
For example Airbus in France got into financial trouble building their huge jumbo airplane now behind schedule. They need more airplane orders and cash right now. Boeing has been taking most of the new order business. Therefore its logical that China ordered yesterday, $17.5 Billion of new aircraft from Airbus. No doubt they will pay with skidding U.S. Dollars. Nice new airplanes for crappy confetti cash is a very good trade in our view.
Mr. Peterson said, “When February comes, the Chinese are going to do something as they will have to decide what the exposure is going to be with the (U.S.) Treasury. As I see it, they have to dump the Treasury. They only keep it because they can use it—they have 43% (of holdings) direct/indirect of U.S. treasuries so they’ll dump them on the market.”
The American Treasury Department is already in hot water trying to sell enough new bonds and notes to keep raising the billions needed daily to keep this country afloat. If and when China dumps their mountain of paper, the Treasury will have to raise interest rates to sell more. Further, under the circumstances, we doubt they can do it as who would want it?
Dear Readers
First, some comments regarding today's big drop in gold and silver. I'm amused at the media's explanation that gold went down due to investor's "risk aversion" and desire to flee commodities. Yea right, and money poured into the big banks looking for somewhere safe?
This is a joke. Monday's stock market is just another one of many manipulated by the Plunge Protection Team to keep investor's calm about an economy where all the news is bad. Precious Metals will be very volatile but the long term trend is up and we will soon see higher records for both gold and silver prices.
Judging from the reaction to my plea to protect your financial assets, many of you have started to take some action. Regarding my concern over Internet Stock companies, this article recently appeared about E-Trade:
http://securities.law360.com/Members/ViewArticlePortion.aspx?Id=39442&ReturnUrl=..%2fsecure%2fViewArticle.aspx%3fId%3d39442
Sub-prime bank Losses is closer to $400 Billion
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3fCFxLIgT2s&refer=worldwide
A nuclear accounting bomb set to go off on November 15
According to the following article, being forced to tell the truth is a world class regulatory blunder. My god what has this place become when truth is a blunder rather than a virtue?
This is a nuclear bomb being dropped on the Big Shot Establishment Financial Liars who will scream, jump up and down, and lie some more.
Why FAS 157 strikes dread into bankers.
Just when we hoped the worst was over...
by William Rees-Mogg
We have heard about sub-prime mortgages; we have heard about collateralized debt obligations (CDOs); we have heard about banks writing down their assets; we have heard about global bankers resigning; we have heard about Northern Rock and the first run on a British bank in 140 years.
The risk of a worldwide banking crisis – one that is particularly damaging to mortgages, private equity, hedge funds and the banks themselves – is higher than it was a month ago, and the storm is rising.
This is still an emerging story. It was not until last Wednesday that The Financial Times led on the legal provision that CDOs can be liquidated by the senior holders when they go into default. That could lead to a fire sale of CDOs and still larger defaults.
Yet this, as important as it could be, is not the biggest threat. Few non-bankers have heard of FAS 157 and 159, yet these are the regulations that will set the terms on which the banks will value their assets. The trouble with FAS 157 and 159 is that they are perfectly reasonable regulations in themselves which could have disastrous, though unintended, consequences.
What are FAS 157 and 159? They are the new United States (Federal) accounting standards that have been introduced to regulate the valuation of bank assets. These valuations are of crucial importance because they are the basis of all bank lending: no assets, no lending; no lending, no bank. According to an informative article in The Financial Times, the new standards will apply fully from Thursday. Many US banks have adopted them already. All US quoted banks will have to publish asset figures in conformity with FAS 157 by next spring.
The new rules divide bank assets into three “levels”, according to the freedom with which they can be bought or sold. Level-one assets, which are easy to value or trade, have to have quoted prices in active markets such as US government bonds or gold bullion. Level two is an intermediate stage; these assets are not as fully marketable as level one, but still sufficiently trade able to have a definite value.
Level-three assets – usually artificial financial instruments – are the problem. They do not have quoted prices in active markets. They have to be valued by reference to the bank’s own models. According to the analyst Martin Hutchinson, who had analyzed some of the US banks, the holdings of level-three assets are substantial. Lehman has $22 billion; Bear Stearns $20 billion; JP Morgan Chase $60 billion. Even these figures may be understated, since the banks have themselves decided whether assets belong to level three or the more acceptable level two, and they have an interest in placing as little in level three and as much in level two as they reasonably can.
Martin Hutchinson has also analyzed the assets of Goldman Sachs. The bank has disclosed $72 billion of level-three assets, out of total assets of $900 billion. That seems reasonable enough, but it compares with Goldman Sachs’s capital of $36 billion. Any substantial write off of level-three assets would impact on Goldman Sachs net asset value.
One cannot say that FAS 157 is only an American regulation and the banks of other countries would not therefore be affected. Most global banks already have a listing in the United States that would therefore be subject to US accounting standards. Those that do not will be judged by FAS 157 as the international standard. From now on all major banks will have to declare their assets in the FAS 157 form with its division into different levels by marketability.
No doubt this is the reform that should have been introduced years ago; that would have saved a great deal of agony and some abuse. But FAS 157 is coming into effect at a most inconvenient time. The sub-prime mortgage defaults have already undermined confidence in mortgage backed securities. These form a significant part – perhaps about a quarter – of all level-three assets. Level three also includes higher-quality mortgages and leveraged bridged loans for buyouts.
The global banking system now faces the risk of a general flight towards cash and liquid level one asset on a scale that has not been seen since the early 1930s. Already British banks are showing signs of near panic. I hear of London banks going back on recently agreed loans to parties of good credit, presumably on orders from head office.
There have also been cancellations of offers of credit cards that had already been approved. One need have little sympathy for the US investment banks; they found it profitable to make speculative loans, and now they are paying the price.
Even if ordinary mortgages do continue to be offered – and they are bound to be restricted – sub-prime mortgages will no longer be available for first-time buyers. Yet the housing market depends on people being able to sell their first houses when they trade up to their second. If all banks are anxious to protect their cash reserves, and to reduce their level-three assets, that will make ordinary borrowing difficult and level-three borrowing impossible. Probably the downturn will spread into stock markets, even though it did not originate in stock market speculation.
It is far too late to cancel FAS 157 and 159, even if that were desirable. The concept of different levels for bank assets has been introduced to the banking system and the defaults on sub-prime mortgages have lowered the acceptability of all level-three assets.
No one knows what they are worth and hardly anyone wants them.
Commercial banking, with its large customer base, is in better shape than investment banking, but will also be affected. FAS 157 may prove an historic regulatory blunder.
----
Why Pennco Coins?
SEVERAL IMPORTANT REASONS WHY PENNCOCOINS.COM IS BEST FOR YOU!
1. Penncocoins allows you to deal directly with the owner, Mike Pennington.
2. Our lower overhead means you pay lower prices.
3. We do not employ high pressure sales staff.
4. All transactions are held in the strictest confidence.
5. Our significant market presence enables us to search the market for the highest quality coins.
6. We are members of NGC and PCGS grading services. These are the top two in the world and we will not sell any others.
7.We are one of the few dealers that allow coin purchase 24/7 on the Internet.
8. Mike Pennington is a consultant and advisor who will work specifically to meet your Precious Metal goals. We are not just order takers. CALL US BEFORE YOUR NEXT PURCHASE, YOU WILL BE GLAD YOU DID.
GOLD CLOSES YEAR UP 31.2%
What a year for Gold and Silver during 2007!! As the market closed today, Gold closed up 31,2% for the year, or 200%. This ends the sixth year of the Precious Metals Bull Market. What an incredible return and yet the majority of people are still not even aware of this sector. The mainstream media keeps this as quiet as possible so the investing public will not enter the market thereby driving up the price of gold higher. But I CAN ASSURE YOU GOLD BE HIGHER AGAIN NEXT YEAR! We are still in the early stages of a 20 year bull market in hard assets. With the Olympics just months away in China, you can be assured that the price of all metals will continue to rise during 2008. If you are not in this market yet, I urge you to do so before everyone is jumping in and the prices will be too high. Let me hear from you if you’re interested in talking @ 425-868-4966.
Dec 2001 | $276.50 |
|
Dec 2002 | $348.10 | Up 25.90% |
Dec 2003 | $415.70 | Up 19.42% |
Dec 2004 | $437.50 | Up 5.24% |
Dec 2005 | $517.10 | Up 18.19% |
Dec 2006 | $638.00 | Up 23.38% |
Dec.2007 | $838.00 | Up 31.2% |
SILVER CLOSES YEAR UP 14.5%
As the Chart below indicates, 2007 was another good year for Silver – it increased over 14.5%.This is the sixth consecutive year of increases for silver. As the supply continues to dwindle and the demand continues to increase, the outlook looking forward into 2008 is very positive for silver. In fact, beginning with the new year I expect Silver to start outperforming Gold. The percentage increases over the next several years should exceed the increase in the price of gold. Remember Gold will soon set an all time record while Silver would have to go from $14.75 per ounce to over $50.00 per ounce. Eventually it will and the returns will be spectacular. Coins are the best way to participate in this coming boom. Gold and Silver stocks are very volatile and the stock brokers themselves face financial uncertainty. Stock certificates are paper and can burn just like the dollar. Gold and Silver are hard assets and will last through the coming crisis. It’s time to take the plunge and get invested in Silver. Call Mike @ 425-868-4966.
Date | Spot Price | % Increase |
Dec 2002 | $4.80 |
|
Dec 2003 | $5.95 | Up 23.96% |
Dec 2004 | $6.81 | Up 14.45% |
Dec 2005 | $8.82 | Up 29.51% |
Dec 2006 | $12.93 | Up 46.60% |
Dec. 2007 | $14.80 | Up 14.5% |
This weekend the G7 consortium of rich countries announced they will sell off a portion of their gold supplies to better invest in other financial instruments yielding a higher return. Regardless of their stated intentions, the real reason behind this announcement is an attempt to drive down the price of gold. This is a strategy the G7 has used many times in the past when trying to cap the gold price rise. Their intent is to scare the market into thinking there will be a flood of new supply which will eventually drive prices much lower.
While at times in the past this tactic has worked in the short term, it always fails in the long term because the underlying fundamentals behind the rise in the gold price is as strong today as it’s ever been. Let’s examine some of specific factors why this strategy will fail once again:
First, any sales of gold like this one has nothing to do with the market for gold, as not one ounce will ever see the free market. The buyers will be gold-poor central banks.
Second, if you examine the history of IMF sales in the 70s is that all the sales did is allow huge buyers to enter the market at one price. That attracts the major buyers.
Third, the following doesn’t mean a damn thing to the gold price trend. The only important fact is that the IMF just demonstrated its total lack of financial sense as it might only hold depreciating paper promises to pay nothing at all backed by nothing whatsoever.
Fourth, the selling of gold like this only occurs in bull markets and has historically been useless to stop the price increase. In fact these sales helped the price of gold higher by facilitating demand from huge interest in the 70s and even more so now.
So while the anti-gold crowd will attempt to exploit this announcement those nations with huge amounts of dollar reserves, like China, Japan, and the oil rich Mid-East will be high-fiving each other with a no-brainer plan to switch out of dollars and into gold. As a result this indicates to me the price of gold is not even half way to its upside resting point. This was true in the 70s.
Finally those that control Black Gold also control Gold. Those that you feel have caused the problem and are anti gold are NOT. To know this you need only the eyes to see and the ability to connect the dots.
This will be looked back at as great for the price of gold, as was the case in the 70s when the same entity, the IMF, proposed and did the same thing, only to stop before the buyers took all their gold. The same will happen if they even start.
Note that the proposed sales come when the US Economic rescue plan is to occur. The reason is clear.
Dear Readers
First, some comments regarding today's big drop in gold and silver. I'm amused at the media's explanation that gold went down due to investor's "risk aversion" and desire to flee commodities. Yea right, and money poured into the big banks looking for somewhere safe?
This is a joke. Monday's stock market is just another one of many manipulated by the Plunge Protection Team to keep investor's calm about an economy where all the news is bad. Precious Metals will be very volatile but the long term trend is up and we will soon see higher records for both gold and silver prices.
Judging from the reaction to my plea to protect your financial assets, many of you have started to take some action. Regarding my concern over Internet Stock companies, this article recently appeared about E-Trade:
http://securities.law360.com/Members/ViewArticlePortion.aspx?Id=39442&ReturnUrl=..%2fsecure%2fViewArticle.aspx%3fId%3d39442
Sub-prime bank Losses is closer to $400 Billion
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3fCFxLIgT2s&refer=worldwide
A nuclear accounting bomb set to go off on November 15
According to the following article, being forced to tell the truth is a world class regulatory blunder. My god what has this place become when truth is a blunder rather than a virtue?
This is a nuclear bomb being dropped on the Big Shot Establishment Financial Liars who will scream, jump up and down, and lie some more.
Why FAS 157 strikes dread into bankers.
Just when we hoped the worst was over...
by William Rees-Mogg
We have heard about sub-prime mortgages; we have heard about collateralized debt obligations (CDOs); we have heard about banks writing down their assets; we have heard about global bankers resigning; we have heard about Northern Rock and the first run on a British bank in 140 years.
The risk of a worldwide banking crisis – one that is particularly damaging to mortgages, private equity, hedge funds and the banks themselves – is higher than it was a month ago, and the storm is rising.
This is still an emerging story. It was not until last Wednesday that The Financial Times led on the legal provision that CDOs can be liquidated by the senior holders when they go into default. That could lead to a fire sale of CDOs and still larger defaults.
Yet this, as important as it could be, is not the biggest threat. Few non-bankers have heard of FAS 157 and 159, yet these are the regulations that will set the terms on which the banks will value their assets. The trouble with FAS 157 and 159 is that they are perfectly reasonable regulations in themselves which could have disastrous, though unintended, consequences.
What are FAS 157 and 159? They are the new United States (Federal) accounting standards that have been introduced to regulate the valuation of bank assets. These valuations are of crucial importance because they are the basis of all bank lending: no assets, no lending; no lending, no bank. According to an informative article in The Financial Times, the new standards will apply fully from Thursday. Many US banks have adopted them already. All US quoted banks will have to publish asset figures in conformity with FAS 157 by next spring.
The new rules divide bank assets into three “levels”, according to the freedom with which they can be bought or sold. Level-one assets, which are easy to value or trade, have to have quoted prices in active markets such as US government bonds or gold bullion. Level two is an intermediate stage; these assets are not as fully marketable as level one, but still sufficiently trade able to have a definite value.
Level-three assets – usually artificial financial instruments – are the problem. They do not have quoted prices in active markets. They have to be valued by reference to the bank’s own models. According to the analyst Martin Hutchinson, who had analyzed some of the US banks, the holdings of level-three assets are substantial. Lehman has $22 billion; Bear Stearns $20 billion; JP Morgan Chase $60 billion. Even these figures may be understated, since the banks have themselves decided whether assets belong to level three or the more acceptable level two, and they have an interest in placing as little in level three and as much in level two as they reasonably can.
Martin Hutchinson has also analyzed the assets of Goldman Sachs. The bank has disclosed $72 billion of level-three assets, out of total assets of $900 billion. That seems reasonable enough, but it compares with Goldman Sachs’s capital of $36 billion. Any substantial write off of level-three assets would impact on Goldman Sachs net asset value.
One cannot say that FAS 157 is only an American regulation and the banks of other countries would not therefore be affected. Most global banks already have a listing in the United States that would therefore be subject to US accounting standards. Those that do not will be judged by FAS 157 as the international standard. From now on all major banks will have to declare their assets in the FAS 157 form with its division into different levels by marketability.
No doubt this is the reform that should have been introduced years ago; that would have saved a great deal of agony and some abuse. But FAS 157 is coming into effect at a most inconvenient time. The sub-prime mortgage defaults have already undermined confidence in mortgage backed securities. These form a significant part – perhaps about a quarter – of all level-three assets. Level three also includes higher-quality mortgages and leveraged bridged loans for buyouts.
The global banking system now faces the risk of a general flight towards cash and liquid level one asset on a scale that has not been seen since the early 1930s. Already British banks are showing signs of near panic. I hear of London banks going back on recently agreed loans to parties of good credit, presumably on orders from head office.
There have also been cancellations of offers of credit cards that had already been approved. One need have little sympathy for the US investment banks; they found it profitable to make speculative loans, and now they are paying the price.
Even if ordinary mortgages do continue to be offered – and they are bound to be restricted – sub-prime mortgages will no longer be available for first-time buyers. Yet the housing market depends on people being able to sell their first houses when they trade up to their second. If all banks are anxious to protect their cash reserves, and to reduce their level-three assets, that will make ordinary borrowing difficult and level-three borrowing impossible. Probably the downturn will spread into stock markets, even though it did not originate in stock market speculation.
It is far too late to cancel FAS 157 and 159, even if that were desirable. The concept of different levels for bank assets has been introduced to the banking system and the defaults on sub-prime mortgages have lowered the acceptability of all level-three assets.
No one knows what they are worth and hardly anyone wants them.
Commercial banking, with its large customer base, is in better shape than investment banking, but will also be affected. FAS 157 may prove an historic regulatory blunder.
Dear customers, Friends and visitors to Penncocoins –
This weekend I couldn’t help but think of the several callers I had over the past 90 days that thought about buying gold/silver but for whatever reason decided not to. First of all, the most obvious reason is that they missed out on some spectacular gains during this time, especially those who bought either gold or platinum. Price of gold is up over 24% or >$150 in the last 60 days. Not a bad annual return for sure. While it's true hindsight is always 20/20 the same fundamentals driving the precious metals market higher still exists today – only more so. The emergency status of our country’s financial affairs will eventually be disastrous to all. So the sooner you begin to protect your wealth the better off you are. Another way of saying all this is that those of you who purchased gold and silver recently have not only seen a good rate of return but your purchasing power has been maintained. Those who retained their wealth in cash or federal reserve notes have seen a considerable decline in their purchasing power regardless of their rate of return. Inflation and the declining dollar have taken a significant bite out of their assets.
I’m begging all of you now to please begin converting more of your assets now being held in dollars to precious metals.
I realize inertia is a powerful force to overcome. I also realize we have never faced such tumultuous times before, but I ask you to weigh the risk reward of not doing something.
The subprime problems and size of derivative problems just coming to light could have global economic crisis written all over it. What is happening today at Citigroup, what happened last week at Merrill lynch and Washington mutual is only the beginning.
DO NOT IGNORE THE WARNING SIGNS. GOLD and SILVER WILL PROTECT YOU BUT YOU HAVE TO START NOW WITHOUT FURTHER DELAY.
There is no hiding place as this is a product of the greed and avarice of the new geek kids on the block who have killed themselves, their industry and hurt everyone everywhere. I am sure that in years to come derivative traders will be seen as pariahs and criminals deserving of prison - not as the multi-millionaires they are today.
Today, start to protect yourself to the degree it can be accomplished by removing people and institutions between you and your assets. This is the real thing. This is what was discussed in the 1970s but did not happen. It was discussed by many in 2000 but it is happening here and now. There is no functional tool to stop a derivative meltdown. It will like the grim reaper clean out many financial institutions and start a domino effect that I do not want you to be caught up in.
I want you to be safe. What can it cost you to take precautions? I believe that the cost to you is nothing. I am telling you to take less risk, not more. I know the central bankers will burn the dollar before all this comes down. What concerns me is that all this could easily get out of hand, as more and more financial institutions fess up to their ignorant greed-driven self destruction.
But first here is some practical advice for all to consider
· Buy bullion gold and silver approximately the same amount each month as long as you can. This dollar cost averaging is an excellent way to enter the precious metal market over a definite time period.
· What you cannot withdraw and is in cash put into short term treasury instruments. For those able, I prefer Swiss and Canadian dollar Federal T bills.
· I suggest selling all equities. It is simply too risky. This includes mutual funds. If you must hold stocks request the stock certificate from your broker.
· Reduce personal debt for peace of mind.
· If you own coins but have them stored by a dealer take delivery of them and request prompt service.
· If you have accounts at Internet financial entities close them and transfer the accounts to a smaller firm that can confirm in writing that they have no over the counter derivative exposure. Be sure to ask for certificates for your share investments and take delivery of them.
· Reduce - if not eliminate - your margined position even if that means selling down to rid yourself of debt on your securities or gold assets. The swings in gold now are going to become so violent that most people will not be able to tolerate it when debt is attached to their positions.
This is a time to be conservative, not adventurous. Gold is going to range trade MORE VIOLENTLY but the fundamentals indicate we will see gold at 1,500 BY next year. And silver will soar to 30.00 over the same time.
CALL ME IF YOU WISH TO DISCUSS YOUR OWN PRIVATE SITUATION.
mpennington14@yahoo.com P) 425.503.8425 or 425.869.4966
1. DOLLAR FALLS TO NEW LOW
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOoJCF.XMFsY&refer=worldwide
2. OIL SETS NEW ALL TIME HIGH - ALMOST $100
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOhoSjcKJhcY&refer=worldwide
3. GM REPORTS RECORD $39 BILLION 3RD QTR LOSS
http://biz.yahoo.com/ap/071107/earns_gm.html?.v=6
4. IRAN DEFIANT REACHES 3,000 NUCLEAR CENTRIFUGES
http://www.jpost.com/servlet/Satellite?cid=1192380756670&pagename=JPost%2FJPArticle%2FShowFull
5. CHINA SAYS IT MAY SELL DOLLAR RESERVES
http://www.marketwatch.com/news/story/dollar-slumps-top-china-official/story.aspx?guid=%7B49785919%2D0D1E%2D4E6A%2DBF51%2DD1DD1D2A874E%7D&siteid=moren
6. SUPERMODEL GISELE JOINS BILLIONAIRES WARREN BUFFETT
AND WILLIAM GROSS AS BEARISH ON THE DOLLAR
7. PAKISTAN CRACKDOWN CAN EXPLODE INTO CIVIL WAR AT
ANY MOMENT
8. FORECLOSURES AT A TWENTY YEAR HIGH AND SEE NO
LETUP IN 2008 AND 2009
9. US BANKS TO WRITE-OFF MORE THAN $40 BILLION IN NEW
DERIVATIVE LOSSES IN 4TH QTR
11/6/07
WE BUY ALL DIFFERENT TYPES OF GOLD, SILVER AND PLATINUM COINS FROM AROUND THE WORLD. SO IF YOU HAVE AN ESTATE YOU WANT TO SELL, OR JUST REPOSITION SOME OF
THE METALS YOU OWN RIGHT NOW GIVE US A CALL. WE ARE FAIR, FAST AND DISCREET.
Contact us now:
mpennington14@yahoo.com
P) 425.503.8425
GOLD & PLATINUM ARE SOARING TO NEW HIGHS!
http://business.inquirer.net/money/breakingnews/view_article.php?article_id=93883
Many clients have made 20%-25% in the last two months as gold and platinum continue to soar around the world. This is just the beginning. You need to think very seriously about adding Precious Metals to your portfolio if you have not already done so. It will
protect your family’s asserts against the devastating problems of ever-increasing inflation - the real inflation of prices, and the watered-down government statistics. One of the advantages of high grade coins is that they offer diversification for the savvy and prudent
investor.
In addition,Precious Metals offer the liquidity and intrinsic value that investments like stocks and bonds do not. The demand for these high grade coins continues to grow while the supply remains fixed.
PLEASE GIVE US A CALL AND ALLOW US TO GUIDE YOU
WITH EXPERT ACQUISITION STRATEGY.
LOSE 5% OR DOUBLE YOUR MONEY WITH GOLD
by Peter Degraaf
Gold issued a buy signal today, with a number of
different signs.
We are faced with a choice now. By buying in at this
point, we could possibly lose 5%, (in the event that
gold drops back to the $700 support level), or we can
double our money and more, (with gold going to
$2,144.00).
This $2,144.00 is the number that gold must reach,
just to be even with gold at $850.00, the previous
high set in 1980, when allowing for inflation (as
reported by the government – notorious for
‘underreporting the CPI’).
To calculate this yourself, simply visit www.bls.gov
and click on ‘inflation calculator’ at top left.
Featured is the GLD, gold ETF. Price dropped early in
the day, below the low of the previous day (red
arrow), then closed above the high of the previous day
(blue arrow). This is called an ‘outside reversal’. A
very bullish signal.
Featured is the HUI index of unhedged precious metals
stocks. The HUI is in the process of carving out a
bullish pennant formation (blue lines). We are faced
with two possibilities here. A breakout on the
downside, will very likely find support at the
previous resistance level (green line). A breakout at
the upside (a very real possibility after today’s
positive action in the HUI), sets up a target at 480!
The RSI (top of chart), has worked off the excessive
bullishness that caused it to rise above 70, and the
two moving averages (50DMA and 200 DMA) are in
positive alignment to each other, and both are rising!
All aboard?
Featured is the XAU, gold and silver stocks index. The
same bullish flag formation that is evident in the HUI
index, is showing up in this XAU chart as well. The
RSI has come down from being overbought at 80 to a
reasonable 60 (top of chart), the 50DMA and 200DMA are
in positive alignment, and both are rising.
Featured is the chart that compares the gold price to
the price of crude oil. For the first seven months of
this year, oil outperformed gold. Then, at the end of
August we see in this chart the forming of an ABC
bottom, which turns the trend back in favor of gold.
The 50DMA is bottoming (solid blue line), and will
soon be heading towards the 200DMA again. The RSI and
MACD at top and bottom of the chart are in positive
alignment to this trend reversal (blue dashed lines).
The most likely outcome will be for gold and oil to
rise in tandem, with gold outperforming oil.
Summary:
While nothing is cast in stone, the best way to
anticipate the future is by examining the past. The
chart patterns highlighted above have proved to be
very reliable indicators in the past. To ignore them
could well mean missing out on a good part of the next
‘leg up’.
To paraphrase the heading of this article: The most we
are likely to lose by getting in now is - 5%, what we
stand to gain cannot yet be measured!
Some of you may be concerned that the US dollar could
rise, in view of the fact that it is currently
‘oversold’. My analysis indicates that a rise to 80.00
is quite likely, although it will have some tough
hills to climb. Quatar and Vietnam announced today
that they are reducing their holdings of US dollars.
The possibility of a ‘domino effect’ is very real. In
any event, I expect gold and silver to soon start
ignoring the ups and downs in the US dollar, and move
up on their own fundamentals. The sub-prime credit
mess has not been solved, merely delayed.
The Wall Street crowd is still under hypnosis.
Citigroup lost 6 billion dollars during the last
quarter, yet its shares rose 1.00 (Oct 1st), upon
this news. What are these people smoking?
Fellow chartist DANI (www.dani2989.com) has just
issued his first buy recommendation on silver stocks
since July 2006. Silver then was 10.50, and
subsequently moved up to 14.50
Peter Degraaf
Mike Pennington Comments on Recent Headlines:
Platinum Continues to Soar to New Record Highs
http://www.bloomberg.com/apps/news?pid=20601012&sid=aX2fXxUm0PW0&refer=commodities
One of the great aspects of owning Platinum is that it provides diversity to your precious metals portfolio. Gold and Silver are affected by different technical factors than platinum that allows the price of platinum to move independently of gold and silver. The driver of Platinum prices higher currently is a shortage of supply along with an increase in demand. This is Economics 101. Global supplies are declining rapidly. The second largest Platinum mine is located in Zimbabwe, a country devastated by the rule of a real life tyrant, Robert Mugabe. He is very close to having the mine closed altogether. The situation led Ron Goodie, Director of Futures Trading at Equidex Brokerage to say of Platinum, “When you look at limited supply and strong global demand, the sky is the limit.”
This is one of the reasons we are recommending for clients to purchase the 2007 Platinum Eagle 4 coin set. It is very possible this set of coins will double in value in the next 12 months.
Quit trying to Time Your Precious Metals Purchases
I talk to many people reluctant to buy right now because they believe the price of gold and silver will decline in the future. I always ask them, “How much do you think it will decline?” They always answer the same, “I’m not sure”. How could they be? No one can predict the future. Why try to guess on any given day what the volatile gold and silver prices will do. The intelligent investor looks at the long term trend and knows that gold and silver will continue to rise in the future. The important thing is to establish a plan and then work your plan. In 1996 I wanted to buy some 8000 silver eagles. The only dealer that had that volume charged me an extra $.25 per coin. Instead of paying $4.10 per coin, I had to pay $4.35 per coin. I’m sure he laughed at me at the time. But earlier this year I sold some of those coins for more than $72 per coin. The extra amount I paid seemed small then. The point is everyone should own some precious metals to protect their family’s assets. Don’t shop around for a year looking for the best deal. Find a dealer you can trust, who gives you good advice and stick to your plan. DO NOT TRY TO TIME YOUR PURCHASES OR SALES.
Why Buy Silver?
Why buy silver bullion indeed! The value of silver is on a steady increase and some even say that it will one day approach the same price as gold. This may or may not be the case but it is sure that, with the shortage of silver and the great demand for more supplies the current trend is sure to continue.
One of the best ways of buying silver is as bullion. Bullion is silver coins and silver bars. Currently these are easy to buy for most people and you can buy a respectable one kilo silver bar for not much more than the current spot price of silver.
Silver bullion can be classed as either pure silver coins or pure silver bars. In both types there are a variety of sizes and weights.
Coins are a good way to collect silver and, apart from the joys of just being a coin collector, there are some good investments to be made by buying certain silver coins. Usually one is looking for proof coins that are 99.99 percent pure silver. There is a premium to be paid for this, however, as the coins have to be struck and the mint, as well as any dealer if you are not dealing directly with the mint, will want to make a profit on the sale. When buying coins, please only buy coins graded by one of the top two grading services – either NGC or PCGS. There are other grading services that do not have consistent quality control and will adversely affect the sale of your coins later.
Coins are usually legal tender in the country for which they are intended so they tend to be tax free. Tax free in both in the purchase and in any subsequent sale. The exception would be a professional dealer of course.
Silver bars tend to be a bit cheaper provided you buy a reasonable sized bar. Buying a one ounce silver bar is likely to attract a handling charge or premium also out of proportion to the value of the silver in the bar. Buying a one or more kilo bar will reduce the premium dramatically. However there may be a question of tax when it comes to sell, particularly if you make a fabulous profit on the deal. One would be wise to consult with one’s financial advisor in such matters as each person's economic situation is different. The biggest drawback to silver bars is that they are susceptible to fraudulent counterfiting. It is easy to drill holes in the bar, fill them with iron or steel and cap with silver. Only expensive assays can determine the true purity of the silver. So, please KNOW THE PERSON YOU BUY A SILVER BAR FROM.
The question then, 'Why buy silver bullion?' would seem to be answered in that silver seems to have an excellent future and it would be wise to take advantage of that.
I am currently recommending purchase of the 2006 Silver Eagle 20th Anniversary three coin set. It is rare and very popular since it commemorates the 2oth anniversary of the Silver Eagle. It’s a must for any Investment grade portfolio looking for high returns over the next 1-2 years.
"RECOMMENDATIONS ON HOW TO BUILD A FANTASTIC GOLD & SILVER INVESTMENT PORTFOLIO"
BY Michael M. Pennington
Knowing WHAT to buy . . . WHEN to buy . . . and HOW to buy precious metal coins is the secret to building a world-class portfolio. But incredibly, only a handful of people even the so-called "Experts" know the real inside story.
Let's face it, today's rare coin market is blazing hot . . .new investors are entering the market everyday looking to safeguard their assets AND earn above average rates of return. Today we are witnessing rare coin collectors and investors expecting 15% to 25% appreciation from their rare coin investments (and sometimes much, much more than that) annually.
The really BIG gains in rare coins (like 100% to 200% or more) come from owning the finest examples of certain types of gold and silver coins. The key to big appreciation is knowing which coins to buy . . . and how much to pay for them.
The biggest mistake I watch people make is buying coins with the "pig in a poke" theory. This theory often works well when markets, be they stocks, real estate or coins, are in major market upswings. But a far better strategy, I think, is buying coins which carry all three of the fundamentals that should be applied when evaluating a potential coin acquisition: Rarity . . . popularity . . . and historical significance.
If you apply common sense to your acquisitions and measure your coins against rarity, popularity and historical significance standards, then you will most likely enjoy the greatest appreciation in your collection . . . AND . . . most likely have ready buyers, whatever the market climate is, at the time you choose to sell.
The following are my "TOP PICKS" for 2007 and beyond, rarities that I believe more than meet the standards for rarity, popularity and historical significance . . . AND . . . also have above-average potential for significant price appreciation in the months and years ahead. I encourage you to browse through these recommendations, and then either contact me or go directly to the “Coins Section” and review current availability and pricing of the items for which you have the greatest interest.
RECOMMENDATIONS
1. 2007 PLATINUM EAGLE 4 COIN PROOF SET –
Worldwide, platinum prices have steady increased to where they are now at historical highs. The 2006 Platinum 4 coin set appreciated 100% twelve months after it’s release. I am confident that the 2007 set will experience similar appreciation one year from now. The coins are rare, beautiful and historically significant. What more can you ask for?
2. 2006 SILVER EAGLE 20TH ANNIVERSARY 3 COIN PROOF SET –
There were only 250,000 of these sets minted so they definitely meet our rarity criteria. In addition, collectors flock toward anniversary type coins because they commemorate a special occasion. This meets our historically significant criteria. They also contain the beautiful Reverse Proof Silver Eagle, the first of its kind.
3. $20 Liberty & St. Gaudens Gold Coins –
$20 Liberty and $20 Saint-Gaudens Double Eagles are among the world’s most recognized and coveted gold pieces. Workhorse coins of trade, they were crucial building blocks of the expanding U.S. financial markets in the 19th and early 20th Centuries. From pocket money in Gold Rush San Francisco to multimillion dollar transactions on Wall Street, $20 “Libs” and “Saints” were involved in every aspect of American economic life. They provide extra leverage to a rising gold market. Due to their large size, low price, limited numbers, and worldwide popularity, these classic U.S. mint Liberty and Saint Gaudens $20 Double Eagle gold coins are avidly sought by smart gold investors looking for extra leverage to the market. With true scarcity and collector value, they can appreciate in a rising gold market much faster than common coins or bullion. And unlike modern bullion coins, they offer complete financial privacy and exemption from possible government confiscation.
Gold highest since January, 1980
Reuters
Published: Thursday, September 20, 2007
LONDON -- Spot gold prices surged to a 28-year high in European trading on Thursday, as the dollar sank to record lows against the euro and oil traded near all-time highs -- raising the precious metal's appeal for investors.
Gold rose as high as US$730.25 an ounce, its highest since January 1980, when it hit a record high of US$850. Bullion was later quoted at US$729.10/729.90 by 7:18 a.m., compared with US$721.10/721.90 in New York late on Wednesday.
"The market was in two minds yesterday, jumping between US$722 and US$726, but the euro's push through US$1.40 against the dollar gave the market fresh impetus to break up again," said Tom Kendall, metals strategist at Mitsubishi Corporation in London.
"The metal is likely to see some consolidation now until the U.S. markets open. We could see further gains then, but the higher we go, the more nerves will be jangling," he said.
The dollar fell to lifetime lows against the euro, weighed by a hefty U.S. interest rate cut earlier this week and expectations of more moves to come.
A weaker dollar makes gold cheaper for non-U.S. investors, while it is also seen as a hedge against oil-led inflation.
Crude hovered just below record highs after U.S. inventories fell more than expected and as the threat of a storm gathering near Florida reignited supply concerns.
"Technically speaking, we are moving through to uncharted waters if we breach US$730 cleanly. And that would be very positive for gold because it does open up the upside," said David Holmes, director of metals sales at Dresdner Kleinwort.
"The scenario is quite bullish. There is still an underlying credit concern that makes gold a sensible investment," he said.
A global credit crunch stemming from the U.S. high-risk mortgage sector has left investors looking for safe parking places for their cash, magnifying bullion's safe-haven status.
Growth in bullion exchange-traded funds (ETFs) continued as investors diversified their portfolios into the metal. Gold used to back StreetTRACKS Gold Shares hit a record high of 577.10 tonnes on Wednesday.
London-based ETF Securities said investment in its gold ETF jumped 240% in the past seven weeks, with total assets under management exceeding US$300-million. The product now holds nearly 350,000 ounces of gold.
"In light of the prospects for further Fed (rate) cuts and potential for further U.S. dollar weakness, the recent increases into the gold ETFs could continue," said John Reade, head of metals strategy at UBS Investment Bank.
"This, combined with private investor buying of OTC gold (bars and coins) has the potential to bring more investment money into gold," he said in a daily research note, referring to over-the-counter business.
Bullion investors await a testimony from Fed Chairman Ben Bernanke on problems in the subprime mortgage sector before a congressional committee from 1400 GMT.
In other bullion markets, the most-active December gold contract on the COMEX division of the New York Mercantile Exchange also hit a new 28-year high of US$738.30 an ounce in electronic trade on Thursday. It was last quoted at US$736.40.
But Tokyo gold futures dropped on the back of profit taking. Benchmark futures for August ended 10 yen per gram lower at 2,719 yen.
Other precious metals also gained, with platinum rising to an 8-week high of US$1,313/1,317 an ounce from US$1,301.70/1,308.70 in New York.
Silver rose as high as US$13.16, the highest in nearly two months, before easing to US$13.12/13.17, versus US$12.95/13.00. Palladium rose to US$333/336 from US$330.25/334.25 an ounce.
© Reuters 2007
FED RESERVE LOWERS FED FUNDS RATE & DISCOUNT RATE
Will today's Fed action solve our problems? No, our problems are alot deeper. By lowering interest rates, the Fed might help increase those who want to borrow but they won't help the banks find the money to lend.
Foreclosures are off the charts and housing start confidence is at an all time low. The housing problems are causing huge layoffs in the mortgage and banking industries.
Today's action by the Fed will cause commodity prices to go much higher and INFLATION will become our worst nightmare. By bowing to Wall Street with interest rate cuts, Main Street will suffer through painful dollar debasement. The only solution for the hard working man on the street is to buy Gold & Silver.
Michael Pennington comments on today’s news headlines….
1. Gold Surges Past $700 per oz
http://www.businessday.co.za/articles/economy.aspx?ID=BD4A563711
http://africa.reuters.com/business/news/usnBAN454016.html
As the dollar declines, the price of gold continues to surge. Now that gold has closed over $700 for several days, $700 becomes support instead of resistance. The bullion market is still very strong as the supply and demand dynamics favor a continuing increase in the price of gold. Gold production around the globe is declining, while demand from countries like China, Russia, India and the Middle East are rapidly increasing. There is nothing now that can prevent gold from achieving unprecedented levels, probably $1,600-$2,000 within the next 12-24 months.
2. Oil tops $80 per barrel or the first time in history
http://www.nytimes.com/2007/09/14/business/14oil.html?ex=1347422400&en=6193c8ccccd1c8b1&ei=5088&partner=rssnyt&emc=rss
http://www.kitco.com/ind/Wiegand/sep122007.html
This is not good news for the US economy and especially for the Stock Markets. Higher energy prices mean higher inflation on many products we buy everyday – food, plastics, transportation and even healthcare.
The FED has been fighting this inflationary trend for over a year by raising interest rates. Unfortunately, though the FED now needs to lower interest rates to offset the liquidity problems brought on by the sub prime mortgage market. The stock market has already priced in an interest rate cut, so without a cut the Stock Markets would plunge significantly. The FED is in a no win situation. However, look for them to bow to their Wall Street Masters and cut rates on September 17. Be aware that this will help fuel greater inflation throughout the economy and help lower the US dollar against all other currencies. Both of these effects will definitely help to drive the prices of gold and silver higher.
3. US Heads for Recession as Foreign Investors Flee from US Dollars
http://news.bbc.co.uk/1/hi/business/2056587.stm
As the US Dollar continues to drop in value other countries have begun to diversify out of dollars. This makes perfect sense since their dollar holdings will continue to buy less goods and services. The problem for the US is that we depend on those funds to support our massive debt. If foreigners are buying less US Treasuries, the FED has to monetize its own borrowings and the dollar falls even further. As our credit expansion is restricted, a recession soon follows.
4. Greenspan says he didn’t foresee until late 2005 how significant sub prime lending problems would be
This is political buck passing at its best. Mr. Greenspan was the architect of the sub prime lending problem we’re seeing right now. He was responsible for creating an environment of easy credit. He directly encouraged people who couldn’t afford it to borrow more. He, better than anyone, understood that the success of our entire economy is based on ever expanding credit. People were converting their mortgages to ARMS and using the funds to buy new cars, boats and other luxury items instead of paying off their mounting credit card debt. This spending was good in the short term for the economy, but in the long run debt has to be paid. Greenspan knew by then it would be someone else’s problem.
5. “The US Dollar loses its luster as the world’s reserve currency” – International Monetary Fund
As the dollar continues its decline against other currencies, the IMF says the Euro is gaining in popularity. It is my opinion that this is being orchestrated by the world’s banksters to help bring the US down from its perch as the world’s most powerful nation. Everyone needs to understand their history. The world has never seen a fiat currency survive beyond 200 years without losing its full value. The US is on the road to complete dollar debasement as we speak. Behind the scenes the US government is working on plans to introduce the “Amero” at a time just before the dollar crashes. The only way the average hard working Americans can protect their assets is through buying gold and silver bullion. Know that the Fed, the Treasury and the elite banksters who control them, only care about protecting their interests.
6. Banks borrow $7.2 billion from the FED
http://www.marketwatch.com/News/Story/Story.aspx?guid={E692D620-B805-45C0-8A07-8D5D32F545AB}&siteid=bnb
This is a glaring example of the problems our economy faces right now. Some of the biggest banks in our nation are literally broke right now. These borrowings from the FED’s discount window are a sign of desperation. Due to sub prime forfeitures, losses on hedge funds, derivatives and non recourse loans, the banks have no new money to lend out now – even to their best, highest rated creditors.
INVESTMENT GRADE PLATINUM COINS UP FOR SALE
INCLUDED IN THIS BID ARE A 4 COIN SET OF THE HIGHEST RATED PLATINUM EAGLES:
1- $100 (1 OZ) Platinum PF-70 Ultra Cameo
1- $50 (1/2 oz) Platinum PF-70 Ultra Cameo
1- $25 (1/4 oz) Platinum PF-70 Ultra Cameo
1- $10 (1/10 oz) Platinum Ultra Cameo
This set just came back from NGC and is only one of sixteen graded a "PERFECT" PF-70. They are truly beautiful and without blemish. Included also is a CERTIFICATE of AUTHENTICITY from the US Mint.
Platinum is the newest, rarest and most valuable of the Precious Metals group. In recent times it has become a great investment option because it increases your portfolio's diversity, provides liquidity and is beautiful to behold. The obverse of the coins are graced with a portrait of the Statue of Liberty while the reverse pictures a bald eagle soaring across a setting sun. They carry a guarantee of the U.S.
Government regarding weight, content and purity. This makes these coins welcomed in major investment markets throughtout the world. They are even acceptable in your IRA.
The 2006 Platinum 4 coin set has now doubled at approximately $7,800. It is very likely that this set will also double in the next year. The 2007 issue is the 10th Anniversary of the Platinum Eagle coins and will surely become a very difficult collector's item.
Why not invest in a very rare, beautiful, Early Release, Highest Rated coin set available today?
I accept Paypal, Cashier Checks, Wire Transfers and Personal Checks (that have cleared). There is a three day money back guarantee if you are not completely satisfied with these beautiful coins. Shipping and Insurance are an additional $30.00.
Price = $3,895.00
The Day of Reckoning For Derivatives Has Arrived
BY: Jim Sinclair, Chairman & CEO of Tanzanian Gold Corp
Dear Friends,
It is not just coming - it is already here.
I am convinced that all that has been anticipated since 1968 has now occurred. I see the mountain of over-the-counter derivatives which, when including all types, exceeds USD$30 trillion. The mountain is shaking quite badly.
The situation now resembles the Weimar Republic (the term given to describe the German state from 1919-33) in the sense that the Weimar case study is predicated on planned currency destruction to avoid war reparations that got out of control.
The present situation is based on the ultimate sin of greed called over-the-counter derivatives. This mountain of unfunded special performance contracts is shaking and will, as a product of declining US business activity and profits, fall precipitously.
Before the fall of this unimaginably large mountain of garbage paper, ALL world central banks will in concert prime the pump any way they can. Priming for this purpose has no practical way of being drained. What is going to get out of control now is monetary inflation to offset the shaking mountain of over-the-counter derivatives. The beginning of this fall is in progress and will be history by 2012 or SOONER.
Simply stated this is it, today, now! Think the best but protect yourself under a worst case scenario.
There is no more "if this happens that will happen"
scenario. It has already started to happen and the result will be a bull market for all commodities to a level that even the wildest (rational) bull cannot not even imagine. The dollar is headed below the estimates of the biggest (rational) bear.
I take what is said here very seriously. What I have just said, I have never uttered before.
The over-the-counter shaking mountain of derivatives can't be fixed by trying to hide it. The problems cannot be fixed by any interest rate action. The problem will not even be fixed by a monetary inflation of unprecedented scope. The problem is coming home by
2012 or much SOONER.
Keep in mind that the $20 trillion plus
over-the-counter credit and default derivatives generally have the following characteristics.
They are:
Without regulation.
Without listing on public exchanges.
Without standards.
Not in the least bit transparent.
Without an open market of the bid/ask type.
Dealt in by private treaty negotiations.
Without a clearing house.
Unfunded without financial guarantee of any kind.
Functioning as contracts of specific performance.
Of a character or ability to perform that is totally dependent on the balance sheet of the loser in the arrangement.
Evaluated by computer assumptions made by geeks, non-market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.
Now in the credit and default category and are considered by accepted authorities as totaling more than USD$20 trillion in notional value. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one sells it.
David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.
These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.
Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.
“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.” Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.
While most of its studies are commissioned by legislators, about 10 per cent – such as the one containing his latest warnings – are initiated by the comptroller general himself. In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with”.
“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.
“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term. The fiscal imbalance meant the US was “on a path toward an explosion of debt”. “With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr Walker, a former senior executive at PwC auditing firm.
Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path”. “Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.” Mr Walker said he would offer to brief the would-be presidential candidates next spring.
“They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably”.
Copyright The Financial Times Limited 2007
By Jeremy Grant in Washington
Published: August 14 2007 00:06 | Last updated: August
14 2007 00:06
The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.
PRECIOUS METALS – THE ONLY REFUGE
by Bob Kirtley
My father spent six of his younger years in the Royal Marine Commandos serving his country throughout the Second World War. The military discipline stayed with him for the rest of his life and some of it rubbed off on us, his children. For instance we could never buy anything unless we could pay for it with cash. What would he think now if he could listen to both the President George Bush and the Federal Reserve Chairman, Ben Bernanke?
The President stated yesterday that the borrowers who were in trouble would be helped by insuring their mortgages through the Federal Housing Administration while Ben Bernanke assured the stock market that the Federal reserve would “act as needed” to prevent this financial crisis from having a knock on effect on the national economy.
We now have a drunk who cannot pay his bar bill so the solution is to insure the drunks debts and to extend credit to the bar owner! Magic! Life without responsibility or accountability, Utopia!
Our drunk or credit junkie can now dig the hole that he is in even deeper making recovery more difficult than it is today as the debt will be bigger later on. There is also the expectation that someone else will come to his rescue, as it’s not actually his problem but the state’s problem.
The US government has given a painkiller to a drunk who is all out of cash at the same time they have extended the drinking hours at the ‘Bar Wall Street’. Tomorrow morning will dawn as always and the hangover will be almost terminal.
The next fix will come on the 18th September when the Federal Open Market Committee (FOMC) meet and proclaim ‘what inflation?…the economy is in great shape so lets have a rate cut.
This next rate cut could well be the final nail in the coffin of the once mighty US Dollar. Why maintain it above the psychological level of ‘80’ anyway. Well the eyes of the world are upon the US Dollar, the stop loss orders are in place and safe heavens are being sort. One of which will be in the robust arms of the precious metals market sector. The stage is set and the starting gun is cocked, so prepare to be swamped by ex-property barons, fallen high-tech gurus and refugees from all corners of the financial markets as the tremors of financial destruction commence.
Gold has been telling us for sometime that all is not well so listen up and put at least a small part of your wealth into precious metals or their associated stocks. Discipline is about to return to a screen near you.
The chart below depicts the demise of the US Dollar: 
The chart below depicts the robustness of gold:
