That Silver and Gold have opened this week in rally mode should really be no surprise. A quick review of the seasonal Gold chart I posted Wednesday, June 29, 2011 should put a smile on the faces of Precious Metals Bulls this Summer.
Past performance is no guarantee of future performance, but has the fundamental case for owning Gold [and Silver] diminished in any way since May 1, 2011? Hell know! If anything the fundamental case for owning Precious Metals has grown substantially over the past 60 days.
EVERYDAY, we are treated to headlines trumpeting the solution to one financial "problem" only to turn the page and see another financial "problem" has opened up. It is the proverbial sticking of the finger in the dike, only to see it spring a leak somewhere else out of reach.
No Solution to the Global Credit Crisis, Rising Gold and Silver Prices
By: Bob Chapman
No solution has been found for Greece’s problems, even though an agreement has been made with lenders, and as an extension of that, we see euro, euro zone and European Union problems that probably are unsolvable.
Debt ratings for sovereign nations are falling like ten-pins, which we look at very skeptically. Why were not these ratings reduced by rating agencies some time ago? We see the rating agencies, as controlled by Wall Street, and we see no coincidence that these ratings are all being lowered almost simultaneously. We think these events are being timed to force debtor European nations to heel to European bankers’ demands. By example, it is obviously the intention of Europe’s Black Nobility, which controls such banking, to rape Greece financially and enter it into financial bondage for years to come and they intend as well to render the other five hopeless EU members into the same position.
Little has been done to repair the damage done by the credit crisis, which began in 2008. The financial sector and government has temporarily been kept from failure, but little else has been done. The situations in Europe and the UK are no better. Failure of a debt extension and or default by Greece could lead to a collapse of the world financial system, as we know it. The long-term looting by the Fed, the Bank of England, and many others, day-by-day is being exposed to the public by talk radio and the Internet and the elitists are powerless to stop it. We’d say it won’t be long before the whole world knows what they have been up too for a long time. The exposure of these facts is affecting public confidence and many are saying, are we next? The entire financial sectors in the US, UK and Europe are now more vulnerable than ever and by the looks of recent economic reports things are looking worse. That is why Greece or debt extension is so important. Their failure could trigger panic. The Democrats in the US House are playing chicken and if a deal is not reached there will be no extension. Further to this China is slowing down and has major inflation problems and a real estate bubble and Japan has been devastated.
Merkel rebuffs rating agencies on Greece
BERLIN (AP) -- German Chancellor Angela Merkel warned Tuesday against putting too much weight on rating agencies' assessments of new bailout proposals for Greece that will see private creditors share part of the burden.
Merkel told reporters that the troika of institutions lending money to Greece -- the International Monetary Fund, the European Central Bank and the EU Commission -- should make their own assessment regardless of what the credit rating agencies say.
"I trust above all the judgment of those three institutions," Merkel said.
Her comments came a day after Standard & Poor's said the current French proposal to have banks rollover their Greek debt holdings "would likely amount to a default."
A major worry in the markets is the potential insurance claims on Greek bonds that could be triggered if the rating agencies conclude that Greece was in a so-called "selective default" in the event of banks and other financial institutions altering their Greek debt holdings.
Moody's Warns China Debt Problem Bigger Than Stated
BEIJING (MNI) - The following is the text of a statement issued by Moody's Investors Service Tuesday:
"Moody's Investors Service says that the potential scale of the problem loans at Chinese banks may be closer to its stress case than its base case, according to an assessment that the rating agency conducted following the release of new data by China's National Audit Office (NAO).
When considering the apparent absence of a clear master plan to deal with this issue, Moody's also views the credit outlook for the Chinese banking system as potentially turning to negative.
"We assume that the majority of loans to local governments are of good quality, but based on our assessment of the loan classifications and risk characteristics, as provided by the NAO and other Chinese agencies, we conclude that the banks' exposure to local government borrowers is greater than we anticipated," says Yvonne Zhang, a Moody's Vice President and one of the authors of the report.
Of the RMB 10.7 trillion (about $1.6 trillion) of local government debt examined by the Chinese audit agency, RMB 8.5 trillion ($1.3 trillion) was funded by banks. However, Moody's has identified another potential RMB 3.5 trillion ($540 billion) of such loans that the Chinese auditors did not discuss in their report.
"When cross-examining the findings by the June 27 NAO report -- in conjunction with reports from Chinese banking regulators -- we find that the Chinese audit agency could be understating banks' exposures to local governments by as much as RMB 3.5 trillion," says Zhang.
"Since these loans to local governments are not covered by the NAO report, this means they are not considered by the audit agency as real claims on local governments. This indicates that these loans are most likely poorly documented and may pose the greatest risk of delinquency," the analyst adds.
One wonders if the "ratings agencies" are not simply subsidiaries of the evil banking empire. An evil banking empire that has created a house of cards that they themselves have bet against, and profit from handsomely each time the "rating agencies" release yet another "negative report" in support of the evil banking empires international sovereign short position.
Gold climbs as risk aversion picks up
By Jan Harvey
LONDON, July 5 (Reuters) - Gold prices rose back above $1,500 an ounce in Europe on Tuesday as risk aversion returned to the financial markets, stoked by concerns over the outlook for the Chinese economy and plans to roll over Greek debt.
Spot gold was bid at $1,502.39 an ounce at 1110 GMT, against $1,495.54 late in New York on Monday. U.S. gold futures for August delivery GCv1 rose $20.50 an ounce to $1,503.10.
Media reports about a possible rate rise in China and a Moody's report saying the scale of problem loans at local governments there may be much bigger than previously thought dented risk appetite, which had returned to the markets last week after Greece approved austerity measures.
"Certainly the Chinese stories this morning have helped (gold)," said Credit Suisse analyst Tom Kendall.
"We have seen a bit of buying coming back in from some of the institutional names that have been absent for a while, and positioning in gold is a lot less from shorter-term players than it has been."
Meanwhile, the premium investors demand to hold Spanish and Italian debt crept up and the cost of insuring peripheral debt against default rose on weak economic data and persistent worries over the impact of a Greek debt rollover.
Worries over mounting debt levels in euro zone economies like Greece, Ireland and Portugal were a key factor driving gold to record highs above $1,575 an ounce in May. Relief after Greece secured a 12 billion euro loan to avert default helped allay some of those concerns last week.
But they persist, with Standard & Poor's warning on Monday it would treat a rollover of privately held Greek debt now being discussed as a selective default. Below forecast euro zone PMI data boosted risk-averse sentiment on Tuesday.
The dollar firmed against the euro as deteriorating euro zone data and concern over the health of the Chinese economy pushed investors towards currencies perceived to offer safety.
Usually this would weigh on gold, but its value as a haven from risk is outweighing the effect of the stronger U.S. unit.
Financial headlines in the month of July will no doubt be centered on the "deliberations to raise the US Treasury's debt ceiling". Once a "deal" is struck to raise the debt ceiling...no matter the amount...the case for owning Precious Metals is strengthened. The US Government has to borrow [print] money to pay off/rollover a $467.4 BILLION debt balance that is due by August 31st. Any increase in the Treasury's debt ceiling will evaporate before the ink dries on the deal. Borrowing money to cover one's debts IS a silent admission of default on one's obligation to repay a loan...just ask the Greeks. A debt ceiling "deal" is a bad deal for America...no matter how it's spun by the financial news media.
T-Minus Two Months Until The $500 Billion Rolling Debt Ticking Timebomb Goes Off
By Zero Hedge
...a just released presentation by the Bipartisan Policy Center titled "Debt Limit Analysis" reminds us, aside from the actual deficit funding math, which is that in August there is a $134.3 billion cash shortfall that has to be funded with debt, there is a far greater risk. Or, put numerically, 467.4 billion far greater risks. This is the amount of debt that matures through August 31, and has to be rolled over or the US is bankrupt... in every sense of the word. Once again, America's politicians and media get broadsided by the definition of gross versus net. Because, in reality, the inability to issue more debt post August 3 means a halt to all new debt issuance. Which, unfortunately because it means Geithner's scaremongering is actually correct, would imply the end for the debt ponzi.
The danger in the debt ceiling deal
By BILL SCHNEIDER
The danger in the debt limit negotiations is not that the two sides will not make a deal. It’s that they will. Specifically, that they will reach the kind of agreement Republicans are demanding — which would cut more than $1 trillion in government borrowing over the next 10 years.
Any deal of that magnitude would have a devastating effect on the nation’s economic recovery. And make the deficit situation worse. Economic activity would slow and government revenues fall even further.
Democrats and Republicans are arguing over the correct balance between spending cuts and tax increases. Republicans insist that all the savings come from spending cuts. Democrats are willing to accept some cuts but insist that the deal be “balanced” with new tax revenues.
What they are both missing is that the exact mix doesn’t matter. What matters is how much money is taken out of the economy at a time when economic growth is desperately needed. Economic growth is necessary for any deficit-reduction plan to succeed.
Ronald Reagan knew that. Reagan said in his 1985 State of the Union speech, “The best way to reduce deficits is through economic growth.” That is because big spending cuts and tax increases are politically impossible.
On the other hand, growth will not be sufficient. The debt problem has become so large that we can’t grow our way out of it without further sacrifice. Some spending cuts and tax increases will be necessary. But growth will have to be a major part of the solution, just as it was in the late 1990s.
Right now, big spending cuts will damage the recovery. So will tax increases. Bill Clinton understands that point. “I hope they make a mini-deal,” the former president said in a recent interview at the Aspen Ideas Festival. “I don’t think you can agree to some mega-deal on their [Republican] terms.”
What makes the most sense, and what Clinton recommended, is a delayed deal. “What I’d like to see them do is agree on the outlines of a 10-year plan and agree not to start either the revenue hikes or the spending cuts until we’ve got this recovery underway,” Clinton said in an interview with ABC News last month.
The problem is political. All we need to do right away is get through the Aug. 2 deadline for raising the debt ceiling. The United States is the only country in the world where a political decision must be made to do that.
But then there is the question of the century: What recovery?
As each day passes, it becomes more obvious to even the casual observer that the central banks and their respective governments have lost contol of their sovereign debt obligations. The Great Debt Ponzi is about to unravel. Don't get left holding the bag. Protect yourself with Physical Silver and Gold. The time is now!