Fed Shift Indicates Main Rate Will Stay at 2% to Revive Economy
Aug. 6 (Bloomberg) -- Federal Reserve policy makers indicated that interest rates won't budge until next year as they wait for the credit crisis to abate and inflation to ease.
The central bank, which left its benchmark rate at 2 percent yesterday, said ``downside risks to growth remain,'' dropping a reference in June's statement to ``diminished'' dangers. The Fed also said price increases are of ``significant concern.''
http://www.bloomberg.com/apps/news?pid=20601103&sid=aLdR6qgl08_o&refer=us
They're going to have a long wait...
The euphoria on Wall Street then obviously revolves around the Fed standing pat on VERY low interest rates. Ask any economist how we got into the present financial crisis and to a man/woman they will tell you that Greenspan left interest rates too low [1%] for far too long. And so now, here we are stuck down at 2% for at least the next 2-3 quarters.
"Hey, let's fix the problem by recreating what caused the problem in the first place!"
"Brilliant!"
But what about Bumbling Ben's hard line "support" of the US Dollar several weeks ago? LOL! Can you believe people actually believed that hot air? You're damn right downside risks to growth remain, and they are colossal. Diminished dangers to growth, can you say Ben looks like a jackass now? C'mon, it's easy...
"BEN LOOKS LIKE A JACKASS NOW!"
Very good.
Now consider this. The feeble "rally" in the Dollar over the past four months has been recently "sustained" by the belief that the Fed would soon be raising interest rates. Well, now that that is isn't going to be happening, I'd suggest this pathetic Dollar rally is about to hit a wall. The Dollar Index ran into its falling 200 day moving average today. If you've got Dollars you've been wanting to dump, now may be the best opportunity you'll have for a long time.
Then consider this. The weakness in Gold the past four months has been recently "sustained" by the belief that the Fed would soon be raising interest rates. That speculation has now been clearly blown out of the water. It would stand to reason then that with the speculation of the Fed raising interest rates to support the Dollar now destroyed, Gold should be free to resume it's march back to $1000, and on to 'infinity and beyond'.
The Fed clearly has chosen to accept inflation at this time, as their ONLY tool to put up a fight against it is via increased interest rates. Clearly they now understand that raising interest rates at this time is all but impossible, but not necessarily for the reasons you might suspect. Sure, raising rates now would most certainly crush the economy, but let's not forget for even a moment that the Fed has promised to loan money "indefinitely" in a lame effort to give the appearance that the banking industry is "sound". Raising short money rates would definitely increase that plans cost to the beggar banks. The Fed cannot raise rates. Too bad for them, too bad for the Dollar, and too bad for the fight against Inflation. Gold is right where the Big Money wants it...cheap.
Tomorrow it is quite likely that Mr. Trichet will comment on slowing growth in Euroland, but remain steadfast in his vigilant fight against inflation. There should be no doubt that he has NO plans at this time to lower interest rates in Euroland. This should help the Euro regain it's footing and throw pressure back on the Dollar. The Dollar has nowhere to go but down, there is absolutely no fundamental basis that supports a move higher.
To be honest, it is obvious that even the most recent strength in the Dollar is less about economic data here at home being "better than expected", and more about weak economic data in Euroland. Growth may slow in Euroland, and they may be heading for a recession there, but the United States IS in a recession right now. Interest rates adjusted for inflation are NEGATIVE. The reasons to own Gold and Silver are too many to count. I have given you countless reasons to own Gold and Silver over the past four months. They all remain valid.
It is interesting to note that Gold had violent upside moves preceding BOTH the Bear Stearns bailout AND the Fannie/Freddie bailout. Both of these moves higher in Gold and Silver were supported by the fear of an imminent collapse of the financial system. Both moves took Gold into the vicinity of $1000. One just over it, the other just under it. Gold reacted to the potential for economic catastrophe just as it should. I point this out because the Inflation angle that supports moves higher in Gold, and Silver, has so far been fairly insignificant. Yes Gold and Silver have risen since 2001 as the US Dollar has fallen, but the investment class has really failed to jump the train as an Inflation hedge. This "investment" factor is what we are patiently waiting for to launch Gold over the $1000 hump. It's out there, it's lurking, and with Gold now flirting with it's 200 day and 50 week moving averages, savvy investors looking to protect their wealth will begin to trickle out of the woodwork and put a floor under the Gold Market. Couple these investors with the physical buyers in India as fall approaches, and we could soon see that astonishing rise in the Gold price we have so patiently been waiting for.
Wednesday, August 6, 2008
Tuesday, August 5, 2008
A Toilet Exploded On Wall Street Today
I have to be brief this evening, but I cannot let this load of crap pass by without comment.
Wall Street extends rally after Fed decision
NEW YORK (AP) -- An already soaring Wall Street extended its advance Tuesday after the Federal Reserve left interest rates unchanged and assuaged some of the market's fears about the economy. The Dow Jones industrial average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.
The market was enjoying a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.
The Fed gave stocks another huge push higher in the last hours of trading. In a statement accompanying its widely expected rate decision, the central bank reported that "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." That assessment was welcome news to a market that has feared the economy was falling into recession because of weak consumer spending.
Early in the session, shares rose sharply after the Institute for Supply Management, the trade group of corporate purchasing executives, said its services sector index rose to 49.5 from 48.2 in June. Analysts surveyed by Thomson Financial/IFR predicted it would rise to 49.0.
Any reading below 50 signals contraction. The report is based on a survey of the institute's members and covers such indicators as new orders, employment, inventories, prices and exports and imports.
The notion that the sector might be in better shape than many investors feared gave Wall Street reason for optimism.
http://biz.yahoo.com/ap/080805/wall_street.html
..."economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." What a honey pot that nonsense is. Economic activity in the second quarter was barely above water ONLY because of the $168 BILLION dollar handout from the government. To suggest otherwise is blatantly misleading and a lie. Oh but the Fed said so, so all the world's problems have been solved. BAH!
Just yesterday we got this headline:
Rising prices stifle impact of stimulus payments
US consumers dig in amid rising prices, softening impact of government stimulus package
In June, the second biggest rise in prices in nearly three decades muted the impact of billions of dollars in government stimulus payments, government figures showed Monday.
Incomes barely budged in June and consumer spending retreated after taking into account the higher prices for food, energy and other items, the Commerce Department data show.
Consumer spending was up 0.8 percent in May and 0.6 percent in June, the Commerce Department said. Those increases were slashed to a modest 0.3 percent increase in May and a drop of 0.2 percent in June, however, when adjusted for rising prices of gasoline, food and other products. Incomes rose just 0.1 percent.
An inflation gauge tied to consumer spending jumped by 0.8 percent in June. That was the second biggest monthly increase since 1981.
http://biz.yahoo.com:80/ap/080804/economy.html
The only thing growing in the second quarter was the rate of inflation and the federal deficit. To suggest otherwise is deceitful.
The ISM Purchasing Managers Index rose to 49.5! Yeha! And it was "BETTER THAN EXPECTED"! Yeha! Never mind the fact that any number below 50 equals contraction. It was BETTER THAN EXPECTED! The delusion is mind numbing. Doomed is too tame a word for the future of this lost nation.
Gold and Silver were battered in the rush to euphoria. Today was a mega short squeeze in the general equities, and nothing more. Gold and Silver and their related shares the victims of naked short selling. Of course that is only illegal if it threatens a broker dealer for the US government, or two insolvent mortgage flippers.
I continue to watch in amazement, and I continue to laugh at it all. None of this is real and will only make more damaging the eventual fall. Nothing has changed...the financial system still rests on the edge of a cliff. The housing sector will continue to slide lower. Home foreclosures will continue to rise. Banks will continue to bleed from the credit derivative mess they have created. Jobs will continue to be lost. And the Dollar WILL get crushed. Gold and Silver are your only protection from the Doom on the horizon...DO NOT BE PERSUADED TO LEAVE THEIR SAFETY to chase this bear market rally in general equities, it will all come crashing back to earth in short order.
Wall Street extends rally after Fed decision
NEW YORK (AP) -- An already soaring Wall Street extended its advance Tuesday after the Federal Reserve left interest rates unchanged and assuaged some of the market's fears about the economy. The Dow Jones industrial average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.
The market was enjoying a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.
The Fed gave stocks another huge push higher in the last hours of trading. In a statement accompanying its widely expected rate decision, the central bank reported that "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." That assessment was welcome news to a market that has feared the economy was falling into recession because of weak consumer spending.
Early in the session, shares rose sharply after the Institute for Supply Management, the trade group of corporate purchasing executives, said its services sector index rose to 49.5 from 48.2 in June. Analysts surveyed by Thomson Financial/IFR predicted it would rise to 49.0.
Any reading below 50 signals contraction. The report is based on a survey of the institute's members and covers such indicators as new orders, employment, inventories, prices and exports and imports.
The notion that the sector might be in better shape than many investors feared gave Wall Street reason for optimism.
http://biz.yahoo.com/ap/080805/wall_street.html
..."economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." What a honey pot that nonsense is. Economic activity in the second quarter was barely above water ONLY because of the $168 BILLION dollar handout from the government. To suggest otherwise is blatantly misleading and a lie. Oh but the Fed said so, so all the world's problems have been solved. BAH!
Just yesterday we got this headline:
Rising prices stifle impact of stimulus payments
US consumers dig in amid rising prices, softening impact of government stimulus package
In June, the second biggest rise in prices in nearly three decades muted the impact of billions of dollars in government stimulus payments, government figures showed Monday.
Incomes barely budged in June and consumer spending retreated after taking into account the higher prices for food, energy and other items, the Commerce Department data show.
Consumer spending was up 0.8 percent in May and 0.6 percent in June, the Commerce Department said. Those increases were slashed to a modest 0.3 percent increase in May and a drop of 0.2 percent in June, however, when adjusted for rising prices of gasoline, food and other products. Incomes rose just 0.1 percent.
An inflation gauge tied to consumer spending jumped by 0.8 percent in June. That was the second biggest monthly increase since 1981.
http://biz.yahoo.com:80/ap/080804/economy.html
The only thing growing in the second quarter was the rate of inflation and the federal deficit. To suggest otherwise is deceitful.
The ISM Purchasing Managers Index rose to 49.5! Yeha! And it was "BETTER THAN EXPECTED"! Yeha! Never mind the fact that any number below 50 equals contraction. It was BETTER THAN EXPECTED! The delusion is mind numbing. Doomed is too tame a word for the future of this lost nation.
Gold and Silver were battered in the rush to euphoria. Today was a mega short squeeze in the general equities, and nothing more. Gold and Silver and their related shares the victims of naked short selling. Of course that is only illegal if it threatens a broker dealer for the US government, or two insolvent mortgage flippers.
I continue to watch in amazement, and I continue to laugh at it all. None of this is real and will only make more damaging the eventual fall. Nothing has changed...the financial system still rests on the edge of a cliff. The housing sector will continue to slide lower. Home foreclosures will continue to rise. Banks will continue to bleed from the credit derivative mess they have created. Jobs will continue to be lost. And the Dollar WILL get crushed. Gold and Silver are your only protection from the Doom on the horizon...DO NOT BE PERSUADED TO LEAVE THEIR SAFETY to chase this bear market rally in general equities, it will all come crashing back to earth in short order.
Monday, August 4, 2008
On Sale: Gold and Silver
Oil prices drop nearly $4 after storm threat eases
NEW YORK (AP) -- Oil prices plunged to a three-month low Monday, briefly tumbling below $120 a barrel in another huge sell-off after Tropical Storm Edouard seemed less likely to disrupt oil and natural gas output in the Gulf of Mexico.
Also weighing on oil prices Monday was a report by the Commerce Department that consumer spending after adjusting for inflation fell in June as shoppers dealt with higher prices for gasoline, food and other items. That fed investors' expectations that a U.S. economic slowdown is sharply curbing U.S. demand for fossil fuels.
The dramatic dive came after traders learned that Edouard, aiming for the coasts of Texas and Louisiana, likely would not damage offshore oil and natural gas drilling platforms that sit in the storm's path.
Adding to the bearish sentiment around oil, Democratic presidential candidate Barack Obama on Monday proposed that the government sell 70 million barrels of oil from its strategic reserves to help lower gasoline prices. He had previously opposed tapping the supplies, but said in a major energy speech that past releases from the reserve have "lowered gas prices within two weeks."
http://biz.yahoo.com/ap/080804/oil_prices.html
What a load of crap. The first advisory that came out about Edouard was late on Sunday afternoon. This storm developed rapidly over the weekend, and it should be noted that prices NEVER rose on fears about this little storm. Why then does the media claim that prices are down on the "relief" that Edouard will NOT be disruptive to Gulf Oil interests...it was never a threat to begin with.
Yet again we get the excuse that Oil is down because "consumer spending is down" and that fact extrapolates into the "belief" that an economic slowdown will drastically reduce US demand for Oil. Last week, supplies of gasoline were down by a "surprising 3.5 million barrels. This threw cold water on the "speculation" that a slowing economy would curtail gasoline use. Not to mention the fact that gasoline demand rose to it's highest level of the year in last weeks report. It should be noted as well the obvious decline in gasoline prices that we have all seen. Gasoline is "on sale". Americans love sales, I suspect they will be using more gasoline should prices drop further.
The increased demand for gasoline at sale prices only make Barack Bin Laden's proposal to sell 70 million barrels of Oil into the market even more ridiculous...even if it did result in lower gasoline prices. Let's not forget that America consumes 20 million barrels of Oil each and EVERY day of the year. 70 million barrels of Oil would not even last four days. Is this not the dumbest idea you have heard of yet? The Strategic Petroleum Reserve is for EMERGENCIES, not for lowering gas prices! The lower gas prices go, the more Americans will use, and then they rise again...it won't solve a damn thing. Simple pandering to the sheep for votes. Pathetic and irresponsible example of leadership if ever there was one.
Why such a great interest in creating the "perception" that falling Oil prices will fix everything?
Because if gas is cheaper, then people will have more money to "just spend". After all, 70% of the US economy depends on consumer spending. It is your civic responsibility to spend, spend, spend! And falling Oil prices will destroy that evil Inflation. No, I'm sorry to inform everybody once again, falling Oil prices will do NOTHING to stop Inflation. Inflation is on the fast track now, and Oil prices are not the cause of it. That is what the government wants you to believe. They preach it every chance they get aided and abetted by the subservient news media.
Inflation is caused by an increased money supply. And the US Government is increasing the US Dollar supply in excess of 15% annually. That is causing the Inflation. That is causing the rising Oil prices. Rising Oil prices are a direct result of a rising money supply. It is patently STUPID to believe that rising Oil prices "cause" Inflation. Rising Oil prices might "fuel" rising prices in general, but they are not the "cause" of Inflation, the Federal Reserve is. Inflation is here and it is going to get catastrophically worse before it gets better, and a 20% drop in Oil prices is NOT going to change that in any way shape of form. Go ahead and sell your Gold on the drop in Oil prices. You don't deserve to own it.
What has crude oil got to do with gold prices?
He asked me: “What do higher crude oil prices do to the general price levels in the world?” I said: “Of course, higher crude oil prices fuel inflation, since most of the demand for oil is inelastic.” He further probed: “Is gold a kind of proxy currency?” I said: “Yes. In fact, in the 1900s, many countries in the world had gold standards — gold was used as a medium of exchange.”
Let’s presume that gold was the currency now. How much gold would be required to buy a barrel of crude oil? Or how many barrels of crude oil will be required to buy an ounce of gold? The answer is around 7.3 barrels of crude oil would fetch one ounce of gold. This ratio is known as the ‘gold-oil ratio’.
He continued his questions: “Paper currencies like US dollar tend to lose their purchasing power over the years, why?” I replied: “Simple — due to inflation.” As time passes, paper currencies can’t buy the same amount of oil which you could have bought years ago. And the final words of wisdom came from him: “But gold is different.
It preserves value — better known as a store of value — and that’s the reason why gold is used to hedge inflation.”
He said: “Look at the very long term chart, the average number of barrels required to buy one ounce of gold is around 14.5, which is now at 7.3.”
I nodded in affirmation and said: “That’s because crude oil has moved up sharply from $38 in 1980s to $123 (high of $144), whereas gold has not moved in tandem. It is still trading near $910 per ounce, a little more than the 1980s high of $850 per ounce.” He jumped up and said: “Bingo, now for the gold-oil ratio to reach its long-term average of 14.50, at current prices, either the crude oil price has to move down to $63 or the gold price has to move up to $1,700.”
As I was leaving his office enlightened, I thought with the current uncertain geo-political situation in oil-rich countries such as Iran, Iraq and Nigeria, and with no new discoveries, crude oil seems unlikely to move down to say $63 levels for the gold-oil ratio to reach its long-term average of 14.50. In that case where would gold go?
http://economictimes.indiatimes.com/Features/The_Sunday_ET/Money__You/What_has_crude_oil_got_to_do_with_gold_prices/articleshow/3319957.cms
The sale prices on Gold and Silver won't last forever, I doubt they last the month. Only ignorance stands in the way of higher Gold and Silver prices now. The delusion that has overwhelmed market psychology has unwittingly conspired to offer savvy investors yet another opportunity to load the boat with Silver and Gold and their related mining shares. Gold and Silver are at or near HISTORIC lows in relation to the price of Oil. Take advantage of it NOW!
Now would be a good time to point out the "seasonal" weakness in Oil that tends to develop year in and year out in June and July. June and July Oil prices are seasonally weak as summer demands for gasoline have been met, and demand for heating oil is at it's lowest between June and August. Demand for winter needs begins to pick up in August, and peaks in late October.
See a seasonal chart of Oil here:
http://spectrumcommodities.com/education/commodity/charts/cl.html
A very strong point should be made and considered. On March 18, as the Fed bailed out Bear Stearns, Gold traded at $1013. On that day Oil traded at $104. It seems unlikely that Gold was trading at this level in relation to Oil because of "higher Oil prices" when today Gold is down substantially, and Oil prices are higher even as they have come off recent highs. If Gold didn't follow Oil prices higher then, why is it following them down now? Gold rose over $1000 at that time becasue of severe threats to the financial system. Those threats still exist today and are frankly more severe than they were considered then. Inflation has exploded since March as well. But as long as the public continues to grasp the delusion that Oil prices cause inflation, Gold prices may suffer the consequences and reflect the delusion and denial of the truth about the "soundness" of our financil system.
The Oil bubble has not burst. Not that Oil is in a "bubble" to begin with. Oil is merely taking advantage of it's seasonality to consolidate recent gains. Demand for Oil "globally" is NOT diminishing. It continues to grow. Oil consumption no longer revolves around the demands of the US consumer, but the World consumer. Grasp this fact and ignore the "reasons" the media gives you for the drop in Oil prices. The media exists to shape public opinion and distract you from reality. Take advantage of this opportunity and buy more Gold and Silver.
For a more detailed explanation of the Oil market I suggest reading this recent essay from Adam Hamilton. Adam has a most unique and easy to grasp interpretation of this raging Bull market in Oil. You can find his essay Gaming Oil Corrections by clicking this link: http://www.zealllc.com/2008/gameoil.htm
NEW YORK (AP) -- Oil prices plunged to a three-month low Monday, briefly tumbling below $120 a barrel in another huge sell-off after Tropical Storm Edouard seemed less likely to disrupt oil and natural gas output in the Gulf of Mexico.
Also weighing on oil prices Monday was a report by the Commerce Department that consumer spending after adjusting for inflation fell in June as shoppers dealt with higher prices for gasoline, food and other items. That fed investors' expectations that a U.S. economic slowdown is sharply curbing U.S. demand for fossil fuels.
The dramatic dive came after traders learned that Edouard, aiming for the coasts of Texas and Louisiana, likely would not damage offshore oil and natural gas drilling platforms that sit in the storm's path.
Adding to the bearish sentiment around oil, Democratic presidential candidate Barack Obama on Monday proposed that the government sell 70 million barrels of oil from its strategic reserves to help lower gasoline prices. He had previously opposed tapping the supplies, but said in a major energy speech that past releases from the reserve have "lowered gas prices within two weeks."
http://biz.yahoo.com/ap/080804/oil_prices.html
What a load of crap. The first advisory that came out about Edouard was late on Sunday afternoon. This storm developed rapidly over the weekend, and it should be noted that prices NEVER rose on fears about this little storm. Why then does the media claim that prices are down on the "relief" that Edouard will NOT be disruptive to Gulf Oil interests...it was never a threat to begin with.
Yet again we get the excuse that Oil is down because "consumer spending is down" and that fact extrapolates into the "belief" that an economic slowdown will drastically reduce US demand for Oil. Last week, supplies of gasoline were down by a "surprising 3.5 million barrels. This threw cold water on the "speculation" that a slowing economy would curtail gasoline use. Not to mention the fact that gasoline demand rose to it's highest level of the year in last weeks report. It should be noted as well the obvious decline in gasoline prices that we have all seen. Gasoline is "on sale". Americans love sales, I suspect they will be using more gasoline should prices drop further.
The increased demand for gasoline at sale prices only make Barack Bin Laden's proposal to sell 70 million barrels of Oil into the market even more ridiculous...even if it did result in lower gasoline prices. Let's not forget that America consumes 20 million barrels of Oil each and EVERY day of the year. 70 million barrels of Oil would not even last four days. Is this not the dumbest idea you have heard of yet? The Strategic Petroleum Reserve is for EMERGENCIES, not for lowering gas prices! The lower gas prices go, the more Americans will use, and then they rise again...it won't solve a damn thing. Simple pandering to the sheep for votes. Pathetic and irresponsible example of leadership if ever there was one.
Why such a great interest in creating the "perception" that falling Oil prices will fix everything?
Because if gas is cheaper, then people will have more money to "just spend". After all, 70% of the US economy depends on consumer spending. It is your civic responsibility to spend, spend, spend! And falling Oil prices will destroy that evil Inflation. No, I'm sorry to inform everybody once again, falling Oil prices will do NOTHING to stop Inflation. Inflation is on the fast track now, and Oil prices are not the cause of it. That is what the government wants you to believe. They preach it every chance they get aided and abetted by the subservient news media.
Inflation is caused by an increased money supply. And the US Government is increasing the US Dollar supply in excess of 15% annually. That is causing the Inflation. That is causing the rising Oil prices. Rising Oil prices are a direct result of a rising money supply. It is patently STUPID to believe that rising Oil prices "cause" Inflation. Rising Oil prices might "fuel" rising prices in general, but they are not the "cause" of Inflation, the Federal Reserve is. Inflation is here and it is going to get catastrophically worse before it gets better, and a 20% drop in Oil prices is NOT going to change that in any way shape of form. Go ahead and sell your Gold on the drop in Oil prices. You don't deserve to own it.
What has crude oil got to do with gold prices?
He asked me: “What do higher crude oil prices do to the general price levels in the world?” I said: “Of course, higher crude oil prices fuel inflation, since most of the demand for oil is inelastic.” He further probed: “Is gold a kind of proxy currency?” I said: “Yes. In fact, in the 1900s, many countries in the world had gold standards — gold was used as a medium of exchange.”
Let’s presume that gold was the currency now. How much gold would be required to buy a barrel of crude oil? Or how many barrels of crude oil will be required to buy an ounce of gold? The answer is around 7.3 barrels of crude oil would fetch one ounce of gold. This ratio is known as the ‘gold-oil ratio’.
He continued his questions: “Paper currencies like US dollar tend to lose their purchasing power over the years, why?” I replied: “Simple — due to inflation.” As time passes, paper currencies can’t buy the same amount of oil which you could have bought years ago. And the final words of wisdom came from him: “But gold is different.
It preserves value — better known as a store of value — and that’s the reason why gold is used to hedge inflation.”
He said: “Look at the very long term chart, the average number of barrels required to buy one ounce of gold is around 14.5, which is now at 7.3.”
I nodded in affirmation and said: “That’s because crude oil has moved up sharply from $38 in 1980s to $123 (high of $144), whereas gold has not moved in tandem. It is still trading near $910 per ounce, a little more than the 1980s high of $850 per ounce.” He jumped up and said: “Bingo, now for the gold-oil ratio to reach its long-term average of 14.50, at current prices, either the crude oil price has to move down to $63 or the gold price has to move up to $1,700.”
As I was leaving his office enlightened, I thought with the current uncertain geo-political situation in oil-rich countries such as Iran, Iraq and Nigeria, and with no new discoveries, crude oil seems unlikely to move down to say $63 levels for the gold-oil ratio to reach its long-term average of 14.50. In that case where would gold go?
http://economictimes.indiatimes.com/Features/The_Sunday_ET/Money__You/What_has_crude_oil_got_to_do_with_gold_prices/articleshow/3319957.cms
The sale prices on Gold and Silver won't last forever, I doubt they last the month. Only ignorance stands in the way of higher Gold and Silver prices now. The delusion that has overwhelmed market psychology has unwittingly conspired to offer savvy investors yet another opportunity to load the boat with Silver and Gold and their related mining shares. Gold and Silver are at or near HISTORIC lows in relation to the price of Oil. Take advantage of it NOW!
Now would be a good time to point out the "seasonal" weakness in Oil that tends to develop year in and year out in June and July. June and July Oil prices are seasonally weak as summer demands for gasoline have been met, and demand for heating oil is at it's lowest between June and August. Demand for winter needs begins to pick up in August, and peaks in late October.
See a seasonal chart of Oil here:
http://spectrumcommodities.com/education/commodity/charts/cl.html
A very strong point should be made and considered. On March 18, as the Fed bailed out Bear Stearns, Gold traded at $1013. On that day Oil traded at $104. It seems unlikely that Gold was trading at this level in relation to Oil because of "higher Oil prices" when today Gold is down substantially, and Oil prices are higher even as they have come off recent highs. If Gold didn't follow Oil prices higher then, why is it following them down now? Gold rose over $1000 at that time becasue of severe threats to the financial system. Those threats still exist today and are frankly more severe than they were considered then. Inflation has exploded since March as well. But as long as the public continues to grasp the delusion that Oil prices cause inflation, Gold prices may suffer the consequences and reflect the delusion and denial of the truth about the "soundness" of our financil system.
The Oil bubble has not burst. Not that Oil is in a "bubble" to begin with. Oil is merely taking advantage of it's seasonality to consolidate recent gains. Demand for Oil "globally" is NOT diminishing. It continues to grow. Oil consumption no longer revolves around the demands of the US consumer, but the World consumer. Grasp this fact and ignore the "reasons" the media gives you for the drop in Oil prices. The media exists to shape public opinion and distract you from reality. Take advantage of this opportunity and buy more Gold and Silver.
For a more detailed explanation of the Oil market I suggest reading this recent essay from Adam Hamilton. Adam has a most unique and easy to grasp interpretation of this raging Bull market in Oil. You can find his essay Gaming Oil Corrections by clicking this link: http://www.zealllc.com/2008/gameoil.htm
Thursday, July 31, 2008
Investor Psychology: Delusional
US Q2 GDP up 1.9% vs 2.4% rise expected, fastest pace since Q3 2007
WASHINGTON (Thomson Financial) - Increased exports, a slightly less grim housing picture and higher consumer spending all caused the US economy to pick up speed in the second quarter, though not as much as analysts had expected, while overall inflation continued to rise, the Commerce Department said today.
The economy grew at a 1.9% annualized pace in the second quarter after rising at a downwardly revised 0.9% pace in the first three months of the year. Economists polled by Thomson Reuters IFR Markets had predicted 2.4% annual growth between April and June. Growth the second quarter is at the fastest pace since the third quarter of last year.
The department also revised lower its estimate for growth in the first quarter to 0.9%, slightly lower than the 1.0% pace released a month ago. And the fourth quarter of last year was revised lower to a 0.2% decline, the first negative quarter since the third quarter of 2001.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=66725df0-03c8-47e4-bc6a-822fe9bfe92f
Economic rebound not as energetic as hoped for
WASHINGTON (AP) -- The prospects for a quick economic recovery dimmed Thursday, with new data showing the economy grew at a slower-than-expected rate this spring despite some oomph from tax rebate checks -- and actually shrank late last year.
Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped.
Armed with government stimulus checks of up to $600 per person, Americans boosted spending on food, clothing and other items in the second quarter, the Commerce Department reported.
But the gross domestic product still increased at a 1.9 percent annual rate, up from 0.9 percent in the first quarter but less than the 2.4 percent economists were looking for.
Government revisions showed the economy actually shrank at the end of last year at a 0.2 percent annual rate. It was the first quarterly dip for the GDP since the 2001 recession.
http://biz.yahoo.com/ap/080731/economy.html
For the past two weeks Hanky Panky Paulson has been blowing smoke all over Washington, financial television, and Sunday Morning news programs about the "strong long-term fundamentals" of the US Economy. He's been blowing smoke up the asses of any Congressman or financial news talking head that will listen, that the stimulus checks Washington sent out early this summer would "provide the growth the nation needs going forward". Today Hanky Panky Paulson got a roundhouse right to the side of his lopsided noggin. The Flim-Flam Man has been exposed, his Confidence Scam revealed for the fraud that it is. How can anybody continue to believe the bald faced lies of this creature of deceit any longer? The Mother Of All Bubbles is about to burst. The Confidence Bubble.
It doesn't take a genius to figure out that if you factor in Inflation there is absolutely NO growth in America these days. Obviously the fourth quarter proves that as it has now been revised as negative even without factoring in Inflation. The only thing growing in America these days is the money supply and the noses of Bumbling Ben Bernanke, Hanky Panky Paulson, and George Bush.
A slightly less grim housing picture? What? Need proof that things won't be getting better anytime soon? Look no further than this observation: "Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped." Another stimulus package? LOL! Why? To keep the charade going a little longer? Where is the money for it going to come from? The checks helped? Mr. President, Sir, helped what? Perpetuate the illusion, I mean delusion, that the economy continues to grow, and everything will get better in the "second half"?
One month in the second half has fallen by the wayside already, and nothing is better than it was at the beginning of the month. In fact, despite all the lies, and pathetic attempts at instilling "confidence" in the economy, 1,978,000 NEW claims for unemployment were booked in the month of July. I can't wait to see what kind of fabricated jobs number the labor Department conjures up for Friday morning's non-farm payrolls report. I can only imagine the number of new jobs in construction, manufacturing, and banking were created. LOOOOOOOOOOOOOOOL! No doubt they will claim there were. But it won't be enough to offset the job loses last month. I boldly predict job losses in the month of July in excess of 125,000.
Weekly applications for jobless benefits soared to 448,000 last week, highest level since 2003
WASHINGTON (AP) -- The number of people filing claims for unemployment benefits jumped last week to the highest level in five years, reflecting in large part a new government outreach effort to locate people eligible for benefits.
The Labor Department reported Thursday that the number of applications for jobless benefits soared to 448,000, an increase of 44,000 from the previous week. That was far worse than the decline of 8,000 that economists had been expecting.
However, the government attributed much of the big jump to a special outreach program to notify people that they could qualify for up to 13 weeks of additional benefits because of legislation Congress passed in June.
When people came in to apply for the extended benefits, state claims officials discovered that many of them were eligible for another round of initial claims because they had held jobs for a brief period after exhausting their original benefits.
Labor Department officials said that these special factors played a big role in pushing claims higher last week. The jump was the biggest one-week increase since claims soared by 94,000 the week of Sept. 10, 2005, following a wave of layoffs in the wake of the devastation from the Gulf Coast hurricanes that year.
http://biz.yahoo.com/ap/080731/jobless_claims.html
Why is there always an "excuse" when there are shocking economic data released? A special outreach program to notify people that could file for unemployment? If that don't beat all. Sheese, they don't even count half the people in this country that are unemployed as "unemployed" because they don't qualify for benefits anymore. Now they make pathetic excuses like this to "explain away" a five year high in "new" unemployment claims. Puh-leeeeeez! Excuses, excuses, excuse, is that all this country has to offer anymore? "Here's an excuse and a band-aid. Run along, everything will be alright." No, it won't.
Oil falls to almost $124 on dour US economic data
NEW YORK (AP) -- Oil prices pulled back Thursday, wiping out some gains from the previous day's $4 a barrel rally, as traders bet that a cooling U.S. economy will continue to eat into U.S. demand for fuel.
...the poor readings rekindled fears of a recession, prompting energy traders to dump oil contracts on expectations that more belt-tightening lay ahead for Americans who are already skipping vacations, giving up gas-gazzling SUVs and cutting back on driving to cope with almost $4-a-gallon gasoline.
http://biz.yahoo.com/ap/080731/oil_prices.html
Yesterdays unexpected drop in gasoline supplies seemed to throw cold water on the theory that a slowing economy will diminish demand for Oil. Yesterday's EIA figures showed gasoline demand reached a yearly high of 9.47 million barrels a day. Though less than a year ago, demand for gasoline obviously remains. The fact that demand for Oil in Asia, India and Russia is growing rapidly seems to escape the America-centric analysts here that believe the world still revolves around America. For every percentage drop in American demand for oil, there is a corresponding rise in demand overseas. China and India are on major growth curves, demand for Oil there is NOT going to wane just because Americans cannot afford it anymore. As a matter of fact, Oil is cheaper everywhere in the world than it is in America because of the floundering US Dollar. Demand destruction is a lie. If it were true then a 3.5 million barrel shortfall in yesterday petroleum numbers would not have sent the oil market into a buying frenzy. There is no excess capacity in the Oil market. Therefore there is no demand destruction. Oil prices are consolidating there recent powerful gains. Dreams of Oil at $60-80 a barrel again are just that.
Stressed banks borrow record amount from Fed
NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers.
Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday.
"It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York.
Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.
http://biz.yahoo.com/rb/080731/markets_credit_banks.html
But, Hanky Panky Paulson told us just last week that the banking system was "sound". I guess that was just another lie intended to help the public "remain confident" in the banking system. Never forget, the first three letters in confidence are CON. The entire banking system is teetering on the edge of collapse. It continues to confound me that a MAJOR Gold Rush has not yet developed. But it will, and quite soon in fact. Unfortunately for many, when they go seeking Gold, it will be far too expensive for them. And that's why we also invest in Silver. The rise in the price of Silver in the months to come is going to be shocking.
How in the hell did the Dollar recover this morning? Gold is now $14 off its morning high. Why? Oil prices are down. Why does Gold continue to be lead around by the price of Oil? I saw an analyst claim that the Dollar was up because Oil was down. LOL! Now that folks, is amusing. There is NOTHING, NOTHING, NOTHING in the US or the World that lends ANY fundamental support to the US Dollar. It should be falling like a stone in the ocean. The only reason I can figure that this is not the case is because if it were "allowed" to happen there would be a panic. And if Hurricane Katrina proved anything, this country is ill equipped to deal with a panic situation...any panic situation. The Dollar's destruction is coming, rest assured on that. The clowns "in power" will keep it suspended in midair or rolling gently downhill for as long as they can in an effort to save as many of their kind first, before they allow the falling Dollar to crush the public when it falls from the cliff.
Gold was shot down right on cue today as it reach 925 and a 38% retracement of it recent decline from 975 on July 22. A lot of Big Money wants Gold. That's why the price was brought in to the 200 day moving average. The Big Money loves to buy the 200 day moving average. Wise investors follow the Big Money. If just 5% of all the money "invested" in general equities was pulled and put into Gold, the resultant rise in price would take your breath away. $1000 Gold is now less than five weeks away. $1200+ Gold is less than five months away. And $25 Silver is going to cause a panic somewhere this Fall.
WASHINGTON (Thomson Financial) - Increased exports, a slightly less grim housing picture and higher consumer spending all caused the US economy to pick up speed in the second quarter, though not as much as analysts had expected, while overall inflation continued to rise, the Commerce Department said today.
The economy grew at a 1.9% annualized pace in the second quarter after rising at a downwardly revised 0.9% pace in the first three months of the year. Economists polled by Thomson Reuters IFR Markets had predicted 2.4% annual growth between April and June. Growth the second quarter is at the fastest pace since the third quarter of last year.
The department also revised lower its estimate for growth in the first quarter to 0.9%, slightly lower than the 1.0% pace released a month ago. And the fourth quarter of last year was revised lower to a 0.2% decline, the first negative quarter since the third quarter of 2001.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=66725df0-03c8-47e4-bc6a-822fe9bfe92f
Economic rebound not as energetic as hoped for
WASHINGTON (AP) -- The prospects for a quick economic recovery dimmed Thursday, with new data showing the economy grew at a slower-than-expected rate this spring despite some oomph from tax rebate checks -- and actually shrank late last year.
Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped.
Armed with government stimulus checks of up to $600 per person, Americans boosted spending on food, clothing and other items in the second quarter, the Commerce Department reported.
But the gross domestic product still increased at a 1.9 percent annual rate, up from 0.9 percent in the first quarter but less than the 2.4 percent economists were looking for.
Government revisions showed the economy actually shrank at the end of last year at a 0.2 percent annual rate. It was the first quarterly dip for the GDP since the 2001 recession.
http://biz.yahoo.com/ap/080731/economy.html
For the past two weeks Hanky Panky Paulson has been blowing smoke all over Washington, financial television, and Sunday Morning news programs about the "strong long-term fundamentals" of the US Economy. He's been blowing smoke up the asses of any Congressman or financial news talking head that will listen, that the stimulus checks Washington sent out early this summer would "provide the growth the nation needs going forward". Today Hanky Panky Paulson got a roundhouse right to the side of his lopsided noggin. The Flim-Flam Man has been exposed, his Confidence Scam revealed for the fraud that it is. How can anybody continue to believe the bald faced lies of this creature of deceit any longer? The Mother Of All Bubbles is about to burst. The Confidence Bubble.
It doesn't take a genius to figure out that if you factor in Inflation there is absolutely NO growth in America these days. Obviously the fourth quarter proves that as it has now been revised as negative even without factoring in Inflation. The only thing growing in America these days is the money supply and the noses of Bumbling Ben Bernanke, Hanky Panky Paulson, and George Bush.
A slightly less grim housing picture? What? Need proof that things won't be getting better anytime soon? Look no further than this observation: "Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped." Another stimulus package? LOL! Why? To keep the charade going a little longer? Where is the money for it going to come from? The checks helped? Mr. President, Sir, helped what? Perpetuate the illusion, I mean delusion, that the economy continues to grow, and everything will get better in the "second half"?
One month in the second half has fallen by the wayside already, and nothing is better than it was at the beginning of the month. In fact, despite all the lies, and pathetic attempts at instilling "confidence" in the economy, 1,978,000 NEW claims for unemployment were booked in the month of July. I can't wait to see what kind of fabricated jobs number the labor Department conjures up for Friday morning's non-farm payrolls report. I can only imagine the number of new jobs in construction, manufacturing, and banking were created. LOOOOOOOOOOOOOOOL! No doubt they will claim there were. But it won't be enough to offset the job loses last month. I boldly predict job losses in the month of July in excess of 125,000.
Weekly applications for jobless benefits soared to 448,000 last week, highest level since 2003
WASHINGTON (AP) -- The number of people filing claims for unemployment benefits jumped last week to the highest level in five years, reflecting in large part a new government outreach effort to locate people eligible for benefits.
The Labor Department reported Thursday that the number of applications for jobless benefits soared to 448,000, an increase of 44,000 from the previous week. That was far worse than the decline of 8,000 that economists had been expecting.
However, the government attributed much of the big jump to a special outreach program to notify people that they could qualify for up to 13 weeks of additional benefits because of legislation Congress passed in June.
When people came in to apply for the extended benefits, state claims officials discovered that many of them were eligible for another round of initial claims because they had held jobs for a brief period after exhausting their original benefits.
Labor Department officials said that these special factors played a big role in pushing claims higher last week. The jump was the biggest one-week increase since claims soared by 94,000 the week of Sept. 10, 2005, following a wave of layoffs in the wake of the devastation from the Gulf Coast hurricanes that year.
http://biz.yahoo.com/ap/080731/jobless_claims.html
Why is there always an "excuse" when there are shocking economic data released? A special outreach program to notify people that could file for unemployment? If that don't beat all. Sheese, they don't even count half the people in this country that are unemployed as "unemployed" because they don't qualify for benefits anymore. Now they make pathetic excuses like this to "explain away" a five year high in "new" unemployment claims. Puh-leeeeeez! Excuses, excuses, excuse, is that all this country has to offer anymore? "Here's an excuse and a band-aid. Run along, everything will be alright." No, it won't.
Oil falls to almost $124 on dour US economic data
NEW YORK (AP) -- Oil prices pulled back Thursday, wiping out some gains from the previous day's $4 a barrel rally, as traders bet that a cooling U.S. economy will continue to eat into U.S. demand for fuel.
...the poor readings rekindled fears of a recession, prompting energy traders to dump oil contracts on expectations that more belt-tightening lay ahead for Americans who are already skipping vacations, giving up gas-gazzling SUVs and cutting back on driving to cope with almost $4-a-gallon gasoline.
http://biz.yahoo.com/ap/080731/oil_prices.html
Yesterdays unexpected drop in gasoline supplies seemed to throw cold water on the theory that a slowing economy will diminish demand for Oil. Yesterday's EIA figures showed gasoline demand reached a yearly high of 9.47 million barrels a day. Though less than a year ago, demand for gasoline obviously remains. The fact that demand for Oil in Asia, India and Russia is growing rapidly seems to escape the America-centric analysts here that believe the world still revolves around America. For every percentage drop in American demand for oil, there is a corresponding rise in demand overseas. China and India are on major growth curves, demand for Oil there is NOT going to wane just because Americans cannot afford it anymore. As a matter of fact, Oil is cheaper everywhere in the world than it is in America because of the floundering US Dollar. Demand destruction is a lie. If it were true then a 3.5 million barrel shortfall in yesterday petroleum numbers would not have sent the oil market into a buying frenzy. There is no excess capacity in the Oil market. Therefore there is no demand destruction. Oil prices are consolidating there recent powerful gains. Dreams of Oil at $60-80 a barrel again are just that.
Stressed banks borrow record amount from Fed
NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers.
Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday.
"It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York.
Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.
http://biz.yahoo.com/rb/080731/markets_credit_banks.html
But, Hanky Panky Paulson told us just last week that the banking system was "sound". I guess that was just another lie intended to help the public "remain confident" in the banking system. Never forget, the first three letters in confidence are CON. The entire banking system is teetering on the edge of collapse. It continues to confound me that a MAJOR Gold Rush has not yet developed. But it will, and quite soon in fact. Unfortunately for many, when they go seeking Gold, it will be far too expensive for them. And that's why we also invest in Silver. The rise in the price of Silver in the months to come is going to be shocking.
How in the hell did the Dollar recover this morning? Gold is now $14 off its morning high. Why? Oil prices are down. Why does Gold continue to be lead around by the price of Oil? I saw an analyst claim that the Dollar was up because Oil was down. LOL! Now that folks, is amusing. There is NOTHING, NOTHING, NOTHING in the US or the World that lends ANY fundamental support to the US Dollar. It should be falling like a stone in the ocean. The only reason I can figure that this is not the case is because if it were "allowed" to happen there would be a panic. And if Hurricane Katrina proved anything, this country is ill equipped to deal with a panic situation...any panic situation. The Dollar's destruction is coming, rest assured on that. The clowns "in power" will keep it suspended in midair or rolling gently downhill for as long as they can in an effort to save as many of their kind first, before they allow the falling Dollar to crush the public when it falls from the cliff.
Gold was shot down right on cue today as it reach 925 and a 38% retracement of it recent decline from 975 on July 22. A lot of Big Money wants Gold. That's why the price was brought in to the 200 day moving average. The Big Money loves to buy the 200 day moving average. Wise investors follow the Big Money. If just 5% of all the money "invested" in general equities was pulled and put into Gold, the resultant rise in price would take your breath away. $1000 Gold is now less than five weeks away. $1200+ Gold is less than five months away. And $25 Silver is going to cause a panic somewhere this Fall.
Wednesday, July 30, 2008
The First Three Letters of Confidence Spell CON
What was witnessed in the Precious Metals today was a "washout". The weak hands are now undoubtedly OUT of Gold and Silver. Those that sold today sold into eager and grateful hands. It should be noted, and highlighted, that this mornings chaos in both metals stopped dead and reversed hard at their respective 200 DAY moving averages. This was a big money buying opportunity. This was exactly what this metals market needed.
What was the cause of this metals meltdown this morning? More lies, spin, and a complete lack of understanding regarding the systemic risks that the financial system now faces. It continues to amaze, and disturb, me that every piece of news that is Gold positive is ignored and the metals sold. Where I come from it's called a scam.
There is no bigger joke, no bigger scam, no bigger crime in the history of humanity than that which is being perpetrated on America and the World today. Our way of life is literally being stolen from us as we sit around oblivious to it all. Each and every day we are inundated with headlines "trying" to warn us of the disaster our fearless leaders and government regulators have created to destroy our freedoms and wealth, and steal it all for themselves. And each and everyday Americans go on sitting in front of their big screen TVs believing they are rich. America is broke! Not just financially, but in total. The entire system is broken. The government is corrupt and full of con men. The banking industry is corrupt and full of con men. The press is not free, but run by the corrupt government. The infrastructure is dated and dilapidated. The auto industry has been crushed. The nations manufacturing base has been destroyed and shipped overseas. Debt is all that remains. Debt will be this nations legacy in the history books, and it's citizens slaves to their debt for generations to come.
SEC extends restrictions on short-selling
Federal regulators on Tuesday extended through mid-August a temporary order banning a certain kind of short-selling of the stocks of mortgage finance companies Fannie Mae, Freddie Mac and 17 large investment banks.
The Securities and Exchange Commission said the ban on so-called "naked" short selling will be in effect until 11:59 p.m. EDT on Aug. 12 and will not be extended.
http://biz.yahoo.com/ap/080730/sec_short_selling.html
Temporary order banning naked short-selling. LOL, naked short selling has been illegal since the 30s. This release claims the "ban" will not be extended beyond August 12. Could the lift-off in Gold then be scheduled for August 13th? Isn't it interesting that the "ban" on naked short-selling is ONLY on the banks and institutions that "borrow from the Fed"?
Borrow from Fed and you get protection against shorting
NEW YORK -- The U.S. Securities and Exchange Commission extended an emergency limit on short sales in shares of Freddie Mac, Fannie Mae, and 17 brokerages as it prepares broader rules to thwart stock manipulation.
The SEC pushed back expiration of its ban on so-called naked short sales of the firms' stocks to Aug. 12, the Washington-based agency said in a statement yesterday. The order aims to keep traders from driving down financial stocks after Bear Stearns Cos. and IndyMac Bancorp Inc. collapsed amid rumors they were faltering.
The emergency order, focused on companies whose collapse might expose the U.S. government to losses, gives regulators time to weigh wider restrictions. The SEC said yesterday it plans to collect data to measure the impact of the rule and will examine additional proposals to curb short sales.
http://gata.org/node/6461
Central banks extend emergency credit; rate hikes less likely
WASHINGTON -- The U.S., European, and Swiss central banks on Wednesday extended emergency lending facilities for investment banks and expanded other liquidity programs to ease credit market strains that have weighed on the global economy for nearly a year.
The U.S. Federal Reserve said it was prolonging until Jan. 30 the emergency credit facility for primary dealers that had been due to expire in mid-September.
The Fed said it acted "in light of continued fragile circumstances in financial markets," and said it would close the lending program once it determined credit market conditions were no longer "unusual and exigent."
Some analysts said the latest action suggested the Fed would be loathe to raise interest rates any time soon and interest-rate futures showed traders trimming back bets on the Fed raising rates this year.
http://gata.org/node/6460
So..., I guess it would be safe to say that the "credit crisis" is far from over? Geeze, I swear they just told us that it was over... How do you spell inflation? How do you spell LOTS of inflation. Strong Dollar, LOOOOOOOOOOOOOOOL. And people actually accepted this "breaking news" this morning as good and Dollar positive. The blind leading the blind. What a horror story.
The ADP employment survey
The ADP employment survey, a traditional gauge of nonfarm payroll figures, was released Wednesday. Joe LaVorgna, chief U.S. economist at Deutsche Bank, was hesitant to put much stock in the report. "Since last November, the average forecast miss on private payrolls using the ADP survey has been 116,000," he said, adding that between March and May, the ADP missed the mark by an average of 109,000.
http://www.forbes.com/markets/2008/07/29/briefing-outlook-gdp-markets-equity-cx_cg_0729markets39.html
Hey now, that's the kind of track record that just makes you want to go out and buy the US Dollar doesn't it? I guess you'd have to say the stock markets over reacted a bit to that news yesterday.
I added up the "initial claims" for unemployment over the first four weeks of July. The number in total was shocking. The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. The toal number of people filing "first-time claims" over the first four weeks of July was 1,530,000. Remember that numer when the non-farm payrolls number is rolled out Friday morning at 8:30 AM.
Government announces plans to borrow $27 billion
Those plans include raising $27 billion by selling a new 10-year note and a new 30-year bond at the regularly scheduled quarterly auctions to be held next week. The government needs to borrow $171 billion during the current July-September quarter, the second highest quarterly borrowing total on record.
The increased borrowing needs reflect the exploding federal budget deficit which is projected to more than double in size this year and to hit an all-time high of $482 billion in the 2009 budget year.
The administration released the new deficit forecasts on Monday. It blamed the surge on the sagging economy and the effort to keep the country from falling into a deep recession by mailing out 130 million economic stimulus payments.
http://biz..yahoo.com/ap/080730/federal_borrowing.html
So the government blamed the deficits on themselves? Write that down. If an exploding federal deficit is "good" for the Dollar, it's news to me. I guess it was good for stocks, they were up again today.
Oil jumps over $4 on surprise drop in gas supplies
NEW YORK (AP) -- Oil prices soared over $4 a barrel Wednesday, halting a dramatic two-week slide after a surprise drop in U.S. gasoline supplies fed speculation that record fuel prices aren't keeping Americans off the roads.
The Energy Information Administration said in its weekly inventory report that U.S. gasoline supplies fell by 3.5 million barrels last week. Analysts surveyed by energy research firm Platts expected gas supplies to increase by 400,000 barrels. U.S. crude stockpiles also fell by 100,000 barrels last week, less than the 1.3 million barrels analysts had predicted.
The report gave some traders reasons to believe that crude's slide was overblown and that the drop in gas supplies mean prices have fallen enough to nudge Americans back onto the roads.
The surprise drop in gas supplies suggests record oil prices haven't curbed U.S. fuel demand to the extent that some energy market experts had anticipated after crude spiked above $147 a barrel earlier this month.
http://biz.yahoo.com/ap/080730/oil_prices.html
Where is all this demand destruction for Oil we keep having thrown in our faces "explaining" the recent drop in Oil prices. People, nothing goes straight up, not even Oil. Any lessening demand in the US will be met by increasing demand in China, India and Russia. Only a fool believes Oil prices are going to plummet back to $60 a barrel. Oil is going through a technical correction /consolidation. The entire Commodity Sector is because of it. Strong Dollar? LOL! If you've read this far, you know that's a crock of donkey dung.
The following essay is an absolute MUST READ. This is a rare "in a nutshell" piece that should put the entire financial collapse we face into complete perspective. If this essay does not convince you to buy and HOLD Gold and Silver, nothing ever will. Please read it in it's entirety at the link below.
The Con In Central Bankers’ Confidence
by Darryl Robert Schoon
Rising gold prices are a cold sore on the lip of central bankers. In the world of paper money, it’s a clear sign something’s not right
Central bankers are the keepers of the keys to the kingdom. The kingdom, however, is on the edge of bankruptcy and in danger as never before. Comparisons are now being made to the Great Depression of the 1930s. The comparisons, however, are just that.
In some ways, the situation is similar. In many ways, it is not. In a very fundamental way, the conditions are much worse. The systemic strains on the global financial system are today much more profound than even during the Great Depression.
The Great Depression of the 1930s was unique in the history of capital markets built on debt-based money, sic capitalism. Until the creation of the Federal Reserve System, the US economy had been a savings-based, not debt-based, economy. The difference between the two, although rarely understood, is profound
The price paid for credit-based expansion is debt. Increasing the debt-based money supply increases the amount of debt; and, over the naturally limited life of a debt-based economy, the constantly increasing and compounding levels of debt will grow until the economy collapses.
Compounding debt, the wellspring of bankers’ profits, will eventually destroy the economy on which it lives. The time it takes to do so is dependent on the strength and productivity of the underlying economy.
No economy, however, no matter how strong initially, can out run the constantly compounding debt of credit-based money—not even the United States.
Modern economics is a shell game, a 300 year old confidence game designed to hide the fact that bankers’ credit replaced real money, credit created out of thin air by private bankers and public government that leaves compounding debt, and ultimately economic destruction, in its wake.
Recently, because of the increasing collusion between bankers and government, the line between private banking and public government is gone. They are now one and the same—only the union hasn’t been publicly announced because of anticipated opposition to the now consummated marriage.
Central bankers are modern day confidence men who have so embedded themselves into the fabric of everyday commerce that people are convinced they need credit in order to survive; like Elvis Presley in his final days believed he needed prescription pills to live.
Just as Dr. “Nick”, Elvis Presley’s pill doctor, is responsible for killing Elvis with his over-prescription of drugs, Dr. Bernanke, the current US credit provider, and his predecessor Dr. Greenspan will be remembered for their fatal over-prescribing of central bank credit to the US and world economy. Too much of a good thing is and has always been in the end, a bad thing.
http://news.goldseek.com/GoldSeek/1217430000.php
What was the cause of this metals meltdown this morning? More lies, spin, and a complete lack of understanding regarding the systemic risks that the financial system now faces. It continues to amaze, and disturb, me that every piece of news that is Gold positive is ignored and the metals sold. Where I come from it's called a scam.
There is no bigger joke, no bigger scam, no bigger crime in the history of humanity than that which is being perpetrated on America and the World today. Our way of life is literally being stolen from us as we sit around oblivious to it all. Each and every day we are inundated with headlines "trying" to warn us of the disaster our fearless leaders and government regulators have created to destroy our freedoms and wealth, and steal it all for themselves. And each and everyday Americans go on sitting in front of their big screen TVs believing they are rich. America is broke! Not just financially, but in total. The entire system is broken. The government is corrupt and full of con men. The banking industry is corrupt and full of con men. The press is not free, but run by the corrupt government. The infrastructure is dated and dilapidated. The auto industry has been crushed. The nations manufacturing base has been destroyed and shipped overseas. Debt is all that remains. Debt will be this nations legacy in the history books, and it's citizens slaves to their debt for generations to come.
SEC extends restrictions on short-selling
Federal regulators on Tuesday extended through mid-August a temporary order banning a certain kind of short-selling of the stocks of mortgage finance companies Fannie Mae, Freddie Mac and 17 large investment banks.
The Securities and Exchange Commission said the ban on so-called "naked" short selling will be in effect until 11:59 p.m. EDT on Aug. 12 and will not be extended.
http://biz.yahoo.com/ap/080730/sec_short_selling.html
Temporary order banning naked short-selling. LOL, naked short selling has been illegal since the 30s. This release claims the "ban" will not be extended beyond August 12. Could the lift-off in Gold then be scheduled for August 13th? Isn't it interesting that the "ban" on naked short-selling is ONLY on the banks and institutions that "borrow from the Fed"?
Borrow from Fed and you get protection against shorting
NEW YORK -- The U.S. Securities and Exchange Commission extended an emergency limit on short sales in shares of Freddie Mac, Fannie Mae, and 17 brokerages as it prepares broader rules to thwart stock manipulation.
The SEC pushed back expiration of its ban on so-called naked short sales of the firms' stocks to Aug. 12, the Washington-based agency said in a statement yesterday. The order aims to keep traders from driving down financial stocks after Bear Stearns Cos. and IndyMac Bancorp Inc. collapsed amid rumors they were faltering.
The emergency order, focused on companies whose collapse might expose the U.S. government to losses, gives regulators time to weigh wider restrictions. The SEC said yesterday it plans to collect data to measure the impact of the rule and will examine additional proposals to curb short sales.
http://gata.org/node/6461
Central banks extend emergency credit; rate hikes less likely
WASHINGTON -- The U.S., European, and Swiss central banks on Wednesday extended emergency lending facilities for investment banks and expanded other liquidity programs to ease credit market strains that have weighed on the global economy for nearly a year.
The U.S. Federal Reserve said it was prolonging until Jan. 30 the emergency credit facility for primary dealers that had been due to expire in mid-September.
The Fed said it acted "in light of continued fragile circumstances in financial markets," and said it would close the lending program once it determined credit market conditions were no longer "unusual and exigent."
Some analysts said the latest action suggested the Fed would be loathe to raise interest rates any time soon and interest-rate futures showed traders trimming back bets on the Fed raising rates this year.
http://gata.org/node/6460
So..., I guess it would be safe to say that the "credit crisis" is far from over? Geeze, I swear they just told us that it was over... How do you spell inflation? How do you spell LOTS of inflation. Strong Dollar, LOOOOOOOOOOOOOOOL. And people actually accepted this "breaking news" this morning as good and Dollar positive. The blind leading the blind. What a horror story.
The ADP employment survey
The ADP employment survey, a traditional gauge of nonfarm payroll figures, was released Wednesday. Joe LaVorgna, chief U.S. economist at Deutsche Bank, was hesitant to put much stock in the report. "Since last November, the average forecast miss on private payrolls using the ADP survey has been 116,000," he said, adding that between March and May, the ADP missed the mark by an average of 109,000.
http://www.forbes.com/markets/2008/07/29/briefing-outlook-gdp-markets-equity-cx_cg_0729markets39.html
Hey now, that's the kind of track record that just makes you want to go out and buy the US Dollar doesn't it? I guess you'd have to say the stock markets over reacted a bit to that news yesterday.
I added up the "initial claims" for unemployment over the first four weeks of July. The number in total was shocking. The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. The toal number of people filing "first-time claims" over the first four weeks of July was 1,530,000. Remember that numer when the non-farm payrolls number is rolled out Friday morning at 8:30 AM.
Government announces plans to borrow $27 billion
Those plans include raising $27 billion by selling a new 10-year note and a new 30-year bond at the regularly scheduled quarterly auctions to be held next week. The government needs to borrow $171 billion during the current July-September quarter, the second highest quarterly borrowing total on record.
The increased borrowing needs reflect the exploding federal budget deficit which is projected to more than double in size this year and to hit an all-time high of $482 billion in the 2009 budget year.
The administration released the new deficit forecasts on Monday. It blamed the surge on the sagging economy and the effort to keep the country from falling into a deep recession by mailing out 130 million economic stimulus payments.
http://biz..yahoo.com/ap/080730/federal_borrowing.html
So the government blamed the deficits on themselves? Write that down. If an exploding federal deficit is "good" for the Dollar, it's news to me. I guess it was good for stocks, they were up again today.
Oil jumps over $4 on surprise drop in gas supplies
NEW YORK (AP) -- Oil prices soared over $4 a barrel Wednesday, halting a dramatic two-week slide after a surprise drop in U.S. gasoline supplies fed speculation that record fuel prices aren't keeping Americans off the roads.
The Energy Information Administration said in its weekly inventory report that U.S. gasoline supplies fell by 3.5 million barrels last week. Analysts surveyed by energy research firm Platts expected gas supplies to increase by 400,000 barrels. U.S. crude stockpiles also fell by 100,000 barrels last week, less than the 1.3 million barrels analysts had predicted.
The report gave some traders reasons to believe that crude's slide was overblown and that the drop in gas supplies mean prices have fallen enough to nudge Americans back onto the roads.
The surprise drop in gas supplies suggests record oil prices haven't curbed U.S. fuel demand to the extent that some energy market experts had anticipated after crude spiked above $147 a barrel earlier this month.
http://biz.yahoo.com/ap/080730/oil_prices.html
Where is all this demand destruction for Oil we keep having thrown in our faces "explaining" the recent drop in Oil prices. People, nothing goes straight up, not even Oil. Any lessening demand in the US will be met by increasing demand in China, India and Russia. Only a fool believes Oil prices are going to plummet back to $60 a barrel. Oil is going through a technical correction /consolidation. The entire Commodity Sector is because of it. Strong Dollar? LOL! If you've read this far, you know that's a crock of donkey dung.
The following essay is an absolute MUST READ. This is a rare "in a nutshell" piece that should put the entire financial collapse we face into complete perspective. If this essay does not convince you to buy and HOLD Gold and Silver, nothing ever will. Please read it in it's entirety at the link below.
The Con In Central Bankers’ Confidence
by Darryl Robert Schoon
Rising gold prices are a cold sore on the lip of central bankers. In the world of paper money, it’s a clear sign something’s not right
Central bankers are the keepers of the keys to the kingdom. The kingdom, however, is on the edge of bankruptcy and in danger as never before. Comparisons are now being made to the Great Depression of the 1930s. The comparisons, however, are just that.
In some ways, the situation is similar. In many ways, it is not. In a very fundamental way, the conditions are much worse. The systemic strains on the global financial system are today much more profound than even during the Great Depression.
The Great Depression of the 1930s was unique in the history of capital markets built on debt-based money, sic capitalism. Until the creation of the Federal Reserve System, the US economy had been a savings-based, not debt-based, economy. The difference between the two, although rarely understood, is profound
The price paid for credit-based expansion is debt. Increasing the debt-based money supply increases the amount of debt; and, over the naturally limited life of a debt-based economy, the constantly increasing and compounding levels of debt will grow until the economy collapses.
Compounding debt, the wellspring of bankers’ profits, will eventually destroy the economy on which it lives. The time it takes to do so is dependent on the strength and productivity of the underlying economy.
No economy, however, no matter how strong initially, can out run the constantly compounding debt of credit-based money—not even the United States.
Modern economics is a shell game, a 300 year old confidence game designed to hide the fact that bankers’ credit replaced real money, credit created out of thin air by private bankers and public government that leaves compounding debt, and ultimately economic destruction, in its wake.
Recently, because of the increasing collusion between bankers and government, the line between private banking and public government is gone. They are now one and the same—only the union hasn’t been publicly announced because of anticipated opposition to the now consummated marriage.
Central bankers are modern day confidence men who have so embedded themselves into the fabric of everyday commerce that people are convinced they need credit in order to survive; like Elvis Presley in his final days believed he needed prescription pills to live.
Just as Dr. “Nick”, Elvis Presley’s pill doctor, is responsible for killing Elvis with his over-prescription of drugs, Dr. Bernanke, the current US credit provider, and his predecessor Dr. Greenspan will be remembered for their fatal over-prescribing of central bank credit to the US and world economy. Too much of a good thing is and has always been in the end, a bad thing.
http://news.goldseek.com/GoldSeek/1217430000.php
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