October 2009

Friday gold prices held at $1,045/oz. despite a firmer dollar as stocks fell on consumer thrift. Gold last traded down $.10 to $1,045.70/oz., silver fell $.36 to $16.31/oz.

* For the month gold prices are up over 4.5%, while silver ended a roller coaster month even. Friday's stock slide caps a volatile week as investors question the fundamental soundness of the economic recovery. U.S. stocks ended the month down 2-3%.

* "U.S. consumer spending fell sharply in September after the government's cash-for-clunkers program ended, the Commerce Department estimated Friday. Real (inflation-adjusted) consumer spending dropped a seasonally adjusted 0.6% in September after a 1% gain in August. Real disposable incomes fell a seasonally adjusted 0.1%, the fourth decline in a row," reports FoxBus

* "The consumer confidence index fell to its lowest level in 26 years this week. The Conference Board's consumer confidence index fell to 47.7 in October from an upwardly revised 53.4 in September," reports Marketwatch.

* "The U.S. is in the beginning of a huge crash in commercial real estate. All of the components of real estate value are going in the wrong direction simultaneously. Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up," said billionaire investor Wilbur L. Ross Jr, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. U.S. office vacancies hit a five-year high of almost 17% in the third quarter," reports Bloomberg.

* "The House health care bill unveiled Thursday clocks in at 1,990 pages and about 400,000 words. With an estimated 10-year cost of $894 billion, that comes out to about $2.24 million per word," reports Politico.

* Gold to win 'The Great Liquidity Race': "Paul Tudor Jones, the legendary hedge fund manager of Tudor Investment sees a wave of money flowing into the markets, pushing up stocks, commodities and other assets in what he terms 'The Great Liquidity Race.' 'I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And that time is now,' says Mr. Jones," reports NYTimes. [Ed. Note: Mr. Jones says gold is cheap at today's price and is at least 20% undervalued according to his latest research, see p. 14-24. Sound familiar?]

* Third-quarter growth surprised economists by rising 3.5%, boosting both stock and commodity prices. Higher consumer spending, a slowdown in the reduction of inventories, an increase in residential investments, and robust government spending all contributed to the rise. Economists warn that expectations going forward range from 2%-3%.

* Stimulus jobs overstated: "The government's first accounting of jobs tied to the $787 billion stimulus program claimed more than 30,000 positions paid for with recovery money. But that figure is overstated by least 5,000 jobs, according to an Associated Press review, which found some counts were more than 10 times as high as the actual number of jobs," reports AP.

* Happy Anniversary Wall Street: Today Wall Street is replaying the 1930s, but to a slightly different meter. With the 80th anniversary of the Great Crash of 1929 falling on October 29th of this year, Wall Street is celebrating in characteristic style–with a euphoria-led bubble that now appears to be crashing up against economic reality. In 1930, though on our reckoning the Depression had well and truly begun, the mindset that prevailed was very similar to today’s—that the worst of the crisis is behind us, and economic recovery is underway," reports Steve Keen at Debtdeflation.

* 1929 Stock Market Crash Also Wiped Out Gold Standard: "What is often lost in the analysis of the Great Depression is that the stage was set to take America off The Gold Standard and allow the FED to slowly devalue the U.S. dollar. Could this latest crisis and the subsequent reaction of the government be setting the stage to ultimately destroy the U.S. dollar? Sadly I believe the answer is YES!. This underlines the importance of individual citizens putting themselves back on a personal gold standard today," writes Swiss America Chairman Craig R. Smith.

* Dollar's fall setting off alarm bells overseas: "The dramatic decline of the U.S. dollar is aiding the American economic recovery but setting off alarm bells overseas, with corporate executives, politicians and pundits calling it among the biggest threats to the rebounds underway in Europe and Japan. Yet analysts say the fall of the dollar reflects a basic economic truth: the U.S. financial situation is no longer as solid as it once was. Rather than being undervalued, many argue that the dollar has room to fall further. The risk remains of a full-blown run on the dollar that could force the Federal Reserve to suddenly raise interest rates, dealing a potentially severe blow to the U.S. recovery. But for now, the weak dollar is one problem the United States loves to have," reports WashPost.

* The Dollar Depends on Politicians Now:"The reality is that Mr. Bernanke cannot totally blame politicians. He could do what Paul Volcker did, and raise dollar interest rates to send a message to the market that he will not allow the dollar to be destroyed. But that is not likely to happen. There has been no indication that Mr. Bernanke will raise interest rates anytime soon, much less raise them to the level needed to convince the market that he intends to preserve the purchasing power of the dollar. Sadly, the dollar is no longer as good as gold. It is now only as good as the empty rhetoric of politicians and central bankers," reports James Turk at HoweStreet.

* Gold: a win-win situation: "With gold at record [nominal] highs, it’s hard to believe that it will go any higher. Oh well. 'Gold is particularly affected by the weakness of the dollar because it has always been viewed as a safe haven for catastrophes and depreciation of currencies,' says Bill Gary, president of Commodity Information Systems Inc. And, if the global economy continues to do well, we will still see even more people want to put their money into gold," reports CNBC.

* As precious metals are tracking the long-term decline of the U.S. dollar, smart money will buy on the price dips. Market uncertainty will continue to drive more and more weary investors into tangible assets as the safest haven of the 21st century.

* "Moving little faster than a 19th century stagecoach, this 'secular' (long-term) bull market in tangible assets has managed to escape the notice of mainstream America or media fanfare so far in the 21st century. That is about to change. A new public phase of the gold rush is set to begin. Strong physical demand, a falling dollar, central bank buying, geopolitical risks and concerns about inflation are only a few of the major forces driving this gold bull," Swiss America reported back in Nov. 2007.

* Weak Dollar Is Protectionist Barrier: "The dollar is likely to continue depreciating and the 'new normal' will see consumers shedding debt in an attempt to balance their books. I think the dollar is an over-owned currency. The Chinese, the Asians have basically owned too many dollars for too long. In the new normal for the world economies, investors will have to get used to a very low return on asset market. The standard of living in the US is likely to go down with the dollar, as we've spent too much over the past 20 years. Let's face it, a lower dollar is basically a protectionist barrier, Bill Gross, the influential manager who runs top bond fund Pimco, told CNBC.

* Gold: a "Crisis Hedge" not an Inflation Hedge: "The 1980 peak price of gold ($850/oz.) today would be over $2,100 an ounce, in 2007 inflation-adjusted dollars. Why is gold rising? Partially because it is a commodity and demand has picked up from China (perhaps they got tired of the gold manipulation game). During times of crisis and fear gold rises and individual governments can't stop it. As a long-term crisis hedge gold is excellent. But as a short term inflation hedge it has a spotty record although it has had its moments. Does this mean Gold is a bad investment now? Certainly not!," reports InflationData.

* "The Chinese have only started to buy gold as an investment product, and there’s huge room for this sector as the middle class grows. We will see double-digit growth of jewelry sales in China for years to come," said Kennedy Wong, Hong Kong Resources Chairman, whose company has 219 jewelry stores in mainland China reports Bloomberg.

* "U.S. home prices in August rose for the fourth straight month, surpassing forecasts and providing the latest sign that the hard-hit housing market is stabilizing after a three-year slump, according a report on Tuesday. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July," reports CNBC.

* "Stocks retreated Monday, led by financials, following news that Dutch bank ING will split in two. Stocks had opened higher, following an upbeat economic report and a couple of earnings beats, but that all evaporated after the ING news. Thursday we'll get the first look at third-quarter GDP — economists expect to see the e economy grew 3.3%," reports CNBC.

* "The dollar reached a 14-month low versus the euro Monday as stocks advanced around the world on confidence that the global economy is recovering, increasing demand for higher-yielding assets. Speculation is that reports this week will add to evidence that economies are shaking off the worst of the recession. The Chinese revived concern over the status of the dollar and triggered knee-jerk selling of the greenback," reports Bloomberg.

* The Dethroning of King Dollar?: "Dollar murdered. Drowned in red ink. Clues point to the White House." So might a tabloid headline read as the angry mourners gathered to affix blame for the end of the era in which the dollar served as the currency in which the world does business -- its reserve currency. Unless Bernanke drains liquidity from the financial system, and shrinks the Fed's balance sheet by winding down $2 trillion in support programs, the dollar's decline will accelerate, shattering confidence in its long-term value," reports WeeklyStandard.

* Devaluing Our Way Out of the Crisis: "Now the policy in the U.S. is to devalue and inflate its way out of the crisis, as the word out of Washington officials such as Treasury Secretary Tim Geithner is that a weak dollar will not only help create more exports, but will restructure the economy permanently towards exports and away from consumer spending. If a weak currency were the way, as John Tamny of RealClearMarkets notes, Argentina would be an economic powerhouse. And to which I would add Zimbabwe would be a superpower," reports FoxBusiness.

* Dollar to drop further, will hurt UAE: "The dollar will fall further against major currencies. The decline is attributed to the trillions of dollar pumped into the US economy to contain the global financial crisis and which in turn has led to a rise in dollar supply. All indicators show that the dollar continues to fall. The International Monetary Fund along with other organizations believe that now is the best time to depeg from the dollar in the Gulf Co-operation Council said Dr Mohammed Al Assoumi, a Dubai-based analyst," reports Bus24-7.

* Gold gives a precious insight into economy: "If gold is telling us anything today it is that governments are about to make a mess of the exit from their economic stimulus programs. Either they are going to tighten too soon, plunging the world into a deflationary ice age, or, more likely, they are going to hang back too long until we are swept away by hyperinflation. Printing money remains the time-honored way out – and it will end as messily as it always has. Hard assets, the king of which is gold, and the shares of companies that produce them are a must for anyone looking to survive this institutionalised generational theft," reports LonTelegraph.

* Gartman sees gold becoming world reserve currency: "Interviewed Friday on CNBC's "Fast Money" program, Gartman Letter editor Dennis Gartman said he sees gold becoming the world's reserve currency and the dollar continuing down for the next year while being very oversold for the moment as gold is overbought. Gartman remarked that "gold bugs" don't like him, but if he makes a few more television appearances like this one, they might start to get over it," reports GATA.

* "Gold prices could rise as high as $1,400 an ounce in 2010 as investors turn to the metal as a store of wealth. High levels of buying through exchange-traded funds shows strong investor interest, which is likely to continue. Silver has benefited from being both an industrial metal and a cheap precious metal. The fact U.S. dollar creditors are talking about the need for another global reserve currency shows that they are losing faith in the dollar," ScotiaMocatta said to Mineweb.

* "The dollar rebounded slightly on Friday after upbeat housing news: "Home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before a tax credit for first-time owners expires. Sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million last month," reports CNBC.

* "Spoiling all of this week’s gains, the stock markets took their biggest one-day hit in three weeks on Friday as weak energy and transportation stocks overshadowed blockbuster tech earnings. Analysts have said for Wall Street's rally to continue, companies must demonstrate they are growing sales and are not simply cutting costs to beat profit expectations," reports FoxBus.

* "The number of newly laid-off workers filing claims for jobless benefits rose more than expected last week. The Labor Department says new jobless claims rose to a seasonally adjusted 531,000 last week, from an upwardly revised 520,000 the previous week. There is little sign that employers are willing to hire, even as the economy shows signs of recovering," reports AP.

* "The Dow climbed nearly 100 points and retook the 10,000 threshold Thursday afternoon thanks to a flurry of upbeat earnings reports but the Nasdaq Composite lagged behind amid some tech weakness. The dollar made slight headway against the Euro earlier, putting pressure on commodities. The Obama Administration will order the seven largest bailout recipients to cut the compensation of their highest paid executives by about 50%," reports FoxBus.

* "The Senate must soon increase the national debt to above $13 trillion — and Democrats are looking for political cover. As of Tuesday, the debt stood at $11.95 trillion, staring at senators amid a roiling health care debate in which critics have seized on the potential costs of the overhaul," reports Politico.

* "The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday. The Aaa rating of the U.S. is not guaranteed. The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 amid forecast deficits of more than $1 trillion through fiscal 2011," reports CNBC.

* Mr. Geithner: Stop Passing The Buck On The Dollar: "To claim that a falling dollar is great because it boosts the earnings of multi-national corporations is tantamount to saying a rise in the number of car crashes would be a wonderful for Americans because they can invest in air bag makers. It looks like the plan the U.S. wants to pursue is to continue to discourage foreign investment, punch our bankers (the Chinese) in the nose and punish those who are savers by crumbling our currency. But please, Mr. Geithner, let's not pretend it benefits anyone except those who are heavily in debt--chief among them our government," reports Forbes.

* What a U.S. Decline Means for Investors: "The dollar's decline is only a symbol of the greater problem. In the investment world, America's importance may be shrinking. According to data tracked by FactSet Research, U.S. companies now account for barely 30% of the value of the world's publicly-listed companies. A decade ago, that figure was more than 50%," reports WSJ.

* High Gold Prices Here To Stay: "Is there any stopping the powerful bull market in precious metals? You must answer only one question: Will Washington decide to stop spending and printing? If our policymakers in Washington agreed to cease and desist in printing dollars to protect the banks too-big-to-fail and to run trillion-dollar deficits it is quite possible that the dollar could stabilize and strengthen. I forecast the following most likely scenario: 1) The dollar will test its March 2007 low point of .7132. 2) Gold will appreciate over the next two years toward the $1500 mark, silver toward $35. 3) The current eight-month bear market equity rally will stall," reports Forbes.

* "Stocks suffered a last-minute selloff on Wednesday -- erasing a daylong rally -- as financial stocks sold off after influential banking analyst Dick Bove slashed his rating on Wells Fargo. The daily fluctuations of the dollar continue to dictate the direction for the stock markets. The Euro traded above $1.50 for the first time in 14 months," reports FoxBus.

* Dollar Decline Draws International Protest: "This could end up being viewed as the week when dollar weakness became too much for the rest of the world to bear, setting the scene for tense encounters at the upcoming meeting of G-20 finance ministers. "Some sort of crisis is looking inevitable," said Neil Mellor, a currencies analyst at The Bank of New York Mellon in London. "You can't continue down this road without something giving way, and it's clear that the U.S. is not going to do anything to put meat on the bones of its strong-dollar policy. Most experts agree that unless the dollar's decline becomes much more rapid, U.S. authorities will continue to stand by and let the buck fall. "This is a benign cyclical descent," reports WSJ.

* Dollar hegemony for another century: "The dollar will still be the world’s dominant reserve currency in 2030, sharing a degree of leadership in uneasy condominium with the Chinese yuan. A currency reflects the strength of an economy and society over time. Of course, if the US were stupid enough to enact the 10-year spending plans projected by the White House — with a deficit of $1.9 trillion in 2019 — the country will be ruined. I do not think America has so far lost its senses that it will commit suicide in this fashion," reports London Telegraph's Ambrose Evans-Pritchard.

* Why Dollar's Continued Slide May Undermine Global Status: "A weak currency can have serious long-term implications. Imported products become more expensive. The price of oil and other commodities is directly tied to the value of the dollar. Many investors are using commodities as a hedge against dollar weakness. That has sent oil prices sharply higher, creating a drag on the economy. Longer term, a weak dollar gives the U.S. less borrowing power. That makes financing the national debt more expensive, making the budget deficit even worse, and hurting the dollar even more," reports CNBC.

* In Dollar’s Fall, Upside for U.S. Exports: "Dollar weakness is a major problem for American jobs and living standards. As the dollar devalues, we have less capital and purchasing power compared to the rest of the world, and there is an increasing risk of higher interest rates and inflation," said David Malpass, a Wall Street economist reports NYTimes.

* Higher jobless rates could be new normal: "This Great Recession is an inflection point for the economy in many respects. I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future. The collective psyche has changed as a result of what we've been through. And we're going to be different as a result," said Mark Zandi, chief economist and co-founder of Moody's Economy.com reports AP.

* "If money is a moral contract between government and its citizens, we are being violated. The rest of the world, meanwhile, simply wants to avoid being duped. That is why China and Russia—large holders of dollars—are angling to invent some new kind of global currency for denominating reserve assets," reports WSJ.

* Cash4Gold Hit With Racketeering And Fraud Lawsuit: "A class action lawsuit was filed against Cash4Gold in California federal court Friday, Oct 9th, accusing the company of a "massive scheme to defraud tens of thousands of consumers throughout the nation," and racketeering. The lawsuit says there are two specific promises that Cash4Gold makes and breaks: 1) that there is a 12-day return policy and 2) items sent in will be handled with the highest care," reports Consumerist. [Read CASH FOR GOLD: ARE YOU KIDDING?]

* Tuesday the Labor Department reported producer prices dropped an unexpected 0.6% in September. Analysts had anticipated prices would remain unchanged after a 1.7% rise in August. Officially "tame" inflation data supports the Fed's decision to keep interest rates near zero, which is also likely to put more downward pressure on the dollar.

* CME accepts gold as money: "Chicago Mercantile Exchange (CME founded 7/07), the world's top derivatives exchange operator, began accepting physical gold as collateral for all trading products, marking the first time an exchange has allowed gold bullion to be used for margin requirements. CME's latest move underscored the rising popularity of gold as an investment asset class," reports Reuters.

* "Gold rose Monday with oil reaching a new high for the year above $79 a barrel, and the Federal Reserve signaling interest rates will stay near record lows for the foreseeable future, the beleaguered greenback fell to a 14-month low on the dollar index," said analysts at GoldCore, reports Marketwatch.

* $2,000 Gold Bullseye: "Gold’s prices are still 53% below the 1980 inflation-adjusted peak. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator. “Gold is not at any peak. The world’s money supply has increased and gold hasn’t kept pace. We’re now in a period where gold is catching up," said Martin Murenbeeld, chief economist at Toronto-based DundeeWealth Inc. reports Bloomberg.

* Gold prices have gained over 5% in October, frequently touching fresh nominal highs this last week. Meanwhile, the U.S. dollar index slid to 14-month lows. Fed Chairman Ben Bernanke attempted to talk the dollar up saying the Fed "will be ready to tighten monetary policy as a recovery takes hold." However, economists don't expect the Fed to lift rates or support the dollar until well into 2010.

* 2009 deficit surges to $1.42 trillion: "What is $1.42 trillion? It's more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the US. Some economists warn, unless the government makes hard decisions to cut spending or raise taxes, it could be the seeds of another economic crisis," reports AP.

* Dollar Suicide: "We’re doing it to ourselves. Dr. Bernanke is, in effect, the dollar incarnate — the walking embodiment of the soundness of our currency — if the dollar does die, it will not have been murder. It will have been suicide. Dollars are just like works of art: The more copies there are relative to demand, the less each one is worth. As with Monet, so with money — only Monet has remained scarce and valuable. As the U.S. money stock has continued to explode, the exchange value of the dollar has tumbled," reports NatReview.

* Dollar To Drop 20%: "The dollar will extend its drop versus the euro over the next two to five years, falling as much as 20% to an all-time low under a widening U.S. budget deficit. Policy makers favor the dollar’s slide as a means of supporting a recovery," Harvard’s Professor Niall Ferguson, author of "The Ascent of Money: A Financial History of the World" said to Bloomberg

* The Dollar's Fall: Deal With It: "The dramatic recent fall of the value of the U.S. dollar grabs headlines every day, even as the U.S. stock market surges to new recovery highs. People are talking about a "dollar crisis," So while it may feel like a blow to our national prestige to have the dollar be just another currency, that's probably inevitable — and probably all for the best. So as an investor, what do you do? Buy gold. Gold is the alternative to all currencies, not just the dollar," reports SmartMoney.

* "The price of gold could rally higher and reach $1,350 per troy ounce within the next six months, but a dollar crisis could push it even higher," Robin Griffiths, technical strategist from Cazenove Capital, told CNBC. "If later we get a genuine dollar crisis, that would involve the dollar-trade-weighted index going under 71, you can talk much higher levels for gold," reports CNBC.

* "Last Friday U.S. consumer sentiment fell unexpectedly to 69.4, from September's 73.5 in October on persistent worries that the "dismal" state of personal finances would not recover quickly from the worst recession in decades, a report showed Friday. This is the longest and deepest decline in the 60-year history of the surveys, and few consumers expect their finances to improve anytime soon," reports CNBC.

* Why is consumer sentiment still declining? Perhaps waning public confidence in government bailouts, stimulus programs, tainted economic data, 17% "real" unemployment and a weak dollar will serve as a reality check for both Washington and Wall Street. But instead of holding your breath, I suggest holding gold.

* "US consumers are tapped there has been no sign in retails sales or consumer credit that the drivers of US growth have resumed their seats behind the wheel. The effect of a weak dollar on US exports may be pronounced. Shipments may increase enough to substantially reduce the trade deficit. But the US is not an export driven economy nor is its work force widely engaged in manufacturing. Exports may grow appreciably without it having any noticeable effect on American unemployment," reports FXSolutions.

* "It is highly likely that substantially more jobs are now being lost than is currently reported by the BLS. When we combine the weak job numbers with declining wages, tight credit, record household debt and the impending explosion of home foreclosures, the chances of a sustainable economic recovery looks exceedingly slim. Yet, for the third time in this decade the stock market is off on another binge not based on reality. Such flights into fantasy always end badly," reports Comstock.

* Obama says he's looking at any way to create jobs: "My goal is an economy where our stock market isn't only rising again but our businesses are hiring again," President Barack Obama said Wednesday. Critics question whether jobs created by the stimulus are worth the price tag and the debt the government has taken on to pay for it," reports AP.

* Meanwhile, consumer prices rose .2% in September, led by higher prices for cars, energy and medical care that offset falling rents and home-ownership costs, the Labor Department reported Thursday. "Fed officials have said inflation is likely to remain low, but over the longer term, massive fiscal and monetary stimulus pumped into the economy threatens to unleash inflation," reports Marketwatch.

* Dollar Storm Clouds Gathering: "One of the biggest clouds out there is the sinking dollar. What we’re witnessing right now is a big global shift out of dollars and into commodities. The dollar is quickly losing its reserve status to the yen and the euro. What we need to be doing is exercising some monetary restraint to save the dollar. The Fed should start moving excess cash from the economy. They should follow Australia’s lead and begin raising their target rate. We also need economic-growth incentives like lower marginal tax rates which would benefit investors, entrepreneurs, and workers. We should be slashing tax rates on large and small businesses across-the-board," writes Kudlow at CNBC.

* Amid the hullabaloo over Dow 10k, keep in mind that both gold and silver have outperformed the Dow in the last year. Silver prices are up 73% year-over-year, compared with an 18% rise in the Dow. Gold prices are up 36%. The question is; which assets represent the best fundamental value looking forward? Savvy investors are voting for precious metals with both feet, buying on the dips.

* The Message of Dollar Disdain: "If money is a moral contract between government and its citizens, we are being violated. The rest of the world, meanwhile, simply wants to avoid being duped. That is why China and Russia—large holders of dollars—are angling to invent some new kind of global currency for denominating reserve assets. As the dollar is increasingly perceived as the default mechanism for out-of-control government spending, its role as a reliable standard of value is destined to fade," reports WSJ.

* Next big political issue? The U.S. dollar: "The state of the dollar probably hasn’t been a first-tier political issue in the United States since, say, the presidential election of 1896. Back then, it manifested as whether or not America would stay on the gold standard or switch to a bimetallic one. A recent Rasmussen poll found that 88% of Americans say the dollar should remain the dominant global currency. They sure think a weaker dollar is a sign of a weaker America. It is just a matter of time before global financial markets reject America's dismal deficit outlook, and that could lead to a punishing dollar crisis," reports Reuters.

* Dow 10K: Celebrating 10 Years of 0% Return: "Congratulations investors. The Dow has hit 10,000 on October 14th, 2009. You now have made officially 0% return if you invested in this index when the Dow first hit this magical level in 1999. Jim Rogers says the Dow could go to 20,000 but it wouldn't matter if the US dollar was worth far less," reports CNBC.

* Dollar to Hit 50 Yen, Cease as Reserve: "The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency," Sumitomo Mitsui Banking Corp.’s chief strategist Daisuke Uno said. "We can no longer stop the big wave of dollar weakness. The greenback is heading for the trough of a super-cycle that started in August 1971. After the dollar loses its reserve currency status, the U.S., Europe and Asia will form separate economic blocs. The International Monetary Fund’s special drawing rights may be used as a temporary measure," reports Bloomberg.

* Fake coins flooding in U.S. market: "Counterfeit coins from China are reportedly flooding into the U.S. market. Five key coin certification organizations have cooperatively issued a warning to collectors about these fakes reportedly appearing frequently on online auction sites and at flea markets. Given the spread of fraudulent coins hitting the market, I wouldn't spend even a penny on a penny until I'd done my homework and found a merchant I could trust," reports Walletpop.

* Dollar Decline Must End: "Over the past six months, the dollar has lost 15% while gold has climbed nearly $150. If this continues, spiking inflation and interest rates will choke off the bull market in stocks and do serious damage to the economy. It could happen fast. How to solve this problem? In supply-side terms, cut tax rates for new growth incentives," reports Larry Kudlow at CNBC.

* US policymakers playing with fire as the dollar continues to tumble: "The willingness of foreigners to hold dollar assets has allowed American citizens to consume beyond their means for many years. If the collapse in the MBS market exposed the first chink in American economic armor, a rejection of the dollar as the world's reserve currency could expose an even bigger hole. If other nations begin to believe the US is happy to allow its currency to plummet, they may all head to the exit at the same time. The US is not just playing with monetary fire: it may also be encouraging an epochal shift in the world financial order," reports the UK's Independent.

* Obama Dollar Retreats Against Commodities in Wealth Shift: "Commodities insist on validation and validity, while currencies are subject to politics and perception. Currencies that have the lack of support of petroleum, metals, and have a liberal central bank posture toward printing money are currencies that will continue to be punished," said Peter Kenny, managing director at Knight Equity Markets in Jersey City reports Bloomberg.

* Senate committee approves health care plan: "With support from a lone Republican, a key Senate committee Tuesday approved a $829 billion middle-of-the-road health care plan that moves President Barack Obama's goal of wider and affordable coverage a giant step closer to becoming law. 'This is our opportunity to make history,' said Finance Committee Chairman Max Baucus," reports AP.

* "Gold prices continued their northward journey as the investors in the international markets are shifting their funds into gold due to depreciation of the dollar against all leading currencies of the world. Market pundits feel that prices of the yellow metal is expected to remain firm," reports IndiaTimes.

* Dollar facing 'power-shift': "The US dollar is being hurt by the continued talk of a shift away from a dollar-centric world. As long as the US economy is not strong enough for any rise in interest rates to be conceivable for a long time, the dollar's underlying downtrend will remain in place" said Kit Juckes, an analyst at currency traders ECU Group," reports AFP.

* Dollar Reaches Breaking Point: "The anti-dollar trend is unmistakable. The world is changing, and the dollar is losing its status. World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy. Central bank diversification signals that the currency won’t rebound anytime soon after losing 10.3% the past six months," reports Bloomberg.

* Obama's peace shattered as dollar takes a pounding: "The divergence between Obama's Nobel honor and the marketplace repricing of his country's future would appear to be a stark lesson in the difference between hope and reality. Hope for Obama's plans may soar, but his ability to meet those hopes is shriveling with the value of the currency," reports SidMornNews.

* Dollar Adrift: "The Fed will let the dollar fall. For a time in the wake of the panic, the dollar benefited from a flight to the relative safety of U.S. Treasurys and other dollar assets. In a storm, the dollar was thought to be less risky than other investments. But as this overall global risk aversion has ebbed, the risk calculus has turned and the dollar itself has become more dangerous to hold than non-dollar investments. If the fall of the dollar becomes a rout, this could cause a spike in commodity prices and jeopardize the nascent economic recovery. Washington may not care to notice, but the sell-off in the dollar is a daily global vote on U.S. economic policy. It is not a vote of confidence," reports WSJ.

* "Gold prices will top $2,000 in a decade, according to Jim Rogers, a famed investor known for his bullish calls on commodities. The dollar "is a terribly flawed" currency, he said. "Foreign debts are increasing rapidly every year, and I don't think Washington seems to care," reports Marketwatch.

* Dow hits new high for '09: "On the two-year anniversary of its all-time closing high, the Dow closed Friday up 78 points to 9864.94, for a 3.98% gain this week. [Ed. Note: The Dow remains down 44% from historic high of 14,198.] "Investors have moved from a flight to safety to a flight to risk," said Rick Lake, portfolio manager of the Aston/Lake Partners LASSO Alternatives Fund. "The investing crowd feels compelled to participate in up moves and buy anything with a higher yield than cash," reports Marketwatch.

* "The dollar’s 15% decline against the euro and 11% depreciation versus the yen since early March are increasing concern among world leaders. At the same time, Americans are getting poorer. 'The U.S. approves of a constantly weakening dollar but doesn’t want a disruptive collapse,' said David Malpass, former chief economist at Bear Stearns and deputy assistant Treasury secretary from 1986 to 1989," reports Bloomberg.

* The Weak-Dollar Threat to Prosperity: "No countries have devalued their way into prosperity, while many — Hong Kong, China, Australia today — have used stable money to invite capital and jobs. Some weak-dollar advocates believe that American workers will eventually get cheap enough in foreign-currency terms to win manufacturing jobs back. In practice, however, capital outflows overwhelm the trade flows, causing more job losses than cheap real wages create," reports WSJ.

* Gold: Canary in the Coal Mine: "The price of gold is a referendum on the quantity and quality of paper money and, like the canary in the coal mine, it is signaling a warning: there’s trouble with the dollar reserve standard. Around the world the alert are looking for ways to abandon it," reports CNBC

* "Gold is a forecaster of inflation instead of a coincident indicator, based on its surge before 1980. The gold market is looking four to six months ahead. This is a monetary rally. Bullion has jumped 18% this year, heading for a ninth annual gain amid rising demand for a hedge against inflation and a weaker dollar," reports Bloomberg.

* $5,800 an ounce gold?: "Using the same growth from 1976 to 1980, gold gained 750%. Applying past performance to the current bull market, we could see gold eventually reach $4,100 during the next run-up. And if you take the entire bull market gain in the 1970s at 2300% and extrapolate, then $5800 would be the equivalent upside target," said the Aden Sisters to Marketwatch.

* The Savage Truth About the Shrinking Dollar: "Out-of-control government spending has caused a precipitous drop in the dollar and now we are see it squeezed out in higher gold prices. Our 'weak dollar policy' does not work. It may be good for Wall Street, but it's horrible for Main Street," Swiss America Chairman Craig R. Smith told national talk show host Michael Savage on Wednesday.

* "As the dollar's dominance fades with the emergence of a multipolar world, gold may stand to gain the most of all assets thanks to an unlikely quality -- neutrality. While no major currency is likely to replace the dollar anytime soon, the need for an alternative is clear, and growing," reports Reuters.

* "The dollar continued its six-month slide amid a growing international chorus that wants the dollar replaced as the world's reserve currency, a move that would end the greenback's six decades of global dominance. The dollar has come under attack from abroad as the economic crisis has played out, thanks to the Federal Reserve's decision to flood a seized-up financial system with liquidity last fall," reports WashPost.

* Dollar fall spells BIG inflation ahead: "Your cost of living is getting ready to go up," Swiss America Chairman Craig R. Smith told Neil Cavuto of Fox News Tuesday. "It appears the world is ditching the dollar," agreed Mr. Cavuto. "With Australia raising interest rates .25% early today, they became the first G-20 nation to begin mopping up the excess liquidity created during the global credit crisis to fight future inflation," said Mr. Smith. "Unless the U.S. does likewise, we should expect a sharply weaker dollar and a lower standard of living."

* "Four-digit gold signals the world has lost confidence in paper currencies, the Federal Reserve and the federal government. The commodity super-cycle has swept gold prices up threefold, but that's just the kickoff phase," says Swiss America Chairman Craig R. Smith. Mr. Smith told CNBC last February he believes gold will rise to $1,200 by the end of this year and a new inflation-adjusted high of $2,300 in the next few years," reports MSN.

* China calls time on dollar hegemony: "Beijing does not need to raise money abroad since it has $2 trillion in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency. "Everybody in the world is massively overweight the US dollar," said David Bloom, currency chief at HSBC. "As they invest a little here and little there in other currencies, or gold, it slowly erodes the dollar. It is like sterling after World War One. Everybody can see it's happening," reports LonTelegraph.

* "The price of gold will continue to rise and outperform stock markets and could go as high at $2,000, depending on the strength of the S&P 500 index. Gold's next point should be pretty quickly to $1,250-$1,300," according to Chris Locke, managing director at Oystertrade.com Management reports CNBC.

* "Chart-based momentum was triggered on gold's dollar-inspired ascent. Technical buying came in when we took out last week's high," said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group to WSJ.

* The demise of the dollar: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar," reports Independent.

* Gulf States Deny Secret Plan to Dump Dollar: "The world's oil producers will continue using the U.S. dollar as the currency for buying and selling crude, high-ranking oil and finance officials in the Gulf said on Tuesday, denying a report in a British newspaper," reports FoxNews.

* "The dollar is getting ready to get hammered, and there is no way for the Fed to stop it," said Craig R. Smith, author of "Rediscovering Gold in the 21st Century." The simplest solution for Americans looking to protect their wealth is to convert it from unstable dollars into gold, the most stable currency in the world," reports WND.

* "Our government has decided to sacrifice the buying power of the US dollar to pay for their trillions in spending. The only way to come back from the brink is inflation. It is the only alternative that is politically expedient. Inflation translates into a shrinking of the value of our time, labor and lifestyle. Bottom line: Americans must work harder and longer just to maintain a fraction of their buying power," writes Swiss America Chairman Craig R. Smith.

* "September's closing price on gold confirms a breakout of a reverse head and shoulders pattern that should propel gold to between $1,250 and $1,300 in fairly short order," reports broker and financial technician Jim Carrillo at GoldIRAs.

* Farewell to dollar supremacy "The sun is setting on the US dollar as the ultra-loose monetary policy of the Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC," reports LonTelegraph.

* "The dollar dropped against both the euro and the yen on Monday. The weekend G7 meeting ended up with no official expression of concerns about U.S. dollar weakness. New York University Professor Nouriel Roubini said markets have 'gone up too much, too soon, too fast.' He expects stock and commodity markets to drop coming months on investor disappointment over a slowing economic recovery," reports Marketwatch.

* Dollar losing ground to gold: "The dollar is unlikely to remain the reserve currency of choice as China overtakes the US as the world's leading economy. To revive the US economy and close the deficits, it is necessary for the dollar to fall. Gold has replaced the dollar as the favored commodity for risk-averse investors," according to Ted Scott, of F&C Asset Management, reports FTAdvisor.

* "Gold prices will hit $1,500 an ounce in 2011 when oil prices move back above $100 a barrel as emerging market growth creates shortages, Bank of America Merrill Lynch said on Monday" reports CNBC.

* Last week gold prices rose to $1,007/oz., the highest monthly close in U.S. history. In September gold rose 5.4% and silver jumped 11.5%. Year -to- date gold prices are up 15.5% and silver is up a sterling 50%. Precious metals are again demonstrating how a healthy bull market works: Two steps forward, one step back. A "buy- the- dip" strategy is recommended.

* "The World Bank is close to running out of money. By the middle of next year we will face serious constraints," said its president, Robert Zoellick to LonTelegraph. "Mr. Zoellick launched a major campaign to persuade rich nations to pour more money into the Washington-based institution."

* Job Losses Far Worse Than Expected: "Employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8%, fueling fears the weak labor market could undermine economic recovery," reports CNBC.

* "The U.S. unemployment rate rose to 17%, the highest on record, if laid-off workers who have settled for part-time work or have given up looking for new jobs are included. All told, 15.1 million Americans are now out of work and 7.2 million jobs have been eliminated since the recession began in December 2007," reports AP.

* "With a weak dollar we can expect a weak recovery," commented Steve Forbes on Fox News. Stocks and commodities fell on the disappointing unemployment news as the dollar rebounded. The buck then fell on downbeat factory data, offering support to stocks and commodities.

* A stronger US economy requires a weaker dollar: "The US dollar will mainly have to depreciate, if a long spell of over-capacity, high unemployment and low growth is to be avoided, vis-a-vis the currencies of the roughly 50% of the economic universe that we call emerging markets and developing countries. China is the largest of these," reports FinTimes.

* Investors in Treasuries, Dollars Defy Common Sense: "Textbook economics suggests that before long, Japan and other Asian nations will start converting their dollars into euro-denominated securities -- or perhaps a new international currency backed by a basket of, say, euros and yen along with dollars. That would mean a significant decline for Treasuries and the dollar. The U.S. no longer will be supreme. Intuition alone should tell investors to look elsewhere for security," reports Bloomberg.

* Bears roaring into October: "U.S. stocks marked their worst decline in three months as a disappointing report on manufacturing early Thursday led to a broad sell-off for many of the companies that helped pace a surging third quarter in stocks, including JPMorgan, Caterpillar and American Express," reports Marketwatch.

* Dollar's Pain Is Big Gain for Rivals: "The dollar's slump worsened in the third quarter as investors moved their cash into riskier investments in search of higher returns. The greenback may tumble further in coming weeks as investors bet that other countries will raise interest rates before the Federal Reserve," reports WSJ.

* "The dollar's going to go down further and that's going to help gold," David Thurtell, an analyst at Citi, said. Gold is on track to close its best quarterly performance since the first quarter of last year, rising 8% in the past three months while the dollar has shed more than 4% over the same period," reports Globe&Mail.

* "The gold price will set a new record high of $1,100 next year as the dollar tumbles and inflation is fueled by government deficits and loose monetary policy around the world, Deutsche Bank said on Thursday," reports CNBC.

* Too late to join the gold rush?: "All the ingredients are in place for a sustained bull market in gold. Falling mine supply, robust jewelery demand and the potential for a reduction in net central bank sales will all be supportive of prices," said Evy Hambro, manager of Black-Rock Gold & General to DailyMail.

* "I think that gold could be $2,000 an ounce and I'm not alone. We're looking at the long-term loss of value in the dollar, what with the tremendous levels of government expenditure-this so-called stimulus. It's wrecking the dollar. All around the world people are looking for alternatives. We're in a world that appears to have encountered peak gold... If you look at historical production, worldwide gold output reached a top right around the year 2000-2001," reports The Gold Report.

* U.S. stocks ended mildly lower on Wednesday after seesawing on mixed economic data. Equities finished the month and quarter higher. The DJIA fell 29.92 points to 9,776.82, leaving the blue chips up 2.3% for the month and ahead 15% for the quarter," reports Marketwatch.

* Less-bad Q2 GDP data: "The U.S. economy contracted at .3% slower pace than previously thought in the second quarter as improved consumer and business spending cushioned the impact of a record decline in inventories, according to government data on Wednesday," reports CNBC.

* "The dollar should be devalued because the U.S. economy is less competitive than other economies and has higher debt, and some form of SDR should become the world’s reserve currency," said Wilbur Ross, of WL Ross & Co to CNBC.

* Ed. Note: Wilbur Ross may be right about the dollar, but he's clueless on gold. When asked about the value of owning gold to hedge a falling dollar Mr. Ross said he views gold as nothing more than a "psychological commodity". Perhaps, but so is the dollar, yen, euro and SDRs. The big difference is that gold insures a stable quality of life in the future, paper promises do not. Gold alone creates economic confidence, government-created currencies all depend upon confidence.

* The Next Culture War: "If there is to be a movement to restore economic values, it will have to cut across the current taxonomies. Its goal will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small. A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs," reports NYTimes.

* "A weak reading of consumer confidence cooled stocks on Tuesday, though the housing market offered some rays of hope. The Conference Board said its monthly index of consumer confidence fell to 53.1 in September from 54.5 in August. Analysts had been hoping to see the measure rise to 57," reports WSJ.

* Fed Continues to Operate Blindly: "What the economy needs right now isn't artificial rates or money creation or economic weakness to keep inflation in check. Instead, the economy needs one thing to heal, and that's a stable dollar. And as long as Treasury and Fed officials don't understand this, they'll be operating blindly to the very real inflation that is crushing us," reports RCMarkets.

* "World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging," reports AP.

* "Top investors in precious metals are waiting for a pullback to buy, but they say gold looks like a promising inflation hedge well into the future. China is hungry for it, too. Hedge fund luminary John Paulson is convinced that gold will be a very good way to protect himself from the eventuality of currency debasement (i.e., inflation). He observed that if one thinks about gold in a three- or five-year time horizon (instead of hour to hour, day to day or week to week), the probability increases of gold being higher over time -- and, most likely, much higher," reports MSN.

* Dollar is the 'New Peso' — Will Keep Falling: "The dollar isn’t the new yen, it's unfortunately the new peso," said Peter Schiff, president of Euro Pacific Capital. The Federal Reserve will soon run into the dilemma of either having to supply the carry traders with an endless amount of cheap dollars or put a halt to the carry trade and aggressively raise interest rates. Schiff added that we're still early in this bull market on gold," reports CNBC.

* "World Bank President Robert Zoellick questioned the wisdom of giving the Federal Reserve more power over banks, as the Obama administration has proposed. Mr. Zoellick says central banks around the world fell down as regulators -- and that the Treasury should be given the authority to regulate big financial institutions, not the Fed," reports WSJ.

* Money figures show trouble ahead: "Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn. Western central banks will have to "monetize" deficits on a huge scale to stave off debt deflation," reports LonTelegraph.

* New world economic order takes shape at G20: "The Group of 20 is set to become the premier coordinating body on global economic issues, reflecting a new world economic order in which emerging market countries like China are much more relevant, reports Reuters.

* Iran's Second Uranium Enrichment Plant: "President Obama and the leaders of France and Britain blasted Iran's construction of a previously unacknowledged uranium enrichment facility and demanded Friday that Tehran immediately fulfill its obligations under international law or risk the imposition of harsh new sanctions," reports WashPost.

* What exactly is the "new normal"?: "Two opposing theories are emerging. One group of prognosticators claims the markets are in the throes of a "new normal," a long period of slow growth during which old investing rules will give way to new ones. The other group says the epic abnormality of the past few years will soon be swept away by a massive reversion to historical patterns. Depending on whom you believe, today's stock market is either a trap door or a coiled spring," reports BusWeek.

* "If the Chinese and Japanese stop buying our bonds, we could easily see inflation go to 15 to 20%. It's not a question of the economy. It's a question of who will lend us the money if they don't," Tiger Management founder and chairman Julian Robertson told CNBC.