World's safest money shines
Dollar weakness driving stocks & commodities up ... US GOLD RUSH!
Dollar Crisis: THE Story of 2009-2010 ... Dollar’s Reckoning Day
BY DAVID BRADSHAW ~ Editor, Real Money Perspectives
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Nov 30, 2009 ~ ((M-F podcast)) ~ gold fraud alert!

Monday gold prices rebounded near $1,180 on a weaker dollar as investors digested Dubai debt default. Gold last traded up $2.40 to $1,179.10/oz., silver rose $.19 to $18.44/oz.

* Gold prices have risen 34% so far in 2009, running 12.8% in November as everyone from individual investors, to hedge funds, to central banks seek wealth protection and growth. Precious metals have again resumed their historic role as most trustworthy assets on earth -- equipping both individuals and governments to withstand the economic storms of 2010.

* Gold run a reason to be wary of stocks: "Gold's rocketing boom -- it's risen from around $260 an ounce about a decade ago to just under $1,200 now -- is a vivid daily example of what a real bull market looks like. Ten years ago, pension funds and institutional investors around the world held little gold, if any. Merrill Lynch's monthly survey of institutional fund managers didn't even include a question about gold until I asked them to start about five or six years ago. History says a generational bull market, like Wall Street from 1982 to 1999, is usually followed by a generational bear market. I'd feel a lot more comfortable about stocks if everyone had lost interest completely, like they did in gold 10 years ago," reports Marketwatch.

* Implications of Dubai's Financial Crisis: "Attempts to build the tallest building in the world require such investor euphoria and access to capital that they frequently mark a top of the cycle. Outside of the UK, foreign bank exposure to the UAE itself is rather diversified, though as one might have suspected, they are concentrated in Europe. A second potential impact is on the monetary policy of the major central banks. A third potential impact is on the UAE's peg to the dollar. While the Saudi's stance toward the dollar peg has been unwavering, the UAE's central banker has been all over the board," reports RCM.

* The Bigger and Riskier Monster: "Derivatives were at the epicenter of the financial earthquake that shook the world last year. They triggered the demise of Bear Stearns, Lehman Brothers, AIG, and many others. And they’re still causing a series of aftershocks around the world, as in Dubai late last week. U.S. commercial banks now hold a grand total of $203.5 trillion in derivatives, a new all-time high. The worldwide total of unregulated, over-the-counter derivatives alone was $604.6 trillion at mid-year 2009. The banks’ extend-and-pretend tactics are especially popular in the one loan sector that has the biggest troubles: commercial real estate," reports Money&Markets.

* Defiant Iran Beefs Up Nuclear Plans: "Iran announced a massive expansion of its nuclear program on Sunday and threatened to pull out of the Nuclear Non-Proliferation Treaty, moves that would dramatically escalate the country's standoff with the international community if Tehran follows through. Iranian President Mahmoud Ahmadinejad unveiled plans to build 10 more facilities to enrich uranium," reports WSJ.

* "India, the world’s largest gold consumer, is open to additional purchases from the IMF, the Financial Chronicle newspaper reported. The U.S. Dollar Index fell for a third day. 'Central-bank buying has been one of the main factors of this recent rally. The weaker dollar is driving commodities higher,' Peter Fertig, of Quantitative Commodity Research Ltd. in Hainburg, Germany, said to Bloomberg.

* "The investment case for gold has become increasingly compelling," said Dan Smith, an analyst at Standard Chartered. Gold rose for an eighth consecutive session Tuesday on speculation that the dollar may fall further and central banks and investors will buy more bullion as an alternative investment," reports TheAge.

* Thanksgiving: Discovering need next door: "Many [readers] said they didn’t really need any help identifying the needy — they found them in their own family, workplace or neighborhood and responded directly. Nina Flores of Fort Worth, Texas, said she reached out to help after her daughters told her about classmates who had nothing but oatmeal to eat at lunch every day. She started by doubling her daughters’ lunches, so they could share with the other girls. Now she is giving groceries directly to the girls' families. Marcie Davis of Puyallup, Wash., said her family was moved by an article about shortages at local food banks. But rather then working through an existing operation, they decided to give Thanksgiving dinners to people in need, whom they found through the Web site Freecycle.org," reports Newsvine. Ed. Note: Here's a printable ["Thanksgiving Reminder List"]

* New gold bugs making gold investments mainstream: "Gold has long been favored by a fringe of the investment world, but this year some of the world's leading hedge-fund managers have loaded up on the precious metal amid concern government efforts to avoid another Great Depression that could undermine major currencies and fuel rampant inflation," reports Marketwatch.

* Miners: We're running out of gold: "Gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year," said Vincent Borg, spokesman for number one producer Barrick Gold. In 2009 global gold mine production will satisfy only two-thirds of demand, which soared this year. All the gold ever produced through history amounts to about 165,000 tons, barely filling two Olympic-size swimming pools," reports BrisbaneTimes.

* CNBC's Santelli: "Central banks suppress gold": "Tin-foil hats are suddenly in fashion, with the latest one being worn by none other than CNBC on-air editor Rick Santelli, who refering to former Treasury Secretary Lawrence Summers said: "Didn't Larry Summers himself write a paper, called 'Suppression,' that central banks have to keep a lid on gold for obvious reasons?" Until today it had seemed that only the lunatic fringe -- or the exceedingly well-informed -- knew about Summers' paper, a keystone of GATA's research.

* Fed sees jobless rate staying high. "Slow economic expansion to keep a tight rein on job rebound. Initial jobless claims fall. Durable-goods orders dip. Consumer spending rises. U. of Michigan consumer-sentiment index rises to 67.4. October new-home sales advance, paced by South's rise," reports Marketwatch.

* "With bond yields spiking and currency values plunging, the Fed and other central banks will, for the first time since their creation, be impotent. That’s when the world as we know it -- powerful central government, fiat currency, fractional reserve banking, global military empire, cradle-to-grave welfare -- ends, and the debate over its replacement begins. Those with gold and other real assets will have a seat at the table, and for the first time in a century Constitutional principals will get a fair hearing," reports John Rubino at GoldIras

* Super-low Fed rates could fuel speculative bubble: "The Federal Reserve doesn't expect the recovery will be strong enough to quickly drive down the jobless rate, and acknowledged its efforts to keep the rebound going could feed a new speculative bubble. Record-low interest rates "could lead to excessive risk-taking in financial markets," according to documents released by the Fed, reports AP.

* "We're about to enter a second 'Gilded' decade, in which the value of tangible assets will grow exponentially in response to government spending run amok," said Swiss America CEO Craig R. Smith in his keynote speech at the Hard Asset Investment Conference hosted in San Fransisco, CA last weekend.

* Dump the dollar! Buy gold!: "The dollar will take a double hit: First, China and other Asian exporters to the U.S. are already maxed out on dollar reserves from the ever-rising sales of their exports and the interest on the Treasuries they've been buying with their dollars. In addition, those exporters will diversify into gold and the euro as they fret about U.S. inflation. Gold is a smart play during both market crises and booms when investors think stocks are overvalued," reports Fortune.

* Is $6,300 Fair Value for Gold?: "The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs. If that were to occur today after Ben Bernanke’s go at the printing press, gold would have to reach $6,300 an ounce," reports Ambrose Evans-Pritchard at LondonTelegraph.

* Top Analysts See No Bottom Dollar Slump in Dollar Slump: "The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Fed begins to raise interest rates, which policy makers say is an extended period away. 'History tells us the dollar shouldn’t start rising on a sustained basis until 12 months after the Fed starts to lift rates,' said Callum Henderson, the global head of foreign-exchange strategy for Standard Chartered," reports Bloomberg.

* The golden age of skepticism: "Forget the polls and ignore the political rhetoric. The best indicator of skepticism in the U.S. government's ability to manage its economy is the surging price of gold. 'Every dollar the price of gold goes up is the world saying the U.S. can't get the job done,' said David Baskin of Baskin Financial Services Inc. in Toronto," reports Globe&Mail.

* "It is an unbelievable [gold] rally. Demand is coming from inflation hedge and safe-haven buying due to continued global economic concerns," said Darin Newsom, a senior analyst at Telvent DTN. Escalating tensions between Iran and the west boosted gold's appeal as a safe haven and a hedge against inflation," reports Marketwatch.

* "Sky will be the limit for rising gold prices, depending on the Fed's monetary policy," Marc Faber, publisher of the Doom, Gloom and Boom Report said to Bloomberg TV. "Gold prices could rise to $10,000, $100,000 an ounce. The U.S. government is on a path toward bankruptcy over the next 5-10 years. Within 5 years 50% of taxpayer revenue will be need just to pay the interest on the U.S. debt. Then the only solution will be monetizing the debt by printing and printing more money."

* "Normally gold has an inverse relationship with the dollar," said JP Morgan in a note. "However, when fundamentals make gold more attractive, it overcomes its normal relationship. Don't be surprised if gold is strong even on a modest dollar bounce." Metals consultancy GFMS said silver may rise above $20 an ounce as surging investment more than offsets a drop in fabrication demand," reports Globe&Mail.

* Gold: right time to sell? "Gold may reach levels previously thought of as crazy -- $5,000 an ounce or even $10,000, with plenty of volatility along the way," said Patrick Kerr, Amerifutures Commodities & Options to Marketwatch. "Investors will not know when to sell as they will be so euphoric, all calls for selling will be ignored," said Ned Schmidt, editor of the Value View Gold Report. [Ed. Note: Long-term investors will likely hold gold longer than traders/speculators because they comprehend that this shiny yellow metal is the only "real" money universally respected and accepted globally; yesterday, today and tomorrow. Right time to sell?? Ha-ha! For what? Dollars? Ha-ha!]

* "Gold should easily reach $2,000 per ounce next year just as a matter of supply and demand, and that if gold should start being considered money again, it would have to rise to between $4,000 and $11,000 to support the big increase in the world's money supply," said Jim Rickards, director of market intelligence for Omnis reports GATA.org.

* "Stocks are being held hostage by the dollar and the S&P 500 is in a struggling trend that could push the index lower or lead to horizontal gains. You always get a fast move from a struggling trend," said Bill McLaren, independent trader, to CNBC.

* House Attacks Fed, Treasury, Some Call for Geithner to Quit: "Political frustration over the rescue of Wall Street and high unemployment erupted in the House Thursday, with one committee threatening to impose tighter scrutiny on the Federal Reserve and another trading verbal insults with Treasury Secretary Timothy Geithner," reports WSJ.

* When is a penny worth a million dollars?: "When it's a 1795 reeded-edge U.S. penny, one of only seven known to exist. It recently sold for nearly $1.3 million at auction — the first time a one-cent coin has cracked the million-dollar price barrier. "It's easier to sell a $100,000 coin today than a $1,000 coin," says John Albanese, founder of Certified Acceptance Corp., based in Bedminster, N.J., which verifies graded coins. Historically, high-end coins have fared well as an asset. The PCGS3000 Index of rare coins has returned an annualized 11.3% since January 1970. During that same period, the DJIA has gained about 6.5% annually," reports WSJ.

* "Commodities rose this week as the recovering world economy spurred demand for raw materials, sending gold to a record and mining stocks higher. 'For commodities as a whole, now there is no fear that there will be an economic calamity,' Amrita Sen, a commodities analyst at Barclays Capital told Bloomberg.

* Waiting for the train-wreck: "With current Fed policy, gold is headed rapidly toward $2,000 per ounce, probably within six months. The forecasters who see such a price, but suggest it would take four to five years to get there, are ignoring history. Since gold was able to get from $185 to $850 in 18 months in 1978-80, there is no reason why it cannot get from $1,100 to $2,000 in six months now. What's more, although 1980's peak seemed madness at the time, and was equivalent to nearly $2,400 today. A $5,000 gold price is possible though not certain, if present monetary policy is continued or only modestly modified – and that price could be reached by the end of 2010," writes Martin Hutchinson, author of "Great Conservatives" at PrudentBear.

* China may spur gold price further: "China is now the largest producer and consumer of gold in the world. Yet despite the fact that they have some $2.3 trillion in reserves, only a very small portion (1.9%) is held in gold. Central banks have become buyers and not sellers, demand is outstripping supplies. If you still can't see what is happening, then I give up," said independent precious metals analyst, David Levenstein reports Miningmx.

* "Gold seems set to extend higher as record-low interest rates, inflation concerns, central-bank purchases and falling mine output draws a broad spectrum of investment demand," said James Moore, analyst at TheBullionDesk.com. "We are looking to see if the dollar index breaks lower, which could push gold above $1,150 and on toward $1,180," reports Marketwatch.

* Paper promises, golden hordes: "Gold’s surge may indicate that investors fear the next stage of the crisis will occur in the foreign-exchange markets. Governments cannot support their currencies as well without risking problems in the bond and equity markets. Central banks no longer trust the creditworthiness of other governments. And if they have lost confidence, private investors should do the same. The next step in this chain of reasoning is to assume a stampede (or at least a quick trot) by other central banks into holding the yellow metal. Gluskin Sheff, a Canadian asset-management firm, suggests that if China followed India’s lead, bullion could hit $1,400 an ounce," reports Buttonwood at Economist

* "Gold has jumped more than 25% this year, and the rally is expected to continue into next year given the outlook for continued weakness in the dollar. Carlos Sanchez, precious metals analyst at CPM Group expects gold to continue its run, mounting to $1,150 an ounce later in November, and $1,200 as the year ends," reports CNN.

* The Great Shrinking American Dollar: "The American government needs to control its budget deficit to stop confidence in the dollar from falling further. Our government collects far too little in taxes for what it spends. There is no choice but to raise taxes soon and rein in spending. Short-term rates (controlled by the Fed) will stay low, while long-term rates (market-determined and affected by trust in our Treasury and Fed to keep the value of dollar strong) will rise as people fear their dollar investments will be debased," reports NYTimes

* "The dollar fell Monday as China accused the U.S. of increasing protectionism and following unexpectedly strong Japanese economic growth figures, pushing gold prices to a record high point. President Barack Obama is in China for a three-day mission aimed at convincing Beijing that Washington is its partner, not its rival," reports AFP.

* "A weak U.S. dollar and low U.S. interest rates had led to massive speculation that was inflating asset bubbles around the world. It has created unavoidable risks for the recovery of the global economy, especially emerging economies," said Liu Mingkang, chairman of the China Banking Regulatory Commission," reports WSJ.

* Bernanke reassures markets on dollar: "The Federal Reserve is monitoring currency markets 'closely' and will conduct policy in a way that will 'help ensure that the dollar is strong', Ben Bernanke said on Monday in rare comments on the US currency. In remarks apparently aimed at reassuring markets and foreign governments that the central bank is not indifferent to the fate of the US currency, the Fed chairman said 'we are attentive to the implications of changes in the value of the dollar,' reports FinTimes.

* "Central banks will be net buyers of gold this year as they diversify away from the U.S. dollar, marking a reversal of a decades-old trend. Investment in gold by central banks has picked up recently, with India buying 200 tons from the IMF, and Taiwan's central bank is studying whether to raise the amount of gold in its reserves, with China and South Korea also debating the issue. Gold stored in central banks worldwide has dropped more than one-sixth since 1989, global commodities investment fund BlackRock said on Monday," reports CNBC

* 'Peak Gold' Production Closes Barrick Hedge: "Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold. "There is a strong case to be made that we are already at 'peak gold'. Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue," said Aaron Regent, president of the Canadian gold giant," reports Ambrose Evans-Pritchard at London Telegraph.

* Stimulus Recipients Report 'Unrealistic Job Data': "The Obama administration, under fire for inflating job growth from the $787 billion stimulus plan, slashed over 60,000 jobs from its most recent report on the program because the reporting outlets had submitted 'unrealistic data.' One recipient – Talladega County of Alabama – claimed that 5,000 jobs had been saved or created from only $42,000 in stimulus funds," according to a document obtained by ABC News.

* "The U.S. trade deficit widened in September by an unexpectedly large 18.2%, the most in more than 10 years, as oil prices rose for the seventh straight month and imports from China bounded higher, a U.S. government report showed on Friday," reports CNBC.

* No more 'too big to fail': "If some unforeseen circumstance should put this firm [J.P. Morgan Chase] at risk of collapse, I believe we should be allowed to fail. As Treasury Secretary Timothy Geithner recently put it, 'No financial system can operate efficiently if financial institutions and investors assume that government will protect them from the consequences of failure.' The term 'too big to fail' must be excised from our vocabulary," reports Jamie Dimon at WashPost.

* The Lost Decade: "In the past decade the private sector hasn't created a single job. In September, on a seasonally adjusted basis, there were 108.5 million private (nongovernment) payroll jobs in the U.S. — almost precisely the number there were in June 1999. That's awful, especially when you consider that the population grew 9% during those years, from 282 million in 2000 to 308 million today," reports Slate.

* "According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years. Eliminating or lowering the economic and regulatory hurdles that stand in the way of their success will pave the way for sustained expansion after the government's current stimulus measures come to their inevitable end," reports WSJ.

* U.S. Backs Strong Dollar; Trading Partners Not Convinced: "The U.S. reiterated its support for a strong dollar Thursday but Pacific Rim trading partners remained skeptical, continuing their calls on Washington to stabilize its sliding currency, languishing near 15-month lows against a basket of currencies. 'They have to make good on what they profess. The volatility is hurting us in a serious way,' Russian Deputy Finance Minister Dmitry Pankin told Dow Jones Newswires," reports WSJ.

* October Budget Deficit Widens: "The U.S. budget deficit widened $176.4 billion last month, as rising unemployment cut revenue at the start of the first full fiscal year under President Barack Obama. It was a record 13th consecutive shortfall and the fifth-largest monthly gap on record," reports Bloomberg.

* Americans are now well over $100 trillion in debt. That's $1.3 million per family of four! (Healthcare Reform Red Alert)

* Why more people may buy gold: "It is very clear that central banks are behaving in a way that would suggest that gold is now again being considered a currency within the global monetary system. When the Fed was created nearly a century ago, it was acceptable to have at least 40% of the money supply backed by gold reserves. The US now has 8,133 tons of gold in reserve, which equates to $285 billion at this year's pricing. Meanwhile, the Fed has spiked the punchbowl to such an extent that the monetary base now stands at $1.7 trillion. Do the math - under the old regime, the US alone would need to buy an incremental $400 billion of bullion, " reports Bill Bonner at DailyReckoning.

* Bad Econ. Policies = Rising Gold: "$1,100 gold prices are a prelude to what is ahead if the Obama administration and Congress do not soon restore fiscal integrity. If the president wants to grow the economy and have a lower unemployment rate, he could make a public announcement that he is going to allow his three key economic advisers — Summers, Volcker and Romer — to develop a portfolio of economic policies to encourage economic growth and restore fiscal sanity," reports Investors.

* China Hints at Departure From Dollar Peg: "China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate. China hinted at a shift from an effective dollar peg that has been in place since the middle of last year," reports CNBC.

* "U.S. stocks gained on Wednesday as traders interpreted a flurry of Fed officials' speeches as a green light to buy up dollar-denominated assets while selling the greenback. Stocks meandered on Tuesday, with major indexes finishing basically unchanged," reports Marketwatch.

* "U.S. Treasury Secretary Geithner said Wednesday that maintaining a strong dollar is "very important" for the country's economy, sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend," reports WSJ.

* "Commercial real estate is somewhere between an orderly massacre and a disaster.The value of real estate is down anywhere from 25 to 75 percent," William Mack, founder and chairman of Area Property Partners, a real estate investment fund, told CNBC. The four keys to restoring this confidence, according to Mack, are: making sure consumers have jobs, rising home prices, access to credit and an increase in their 401k.

* "The U.S. dollar has so far had an orderly depreciation, Fed Dallas President Richard Fisher said when asked about the carry trade on Tuesday. He said he was aware of risks the FOMC ran of fueling the trade by stating the Fed would hold its funds rate at exceptionally low levels for an extended period," reports Reuters.

* G20 leaves door open for fresh pressure on dollar: "We're probably looking at fresh dollar weakness in the short term in the wake of the G20 meeting, said Kenneth Broux, senior markets economist at Lloyds TSB. Finance ministers and central bank governors of the Group of 20 major countries, meeting in Scotland at the weekend, launched a "framework" in which they will discuss how to reduce trade and savings imbalances between nations," reports Reuters.

* "The G20 finance ministers' promise means more deficit spending and easy monetary policy around the world. The markets responded by driving the price of gold up over $1,100 an ounce, sinking the U.S. dollar and rekindling stock market speculation," reports NationalPost.

* "The world is tired of having billions of pieces of green paper crammed down its throat. Other governments are tired of 'investing' in dollars and Treasuries, only to watch as the U.S. inflates away the value of their assets," said James DiGeorgia, an author and commodities analyst," WashTimes.

* $1,100 gold signals what?: "The collateral damage done to the U.S. dollar by government spending run amok is reducing the U.S. standard of living and is driving gold to new nominal records almost daily. The passage of HR-3200 ("government option") in the House, the G-20 commitment to further government stimulus, as well as the recent move by central banks buying gold for the first time in a decade are just a few of the major factors driving precious metals higher," said Swiss America Chairman Craig R. Smith, who will be discussing this live with "Your World with Neil Cavuto" on Fox News, CNN radio and The Jerry Doyle Show on Monday.

* Three Things To Stop the Dollar's Decline: "Since 2001, four consecutive Treasury secretaries have made 'a strong dollar policy' the cornerstone of their rhetoric on the U.S. currency. Over that period of time, the currency has lost nearly a fifth of its value. Hint to the current Treasury secretary: it's not working. Here are three ways Federal Reserve and the Treasury could stop the dollar's decline without changing current policy too much. #1: Change the rhetoric. #2: Build a credible plan to reduce deficits. #3: Coordinate policy with Europeans and other foreign central banks," opines Steve Liesman at CNBC

* Which will come out on top: paper or gold?: "The latest rise in price reflects the significance of gold as part of the world’s monetary reserves. The significance of the [India central bank] purchase is that it may be the start of a new phase in the struggle between gold and paper. Gold will be a stronger reserve currency than paper, and the market will increasingly decide national policies," reports LonTimes.

* "Stocks traded higher Monday, coming off their best weekly performance in a month, after the Group of 20 pledged to keep stimulus in place until recovery was assured. The dollar fell across the board. Oil jumped above $79 a barrel and gold hit a new record above $1,110 an ounce," reports CNBC.

* ObamaCare legislation in trouble: "Not so fast. President Obama's victory dance yesterday for the House-passed health-care bill came as Senate foes pronounced the measure mortally wounded, if not outright DOA. Speaking from the Rose Garden after the squeaker 220-215 Saturday-night vote, Obama urged senators to be like runners on a relay team and "take the baton and bring this effort to the finish line on behalf of the American people." Instead, he met with immediate resistance, reports NYPost.

* "The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported last Friday. Nonfarm payrolls dropped by 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million," reports Marketwatch.

* You can't solve a credit crisis by pushing bad private debt onto the public without major consequences such as; a Fed fearful raising interest rates, an ever-shrinking dollar and 17.5% "real" unemployment -- all of which fuel further erosion of public confidence. The only real surprise is that gold prices are not already much higher.

* Who Cares About the Dollar?: "It turns out quite a few do, except for those who could put it on a course to long-term recovery. First of all, you should care, as the purchasing power of your dollar savings is at risk when the dollar plunges versus other currencies. Let’s examine a couple of groups and what they have at stake," reports MERK.

* "Gold prices will reach $1,500 an ounce by June of 2010. You’ve got to look at this as a real breakout commodity. So you look to buy the dips," said Jonathan Kleisner of REX Capital Group to CNBC.

* Valuing Bonds, Dollar Is Crazy in World Gone Mad: "In price is knowledge," one editor used to scream at me. Not anymore. The ad-hoc combination of quantitative easing, government stimulus packages and zero-interest-rate policies has distorted markets beyond recognition. You know markets have gone mad when the yen is perceived to be a refuge and the dollar is the catalyst of choice for re- inflating a global bubble," reports Bloomberg.

* No surprises from Fed: "The Federal Reserve held policy steady repeating that it expects to hold interest rates low for an extended period. Economists expect the Fed to hold interest rates close to zero into sometime in 2010. Some see no action at all until 2011," reports Marketwatch.

* "What is really behind the recent rally is very robust diversification demand from central banks, hedge funds and pension funds. Gold can hold these levels and remains undervalued from a long-term inflation and historical basis," said Mark O'Byrne, director at GoldCore reports Marketwatch.

* India Shows Savvy With Huge Gold Buy: "Consider India the vanguard of central banks more aggressively diversifying reserves away from U.S. assets. As markets brace for that inevitability, here are four things we can conclude from India’s gold rush. One, the dollar’s plight just got worse. Two, India’s got game. India could touch off a bidding war among central banks. Three, the IMF is back. Four, central banks are reverting to the past. Expect Asian central banks that took the whole 'trust-the- Federal-Reserve-to-protect-the-dollar' hype too literally to be especially avid buyers," reports Bloomberg.

* "The real message of the RBI gold purchase is that the cornerstone of the bears’ thesis on gold has been removed – central banks are not sellers. In fact, they are buyers! The central bank printing press is a costless mechanism for acquiring the world’s scarcest monetary metal and the market is beginning to understand that any central bank, not just the RBI, can utilize this model," reports GoldIRA.

* Gold Should Be at $2,300?: "The fast ascent to new record highs this year has some gold proponents worried it might be getting ahead of itself. But on an inflation-adjusted basis, the prices of almost all commodities have reached their 1980's level, except for gold and silver. On that note, gold would have to double to $2,291.55 to reach its 1980`s high, which its supporters believe means gold could go much higher," reports SeekingAlpha.

* "Rising gold and silver spells trouble for the declining dollar index which could push as low as 66 points. The silver market is likely to rise with gold pushing the spot silver value to more than $20 per ounce," according to Chris Zwermann, strategist from Zwermann Financial reports CNBC.

* "Tuesday the International Monetary Fund sold 200 tons of gold to the Reserve Bank of India for $6.7 billion, quietly executing half of a long-planned bullion sale that has threatened to slow gold’s ascent. The deal, which surprised traders who expected China to be the most likely buyer, will relieve the gold market of some uncertainty over how and when the IMF would sell 403.3 tons of gold, about one-eighth of its total stock," reports BusinessDay.

* "The Indian transaction is the biggest single central-bank purchase that we know about for at least 30 years in such a short period. The only comparable event was the U.S.’s steady purchases in the 1930s and 1940s," said 'The Ages of Gold' author Timothy Green. 'This is positive for the gold market. Bilateral sales which avoid the open spot market will avoid adding to marginal physical supply,' said David Barclay, a commodity strategist with Standard Chartered Bank in Hong Kong to Bloomberg.

* Gold Jumps $31 To New Record High: "Having seen gold consolidate and with dips continuing to draw strong support, gold could be poised to make a fresh challenge to the upside as India's purchase announcement clears some of the overhanging resistance," said Bulliondesk.com analyst James Moore reports TheStreet.

* RBI buys half of IMF's gold for sale; who's next?: "Removing half the IFM gold overhang is a decisive tonic to the bullion market, especially in the context of the ECB [European Central Bank] echelon of banks apparently virtually not selling, is obviously positive. And the fact that a Central Bank has stepped in to take the gold is likely to greatly excite those who have been predicting such an event. They are probably right to be excited. The economic authorities have traditionally been rather disdainful of the metal. For many years it has been clear that Washington has been strongly opposed to Central Bank interest in gold, out of jealousy for the US$. That India feels able to defy American preferences in this way is an ominous sign for the dollar hegemony," reports Reuters.

* "Barrick announced Monday that not only did the company buy back one million ounces of hedged gold in October, it may complete the planned closure of its hedge book announced last month before the end of the 12-month window it had set," reports Reuters.

* "Central Banks and Barrick are both signaling we should expect much higher gold prices ahead. As Barrick [and its bullion bank, JPMorgan] are now obviously running for the exits," writes Jim Carrillo at GoldIRAs. Barrick's CFO, Jamie Sokalsky, admitted as much when he said, "It is hard to put a number on it [new high gold prices], but if you look at where gold rose to back in the early 1980s on an inflation-adjusted basis, it was over $2,000 an ounce."

* "Gold traders are 'position building' ahead of the three major upcoming central bank meetings: the U.S. Federal Reserve, the European Central Bank and the Bank of England, he said, with none of them expected to change their interest-rate outlook until the first quarter of 2010," reports Marketwatch.

* "Volatility is all about the dollar -— the dollar became a funding currency when they started to do the dollar carry trade and it’s got everyone nervous. I think it will be dangerous if we break 1,030 [or] 1,025 on the S&P—that may call for a further leg down," Art Cashin at UBS Financial Services told CNBC.

* Mother of all carry trades faces an inevitable bust: "The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Traders are borrowing at negative 20% rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. The longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating," reports FT.

* "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.

* In October gold prices rose 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. Stocks ended the month down 2-3%.

* Gold to Make New Highs Above $2,000: "Gold is likely to make a new inflation-adjusted high before its current bull move ends. That's the word from Frank Holmes the man behind the Morningstar 5-star rated U.S. Global Investors Gold and Precious Metals Fund, which is up 33% in the past year. The journey to new highs will comes with bumps along the road. Holmes predicts several 10% price swings in the near future. Negative interest rates combined with massive deficits is a recipe for gold to shine," reports Yahoo.

* Gold Mutual Funds Vs. Gold ETFs: "Gold-related stocks are a leveraged play on gold. If the investment premise is that gold is in the midst of an extended bull market, perhaps because of rising inflation or monetary and fiscal policies that lead to a weaker dollar, then gold stocks may be the better choice than ETFs. Of course, the risk with gold stocks is that gold prices in fact decline and that bang turns into an implosion," reports WSJ.

* "The world will slump into a depression similar to that in the 1930s if stimulus measures are pulled out too soon. The amount of money poured into the economy has not yielded the appropriate response," Roger Nightingale, economist at Pointon York, told CNBC Monday.

* Let the dollar prove itself - Ron Paul: "The long-term strength of the dollar will only be weakened by maintaining the Fed's monopoly on our monetary system. Our foreign creditors are already moving to dethrone the dollar as the world's currency. The prospect of American citizens also turning away from the dollar toward alternate currencies should provide an impetus to the U.S. government to regain control of the dollar and halt its downward spiral," reports CNN.

* A Dollar’s Worth of Foreign Policy: "How do you catch a falling dollar? A classic approach would be for the U.S. government to stand ready to raise interest rates and adopt plans for future fiscal austerity. It would be responsible, but it would not be much fun, particularly at a time when U.S. unemployment is approaching 10%. Suppose, instead, the dollar continues to slide and loses its premier status among world currencies. There could be domestic political benefits, but it would leave key countries economically bruised and seething," reports ForeignPolicy.

* The Worst Bill Ever: "Epic new spending and taxes, pricier insurance, rationed care, dishonest accounting: The Pelosi health bill has it all. Speaker Nancy Pelosi has reportedly told fellow Democrats that she's prepared to lose seats in 2010 if that's what it takes to pass ObamaCare, and little wonder. The health bill she unwrapped last Thursday, which President Obama hailed as a "critical milestone," may well be the worst piece of post-New Deal legislation ever introduced," reports WSJ.

October 2009

* "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.

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