$1,200/oz. gold in 2009 as forecast, year-end buy! ... Gold Coins Shine
NEW -- The Gold Rush of 2010 ... Dollar’s Reckoning Day
BY DAVID BRADSHAW ~ Editor, Real Money Perspectives
Gold's Future Bright! -Experts ~ Gold IRAs +20%/year!
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Dec 31, 2009 ~ ((M-F podcast)) ~ gold fraud alert!
Swiss America will be closed on New Years Day 2010. Happy New Year!
Thursday gold prices ended 2009 near $1,100/oz. on a flat dollar after rising nearly 25% for the year. Gold closed up $4.30 to $1,096.40/oz., silver rose $.12 to $16.87/oz.
* It's been an exciting year for precious metal investors. Gold prices rose 24.5% after starting the year at $880/oz., while silver prices climbed up 50% from $11.32/oz. Despite the "great recession", and the subsequent government spending gone wild, metals have demonstrated to the world they are the safest haven for reserve capital. Everyone from central bankers to small investors have help to crown gold as the best asset of the year, the decade, and the new century!
* "Gold has been outperforming not just the dollar since 2000, but also most developed currencies as well as most developed bond markets and most developed equity markets. Going forward, it will be an alternative to paper money. A currency, rather than a commodity, and that's what it's been doing so far," Tom Fitzpatrick, chief technical analyst at CitiFX, told Reuters.
* "It appears that 2009 will end much the way it started in the financial markets, a dollar story. For gold the catalyst in 2010 will be inflationary pressures," said Brian Kelly, chief executive of Kanundrum Research, a commodities and macroeconomic research firm," reports Marketwatch.
* Gold: the commodity of the year: "In fact, it's probably the investment of the decade. If you bought gold at the millennium, you would be sitting on gains of about 280%. An investment in the FTSE 100 over the same period would have lost you more than 20% of your capital. When dividends and inflation are taken into account you would have barely broken even," reports Telegraph.
* Adjusted for Inflation, Dow's Gains Are Puny: "Many investors realize that stocks have been among the worst investments of the past decade. Despite its 2009 rebound, the Dow Jones Industrial Average today stands at just 10520.10, no higher than in 1999. And that is without counting consumer-price inflation. In 1999 dollars, the Dow is only at about 8200 and would have to rise another 28% or so to return to 1999 levels," reports WSJ.
* "The bull market in gold has a long way to go - both in magnitude and direction. Looking ahead to 2010, don't be surprised to see gold the yellow metal's price will continue its long-term upswing for at least a few more years, very likely reaching $2,000 an ounce . . . and possibly hitting $3,000 or more before the gold price cycle begins its next long-term cyclical 'bear' phase," reports Mineweb.
* "This secular bull market remains strong and healthy. Gold is again exhibiting to the world how a healthy bull market correction works. Gold's 11% correction this month could expand, perhaps to 15%, or even 25%, like we saw in 2006 and in 2008 from $1,000/oz. to $750/oz. I hope prices drop further because then India, China, central banks, hedge funds and individual investors will view this dip as a rare buying opportunity," reports Swiss America Chairman Craig R. Smith in Asset of the Century. (Request Mr. Smith's "2010 Economic Realities")
* Gold: the decade's best performer: "Happy holidays wishes to all, with a special season's greetings to the permanent gold skeptics. There are many commentators out there who see no value in gold and who denounce it as an investment at every opportunity. They are certainly entitled to their opinions, but it's hard to argue with the numbers over the past 10 years - investors on average would have been better off with a gold allocation than having no exposure. We consider gold a legitimate asset class and consistently suggest that investors consider a maximum 10% allocation to gold-related assets," reports Frank Holmes at Mineweb.
* "Despite its recent decline, gold will continue to serve as an investors' 'insurance policy' in 2010. In case something does go wrong and there's unintended consequences, we feel gold will act as insurance for those events," said Rachel Benepe, portfolio manager of five-star rated First Eagle Gold Fund to CNBC.
* Senate vote to raise debt limit on Christmas eve: "The final congressional approval of a bill would provide a two-month increase of $290b to the federal debt, now at $12.1 trillion. The debt has more than doubled since 2001, due to wars in Iraq and Afghanistan, tax cuts and the worst recession since the 1930s, one that has caused tax revenues to plunge and spending on federal safety-net programs to rise," reports Reuters.
* The Debt Bomb: "Given the ability of the Federal Reserve to create confetti money, we are convinced that it will opt for the inflation tonic. Remember, inflation dilutes the purchasing power of each unit of money and it will make America's debt more manageable. We expect precious metals and commodities to outperform all other asset-classes. Conversely, we anticipate that cash and fixed income instruments will probably turn out to be the worst assets to own over the next decade," reports SafeHaven.
* "Stocks pushed higher as investors weighed a big jump in home sales against weaker-than-expected economic growth. The National Realtors Association said home sales rose 7.4% in November, though the gains came mostly from the low end of the market and one in three sales was off a foreclosure. The Commerce Department said third-quarter gross domestic product came in at 2.2%, well below expectations of 2.7%, reports CNBC.
* The bull case for gold: Dramatic rises ahead: "Rapid swings in market sentiment may be expected which will induce volatility for gold within a range of $950 to $1,350/oz. as the dollar intermittently strengthens and shorter-term speculators take profits and switch to where they see highest risk-adjusted returns. However, we anticipate gold will still outperform other asset classes in real terms over the next few years with falling supply and continued demand from governments, institutions and private investors alike," reports Citywire.
* It's Not A Gold Bubble: "In the absence of fundamental value, a bubble happens when the price of an asset is extraordinarily high. Whether the current gold price is artificial, only history will tell. Gold is certainly expensive, but it is worth what investors are paying for it," reports Forbes.
* "A combination of worries about a tightening Fed and the ability of Greece to service its debt sent the U.S. dollar rallying to 3-month highs last week. Thin pre-holiday trading conditions also contributed to volatile moves in markets. Standard & Poor's late Wednesday downgraded Greece to BBB+, matching a fellow downgrade from Fitch Ratings just over a week ago," reports Marketwatch.
* Health Care bill clears Senate: "Landmark health care legislation backed by President Barack Obama passed its sternest Senate test in the pre-dawn hours early Monday, overcoming Republican delaying tactics on a 60-40 vote that all but assures its passage by Christmas. 'Let's make history,' said Sen. Tom Harkin, D-Iowa, shortly before the bill's supporters demonstrated their command of the Senate floor in an extraordinary holiday season showdown," reports AP. [Ed. Note: What will this mean for gold?]
* Health plans on collision course: "Liberal and moderate Democrats remain on a collision course over the bill. 'This process is not legislation. This process is corruption,' said Sen. Tom Coburn (R-Okla.). 'And it’s a shame that that’s the only way we can come to consensus in this country is to buy votes," reports Politico.
* Harder to buy US Treasuries: "IT is getting harder for governments to buy U.S. Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, said Zhu Min, deputy governor of the People's Bank of China. In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending," reports Shanghidaily.
Russia's gold for cash for budget crisis: "Russia's Finance Ministry has sold 30 metric tons of gold to the country's Central Bank for $1 billion, an official said Monday, saying the cash will help ease the crisis in the country's budget," reports Thestreet.
* "The recent new all-time high in the price of gold has been caused by the convergence important drivers; falling mine supply, a weaker dollar and central bank buying. The key factor will be investment demand – which remains strong, according to the latest data from the World Gold Council," reports Telegraph.
* "The Federal Reserve reaffirmed its pledge to keep interest rates low for the foreseeable future. Analysts say the Fed's commitment to keeping interest rates low is good for gold over the long-term because it means the dollar should continue to weaken," reports AP.
* "It is inevitable that the dollar will continue to weaken," said Chinese central banker Zhu Min. "The U.S. has to fund its deficit through the combination of issuing more Treasuries and printing more dollars. It will become more difficult for nations to buy U.S. Treasuries," said Mr. Min at a forum in Beijing Thursday reports Bloomberg.
* "The U.S. government's consumer price index rose 0.4% in November in line with expectations. A separate report showed housing starts rose to a 574,000 pace in November. Price activity is likely to be muted before the Federal Reserve completes its monetary policy meeting later in the session," reports Marketwatch.
* "Since September 2008 the FED and central banks worldwide have flooded the markets with liquidity, causing the money supply and their balance sheets to triple. During the same period gold prices shot up from a 2008 low of $750/oz. to 12/2/09 high of $1,215/oz., a 62% price rise. I am expecting gold prices to rise to at least $1,550/oz. by the first or second quarter of 2010," said Swiss America Chairman Craig R. Smith to Fox Business.
* Gulf petro-powers to launch currency in latest threat to dollar hegemony: "The Arab states of the Gulf region have agreed to launch a single currency modeled on the euro, hoping to blaze a trail towards a pan-Arab monetary union. The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion, some 40% of the world’s proven oil reserves, and financial clout equal to that of China. "The US dollar has failed. We need to delink," said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank," reports Ambrose Evans-Pritchard at Telegraph.
* "Investment bank Société Générale expects gold to rally sharply in the next two quarters, rising to $1,500 before mid-2010, with the view partly driven by the weight-of-money argument that revolves around gold's relatively small market size by comparison with other asset classes. Other bullish gold drivers include flat mining supply and the expectation for ongoing Asian central bank gold buying," reports Mineweb.
* Inflation up, manufacturing down: "US producer prices rose 1.8%, more than expected in November, lifted by a surge in energy costs, and recorded the first year-on-year gain since last November, according to a government report on Tuesday. Separately, New York state manufacturing unexpectedly weakened in December, signaling the recent revival in the factory sector is slowing," reports CNBC.
* Gold prices have corrected 10% from a recent high of $1,225/oz. Lower gold prices are making gold attractive to bargain hunters, but short term pressure remains as investors seek to shore up their profits before the end of the year. This dollar index has bounced up 3% in December but will likely be short-lived given the world is abandoning the buck.
* "Don’t be surprised to see gold at $1,500 or higher by the end of 2010. The four pillars of gold-price strength remain intact. They are inflation, fueling US monetary and fiscal policies; Central bank reserve diversification with the official sector being a taker rather than a supplier of gold in 2009 and the next few years; expanding retail and institutional investor participation in the U.S., China, and around the world; and declining world gold-mine production," reports Jeffrey Nichols, managing director of American Precious Metals Advisors to Telegraph.
* Gold has appreciated 365% in terms of dollar: "While it is true that the US gold price tends to move inversely to the Dollar the investment demand far outstrips the currency action. In the past eight years the US Dollar Index has declined by 61%. The Euro is up 78%, the Yen 55% and the Canadian Dollar by 53%. However, gold has appreciated by 365% in terms of the US Dollar. So much for the theory that it has been a weak dollar that has caused the gold rally. However, the action of the dollar does offer guidance in establishing interim highs and lows in the gold price," reports CommOnline.
* "The world's perception of gold has changed and the pace of the bull market has quickened. We believe that the U.S. Federal Reserve, watch dog of the dollar's purchasing power, no longer seems displeased to see a rise in the metal's price. Their game is reflation and they are not terribly choosy about which assets become overvalued as a result. The implication of gold's continuing strength remains a mystery, even to most of those who have jumped aboard the bandwagon. Despite the acceptance of gold by elite investment thinkers gold continues to be under owned and misunderstood by most, It is safe to say that it has a long way to go before it becomes mainstream," writes Tocqueville Gold Fund manager John Hathaway reports Mineweb.
* "Russia's state repository will sell 30 tons of gold worth $1 billion to the central bank next week, a source at the body said on Friday, keeping the metal inside Russia after rethinking a plan to sell it on the market. Central banks worldwide are building up their gold reserves as the metal trades near record highs," reports Reuters.
* Price Drop Lures Gold Buyers: "We could see some people very excited to get back into gold after its decline. If you’re seeking a safe haven, people will buy gold on dips," said Bernard Sin, head trader at bullion refiner MKS Finance SA in Geneva reports Bloomberg.
* Gold Jitters for Jewelers: "For independent jewelers across the country, elevated gold prices -- which set a new record high in early December when it briefly surpassed US$1,200 an ounce -- have made already tight margins in their businesses even tighter. You hear some people saying it will go to $3,000, $4,000, $5,000 an ounce and I hope to God it doesn't. If it does and the economy is that bad then we're all in trouble," reports FinPost.
* HSBC sees gold up 21% in 2010: "HSBC has upgraded its 2009-2011 price forecasts of precious metals on expectations investor buying for hard assets should continue, reports FastMarkets. Gold prices are projected to rise above $1,360/oz.
* "We're entering that time where you have end-of-year position squaring by hedge funds. They have been heavily long in the gold and silver markets. But the recent strength in the dollar -- even though it's not up today -- has been enough to trigger end-of-year profit-taking," said Michael Gross, broker and futures analyst with OptionSellers.com reports DowJones.
* Precious metal prices dipped then rebounded on bargain hunting amid dollar volatility. Gold prices are up 27% in 2009 ytd. Today everyone from individual investors, to hedge funds, to central banks are seeking wealth protection and growth. Precious metals have again resumed their historic role as world's most trustworthy assets.
* Stocks slide on global debt worries: "Moody's downgraded all six Dubai government-related issuers on Tuesday, saying that the U.S. and Great Britain may test the boundaries of their AAA sovereign ratings due to deteriorating public finances," reports Marketwatch.
* Why the Gold Bears are Wrong once Again: "Since late 2008 the Monetary Base has almost tripled. That kind of an increase has never happened before. You can ‘bet your bippy’ this is going to cause price inflation. A few bearish analysts are concerned about a possible deflationary collapse. They are missing an important piece of the puzzle. Deflation (except for isolated asset deflation) is a monetary phenomenon. It is caused by the FED withdrawing money from the system. Does anyone expect that to occur anytime soon?" asks Peter Degraaf.
* Gold not going up – paper money going down: "Most people don’t even understand that their government makes their money worthless. Money printing gives them the illusion of being richer whilst all they have are pieces of paper with more zeros on them. But there is one currency that governments can’t print which is gold. Gold has been real money for almost 5,000 years and it is the only currency that has survived throughout history," reports Egon von Greyerz at MatterhornAM.
* "Last Friday's 4% drop in the gold price is a perfect example of a healthy bull market correction. I hope prices drop further because then India, China, central banks, hedge funds and individual investors will view this dip as a rare buying opportunity. No market goes straight up if it's a real market propelled by legitimate buying and selling. If anyone believes the dollar will regain the strength lost over the last decade, while the government is borrowing and printing their way out of a financial crisis, then they're dreaming. The dollar may have short rallies but long-term it is headed lower, pushing gold prices higher," writes Swiss America Chairman Craig R. Smith.
* U.S. Mint suspends all ounce gold coin sales: "Once again the U.S. mint has had to suspend sales of all its one-ounce gold coins due to shortage of physical gold as its supplies of physical gold cannot meet the demand. This demonstrates the extent to which demand for easily available physical gold has increased over the past two years. Some of this has been the ever increasing interest by the U.S. public in gold and also a certain amount of distrust generated by some commentators as to whether the various ‘paper gold' offerings were secure," reports Mineweb.
* Central Bank Said to Buy More Gold: "Russia’s gold reserve probably rose by $790 million to $23.1 billion in the week ended Nov. 27, Anton Nikitin, an analyst at Renaissance Capital in Moscow, wrote in a research note Friday. The Central Bank increased gold holdings by almost 130 million metric tons in the last year. The bank’s holdings equaled $23 billion on Dec. 1, a gain of 13% in the month, reports Moscowtimes.
* "U.S. employers cut a far fewer-than-expected 11,000 jobs in November, the smallest decline since the start of the recession in December 2007, government data showed on Friday, strongly suggesting the deterioration in the labor market was in its final stages. The unemployment rate fell to 10% from a 26-1/2 year high of 10.2% in October," reports CNBC.
* "The total 'underemployment rate' was 17.5% last month, the highest since the government began tracking it in 1994. The 7 point difference between the 10% jobless rate and underemployment rate is almost double the usual gap. That's an indication of how many more people are likely to be looking for work in coming months. The unemployment rate is likely to climb as high as 12%. Those economists who expect it to peak near its current levels are borderline delusional," said David Rosenberg, chief economist for Gluskin Sheff to AP.
* "Friday gold investors locked in profits after the precious metal topped $1,220/oz. to mark a record high for the third straight day. 'Gold gained momentum as it broke through above $1,200 and rose to $1,210 and $1,220, triggering a round of short-covering (to cut further losses),' said Koichiro Kamei, managing director at Market Strategy Institute in Tokyo," reports Reuters.
* "China looks set to overtake India as the world's largest gold consumer in 2009, with total demand for jewelery and investment forecast at 432 tonnes, a senior official at major metals consultancy GFMS said on Friday.
* "Today we have both a grassroots awakening propelling gold from the bottom up PLUS we have Wall Street and Central Bank buying at the very highest levels. This helps explain why all roads are now leading to gold. $1,200/oz.gold, at just over half of its inflation-adjusted high in 1980 of $2,300/oz., remains a good buy," reports SwissAmerica.
* "Swiss America Chairman Craig R. Smith. told CNBC in February 2009 he believed gold would rise to $1,200 by the end of this year and a new inflation-adjusted high of $2,300 in the next few years. 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 fourfold, but that's just the kickoff phase," says Mr. Smith.
* "Even though gold is still relatively unknown in mainstream investment circles, it’s starting to attract some attention. As this interest grows, momentum buying will pick up and the exchange traded funds are another big positive, simply because they make it easy to buy gold. The improving economy is another positive factor. Once a nation's debt levels vs. GDP percentage exceeds 5-6%, the currency of the country historically falls sharply. Currently, this percentage has soared to about 10% in the U.S. and unfortunately, that pretty much puts the nails in the dollar’s coffin. This alone will propel gold much higher," report The Aden Sisters at Kitco.
* "If people buy gold today, they will be very happy two years from now as prices reach $3,000," said David Tice, strategist at Federated Investors to CNBC. "Fear is going to be key — there will be a global currency disaster ahead. We can certainly see some inflation, but if the economy really grows like it is now — then prices can go up around the world and gold can go up as well."
* "Gold hit record highs above $1,200 an ounce on Tuesday as dollar weakness fueled buying of the metal as an alternative asset, while investors speculating on more gains were cheered by its recovery from last week's losses. Everyone was waiting for that correction, and the way gold recovered suggested there was a lot of buying lurking in the wings (among) people who missed the opportunity to get into the market in the first place," reports CNBC.
* China's appetite for high-flying gold: "Gold's successive run-ups to record highs are underpinned by hopes for central banks to further diversify reserves, particularly China's, a topic set to dominate a two-day industry gathering in Shanghai from Thursday. It's possible for China to buy gold from the IMF in large volumes in pursuit of asset allocation for its foreign reserves, but that will mean further detachment from dollars of which China holds the most," reports Reuters.
* All That Glitters: "Gold, that barbarous relic, is having a thoroughly modern moment in the spotlight. But there is more to gold's current boom than just a flight to safety. The metal is showing signs of a more sustained run at respectability. Gold is looking less barbarous than the alternatives," reports TIME. [Ed. Note: Since gold has not yet made the cover of TIME, it's still not too late to buy, as they say.]
* "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. on Nov 21-22.
* "What’s next for gold? I still think $1,200-$1,400 is a reasonable target for the end of this year, so I am staying with that forecast. But first, it seems likely that gold will re-test support seen this past Friday. So I expect gold to trade under $1,150 some time this week. If we do see a drop into the $1,140s, it will be an ideal opportunity for traders to add to their position," reports GoldMoney founder James Turk at CommOnline.
* The Last Great Dollar Crisis: "The more the U.S. becomes financially overextended, the more it is at the mercy of seemingly insignificant financial events. The U.S. has few viable alternatives to deficit reduction and eventually tightening the money supply. If the U.S. government cannot muster the will to rein in the money supply and the national debt on its own, it faces the prospect of a rival power increasingly constraining U.S. economic policy options or a collapse in global confidence in the dollar," reports WSJ.
* Little-Known Rule Could Send Gold to $10,000: "The Greenspan-Guidotti rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default. According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. We owe at least $880 billion to foreign creditors. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months. Where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. How high will gold go during this crisis? Nobody can say for sure. We've never been in the situation we are now. The numbers have never been so large and dangerous. But I wouldn't be surprised at all to see gold at $10,000 an ounce by 2012. Make sure you own some," reports Porter Stansberry at GoldIRAs.
* 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.
* 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.
* 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
* 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.
* 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.
* 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.
* 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.