June 2009

Tuesday gold prices slipped 1% on a firmer dollar as stocks fell amid end of month/quarter volatility. Gold last traded down $10.00 to $927.30/oz., silver fell $.29 to $13.55/oz.

* Gold priced ended the month with a 5% decline, but a 2% rise in the second quarter and 6% rise in the first half of 2009. June is typically the best month of the year to buy gold at an average 10% low for the year. Most analysts are projecting gold prices will end the year above $1,000/oz.

* "Gold Prices Seen Trending Higher, said Peter McGuire, MD of Commodity Warrants Australia, reports CNBC video. Expect to see a softer U.S. dollar over the course of this week," predicts Stephen Roberts, chief economist at Nomura.

* "Gold and economic freedom are inseparable. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights," wrote Alan Greenspan back in 1966.

* "Wal-Mart, the world's largest retailer, said on Tuesday that it supports President Barack Obama's push to require large employers to offer health insurance to workers. Wal-Mart has drawn criticism from labor groups, who have accused it of mistreating employees and not offering adequate health care coverage," reports Reuters.

* "Obama's plan is a job killer, at a time when America cannot afford to lose any more jobs," said Swiss America CEO Craig R. Smith to FOX Your World.

* As Calif goes, so goes the nation? "California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red. Once the US’s richest state, California now has the dubious distinction of having the worst credit rating in the country. It is facing a budget deficit of $24B," reports FT.

* "From my work I see the green shoots of hyperinflation. When a government is determined enough to debase its currency it can distort the measurement of economic value such that nominal prices rise while the value in real terms is falling. This is likely to be the case with the stock market," writes Adrian Douglas of MarketForce.

* "China and Brazil are working on a currency arrangement to allow exporters and importers to settle deals in their local currencies, bypassing the U.S. dollar, the countries' central banks said on Sunday. On Friday the Chinese central bank renewed its call for the creation of a super-sovereign reserve currency, saying dollar dominance has worsened the financial crisis," reports Reuters.

* "Stocks rose on Monday as economically sensitive sectors enjoyed a tentative return of buyers betting on a recovery. The June employment report, which will be announced earlier than usual on Thursday, as U.S. markets will be closed Friday in recognition of Independence Day," reports WSJ.

* "Financial products should be treated like medicines and sold to consumers only when they are certified safe to prevent a repeat of last year's financial meltdown, the world's central bankers said on Monday. The 150 year sentence of Bernard Madoff serves as a reminder of market excess and oversight flaws that led to the worst downturn since the Great Depression," reports Reuters.

* "Let's connect the dots: The Fed prints money at the speed of light. President Obama spends money at the speed of sound. And Americans pay trillions for it all over multiple generations! Yet Warren Buffett says much more stimulus is needed! You cannot stop this train wreck, but you can hop off the train! The imperative question is; Are you ready for inflation?," reports GoldNewsDaily.

* "The savings rate, which hovered near zero in early 2008, surged the highest level since December 1993. Consumer spending rose 0.3% in May, in line with expectations. The higher savings rate is healthy in the long term, economists said. But without vigorous consumer spending, the government may have to do more to revive the economy, possibly through further tax breaks and spending," reports CNBC.

* "Should we buy gold or U.S. Treasuries? The U.S. is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice," said Li Lianzhong, who heads China's economic policy research office to CNBC.

* "Health-care stocks surged Thursday after Senate Finance Committee Chairman Max Baucus said U.S. senators reached an agreement to slash the price tag of a sweeping reform bill to below $1 trillion over 10 years. Senate lawmakers have been trying to whittle the cost of the bill down after a Congressional Budget Office analysis showed that the bill would carry a cost of $1.6 trillion," reports Marketwatch.

* The Cap and Tax Fiction: "House Speaker Nancy Pelosi has put cap-and-trade legislation on a forced march through the House, and the bill may get a full vote as early as Friday. It looks as if the Democrats will have to destroy the discipline of economics to get it done. Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history. Even Democrats can't repeal that reality," reports WSJ.

* "Fed Chairman Ben Bernanke defended the central bank's involvement in Bank of America's controversial acquisition of Merrill Lynch, on Thursday saying the central bank acted with integrity and did not apply any undue pressure to complete the merger," reports Marketwatch. [Ed. Note: Was that a quiver in Ben's voice I detected?]

* "Warren Buffett said there has been little progress over the past few months in the "economic war" being fought by the country. While the economy is a "shambles" and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years," reports CNBC.

* ABC ObamaCare Special: "President Obama uses network primetime special and overtime 'Nightline' coverage to talk for more than 45 minutes of combined 75-minute programs, revealing nothing new. Obama said health care reform would be resolved assuming he gets the support of the American people. He even claimed 'the stars are aligned' to get this done," reports Bus&Media.

* "Yesterday the Fed re-affirmed its plan to purchase by the end of the year $1.8 trillion of US government paper. That’s nearly $6,000 for every man, woman and child in the U.S. The US dollar has caught the fiat currency disease, where too many units of account are created. This disease is fatal. The Fed has sealed the dollar’s inflationary fate. Own gold and/or silver to protect yourself and your family from this inevitable outcome," reports James Turk, founder of Goldmoney.com.

* "The Federal Open Market Committee kept the benchmark interest rate between zero and 0.25%. The rate will stay at 'exceptionally low levels for an extended period.' The Fed left its $1.75 trillion bond-purchase program unchanged and said inflation will remain 'subdued for some time,' " reports Bloomberg.

* "The U.S. dollar was weakened by expectations that the Federal Reserve will announce today that it is not yet ready to raise interest rates. Most economists predict the Fed won't launch any bold new efforts. Fears have grown on Wall Street that the Fed's radical efforts could ignite inflation," reports AP.

* "The days of calling the dollar almighty may be numbered. the financial crisis that started in the U.S. is dramatically intensifying the debate over the future of the dollar, and whether it can, or should, remain at the top of the financial food chain. The easy monetary policy embraced by the Fed to spark a recovery -- including zero-interest rates and the printing of cash to support stimulus spending -- is also working against the strength of the dollar," reports WashPost.

* "After months of wishful thinking, investors are nervous again about financial markets and the world economy, and it may take a flurry of much better economic data to make them believe in a sustainable recovery. Anxiety grew after the World Bank cut its 2009 global growth forecast, saying the world economy will contract 2.9 percent this year," reports CNBC.

* "Stocks faltered Tuesday after a report showed home sales rose but not as much as expected. Existing-home sales rose 2.4% to a 4.77 million annual pace in May, less than the 4.81 million rate expected. 'Home prices are still declining and inventory is still high. Those are headwinds that may restrain a recovery in housing,' said Gary Thayer, senior economist at Wells Fargo Advisors," reports CNBC.

* Obama's $1T health-care reform plan = higher taxes + redefining "rich": Paying for Obama's sweeping health-care reform may require raising taxes on all Americans earning $50,000 a year, Swiss America CEO Craig R. Smith told FOX 'Your World with Neil Cavuto' on Monday. "Soon, if you live in America, you are 'rich'. This is insane," said Mr. Smith. According to a growing chorus of critics, Obama's campaign promise of 'no new taxes under 250,000 income' appears to be a financial impossibility.

* In our current 8-year bull market, June has seen the lowest return for gold and one of the best times to buy. Gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power. How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints," reports BigGold editor Jeff Clark.

* "Precious metals are the only currency to own when central bank printing presses are debasing global currencies at a historic rate. And because they are a proven store of value, precious metals may be the only asset class that will preserve your portfolio's purchasing power as we enter into a prolonged period of ‘ –flation' : deflation, stagflation or inflation, one of the latter two being much more likely," reports IBTimes.

* "A grim economic forecast from the World Bank put pressure on stocks and commodities prices on Monday and increased demand for Treasurys and the dollar. The Fed is expected to leave interest rates unchanged, but traders are looking for any indication that the central bank intends to rein in some of its monetary stimulus," reports MarketWatch.

* Summertime Brings Out Pessimists: We believe very strongly that this is a secular bear market. The theme here is global reflation that replaces the mortgage bubble. The market is beginning to recognize that there will be losers in the government's efforts to recapitalize the economy, particularly among stocks tied to the American consumer," says Prudent Bear fund manager Doug Noland to WSJ.

* "An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday," reports Forbes.

* "Silver remains way too cheap relative to prevailing gold prices. And history strongly suggests this anomaly, driven by the stock panic, will not persist. Silver needs to rise considerably to normalize with gold even if the latter stays flat, which is unlikely. The gigantic money-supply growth and coming inflation scare should drive incredible mainstream interest in deploying capital in gold and silver," reports Adam Hamilton of Zeal.

* "Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy. In the next few months, unemployment may reach 11% in the US and around 10% in Europe. Because of bad macroeconomic data and poor earnings prospects, the surprises will be on the downside. That's why I believe there's going to be a significant market correction for equities, for commodities and even for credit," said economist Nouriel Roubini to CNBC.

* Americans fend for themselves until 2010: "Mr. Obama has done more to ignore and destroy the Constitution in the first five months of his administration than the last 10 presidents combined. Separation of powers is a thing of the past. Can 306 million citizens sit back and allow this to occur? I sure hope not. Hopefully November 2010 will be the start of a new day in America. A day when the Constitution and free markets are restored," reports WND.

* "Sometimes those long, lazy days of summer can become, well, boring. What are you going to do when your little ones are underfoot, the temperature is rising, and everyone's becoming cranky? Don't give in to the irritability; instead, turn to Kim Kautzer's WeE-book™ "Beating the Summertime Blues" for fabulous summer.

* "Stocks finished a volatile session mixed as traders jockeyed for positions on this quadruple-witching Friday and techs rallied. Techs shot out of the gate after the debut of Apple's new iPhone and several analyst upgrades in the smartphone sector, though BlackBerry maker Research In Motion didn't join in the rally," reports CNBC.

* Lawmakers Balk As Administration Tries to Redefine Central Bank's Role: "Lawmakers are critical of the Fed for not doing enough to prevent the financial crisis and then taking steps that many think were too aggressive," reports Washington Post.

* "The Obama administration projects total U.S. debt to increase by $1.8 trillion in 2009 and another $1.4 trillion in 2010. On top of that, the Congressional Budget Office (CBO) projects almost $10 trillion in additional debt from 2010 through 2019. This reflects a doubling in public sector debt as a percentage of GDP through the next decade," reports Schwab.

* "European Union leaders spotted the first signs of a 'sustainable economic recovery' and started planning to roll back budget deficits piled up to combat the worst slump since World War II. It is time central bankers start hatching an 'exit strategy'. They also agreed to overhaul financial regulation after banking supervision failed to contain the crisis sparked in the U.S. housing market," reports Bloomberg.

* "Three principles should guide reform of the way we regulate financial markets. First, since markets are bubble-prone, regulators must accept responsibility for preventing bubbles from growing too big. Second, to control asset bubbles it is not enough to control the money supply; we must also control the availability of credit. Finally, the issuance and trading of derivatives ought to be as strictly regulated as stocks," reports LonFinTimes.

* "Outspoken Republican Rep. Michele Bachmann says she will refuse to fill out anything more than the number of people in her household on next year's national census because she's worried that information will be abused. The questions have become "very intricate, very personal" and she also fears ACORN, will be part of the Census Bureau's door-to-door information collection efforts," reports WashTimes.

* "Gold is the safest asset to buy in these times as, despite reassurance from central banks, inflation is likely to crop up again next year or in 2011. As a consequence, you've just got to be bullish on gold even at these levels. It's going to go to $2,000 next year. In the currencies and the companies, you've got political and corporate risk, go buy the pure asset," said Philip Manduca, investment manager at ECU Group to CNBC. [Mr. Manduca is one of 75 experts quoted here.]

* "If gold is the ultimate sanctuary for small investors who have taken furious flight to quality, then Thomas Geissler may have invented the ultimate vending machine, TG-Gold. Customers will be able to buy 1-, 5- and 10-gram pieces of gold, and Canadian Maple Leafs and South African Krugerrands, each a tenth of an ounce. His system allows prices to be updated every few minutes. Mr. Geissler does what everyone loves to do these days, take a swing at the banks: In short, he said, they can be undersold. 'The banks have an oligopoly. Generally, oligopolies wait too long to compete, and by then it is too late.'" reports NYTimes.

* "Stocks advanced Thursday after a trio of encouraging economic reports: The Philadelphia Federal Reserve's manufacturing report, leading indicators and weekly jobless claims. Treasury Secretary Tim Geithner was on Capitol Hill today, urging Congress to move quickly on the Obama administration's financial reforms," reports CNBC.

* "In free markets, supply and demand determine price and profits. Capitalism’s paper-based markets, however, are not free markets. In today’s capitalist markets, price and profits are determined by credit flows emanating from government central banks. The real conundrum faced by central bankers is how to convince investors that the economy is improving when it isn’t. A slowing descent is not the same as ascending although many investors are willing to bet their last dollar that it might be so," reports MarketOracle.

* "President Barack Obama faces new concerns among the American public about the budget deficit and government intervention in the economy as he works to enact ambitious health and energy legislation, a new WSJ/NBC News poll finds. Rising doubts threaten to overshadow the president's personal popularity and his agenda, in what may be a new phase of the Obama presidency. A solid majority -- 58% -- said that the president and Congress should focus on keeping the budget deficit down, even if takes longer for the economy to recover," reports WSJ.

* Inflation Stays Tame, But Gas Prices A Worry: "Consumer prices increased a meager 0.1% in May. Widespread unemployment is stopping companies from raising prices for fear of losing cash-strapped customers. But not at the gas station. Pump prices have marched upward for a record 49 days in a row, reaching $2.67 on Tuesday," reports Forbes.

* "Worries about the health of the U.S. consumer pressured the stock market on Wednesday morning. Stocks later recovered thanks to a jump for health-care firms. FedEx sank 2.1% after its fiscal fourth-quarter loss widened and the package-delivery giant projected earnings for the current quarter well below Wall Street forecasts," reports WSJ.

* "President Barack Obama on Wednesday proposed a sweeping revamp of the U.S. financial regulatory system which rivals the reform that was enacted in the 1930s. Obama argued that the financial regulatory reform will empower the free market to be more creative, bringing prosperity to the U.S. The plan would empower the Federal Reserve with the authority to be a lender of last resort in unusual and exigent circumstances," reports MarketWatch.

* "Obama said on Tuesday that worrying about the U.S. government's finances 'keeps me awake at night' and the country needed to start planning now to tackle soaring deficits. 'There's no doubt that we've got a serious problem in terms of our long-term deficits and debt. I make no apologies for having acted short term to deal with our recession,' he told CNBC reports WashPost.

* "A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday. 'China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar.' Major emerging economies cast doubt on the dollar's long-term future as the world's main reserve currency," reports AFP.

* "Gold and oil have moved sharply up on the fear that the trillions of dollars in government bailout spending eventually will end badly, with inflation eating away at the buying power of money. While the flow of money into the system ultimately could ignite inflation, the concern seems disconnected from today's realities," reports ChiTrib.

* Reserve Status Concerns Hurt Dollar : "The dollar is lower Tuesday morning following a failure to push decisively higher after Monday's rally and renewed fears about an erosion of the currency's reserve status prompted a change in direction for the currency. the dollar's role will be discussed at Tuesday's meeting between Russia, China, India and Brazil," reports WSJ.

* "The rise in the dollar on Monday for the first time in weeks is nothing more than a dead-cat bounce. With this much money being created, the dollar has only one way to go -- down. It's nothing more mysterious than supply and demand," reports MarketWatch.

* "The world's authorities are taking steps never tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold," reports AMBROSE EVANS-PRITCHARD, International Business Editor, London Telegraph.

* "The dollar rose broadly against other currencies Monday in the wake of the G8 meeting and after Russia said the US currency's role as the world's main reserve currency was unlikely to change in the near future. 'The worst may yet lie ahead for the world economy in the current financial crisis,' the head of the International Monetary Fund warned today," reports Guardian.

* "New U.S. housing starts and permits surged in May from record lows, while producer prices rose at a slower pace despite higher gasoline prices, boosting prospects for the economy's recovery from recession. U.S. stock indexes opened higher, while Treasury debt prices extended losses and the dollar fell," reports CNBC.

* "Stocks and commodities suffered sharp, broad-based declines on Monday as investors unwound some of the bets that pushed blue chips into positive territory last week. Stocks were weighed down by a fall in commodities prices brought on by strengthening in the dollar," reports WSJ.

* "The Federal Reserve should stop buying government debt and instead focus on kick-starting areas of the credit markets having to do with consumers, Steve Forbes, Forbes CEO, told CNBC Monday. The Federal Reserve should "aggressively" buy mortgage-backed securities, to get housing sales moving again."

* "President Obama's "learning curve" regarding his policies toward Iran might buy Tehran enough time to produce nuclear weapons, Shabtai Shavit, former chief of the Mossad intelligence agency, warned in an exclusive WND interview Monday.

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* Printing money isn't the cure: "The economy needs strong medicine, and it's getting a big dose of it. But the side effects are dangerous, and the prognosis for a quick recovery is poor. When money printing goes to excess, as it almost always does, speculation follows. (This is not to say that speculation requires money printing. It doesn't.) However, one can never know in advance exactly where the speculative juices will flow and what assets or markets will be kited wildly higher," reports MSN.

* "Central banks may be justified in increasing their gold holdings to 40-50% of their reserves. 'It is not only about the dollar, not only about diversification, but also about future inflation,' a senior executive of the World Gold Council said to Reuters.

* "Some experts say the gold rush is now over, with an economic recovery underway. Perhaps, but so far the commodity super-cycle has swept gold prices up threefold since 2001. Impressive, but that's just the kickoff phase according to over 75 experts surveyed by Swiss America.

* "The structure of the gold market is changing. ETF investment is in its infancy, and so is gold investment. Most allocations of gold are zero. You would only need a small shift in allocations to gold in segments of private and institutional wealth to have a major impact, when mining supply is only 2,400 tons a year," reports BusIntel.

* "Finance officials from G8 countries face rifts at their summit Friday over the scope of global banking rules and how to exit massive government-stimulus efforts, even as they acknowledge fledgling signs of an improving economy. The pressure is on policy makers to map a way out of expansive stimulus policies that could fuel inflation and leave governments heavily in debt," reports WSJ.

* "Health-care overhaul legislation being drafted by House Democrats will include $600 billion in tax increases and $400 billion in cuts to Medicare and Medicaid, Ways and Means Committee Chairman Charles Rangel said. Some Senate Republicans, including Senator Orrin Hatch of Utah, say the costs will likely exceed $1.5 trillion," reports Bloomberg.

* "The number of U.S. workers filing new claims for jobless benefits fell more than expected last week, government data showed on Thursday, pointing to an easing of labor market weakness. Sales at U.S. retailers rose for the first time in three months in May, lifted by strong gasoline and building material receipts, bolstering views the recession is abating," reports CNBC.

* "Stocks ended mixed on Thursday as Wall Street traders digested two moderately good economic reports and continued to watch the rise in yields in the bond markets and the price of oil. 'It’s going to be near-term negative for this economy if bond yields keep rising like this,' said Art Hogan, chief market strategist with Jefferies," reports FoxBus.

* "Rising interest rates threaten to dim prospects for a housing recovery and choke off a refinance wave that was a major plank of the Obama administration's economic-stimulus efforts. On Wednesday, rates on 30-year fixed-rate mortgages climbed to 5.79%, up from 5% two weeks ago," reports WSJ.

* "US Treasury prices fell on Wednesday, sending benchmark yields to eight-month high of 3.99%, after an auction of 10-year notes heightened concerns about the cost of financing the burgeoning U.S. budget deficit. It was the first test of the government's long-term borrowing ability since investors began to wonder last month whether the U.S. AAA credit rating may be living on borrowed time," reports CNBC.

* Get Ready for Inflation: "The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart) I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury's planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds," reports WSJ.

* "The Fed's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit. With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions said Jim Grant, editor of Grant's Interest Rate Observer, to CNBC.

* The 5 Biggest Myths About Gold: "As confidence in the world's leading fiat currencies erodes, gold's immutable role as the universally recognized alternative to paper money is plain for all to see. Whether it's in the tripling of gold prices since the dollar began to tumble in 2002, China's timely expansion of gold currency reserves to 33.9 million troy ounces, or the introduction of bullion ETFs, in practice, gold's relevance as a currency cannot be cancelled by a short-lived preference for paper," reports Fool.com

* "Russia may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the central bank said Wednesday. The IMF securities give countries a different way to contribute to the fund and are unlike traditional bonds because they pay an interest rate pegged to the IMF’s basket of currencies, known as Special Drawing Rights. The comment drove Treasuries and the dollar lower. 10-year yields moved toward the highest level in seven months," reports Bloomberg.

* "The U.S. dollar declined Tuesday as investors questioned the long-term staying power of the greenback's recent resurgence. Dollar bears argue that the greenback's recent jump was largely a rebound from technically oversold levels and that fundamentals will favor a return to weakness in the U.S. currency in the near term," reports MarketWatch.

* Stagflation Scenario Stalks U.S. as Commodities Jump: "A 60% jump in gasoline prices this year may cause inflation to soar as it did in 2008 and throw another roadblock in the way of recovery. 'You could end up with something like a stagflation scenario,' said David Hensley of JPMorgan Chase," reports Bloomberg.

* "That Bernanke has created an inflationary time bomb has not eluded the markets. Yields on 10-year U.S. Treasury bonds are rising and the 30-year fixed mortgage rate exceeded its three-month peak when it hit 5.64% on 7 June. Since last September there has been a massive and unprecedented monetary expansion, the monetary base doubled. It seems pretty clear that the markets are factoring in an inflation premium," reports BrookesNews.

* Bernanke in a Box: "The market’s growing unease about the Obama budget is most plain to see in the renewed collapse of the dollar to its lowest value this year. The dollar’s collapse in turn is now fueling a strong rally in international commodity prices in general and in the price of oil in particular, which has to raise longer-run inflationary concerns in the U.S. Of equal concern for Bernanke has to be the fact that foreigners appear to be bailing out of their long-dated U.S. Treasury bonds," reports AEI.

* "Stocks turned mixed Tuesday after the banks approved to repay TARP loans were named. Ten banks will be allowed to repay capital they received through the Troubled Asset Relief Program. The companies are expected to give back some $68 billion, about twice what the government expected," reports CNBC.

* The Obama Numbers Are Pure Fiction: "Saved or created" has become the signature phrase for Barack Obama as he describes what his stimulus is doing for American jobs. "You would think that any self-respecting White House press corps would show some of the same skepticism toward President Obama's jobs claims that they did toward President Bush's tax cuts, but I'm still waiting," reports WSJ.

* "For investors worried about inflation, it still isn't too late to consider gold. The sweat of the sun -- what the Incas called gold -- is an inflationary haven, though timing is everything as traders confess to having little idea whether inflation will begin in six months or two years," reports Barrons.

* "The head of China's second-largest bank has said the U.S. government should start issuing bonds in yuan, rather than dollars, in the latest indication of the increasing importance of the Chinese currency. In April, the Chinese government said traders in major Chinese cities could start to settle their bills in yuan, rather than dollars, paving the way for the currency to become more fully convertible," reports Telegraph.

* The Buck Stops Here: "At some point, the U.S. deficits, debts and dilemmas become so unmanageable that not even America’s cherished safe haven status can protect its reputation or the dollar’s value in world markets. Uncle Sam’s creditors and investors may soon reach a crisis point of repudiation, triggering a major dollar devaluation and/or the replacement of the dollar as the global reserve currency. This will bring about profound changes in the American lifestyle," writes Douglas E. Johnston, Jr. at Kitco.

* "Stocks ended flat Monday as a late rally fizzled after the Supreme Court temporarily halted the sale of Chrysler to Fiat. Stocks had staged a late rally as financials bounced back, after being lower for much of the day as last week's jobs report spurred worries that the Federal Reserve may raise rates at its next meeting.," reports CNBC.

* "Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation. The Fed announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market. But this and other big government spending programs are turning out to have the opposite effect," reports AP.

* "Crude-oil prices fell below $68 a barrel on Monday, extending losses seen as demand for energy remained weak and the U.S. dollar strengthened against rivals. From a fundamental point of view, the outlook remains subdued," said analysts to MW.

* "Commodities still seem to be in a supercycle that was only temporarily interrupted by the global economic malaise. As inflation money finds its way into commodities, it is still not too late to purchase these, but only on price corrections that occur from time to time. The world has just endured the steepest world economic setback in 70 years and yet commodity prices across a broad front - gold, oil, copper, soybeans - managed to bottom at their highest 'recession levels' of all time," reports Istockanalyst.

* "The dollar is the most overextended currency internationally. We are at the point where the Federal Reserve Act is going to be reviewed, as to the appropriate role for the Fed in the future," said former Fed Chairman Paul A. Volcker last April.

* "Nonfarm employers cut payrolls by 345,000 last month, well below the 525,000-drop expected. And, the previous month was revised to show fewer jobs were lost than initially reported. The unemployment rate, however, jumped to 9.4%, the highest since August 1983," reports CNBC.

* Survival is not Recovery: "Survival alone is not recovery, and we think that the market is now way ahead of itself. The stock market rally started on the realization that the much-feared meltdown of the global financial system would not occur and that the economy was no longer falling off a cliff. In order for the market rally to be sustained from this point and not at least retest the bottom, less worse is not good enough. The S&P 500 is selling at 35 times estimated 2009 reported earnings of $27. In sum, we believe that the risk is now once again heavily to the downside," reports Comstock.

* "The dollar gained against major currencies on Friday after data showed the U.S. shed fewer jobs than expected last month, boosting hopes of an economic recovery. 'Today seems to be the first day in a while where the dollar is responding positively to positive U.S. news. That has wrong-footed people,' said Marc Chandler, senior currency strategist at Brown Brothers Harriman reports Reuters.

* "The U.S. dollar's appeal around the globe is souring, polishing the outlook for gold and raising the metal's status as a monetary asset. 'Gold will likely be increasingly used as a safe-haven monetary asset to protect and bolster national currencies as it has been throughout history,' said Mark O'Byrne, executive director at Gold and Silver Investments Ltd." reports MarketWatch.

* "We stay with gold's rising trend and buy more during sporadic corrections. We don't trade in-and-out of gold during a primary bull market. I have to wonder whether gold is ready to go parabolic. Gold has been in its corrective mode for many months and thus a lot of energy has been stored up in the yellow metal," reports Richard Russell of the famed DowTheoryLetters.

* "We doubt it will be long before gold tests the high from February. Given background fears of inflation and fiat currency devaluation, the metal will continue to be viewed favorably by investors ," said James Moore, an analyst at TheBullionDesk.com in London to Bloomberg.

* "Gold could start playing a more important role in Russia's reserves due to the influence of regional currencies, a Kremlin aide said on Friday. Addressing the St. Petersburg Economic Forum, Russian President Dmitry Medvedev earlier said the structure of the global currency system would inevitably change with the increasing role of regional reserve currencies, and called for a reassessment of the potential role of gold in the global currency system," reports RIA.

* "Silver, which has topped gold and platinum to become the fastest rising precious metal this year, has a chance to keep outperforming thanks to its double use as both an inflation hedge and industrial material, analysts are forecasting. But with higher returns come greater risks. Silver has proved much more volatile than gold, partly because fewer people trade the white metal than gold," reports MarketWatch. (More on the new silver rush Hi-Ho Silver!)

* "Any new dollar weakness could prompt more buying of gold as an alternative asset, and will make dollar-priced commodities cheaper for holders of other currencies. 'We would expect gold's inverse correlation to the dollar to remain strong, while its correlation to the stock markets will start weakening,' VTB Capital said" to Reuters.

* "Stocks advanced Thursday after a report showed jobless claims fell last week and banks gained. The market got off to a wobbly start after three-quarters of retailers reporting chain-store sales this morning missed their targets, dashing hopes that consumers are again digging out their wallets," reports CNBC.

* "Oil prices rose $2.75 to near $69 a barrel Thursday, resuming a three-month rally after a jump in U.S. crude inventories triggered a sharp pullback a day earlier. The slump of the U.S. dollar against other major currencies helped boost oil prices, as investors buy into commodities to safeguard against inflation and dollar weakness," reports AP.

* It's the Economy, Stupid: "Tomorrow will likely bring more bad news for President Barack Obama on the number one issue for voters -- the economy. The Labor Department's monthly job report will almost certainly show unemployment topping 9% in May. The difficulty for Mr. Obama will be when the public sees where his decisions lead -- higher inflation, higher interest rates, higher taxes, sluggish growth, and a jobless recovery," reports WSJ.

* The Plummeting Dollar Prosperity Plan: "It is becoming painfully obvious that the Fed, Treasury, and Administration's disastrous recovery plan hinges on the devaluation of the U.S. dollar. Their specious strategy stems from the belief that a falling currency can re-ignite exports and spark a recovery in manufacturing while putting a floor in U.S. asset prices. But just as the President's initials indicate, the plan stinks of B.O. If higher inflation, more taxes, and debt lead to economic prosperity the economy is on the right course," reports Deltaga.

* Gold Going Mainstream: "Bull markets have 3 phases: The smart money moves in early, the institutional money next and finally the dumb money, the retail money, last. Phase 3, when the smart money sells to the dumb money, is where fortunes are made. Gold bottomed at $252 in 1999. Smart money has taken it to today’s $980. Big gains, yes, but institutional money is only now moving in. If gold is the real deal, and I believe it is, an explosive Phase 3 still awaits. At the top of the last bull market in gold, gold comprised 22% of the world’s assets. Today it’s a mere 5%. Perhaps, we ain’t seen nothing yet!," reports FinSense.

* "Gold was under heavy pressure Wednesday as the dollar posted sharp gains after comments by Asian officials that they would keep buying U.S. Treasuries even if the U.S. credit rating were to be cut. The overall pullback in the commodities market, led by oil, led to the decline in gold," reports Reuters.

* Dump dollars before central banks do: "Holders of U.S. dollars should diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits. The U.S.'s fortune-producing capabilities and relative standard of living seem to be declining," said Bill Gross, founder of PIMCO to Bloomberg.

* "A broad-based decline in stocks Wednesday was led by sectors most dependent on an economic recovery as investors focused on mixed signals on jobs and service-sector activity. Investors also paid close attention to congressional testimony from Ben Bernanke, who warned that the government can't borrow "indefinitely" to meet the growing demand on its resources," reports MarketWatch.

* "Fed Chairman Ben Bernanke told Congress Wednesday that a gradual recovery remains on track for this year, and inflation would remain low given the slow pace of recovery. "Improving economic conditions and stable inflation expectations should limit further declines in inflation," Bernanke reports WSJ.

* Is the Stock Market Rally an Illusion?: "It will be a trading-range market characterized by volatility. It will be an environment that will benefit active investment managers as opposed to passive investors. If you are in the 'buy and hold' mentality, this is not a market for you," said economist David Rosenberg to TIME.

* Is Your Portfolio Ready for Hyperinflation? "There are plenty of reasons to be worried about the risk of inflation. No wonder "Black Swan" author Nassim Nicholas Taleb and Universa Investments' Mark Spitznagel are launching a new fund to bet on it. They're looking to gamble on likely inflation winners, like commodities and perhaps gold, and against the most likely loser -- Treasury bonds," reports WSJ.

* "Bullion, often bought as a hedge against weakness in the U.S. currency, rose in earlier trade as the dollar fell to five-month lows versus the euro on sharper risk appetite. Sources said a U.S. sovereign credit rating downgrade would not stop Asian central banks buying Treasuries," reports Globe&Mail.

* Northwestern Mutual buys gold: "Northwestern Mutual Life Insurance Company, the third-largest U.S. life insurer, has bought gold for the first time in 152 years to hedge against further asset declines. 'Gold just seems to make sense; it’s a store of value. In the Depression, gold did very, very well,' said CEO Edward Zore. Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10% last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years," reports Bloomberg.

* "The dollar dropped to its lowest level against the euro this year on speculation record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency. 'There’s been a lot of talk out of Russia about a new global currency, and that’s contributing toward this latest bout of dollar weakness,' said Henrik Gullberg, a currency strategist at Deutsche Bank," reports Bloomberg.

* "The term 'strong dollar' increasingly seems an oxymoron in light of the policies pursued in the U.S. China and the U.S. are putting on a show to tell the world the U.S. dollar is strong; China may be well advised to use this opportunity to put steps in motion for a sustainable recovery that does not depend on a 'strong' dollar," reports Merk.

* "Investors were torn Tuesday between a round of encouraging housing data and a rising supply of shares in several Wall Street bellwethers planning to raise capital. Major indexes have seesawed between gains and losses since the opening bell, though major milestones for the year have remained in sight," reports WSJ.

* "Stocks rebounded off a lower open Tuesday after a report showed the sharpest jump in pending-home sales in 7 1/2 years. Pending sales of previously owned U.S. homes shot up 6.7% in April, the National Association of Realtors reported. It was the biggest jump since October 2001," reports CNBC.

* "Better-than-expected data on personal income, manufacturing and construction propelled the S&P 500 to a new 2009 high on Monday, but renewed inflation fears continued to chill the bond market. Stock investors' sentiment was also lifted by a landmark bankruptcy filing by General Motors, with market veterans hoping to move on quickly. "There is a positive, relief reaction to this filing," reports WSJ.

* "As confidence increases in the stock market investors are unlikely to flock to Treasury bonds until yields get significantly higher. The looming threat of inflation along with the tumble of the dollar and the unabated gush of government debt also are pushing bond prices lower," reports CNBC.

* 60% Government Motors, shareholder wipe out: "General Motors filed for bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government. The plan is for the federal government to take a 60% ownership stake in the new GM. The Canadian government would take 12.5%, with the United Auto Workers getting a 17.5% share and unsecured bondholders receiving 10%. Existing GM shareholders are expected to be wiped out," reports AP.

* "The potential biggest loser, unfortunately, is the U.S. taxpayer. It is a big uncertainty if the company will do well," says bankruptcy expert Edward Altman, a business professor at NY University. The government already has extended $19.4 billion of loans to GM and is expected to provide another $50 billion in GM's reorganization," reports MoneyNews.

* Perspective: The 10 largest U.S. bankruptcies: GM's $91 billion puts it in fourth place. "From Lehman to Texaco, the mighty have fallen, taking down billions and billions with them," reports Fortune.

* "U.S. stocks and commodities gained on Monday after data from abroad reinforced hopes for a global economic recovery despite the bankruptcy filing of General Motors. The spurt in commodities prices put pressure on the dollar," reports MW.

* Fed puzzled by yield curve steepening: "We keep waiting for central bankers to point to the price of gold and silver as a better indicator of what is going on than the mass of inconclusive data through which they apparently sift. Haven't these clever individuals noticed that gold is on its way to cracking US$1,000 again and that silver is over US$15? Are money metals not still a barometer of concern, given the way that paper money is headed? We think they are. In fact, we think that gold could double its price and silver could easily quadruple before this leg of the business cycle is concluded," reports TheDailyBell.

* The dollar fell 6% in May hitting fresh five-month lows Friday amid fears over the impact of aggressive stimulus spending. "If the dollar continues to be sold, the next target for gold is $1,006/oz., the peak we had in February this year. That is feasible over the next week or so, if that trend in the dollar continues," said Tom Kendall, precious metals strategist with Mitsubishi to Reuters.

* "A combination of a weaker dollar and rising inflation expectations represent the perfect storm for gold. In the near term, the dominant theme behind moves in gold appears to be moves in the U.S. dollar rather than inflation expectations," said UBS analyst John Reade to Miningmx.

* Bond markets defy Fed as Treasury yields spike: "The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs. "The Fed is going to have to consider doubling its purchases of Treasuries. We could be nearing the end-game for the US dollar but the Fed has little choice at this point," said Ashraf Laidi, from CMC Capital Markets reports Telegraph.

* "Silver gained 26.6% in May, the biggest since April 1987. The metal has many industrial uses but is also seen as a hedge against a weaker dollar and inflation. Gold, which has limited industrial uses, has gained 10% in the month. "People think we are moving toward a recovery, and maybe we should be less pessimistic about the future of the metal, that may be factoring in the prices," said Jeffery Christian, managing director of CPM Group," reports MW.

* "Stocks jumped in the final half hour of trading Friday. The major indexes bounced late in the day after spending most of the final session of the month swaying from gains to losses. The DJIA jumped 96.53 points, or 1.2%, to 8500.33. It rose 4.1% on the month and has risen 20% over the last three months. The market's spring gains have been driven by a widening consensus on Wall Street that the worst fallout of the financial crisis and recession has passed," reports WSJ.

* Chinese investors are now rushing to hoard the yellow metal as fears over the global recession deepen. "China's gold reserves may serve as backing for the yuan as Beijing is stepping up the promotion of its use overseas," said Albert Cheng, director of the World Gold Council's Far East Division," reports ChinaDaily.

* "Gold may be the safest haven for investors as policy makers accelerate responses to the crisis, devaluing currencies versus hard assets such as gold in the process. Gold is likely to more than quadruple from the current level to $3,500/oz. in 2010," said Christopher Wood of CLSA Ltd. reports Bloomberg [Note: Read more by Christopher Wood and 74 other respected gold experts here].

* "The U.S. economy will enter hyperinflation approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. Faber said he’s adding to his gold investments, advised buying the precious metal at the start of its eight-year rally, when it traded for less than $300 an ounce. 'There are some concerns of a risk from inflation from all the liquidity injected into the banking system but it’s not an immediate threat right now given all the excess capacity in the U.S. economy,' said David Cohen, head of Asian economic forecasting at Action Economics in Singapore," reports Bloomberg.

* "Total debt per household now stands at $668,621.00: "Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows. The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.