Seek ye the Lord while he may be found, call ye upon him while he is near Isaiah 55:6KJV
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Ignore Gold Sell-Off Panic
Today (Wednesday, March 7, 2012) gold futures performed best based upon “growing optimism that the necessary bond swaps will occur to allow Greece to obtain another bailout. This has nudged the euro higher, pulling gold with it, traders said.”
Last Wednesday, Ben Bernanke single-handedly pulled gold prices down sharply by shying away from further rounds of quantitative easing.
Yesterday, April gold plummeted to the lowest level we've seen since late January...
However, investors are encouraged to stay calm and refrain from over-reacting in a sell-off panic.
It's a proven psychological fact that people almost always seek stable money. Nearly 100% of the time, the only secure choice is gold or silver.
Why should this time be any different?
According to precious metals commentator David Levenstein, investors seem to be ignoring what's truly at the center of the global markets right now: the Greek debt crisis — not Ben Bernanke and the Fed.
In order for Greece to avoid a default, the largest debt restructuring deal in recent history must take place:
... investors who own bonds governed by Greek law, which covers 92% of bonds outstanding will incur a loss of as much as 75%, thereby erasing some 107 billion euros ($144 billion) of Greek debt from its total debt burden of 373 billion euros ($496 billion).
The losses of these bond holders which include banks, hedge funds, financial institutions and private investors may be used as a reminder to potential investors that holding sovereign debt is not necessarily a sure and safe thing. In 2006 Iraq imposed an 89% loss on its bondholders in 2005 investors lost 76.8%.
A crucial element for investors to come to terms with is the idea that investing is not merely about looking for high yields.
Rather, it's more important to pay attention to the bigger picture and know the fundamentals of your investment.
Gold's fundamentals make it stronger and less volatile than other assets, regardless of external world events.
The yellow metal will always maintain its reputation as a stable hedge against inflation, because all governments end up abusing their money-issuing privileges eventually...
And when that occurs, people almost always go for gold.
The price dips merely provide a solid opportunity for investors to pick up more of the yellow metal safe-haven at a cheaper rate.
This morning at 11:53 (EST), April gold was up $13.50 to $1,685.60 on the Comex in New York, a 0.8% increase.
Following suit, May's silver climbed up by 60.7 cents to $33.90 per ounce — a 1.8% increase.
http://www.wealthwire.com/news/metals/2816
Posted by Brittany Stepniak - Wednesday, March 7th, 2012
Commodities still best bought before rather than after a correction?
The assumption implicit in this title is that a correction is coming sometime soon in global financial markets. That might seem a bit of a long shot after such a long rally but what has gone up does tend to go back down, especially after passing a former 2008-high like 13,000 on the Dow.
Last week gold, silver and even oil did show some weakness after some stellar gains since the start of the year, indeed the best start to the year since the commodities super-cycle began. A dip in an accelerating uptrend might therefore be showing vulnerability to a correction.
Economic contraction
There is plenty of weakness in global economies this year from the euro zone to China and Japan. Only in the US is monetary expansion gaining some traction on GDP growth and unemployment though inflation is rising way too fast for comfort and growth may be something of an illusion from unaccounted inflation.
If the world economy dips back into recession, and its largest economic bloc the European Union is already there, then commodity prices should be pulled back, particularly those where supply is not tight. But it will not be a uniform picture.
Oil, for example, has real supply issues with Iran under pressure from economic sanctions and sales to Europe to stop completely in July. At the same time the Arab Spring has downed oil supply from minor producers like Syria and Yemen, and Libya is still limping.
It looks unlikely then that oil prices will suffer a 2008-style collapse in any correction. There is more demand for less oil. China imports two million barrels per day that it did not in 2008. Industrial commodities on the other hand would feel the full impact of a recession.
Gold and silver prices would also likely fall though for a different reason. Speculators holding these precious metals would tend to dump them knowing what happened to prices in 2008 (they went down) and because they would need money for margin calls on other investments.
Recovery play
However, commodities would be a better play on the recovery than stocks if the experience of 2008-9 is any guide. Silver has bounced back four-fold from the depths of that sell-off while stocks have only doubled back to pre-crisis levels. The oil price is also up by a factor of more than four.
Why should this be the case? It just has to be all the money created by central banks since then. More money chasing a relatively fixed supply of commodities is driving up prices.
So when the Fed launches QE3 and Mr Draghi does his LTRO after the next correction, commodities seem the place to be.
Get in touch with me and come over to my board....I am looking at starting an aquaponics farm here in the US...Might be able to help.
http://investorshub.advfn.com/boards/board.aspx?board_id=21922
JER1
WWAG nice day! I have been telling people about this for a while on my board.. Check out my board sometime-
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66585569
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66434084
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66551579
JER1
Don't worry I have been holding a while as well but If you look at my past post you will see some of my dd here. I have been on contact with CEO and things are coming around slowly but surely.
Like I have told everyone before this is one of those that you just tuck away and forget about.
JER1
How about that! nice to see a move again
Thanks, yeah it will defiantly be a lot of work. I think that it will be very profitable since there is such a large growing market for completely organic veggies and fish. I'm really looking forward to working for myself.
JER1
Thanks for that post very good stuff.
JER1
I'm doing alright, how about your self? I have been doing a lot of traveling lately. I'm getting ready to open an aquaponic farm and have really been putting a load of time in to getting this business plan together.
JER1
The Death of Privacy
You may or may not be surprised to hear this but I am not a big "privacy buff". You've probably noticed this as I've regularly detailed the minutia of my personal life for a number of years. I'm certainly not one of those who would protest against Google StreetView for taking photos of public locations. Take all the photos you want, Google.
In fact, if it weren't for government, I wouldn't care about privacy much at all. I want companies to know everything they can about me so they can constantly target their products to my exact preference. If they did that then maybe I'd get a few less spams for discount Viagra every day and a few more for 90% female occupied anarcho-capitalist seastead condo offers. However, I suppose, in that case, I'd then need the Viagra.
But, the problem with privacy arises, as with almost all things, with government. Governments are thieving, criminal organizations who falsely presume to have some right to own you and your property just because you had the misfortune to be born in the particular geographic area where they run rampant. They are extortionists. And it makes sense to avoid giving extortionists any more info than possible about yourself and your assets for fear of even further theft.
But, here is the bad news for all you privacy buffs. Privacy is dead.
It already had one foot in the grave with the rise of the Big Brother state, but now thanks to the internet, it's deader than Aunt Edna on top of the Griswald's Wagon Queen Family Truckster. Facebook alone has almost negated the need for the FBI and CIA surveillance infrastructure completely as was detailed in this Onion spoof which is mostly just funny because it is true.
And with western governments stealing about half of your income and using a sizeable part of that loot to track you at every turn, privacy is mostly a lost cause. Sure there are ways to encrypt your communications to thwart them somewhat (which is something we'll have more info on soon), but for the most part you should consider your financial affairs to be mostly public domain, at least as far as your government is concerned, if you live in the western surveillance states.
IT'S NOT JUST AMERICANS ANYMORE
Those who have been paying attention already know that Americans are the most globally enslaved people in history. We know of not one brokerage on Earth outside of the U.S. that accepts U.S. clients. And the recently passed Foreign Accounts Tax Compliance Act (FATCA) has all but ensured that most international banks will soon stop accepting Americans as clients for bank accounts also.
What may come as a surprise, but shouldn't, is that all the other western nation-states are following along right behind. Most of the European nations including the UK, France, Germany, Spain and more have all begun to enter into inter-governmental information sharing agreements.
In other words, even having a foreign bank account now will give you no privacy against your own government
TWO SOLUTIONS
In this respect there are really only two solutions if you want to keep any level of privacy or control of your assets.
One is to keep your assets outside of the financial system as much as possible.This can be done to an extent via keeping your assets in precious metals, strategically deposited at non-financial institutions worldwide.
The other way to keep some level of privacy from your own government is to get a second passport. In this way you can open financial accounts worldwide that will not be directly reported to your "home" government.
PASSPORTS & GOLD AREN'T JUST FOR 007 ANYMORE
Getting a second passport and placing gold and silver in foreign places like Switzerland and Singapore used to be considered in the realm of James Bond. But, no longer.
Today, for anyone who has any assets they wish to keep private or protect from government theft the only sane and rational thing to do is to follow some of the advice listed above because western governments have no limit to how far they will spend and how much they will confiscate from you to pay for their welfare, wars and payola.
To them, the world is not enough and your financial affairs are not for your eyes only.
Shipping CEO: "Oil to $440"
The war games have officially begun...
In the midst of global trade strife, Iran is threatening to close-off the Strait of Hormuz. This is a huge concern for the United States and the impact it would have on our unstable economy.
Currently, approximately 40 percent of all American crude imports pass through the Strait of Hormuz before landing on U.S. soil.
Therefore, Bob Bandos – CEO of GAC North America, a marine logistics and service company stationed in Dubai – has sent an alarming message to American consumers...
If Iran does, in fact, cut off supply from the strait we could face oil costs rising to $440 per barrel.
Bandos told Pierre Bertrand of International Business Times:
T]ankers can haul 1.8 million barrels of oil a day through the strait. If that supply is choked off, the effect would be similar to the fuel shortages of the 1970s - but more extreme, Bandos said.
"That would be nothing compared to this," Bandos said, who added the shortage would be global.
If the 1973 embargo experience repeats itself, the price of a barrel of oil could soar to $440 a barrel.
Recently, other analysts have reported on the issue, siting that oil could rise to at least $200 if the Hormuz Strait is closed. Societe Generale reported on the worst case scenario of Iran taking retaliatory measures against oil sanctions. According to SocGen, this is the biggest economic risk facing the globe right now.
Although experts aren't convinced the straight would remain closed for an extended period of time, a choked-off supply could result in debilitating oil (fuel) shortages mirroring those of the 1970s...only this time, it would be far more “extreme”, according to Tehran Times.
As fears of war have emerged, Iran now has quite a bit of leverage as it has sent crude oil prices surpassing $112 a barrel.
If matters worsen and the strait is closed, stock market volatility would only be the beginning....
Shippers would halt activity with the added strain coming from such an extreme oil-price spike. Bandos said that companies “usually spend anywhere between $30,000 and $120,000 a day to charter a tanker ship, and that does not include bunkering and fuel costs.”
If the strait does close, Bandos has no doubts that oil prices will reach record heights in a situation similar to the 1973 embargo dilemmas pushing oil costs up to $440 for just one barrel.
Economic 9/11: How to Prepare for the Coming Crash
It's been argued for quite some time that our nation's economy has been living well beyond its means since the 1970's. Living in present day conditions, there's no denying that matters have become rather dangerous as our finacially-based society skates on thin ice...
As one legislator attempts to prepare his state for potential catastrophes, three other esteemed analysts are warning Americans to prepare for an 'economic 9/11'.
Despite some optimistic numbers floating around the economy right now, authors Harry Dent, Robert Prechter along with trend forecaster Gerald Celente all say the recent rebound won't last.
Currently, unemployment is down to 8.3 percent – the lowest rate in three years – experts aren't convinced we're on a sustainable road to recovery.
The Dow Jones index has been trading relatively high early this week (around the 13,000 mark), but again, analysts and skeptics are far from certain that it will remain high in weeks and months to come.
Robert Prechter worries that today's economic woes are uncomfortably similar to those of the Great Depression era and this brief recovery is likely to end up like the failing economy did back in the 1930s.
According to a USA Today feature story, “a potential run on banks by savers could cause the government to invoke a national holiday and temporarily close them all, which happened during the Great Depression.”
Mr. Pretcher has predicted that markets will crash at historic lows, worse than the lows hit in the financial meltdown of March 2009.
As a result, Harry Dent speculates that more people will find themselves jobless by 2013 and into 2014 after the markets crash in response to quantitative easing from central banks.
The economy is proving to be the major issue in this autumn’s presidential election, with every Republican candidate berating President Barack Obama for his handling of the recession.
Mitt Romney said on Monday that his major rival Rick Santorum is ill-prepared to deal with the nation's economic woes, calling his GOP rival a nice guy who never held a job in the private sector.
But Mr Santorum has mounted an unexpectedly strong challenge against Mr Romney ahead of the primary in Michigan tomorrow, despite accusations from his rival that he doesn't know how to create jobs.
Mr. Celente leaves us with a haunting image warning of what is to come: “When money stops flowing to the man on the street, blood starts flowing in the street.”
Until then, many Americans are stocking up on guns and gold to prepare for the worst-case-scenario...
JER1
Ron Paul Grills Bernanke
In typically sardonic fashion, Ron Paul took Ben Bernake to task during today's Financial Services Hearing.
He lambasted the Fed's performance over the last 99 years, and compared the Federal Reserve system to a builder who uses a yard stick that changes its value every single day.
"Just think of what kind of building we would have?" he quipped.
Check out the whole exchange, and behold as Paul whips out a Silver Eagle coin and explains inflation to the Fed chairman:
Nice post thanks!
Got it, will check it out Thanks!
JER1
James Dines: 'Wealth In The Ground' Is Your Best Bet to Surviving the Coming 'Supernova of Inflations'
Chris Martenson has released an excellent interview with James Dines regarding protecting yourself from the coming Supernova of Inflations with wealth in the ground.
We couldn't agree more- particularly if that wealth is buried 4-6 feet underground in a secure vault at a remote, unknown location.
NYBob been awhile hope all is well brother. Sorry I have been gone for so long. Please stop by and post some more
JER1
$158 silver price target set by Elliott Wave guru Alf Field
Well known for his $4,500 an ounce price target for gold, Elliott Wave guru Alf Field has projected $158 an ounce for silver in a new piece of analysis published this week.
Elliott Wave theory takes patterns established for past price movements and uses them to try to predict the future. It is far from infallible but has quite a good record of success. It can also be rather complicated with its use of mathematical series.
Wave three
Mr Field explains: ‘Silver, as with gold, is starting intermediate wave 3 of Major THREE, which should be the longest and strongest wave in the bull market. It should certainly be longer than intermediate wave 1 which was the gain from $8.77 to $49.52, or +464 per cent.
‘Thus the gain in wave 3 of Major THREE should be larger than +464 per cent. It should be a gain of at least 500%. Starting from the $26.39 low, a gain of 500 per cent would produce a target price of $158.34 for silver. That is the number which equates with the $4,500 price forecast for gold and produces a silver to gold ratio of 28.4 ($4,500 divided by 158.34).
‘The gain in gold was forecast to be 200 per cent for this move while the forecast rise in the silver price is 500 per cent. Silver is again predicted to perform better than gold based on these Elliott Wave calculations.’
However, Mr Field is careful to add: ‘A word of caution is appropriate at this stage. All Elliott Wave studies are based on probabilities. While the wave counts may provide a high degree of confidence in the forecasts, one cannot be 100 per cent certain of any forecast.
‘It is necessary to have a point at which it is obvious that the forecasts are wrong. In the case of this silver study, the line in the sand is at $26. If the silver price drops below $26 the odds are that the above calculations will not work out.’
Volatility warning
Finally he adds something readers of ArabianMoney have all heard before: ‘A further word of caution: silver is not for the faint hearted. Silver is considerably more volatile than gold and the corrections are much larger. Silver corrections can and do happen quickly. They are emotionally gut-wrenching and it is easy to get shaken out of one’s position near the bottom of a large correction.’
That said Alf Field’s analysis counts for a great deal in the world of precious metals and must be stacked up with the other evidence that made silver the pick of the year for this website
http://www.arabianmoney.net/gold-silver/2012/02/03/158-silver-price-target-set-by-elliott-wave-guru-alf-field/
Weekly Bull/Bear Recap: Jan. 30 - Feb. 3, 2012
Bull
+ The U.S. economy is now in a sustainable expansion:
The January U.S. non-farm payrolls report shines, while prior months are revised higher by 60K. A gain of 243K marks the strongest pace of job creation since April. Furthermore the unemployment rate falls to 8.2% from 8.5%. Job creation was widespread. The key cog for a sustainable recovery is now in place.
Improvement in the Chicago Fed Midwest Manufacturing index and Dallas Fed Manufacturing survey culminate in a strong national ISM reading of 54.1, the highest since June of 2011 (with positive backlogs to boot). Looking ahead, a resurgence in business spending in December (Core Durable Goods orders are revised higher to 3.1% from 2.9%), within a stronger factory orders number of 1.1% signal further growth for the beacon of the U.S. recovery in the months ahead.
The service sector, which accounts for close to 90% of the economy, is reaccelerating. January’s print is the strongest in 11 months, led by New Orders, Production, and Employment sub-indicies.
Consumption remains healthy, as car sales have their best January in 3 years. On the horizon, the payroll tax credit is set to be extended, relieving the economy of excessive fiscal contraction. Who knows, we might even get further tax cuts!
Don’t look now, but the ECRI’s leading indicator growth rate is higher for the 3rd consecutive week and is now at its highest level since late August. ECRI, it’s time to admit that you and the rest of the bears were wrong.
Consumer confidence continues to recover. While the Conference Board showed a setback, Bloomberg’s Consumer Comfort index just hit its highest monthly average in more than half a year.
+ The global economic outlook is improving:
In Europe, Germany’s unemployment rate hits a record low and her economy reverts back to growth according to the Markit PMI. For the Eurozone as a whole, Chris Williamson, Chief Economist at Markit says, “Euro area manufacturing has started 2013 surprisingly well, suggesting the region may avoid a slide back into recession.”
UK consumer confidence rises to the highest in 7 months on lower inflation.
Russia reports better than expected economic growth, with GDP rising 4.3% vs. expectations of 4.1%.
In Japan, industrial production surges 4%.
China PMIs point to a soft-landing for the most important link of the global recovery. Premier Wen is looking to stimulate the small business sector.
+ In Eurozone political and financial news, European nations take one step closer to integration with 25 out of 27 nations signing the new fiscal compact treaty. Moreover, leaders signal strong resolve to save the region, as talk of initiating a €1.5 Tn bailout fund is making the rounds. Meanwhile, the Spanish 10-yr yield breaks under 5%, the Italian 10-yr yield breaks under 6%, the Belgian 10-yr yield breaks under 3.7%, and the French 10-yr yield breaks under 3%. Markets signal that a strong firewall is in place for a Greek and/or Portuguese default. As a hefty insurance policy, the second LTRO on February 29th will likely be more than double the size of the first one (@ ? €1Tn), thus reinforcing the firewall for the banking system from a Greek or Portuguese default. Besides, the Greek default has been on investors’ radars for so long, even martians on Pluto know that Greece is defaulting. A climax would result in a rally as uncertainty is lifted.
Bear
- The end game is coming into view for the Eurozone:
Germany has demanded that Greece cede its budgetary sovereignty to the EU, a request Greece has declined. Furthermore, stiff resistance from Greek political leaders to implement further austerity makes for another “Papandreaou referendum-like” showdown with the troika. And for the trifecta, the Hellenic republic has warned that it may need even more bailout cash.
Portuguese bond yields are repeatedly hitting record highs; hard default #2 is rapidly approaching.
In Ireland, a solid majority demand a referendum (guaranteeing a defeat for the army of unelected technocrats in Brussels). As Hollande eloquently stated, “Where democracy retreats and politics pulls back, the markets advance.”
Hollande is creating daylight between himself and Sarkozy in the French presidential election (here’s a primer on what he wants to do).
- On the region’s economic front, austerity is biting, hard. Italian business confidence slumps to the lowest in 2 years. While Germany is benefiting from a weaker Euro, it’s coming at the expense of the rest of the Eurozone; the region’s unemployment rate remains near the highest since 1998. French consumer spending dives 0.7% vs. expectations of a gain of +0.2%. Even worse, German December retail sales tank 1.4% vs. expectations of a 0.5% gain (the 4th decline in last 5 prints); so much for a low unemployment rate. Meanwhile, on the financial front, banks are using some of the LTRO money to buy sovereign bonds; but that’s about it. They continue to de-leverage, cutting off credit to the Eurozone and undermining any recovery in the region. Furthermore, post-crisis highs in FX swaps between the ECB and the Fed point to tight liquidity conditions, despite unprecedented worldwide coordinated monetary loosening.
- The throes of stagflation are in plain view; China “unexpectedly” holds off on reducing reserve requirements for banks, opting instead for reverse-repurchase contracts. Simultaneously, here’s what a popping housing bubble looks like. Protests are progressively more intense.
- On the U.S. economic front, the S&P Case-Schiller index flags a deepening double-dip for the 99%’s largest asset. Lower home prices will anchor consumer confidence over the medium-term. Over the short-term, rising gas prices are starting to damage confidence; the Conference Board’s survey disappoints, printing 61.1 vs. expectations of 68.0 (led by a decline in the present situation).
- Israel/Iran continues to bubble underneath the facade of bullish sentiment. No groundbreaking announcements were made after the UN inspection. Instead, it’s looking increasingly clear that the U.S. is no longer in control of the situation; an Israeli unilateral attack could come in as soon as 3 months.
http://www.zerohedge.com/news/weekly-bullbear-recap-jan-30-feb-3-2012
Hey gtsourdinis Thanks for all the great posts while I have been gone.
I will try and be around more often now.
JER1
Alright Gals and Girls I back from my travels. How’s everyone been?
JER1
Economy, environment stand to gain from Keystone XL
According to an economist for the largest U.S. trade association for the oil and national gas industry, jobs may not be the only reason why President Barack Obama should approve the Keystone XL pipeline.
For every dollar the U.S. would spend buying Canadian oil, Rayola Dougher, senior economic advisor at the American Petroleum Institute (API), says Canada would spend 90 cents buying U.S. goods and services.
"Crude is going for about $100 a barrel or so. So just imagine 700,000 barrels a day, initially, at $100 a barrel, and then 90 percent of that money coming back to the United States," she poses. "You very rapidly can get to about 500,000 jobs within the next 20 years or so."
Merely building the pipeline would create upwards of 20,000 jobs. And as Dougher goes on to point out, the Keystone XL pipeline would give America half of what it currently imports from the Persian Gulf.
As for the environmental concerns that have delayed the Keystone XL pipeline, the API senior economist says Canada will look to China if the U.S. rejects the pipeline, which would pose a bigger threat than any one pipeline.
"In terms of an environmental perspective, it's much cleaner for the world to have it come to the United States by pipeline than it is to put in a tanker and move it to Asia," she explains.
As previously reported on OneNewsNow, until a decision is made, the Institute for Energy Research estimates the XL Pipeline delay will continue to cost the United States $70 million a day. The requirement for a decision on the pipeline was included in the two-month extension of the Social Security payroll tax cut approved by Congress.
Economy, environment stand to gain from Keystone XL
According to an economist for the largest U.S. trade association for the oil and national gas industry, jobs may not be the only reason why President Barack Obama should approve the Keystone XL pipeline.
For every dollar the U.S. would spend buying Canadian oil, Rayola Dougher, senior economic advisor at the American Petroleum Institute (API), says Canada would spend 90 cents buying U.S. goods and services.
"Crude is going for about $100 a barrel or so. So just imagine 700,000 barrels a day, initially, at $100 a barrel, and then 90 percent of that money coming back to the United States," she poses. "You very rapidly can get to about 500,000 jobs within the next 20 years or so."
Merely building the pipeline would create upwards of 20,000 jobs. And as Dougher goes on to point out, the Keystone XL pipeline would give America half of what it currently imports from the Persian Gulf.
As for the environmental concerns that have delayed the Keystone XL pipeline, the API senior economist says Canada will look to China if the U.S. rejects the pipeline, which would pose a bigger threat than any one pipeline.
"In terms of an environmental perspective, it's much cleaner for the world to have it come to the United States by pipeline than it is to put in a tanker and move it to Asia," she explains.
As previously reported on OneNewsNow, until a decision is made, the Institute for Energy Research estimates the XL Pipeline delay will continue to cost the United States $70 million a day. The requirement for a decision on the pipeline was included in the two-month extension of the Social Security payroll tax cut approved by Congress.
The Nightmarish Decline of the Euro Has Begun!
The euro is a dying currency. On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010. In fact, as I write this the EUR/USD is sitting at 1.2791. Back in July, the EUR/USD was over 1.45. But this is just the beginning. The euro is going to go a lot lower. At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed. Most Americans simply do not grasp the gravity of what is happening. Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay. As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do. U.S. banks are massively exposed to European sovereign debt and European banking debt. When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet. So you better look out below - the euro is coming down and it is coming down hard. After the euro implodes, nothing is every going to be the same again.
So how far are we going to see the euro decline?
Julian Jessop of Capital Economics expects the euro to fall much further....
The relative strength of the recent economic data from the US is supporting the dollar more generally, and we expect this divergence to persist as the euro-zone slides into a deep and prolonged recession. Above all, doubts about the very survival of the euro itself are likely to remain a drag on the currency. We therefore continue to expect the euro to fall to around $1.10 by the end of the year.
Others are even more pessimistic
As I have written about previously, the head of global bond portfolio management at PIMCO believes that the euro is going to go even lower than that....
"Parity with the dollar next year is not out of the question"
Can you imagine that?
Can you imagine that?
1 dollar = 1 euro?
Don't think that it can't happen.
But the decline of the euro is just part of the story. The truth is that Europe is on the verge of a financial collapse that could end up dwarfing the financial crisis of 2008.
Sadly, most Americans have no idea what has been going on in Europe the past few days....
-The stock of the biggest bank in Italy, UniCredit, is absolutely collapsing. Shares of UniCredit fell 14 percent on Wednesday and 17 percent on Thursday.
-Shares of another major Italian bank, Intesa Sanpaolo, fell 7.3 percent on Thursday.
-Shares of three major French banks all fell by at least 5 percent on Thursday.
-Even shares of German banks are falling like a rock. Shares of Commerzbank fell 4.5 percent on Thursday and shares of Deutsche Bank fell 5.6 percent on Thursday.
-The yield on 5 years Italian bonds is back over 6 percent and the yield on 10 year Italian bonds is back over 7 percent. Analysts all over Europe insist that that the Italian debt situation is not sustainable if rates stay this high.
-Italy's youth unemployment rate has hit the highest level ever.
This is mind blowing news.
But what is the top headline on USA Today right now?
"Employers Impose Bans On Smokers"
These are some of the other top headlines on USA Today right now....
"Automakers Rush To Offer Apps In Your Car"
"Bargain Season At Taco Bell, Pizza Hut, Wendy's"
"Does Your Dog Understand You? Study Says Maybe"
Is that what passes as news in this country?
A financial meltdown of historic proportions is happening in Europe and you cannot even find anything about it on the front page of USA Today.
Amazing.
All of us need to snap out of our television-induced comas and start waking up.
Things are about to get really bad for the global financial system.
At this point so much confidence has been lost in the euro that even the Council on Foreign Relations is admitting that the euro is a failure....
The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries. The adverse economic consequences of the euro include the sovereign debt crises in several European countries, the fragile condition of major European banks, high levels of unemployment across the eurozone, and the large trade deficits that now plague most eurozone countries.
If even the CFR is throwing in the towel, that should tell you something about what is about to happen to the euro.
There is a very real possibility that we could see the euro break up at some point during the next couple of years.
It now seems that a report produced a while back by Credit Suisse's Fixed Income Research unit was right on target....
"We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks."
The European debt crisis just continues to get worse and worse. None of the solutions that European leaders have tried have worked. We are rapidly approaching the meltdown phase of this crisis.
As I have written about previously, it doesn't take a genius to figure out what is happening in Europe. The equation is simple....
Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions
Unfortunately, what is happening right now in Europe is eventually going to happen in the United States as well.
As I wrote about yesterday, U.S. debt is a ticking time bomb that is going to devastate the entire global economy at some point. Nobody knows when the implosion will happen, but everyone knows that it is inevitable.
When Europe falls apart financially, that is going to make our own financial system much less stable. What is happening in Europe could turn our "limited recovery" into a "major recession" almost overnight.
So keep your eye on the euro.
If the euro keeps going down, that is going to be really bad news for the global economy.
Unfortunately, the truth is that the decline of the euro is just getting started.
Hold on to your hats!
The Nightmarish Decline of the Euro Has Begun!
The euro is a dying currency. On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010. In fact, as I write this the EUR/USD is sitting at 1.2791. Back in July, the EUR/USD was over 1.45. But this is just the beginning. The euro is going to go a lot lower. At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed. Most Americans simply do not grasp the gravity of what is happening. Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay. As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do. U.S. banks are massively exposed to European sovereign debt and European banking debt. When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet. So you better look out below - the euro is coming down and it is coming down hard. After the euro implodes, nothing is every going to be the same again.
So how far are we going to see the euro decline?
Julian Jessop of Capital Economics expects the euro to fall much further....
The relative strength of the recent economic data from the US is supporting the dollar more generally, and we expect this divergence to persist as the euro-zone slides into a deep and prolonged recession. Above all, doubts about the very survival of the euro itself are likely to remain a drag on the currency. We therefore continue to expect the euro to fall to around $1.10 by the end of the year.
Others are even more pessimistic
As I have written about previously, the head of global bond portfolio management at PIMCO believes that the euro is going to go even lower than that....
"Parity with the dollar next year is not out of the question"
Can you imagine that?
Can you imagine that?
1 dollar = 1 euro?
Don't think that it can't happen.
But the decline of the euro is just part of the story. The truth is that Europe is on the verge of a financial collapse that could end up dwarfing the financial crisis of 2008.
Sadly, most Americans have no idea what has been going on in Europe the past few days....
-The stock of the biggest bank in Italy, UniCredit, is absolutely collapsing. Shares of UniCredit fell 14 percent on Wednesday and 17 percent on Thursday.
-Shares of another major Italian bank, Intesa Sanpaolo, fell 7.3 percent on Thursday.
-Shares of three major French banks all fell by at least 5 percent on Thursday.
-Even shares of German banks are falling like a rock. Shares of Commerzbank fell 4.5 percent on Thursday and shares of Deutsche Bank fell 5.6 percent on Thursday.
-The yield on 5 years Italian bonds is back over 6 percent and the yield on 10 year Italian bonds is back over 7 percent. Analysts all over Europe insist that that the Italian debt situation is not sustainable if rates stay this high.
-Italy's youth unemployment rate has hit the highest level ever.
This is mind blowing news.
But what is the top headline on USA Today right now?
"Employers Impose Bans On Smokers"
These are some of the other top headlines on USA Today right now....
"Automakers Rush To Offer Apps In Your Car"
"Bargain Season At Taco Bell, Pizza Hut, Wendy's"
"Does Your Dog Understand You? Study Says Maybe"
Is that what passes as news in this country?
A financial meltdown of historic proportions is happening in Europe and you cannot even find anything about it on the front page of USA Today.
Amazing.
All of us need to snap out of our television-induced comas and start waking up.
Things are about to get really bad for the global financial system.
At this point so much confidence has been lost in the euro that even the Council on Foreign Relations is admitting that the euro is a failure....
The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries. The adverse economic consequences of the euro include the sovereign debt crises in several European countries, the fragile condition of major European banks, high levels of unemployment across the eurozone, and the large trade deficits that now plague most eurozone countries.
If even the CFR is throwing in the towel, that should tell you something about what is about to happen to the euro.
There is a very real possibility that we could see the euro break up at some point during the next couple of years.
It now seems that a report produced a while back by Credit Suisse's Fixed Income Research unit was right on target....
"We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks."
The European debt crisis just continues to get worse and worse. None of the solutions that European leaders have tried have worked. We are rapidly approaching the meltdown phase of this crisis.
As I have written about previously, it doesn't take a genius to figure out what is happening in Europe. The equation is simple....
Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions
Unfortunately, what is happening right now in Europe is eventually going to happen in the United States as well.
As I wrote about yesterday, U.S. debt is a ticking time bomb that is going to devastate the entire global economy at some point. Nobody knows when the implosion will happen, but everyone knows that it is inevitable.
When Europe falls apart financially, that is going to make our own financial system much less stable. What is happening in Europe could turn our "limited recovery" into a "major recession" almost overnight.
So keep your eye on the euro.
If the euro keeps going down, that is going to be really bad news for the global economy.
Unfortunately, the truth is that the decline of the euro is just getting started.
Hold on to your hats!
Americans Buy Guns in Record Numbers for Christmas
'Tis the season to be jolly.'
Well according to the FBI, this Christmas season provided a lot of jolliness to gun enthusiasts.
Over 1.5 million background checks on customers were requested by gun dealers to the National Instant Criminal Background Check System in December. What's even crazier with these numbers is how much these gun purchasers are procrastinators. Nearly 500,000 of those requests were just within six days of Christmas.
It was the highest number ever in a single month, eclipsing the previous record set in November. So it looks like it is safe (or unsafe) to say that 2011 was a year for the guns.
On December 23 along there were 102,222 background checks, making it the second busiest single day for buying guns in U.S. history.
Let's not forget that these are JUST background checks, meaning that at the very minimum, one gun was sold for each check, while that does not figure into individual customers bringing home more than one firearm.
Many believe that due to the halted economy, people are preparing for crime waves to sweep the nation, therefore guns are being purchased rampantly. This summer before the Occupy Wall Street protests, Wealth Wire reported the highest selling items on Amazon.com were crowd control and protest-ready weapons such as batons and baseball bats.
Other theories as to why buyers are cleaning the shelves of gun stores is because they believe tighter firearms laws will be introduced in the near future. So to make sure they are prepared for the projected law changes, people are buying in hoards.
On a different level, some just attribute the high gun sales in some creative marketing. There has been reports of certain gun clubs offering pictures with Santa, a very interesting yet effective technique.
According to The National Rifle Association, people are mostly concerned with self defense police officer numbers are continuing to fall.
NRA spokesperson says, “I think there's an increased realization that when something bad occurs it's going to be between them and the criminal.”
From The Telegraph,
But anti-gun campaigners said those who already owned weapons were simply hoarding more of them due to "fear-mongering" by the NRA.
A spokeswoman for the Brady Campaign to Prevent Gun Violence said: "The research we've seen indicates fewer and fewer people are owning more and more guns."
In states like Arizona, home to the tragic killing of six and near-fatal shooting of congresswoman Gabrielle Giffords, citizens are calling for tighter gun control, but according to one local gun dealer, sales couldn't be better. Legendary Guns in Phoenix had 25% higher sales on Christmas and the owner describes ammunition sales as “brisk”.
“A lot of people are concerned about pending gun legislation and the sense about the current administration. People think future availability will be limited and there's a feeling of 'get it while you can.'”
Americans Buy Guns in Record Numbers for Christmas
'Tis the season to be jolly.'
Well according to the FBI, this Christmas season provided a lot of jolliness to gun enthusiasts.
Over 1.5 million background checks on customers were requested by gun dealers to the National Instant Criminal Background Check System in December. What's even crazier with these numbers is how much these gun purchasers are procrastinators. Nearly 500,000 of those requests were just within six days of Christmas.
It was the highest number ever in a single month, eclipsing the previous record set in November. So it looks like it is safe (or unsafe) to say that 2011 was a year for the guns.
On December 23 along there were 102,222 background checks, making it the second busiest single day for buying guns in U.S. history.
Let's not forget that these are JUST background checks, meaning that at the very minimum, one gun was sold for each check, while that does not figure into individual customers bringing home more than one firearm.
Many believe that due to the halted economy, people are preparing for crime waves to sweep the nation, therefore guns are being purchased rampantly. This summer before the Occupy Wall Street protests, Wealth Wire reported the highest selling items on Amazon.com were crowd control and protest-ready weapons such as batons and baseball bats.
Other theories as to why buyers are cleaning the shelves of gun stores is because they believe tighter firearms laws will be introduced in the near future. So to make sure they are prepared for the projected law changes, people are buying in hoards.
On a different level, some just attribute the high gun sales in some creative marketing. There has been reports of certain gun clubs offering pictures with Santa, a very interesting yet effective technique.
According to The National Rifle Association, people are mostly concerned with self defense police officer numbers are continuing to fall.
NRA spokesperson says, “I think there's an increased realization that when something bad occurs it's going to be between them and the criminal.”
From The Telegraph,
But anti-gun campaigners said those who already owned weapons were simply hoarding more of them due to "fear-mongering" by the NRA.
A spokeswoman for the Brady Campaign to Prevent Gun Violence said: "The research we've seen indicates fewer and fewer people are owning more and more guns."
In states like Arizona, home to the tragic killing of six and near-fatal shooting of congresswoman Gabrielle Giffords, citizens are calling for tighter gun control, but according to one local gun dealer, sales couldn't be better. Legendary Guns in Phoenix had 25% higher sales on Christmas and the owner describes ammunition sales as “brisk”.
“A lot of people are concerned about pending gun legislation and the sense about the current administration. People think future availability will be limited and there's a feeling of 'get it while you can.'”
3 Charts Every Dividend Investor Should See
The stock market volatility has been unprecedented.
For years now we've seen the market rise one day... only to fall the next. Meanwhile, events considered to be "once in a generation" -- credit crises, sovereign-debt downgrades and bailouts -- are now happening with surprising frequency.
But the biggest surprise? There has still been a way to make money in the market without losing sleep... without "gambling" on speculative stocks... and without seeing stomach-churning volatility in your portfolio.
So what "miracle" investment has been able to do all that in a roller-coaster market? Dividend-paying stocks.
Even The Wall Street Journal is covering the trend. Their headline says it all...
"Dividend Stocks Become the Heroes"
- The Wall Street Journal, Dec. 19, 2011
And according to this article, in 2011 the 100 highest-yielding stocks in the S&P 500 were up an average of 3.7% -- before dividend payouts -- while the 100 lowest-yielders were down an average of 10%.
That performance is impressive, but buried deep within that same piece was the real reason to be excited about dividend payers -- not just this year, but for decades to come.
"Such stocks could get an even longer-lasting lift as more baby boomers reach retirement age -- and reduce their risk appetite. The first baby boomers turned 65 years old this year," the article read.
Right now we're seeing the first taste of what could be a tremendous time for dividend payers. Many investors, fed up with a wildly swinging market, are seeking shelter in more stable dividend payers.
At the same time, baby boomers are starting to look toward dividend-paying stocks to supplement their retirement income... especially when Treasury bonds yield just 2% and certificate deposits (CDs) and savings accounts pay nearly 0%.
That's pushing dividend payers up across the board...
You can see for yourself.
In the past year, shares of Philip Morris International (NYSE: PM) -- which yield 4.0% -- have returned more than 30%:
"Boring" phone company Verizon (NYSE: VZ) is dominating the market, thanks in part to its 5.0% yield:
Terra Nitrogen (NYSE: TNH) is up more than 70% in the past year and pays an 8.0%-plus dividend yield:
Action to Take --> I'm not saying every dividend stock beats the market. But I could find dozens -- if not hundreds -- more high-yielding stocks that are topping the S&P. The trend is clear -- dividend payers are one of the best places to make money in this market.
It makes sense. After all, firms that pay steady (and increasing) dividends tend to be strong, stable companies that can weather rocky environments like we're seeing right now. These are exactly the type of stocks investors flock to during times of uncertainty.
But even in good times these stocks still see plenty of buying interest. Their high yields all but guarantee that investors will be interested -- especially in a period when rates on Treasuries, savings accounts and CDs are historically low.
After all, why buy a Treasury bond yielding 2% when you can buy a high-yielder paying 8% AND beat the market?
Paul Tracy
Paul Krugman on U.S. Debt : "We Owe it to Ourselves"
Another Monday, another economic fallacy spread across the New York Times editorial page thanks to Princeton economics professor and Keynesian champion Paul Krugman. This week's crime in logic? The often used justification for government debt known as "we owe it to ourselves." Here is Mr. "more Keyensian stimulus" in all his brilliance
Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.
This is, however, a really bad analogy in at least two ways.
First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.
Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.
The "we owe it to ourselves" doctrine was popularized by economist and functional finance proponent Abba P. Lernr, who holds a special place in the hearts of Modern Monetary theorists. MMT states that under a complete fiat based currency, governments are not revenue constrained as they have the ability to effectively print on demand. While true as a point-of-fact, the idea that bureaucrats are capable of regulating spending, currency creation, and inflation through taxation places a superhero-like faith in "public" officials.
Writing in Man, Economy, and State, Murray Rothbard tackles the core theoretical issue with the "we owe it to ourselves" dogma:
The ingenious slogan that the public debt does not matter because "we owe it to ourselves" is clearly absurd. The crucial question is: Who is the "we" and who is "ourselves"?
Analysis of the world must be individualistic and not holistic. Certain people owe money to certain people, and it is precisely this fact that makes the borrowing as well as the taxing process important. For we might just as well say that taxes are unimportant for the same reason.
Whenever the government borrows and increases the size of its debt, the burden must always fall on future taxpayers who are bound to pay for rollover interest payments. The money isn't owed to "ourselves," it's owed to the creditors who are entitled to receive said interest payments. As Rothbard also points out, public sector workers don't, in actuality, pay any taxes. Such is an accounting identity where those in the government receive their income and a portion is withheld for tax purposes. So while taxpayers are on the hook for the public debt, government workers are not. The "we" Krugman is referring to does not consist of them.
The U.S. federal debt really is a crucial issue, which Krugman does admit, but not for the reasons of the debt alone. Government incurs debt to finance its spending beyond what it takes in through forceful tax acquisition. To reduce the debt, two things can be done: cutting spending to stop borrowing all together and make payments on the principle or a strict default on creditors. Since politicians thrive off the purchasing of votes, the prospect of minimizing the flow of tax money to special interests spells disaster for the next election. This makes cutting government expenditures, and hence reducing the debt, unlikely.
It also doesn't help when the Krugmanites of the world cry bloody murder at the very idea of cutting a single cent from the federal government's budget.
While Krugman is correct that many don't understand the nature of government debt, he is also guilty of the same charge. Government debt, a necessary product of an addiction to spending, is a burden on all taxpayers no matter what the circumstance.
Posted by Wealth Wire - Wednesday, January 4th, 2012
Been Good, youself?
JER1
Thanks, Agree! They have been working on things & its deff nice to here Good things about the guidewire.
CVSL has always been one of my fav long term holds
JER1
Happy New year as well.
Good to see CVSL still holdinsteady with the Game Plan here.
JER1
CVSL Glad to here some good news.
JER1
Appreciate it, all the best to you & your new board
JER1
Nice Board, Board Marked!
JER1
Ron Paul teaches Bernanke Austrian Economics
Ron Paul teaches Bernanke Austrian Economics