IF-June 2, 2012

US MARKETS

With the recent late night announcement from China and Japan as to their plan to bypass the US dollar and trade directly in the yuan and yen, this will bring about significant consequences for the US dollar's reserve currency status. As usual the socialist media groups are doing their best to keep this out of the public eye due to future toil this could take on the already strained US dollar. As China, the worlds largest import/exporter along with Japan as a major trading partner with China's slow withdrawal from the US dollar it only adds to the demise of the US dollar as a fiat currency will be slow and methodical, the only safe haven will be gold and silver.

The US economy with all its money printing and how interest rates still remain lagging at best and with consumer confidence slowly declining, the avenue to QE3 is being smoothly laid. With that being said precious metals are severely undervalued given the relativity as to what is occurring in the world as to where their prices should be, don't allow an over manipulated precious metals market fool you into believing otherwise. With QE3 on its way, we should see gold prices fighting their way upwards pulling silver along with it.

The US housing market's ongoing weakness along with its recent fall in home sales by 5.5 percent to 95.5 the lowest levels since December thus far is disappointing at best and could be the signal for the beginning of a downturn in an already lagging market.

With the housing market being one of the US economies toughest hurdles to overcome during an attempt at recessionary recovery and millions of current homeowners being underwater on their homes forcing them to be extremely cautious with their spending habits thus far causing a severe holding pattern for economic recovery, adding fuel to the fire are the abundance of unsold properties and the continuing foreclosures as is evident with the mid week report showing contracts fell 12 percent in the western US, 6.8 percent in the south, slightly lower in the Midwest, and a slight rise in the northeast. Another factor overshadowing the recovery is the faltering application demand for refinancing US home mortgages; they decreased 1.3 percent in the week ending May 25th. As would be expected, the National Association of Realtors downplayed the declines in pending home sales.

Views on the labor markets deteriorated this month. The board's survey showed 7.9% of respondents think jobs now are "plentiful," down from 8.4% thinking that in April. Another 41.0% think jobs are "hard to get," up from 38.1% last month.

Confidence among U.S. consumers unexpectedly fell in May to the lowest level in four months as optimism about employment prospects faded.

The Conference Board’s index decreased to 64.9 this month from a revised 68.7 in April, figures from the New York-based private research group showed today. Home prices in 20 cities dropped in the 12 months ended in March at the slowest pace in more than a year, according to another report.

The share of Americans expecting fewer job opportunities in the next six months climbed to the highest level since November, raising the risk that consumers will limit spending. A 30-cent decline in gasoline prices since early April failed to brighten spirits, showing that more progress is needed in the job market.

“Gasoline prices aren’t doing the trick,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, whose forecast was closest. “We are making progress when it comes to the labor market, but clearly this is another sign that it’s still very slow going.”

Stocks gained after Greek opinion polls eased concern the country will leave the euro. The Standard & Poor’s 500 Index climbed 1.1 percent to 1,332.42 at the close in New York. Crude oil for July delivery on the New York Mercantile Exchange settled at $90.76 a barrel, down 10 cents.

International Forecaster: Jan 21, 2012

US MARKETS

           

If the entire financial system does not come down upon our heads and if we do not have another war, global growth is going nowhere in the year’s ahead. We had a mini-recovery, but it cost $1.8 trillion. We had a second recovery and that cost $1.5 trillion. We are entering a third of what is becoming yearly recoveries that will probably cost $1.3 trillion. In other worlds without these massive injections of money and credit we would probably be in a deflationary depression.

As a result of overspending and poor financial choices state, county and local governments continue layoffs, increase taxes, cut services and attempt to pay back unemployment loans from the Federal government by creating more debt, by floating additional bond issues. The people who run these governments just do not get it. They expect the next bull market is just around the corner and it isn’t. In 2014-2015 we can expect a housing inventory at banks of 9.8 million homes, all for sale. That guarantees no housing recovery for years to come.

The massive exodus of good paying jobs, one million a year, due to free trade, globalization, offshoring and outsourcing and the loss of 450,000 manufactures will soon end, as a number of countries debate trade barriers. Such protectionism will initially cut back on world demand and the expansion of world debt. Austerity is already a by ward and means restrained spending as well. Governments will become more onerous with additional regulation and taxes, because they have no intention of really cutting spending. We have been waiting for more than three years for debt reduction and saving and it has not as yet really materialized on an ongoing basis. We ask, are American consumers capable of reducing debt and savings? If they do will personal consumption of GDP fall from 70% to lower levels? The answer is of course it will.

Thus far Americans cannot or will not in any meaningful way reduce spending and we see that mode continuing with an absence of savings. In this regard the Europeans are cutting back spending. China’s export growth has fallen to a 2-1/2 year low and Europe is China’s largest customer.

Over and over again we see other professionals still recommending US Treasuries yielding anywhere from zero to 1.87%, while official inflation is 3.8% and real inflation is 11.6%. These buyers of Treasuries have to have some fierce pressure put on them to purchase such investments; some are predicting a 2-1/2%, 30-year bond and a 1-1/2% 10-year note. Those gains are fine, but they nowhere offset the inflationary risk. For 25 years bonds have outperformed stocks, but few money managers talk about the outsized returns in gold and silver related assets. That isn’t acceptable and probably never will be. Professionals going the income route may be able to return 5% or even 7%, but that is not sufficient in having to deal with inflation and the volatility of the market. Producing gold and silver mines are selling at 15 times earnings when they could sell substantially higher based on P/E and gold and silver prices. You are looking at very easy 50% increases. Just recently we recommended Pretium (PVG) at $6.00 and it traded up over $16.00 this week.

IF Issue: Wednesday Jan 11, 2012

Excerpts and links from the latest issue:

Bob Chapman - AROOSTOOK WATCHMEN - Jan. 4, 2012

http://www.youtube.com/watch?v=BkajAYzM_Kc&feature=email

Bob Chapman - Financial Survival - January 6, 2012

http://www.youtube.com/watch?v=lo1GgaRrfDY&feature=email

Bob Chapman on Where to expatriate in case Ron Paul does not win the presidency

http://www.youtube.com/watch?v=9KfFPrsBblI&feature=email

Bob Chapman - Gold Radio Cafe - January 6, 2012

http://www.youtube.com/watch?feature=player_embedded&v=uumAUmpQ-LM

The Stark Truth: Interview with Bob Chapman

http://reasonradionetwork.com/20120104/the-stark-truth-interview-with-bob-chapman

Interview 446 – Bob Chapman

http://www.corbettreport.com/interview-446-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29

The Power Hour with Joyce Riley

http://archives2012.gcnlive.com/Archives2012/jan12/PowerHour/0109122.mp3>

Bob Chapman - Radio Liberty - 09 January 2012

http://www.youtube.com/watch?v=R3zbtDnl0ZE&feature=email

US MARKETS

           

The hand of the US elitists shows more each day in the decisions being made in Europe. Mario Draghi, ex-Goldman Sachs, Trilateralist and Bilderberg, is putting everything in place just the way the US elitists want. We are about to see full scale quantitative easing. One trillion in loans times fractional lending of 3 to 9 to whatever will give Europe the funds it needs indefinitely. Europe is going to be a rerun of what we have seen in the UK and US. In behalf of German voters who are 65% against such funding, Chancellor Merkel has refused to allow issuance of Eurobonds or an expansion of the EFSF. Draghi at the head of the ECB is now putting pressure on Mrs. Merkel to drop back to a more defensive position. The intrigue is at its height. If Frau Merkel gives into Draghi she and her party will not score well in the next election and may even lose political control. That could cause Germany to consider leaving the euro, which would destroy the euro zone. There are major dangers here and all the players are well aware of it. Agreement will take time and if it is not reached everything could short circuit, other than the fact that the Fed has put the funds in place. The other objective of getting Germany to whole-heartedly accept the bailout and stimulation is another matter. Confusion reigns even among the participants. The US, UK, France and their front men, Draghi, Monti and Papademos are all moving forward. The price will be very high from an inflationary standpoint, but to the elitists that isn’t even a consideration. They could care less. That is why you want to have your assets invested in gold and silver related assets. We could be headed toward another Weimer episode.

What we are seeing worldwide is another expansive use of money and credit creating better known by the euphemism, quantitative easing. In June, the Fed will announce its latest version that has been secretly underway for the past few months. The Fed is the instrument of liquidity, because it is appointed. By using the Fed everyone’s covered politically. That lets the political types slide into the election not having to be worrying about finances and the economy. It will all be designated the Fed’s fault. This will do the Fed lots of damage. If Ron Paul is elected president these actions could lead to the Fed’s demise. Long-term unemployment is still about the same and the housing situation is worsening, not improving. U-3 unemployment figures at 8.5% are almost meaningless. It is U-6 that counts less of course the birth/death ratio and that is 15.2%, or real unemployment of 21.5%.

This past week the euro hit its lowest level versus the dollar in 15 months. Investors certainly see the short-term positives of more than a trillion dollar injection to the banks and sovereigns of Europe, but they are looking beyond that. They see major long-term damage to the euro caused by this massive injection of new liquidity. Unless there is a breakdown in Greece, or another European sovereign, the euro should make it in 2013. That may be so, but banks that just borrowed $850 billion from the ECB have re-deposited $587 billion of those funds back with the ECB. That means only $263 billion was used in other ways, or about 15%. Normally banks would lend overnight to other banks, lending banks do not trust other banks, hence, the massive deposits at the ECB. The lending is for three years or less at 1%, but this program may go on indefinitely as perhaps the programs in the UK and US will as well.

In addition to this really open ended financing many countries are rushing to sell bonds, as $90 to $100 billion has to be refinanced in Europe. That is $203 billion in just the first quarter.

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