World Financial Report – December 16th, 2011

Radio Show Newsletter

• Charts of the Week-Quotes-Quick Hits
• RareColoredDiamonds.com
• Gold
• Silver
• QE
• Sovereign Debt
• U.S. Debt-Deficit
• Interest Rates
• MF Golbal
• Real Estate
• Geopolitical

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: Guess Which Country Spends The Most On Holiday Gifts. Read more here-http://tinyurl.com/cztnfql

-CHART OF THE WEEK: U.S. Oil Independence Beckons as Exports Rise. U.S. net exports of oil products such as diesel will more than double in the next decade from record levels as slowing domestic consumption cuts the nation’s dependence on foreign energy, Citigroup Inc. said. Read more here-http://tinyurl.com/bt7nt67

-”Since the financial crisis of 2008 exposed Wall Street’s reckless casino culture where profits are privatized and losses are socialized the public has grown increasingly tired of corporate greed and blatant disregard for the interests of shareholders and the public at large.” Gary Lamphier

-Most Economists Expect Another Global Recession. So acute are the risks that few economists are now willing to bet heavily against another global recession in 2012. By common consent, the world economic outlook is much darker today than it appeared in the early autumn.

The eurozone crisis has worsened with contagion spreading through Italy and Spain and now lapping at the door of France. Recoveries remain feeble in other advanced economies. And emerging markets are beginning to feel the pressure. Policymakers are worried.

Christine Lagarde, managing director of the International Monetary Fund repeatedly warned in September that the world economy had entered a “dangerous phase.” By December, she said those threats were materializing. “The global economic outlook will be lower, and in certain parts much lower than what we had initially envisaged.” Read more here-http://tinyurl.com/6vjtv3p

-IMF’s Lagarde: Europe Crisis ‘Escalating.’ The European debt crisis is growing to the point that it won’t be solved by one group of countries, Christine Lagarde, the managing director of the International Monetary Fund said today. Lagarde said that if countries don’t work together, the world will face a situation similar to the 1930s, before the world slid into World War II.

“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super- advanced economies that will be immune to the crisis that we see not only unfolding, but escalating at a point where everybody would actually have to focus on what it can do,” Lagarde said.

If the international community doesn’t work together, “the risk from an economic point of view is that of retraction, rising protectionism, isolation,” Lagarde said. “This is exactly the description of what happened in the ’30s and what followed is not something we are looking forward to.” Read more here-http://tinyurl.com/co5fwbd

-BlackRock Says Euro Area Headed for ‘Full-Fledged’ Recession. BlackRock Inc., the world’s biggest asset manager, said European nations including France and Germany are headed for a recession as the prolonged debt crisis has prompted companies to cut spending and stop hiring. Read more here-http://tinyurl.com/brvqymq

-Kyle Bass : For Europe, Only Way Out Is to Break Up. With no workable solutions in sight and a sovereign debt crisis only likely to get worse, the European Union is likely to see an ultimate breakup, widely followed hedge fund executive Kyle Bass told CNBC.

Bass said last week’s EU summit produced “a blank piece of paper” on which “there are no details,” causing him to conclude, “It won’t work.” “They’re going to have to restructure a lot of their debt. Eventually the EU is going to have to break up,” he said. “The adjustment mechanism that these countries need is a much weaker currency.

It’s very difficult to go through a hard restructuring and become competitive once again as a nation unless you have a currency adjustment mechanism that’s associated with your restructuring.” Under current EMU rules, individual countries cannot devalue their currencies because they are all tied to the euro. Read more here-http://tinyurl.com/cq9cx3z

-Kyle Bass: Europe to Face Run on Banks. Kyle Bass, the Dallas-based hedge fund manager who said in 2009 that governments would default within three years, said Greek, Portuguese and Spanish depositors will withdraw money from banks in the coming months.

“Just as Latvians ran to the ATMs this weekend, so will depositors all over peripheral Europe in the months ahead,” Bass, who runs Hayman Capital Management LP, said in an investor letter. “Deposits are now declining at an accelerated pace. What’s surprising is that it hasn’t happened much sooner.”

In Greece, business and household bank deposits have slumped 26 percent in the past two years to 176 billion euros ($229 billion), and fell in October by the most since the nation joined the euro, according to the Bank of Greece. There were 2.24 trillion euros of overnight deposits with euro-region financial institutions at the end of September, down from 2.26 trillion in July. Read more here-http://tinyurl.com/cnbm9hz

-Latvians withdrew, transferred and were paid out about $328.5 million from local Swedbank AB automatic teller machines on Dec. 11 and 12 on speculation customers wouldn’t be able to access their funds. Clients withdrew about 10 percent of total deposits on Dec. 11/12, the Swedish bank said in a statement. Bloomberg-Read more here-http://tinyurl.com/cmrwz5s

-$1.6B Missing, a Bankrupt Baltic Bank, and Soccer. Vladimir Antonov, whose grandfather worked on the Soviet atomic bomb, opted for a career in banking when he arrived in Moscow in the early 1990s. Almost two decades later, the fallout from that choice is being played out across Europe as authorities try to trace the whereabouts of more than $1.6 billion missing from banks owned by the 36-year-old Russian in Lithuania and Latvia. Read more here-http://tinyurl.com/cxn7hz3

-BIS: Derivatives Dealers Have Transferred Credit Risk To Shadow Banks Since 2010. Derivatives dealers have transferred large amounts of credit risk to opaque and largely unregulated parts of the financial system, often using instruments that were themselves opaque, the Bank for International Settlements said in its quarterly report. Read more here-http://tinyurl.com/cnyb5bh

-Venezuela’s annual inflation increases to more than 27 percent. Venezuela’s Central Bank says the country’s annual inflation has risen to 27.6 percent. Monthly inflation was 2.2 percent in November, up from 1.8 percent in October. Annual inflation rose slightly from the 26.9 percent rate recorded in October. Read more here-http://tinyurl.com/clg933g

-Average US Family Lost $21K in 6 Months Due To Property Values, Stock Market. Read more here-http://tinyurl.com/6pb64cg

-Household wealth took its biggest hit since the height of the 2008 financial meltdown during the third quarter, weakened by a downturn in stocks, according to a report issued. The Federal Reserve said the net worth of households fell by $2.2 trillion, or 4.1%, to end at $57.4 trillion. The decline comes to about $7,800 for every U.S. resident. Read more here-http://tinyurl.com/899bf3p

-Rich Man, Poor Man: Connecticut Tops U.S. Wealth Gap. Read more here-http://tinyurl.com/csrd7j6

-Richest NJ County Leads Rise in Food Stamps. Read more here-http://tinyurl.com/cy7bqf8

-Six Waltons Have More Wealth Than the Bottom 30 % of Americans. Read more here-http://tinyurl.com/cv2kehg

-Lance Roberts: A Million Dollars Ain’t What It Used To Be. Read more here-http://tinyurl.com/cs2vob4

-Is 80 The New Retirement Age? Many Americans Think So. Read more here-http://tinyurl.com/cc6ndpl

-US presidential dollar coins victims of budget crunch. Searching for savings in a tough economy, the White House said that the U.S. Mint would scrap automatic production of millions of dollar coins bearing the image of deceased American presidents at a saving of $50 million a year. Read more here-http://tinyurl.com/bm85kex

-Jeff Gundlach’s Latest Presentation On Markets, The Economy And Society. Read more here-http://tinyurl.com/c3u5jgr

-Paul B. Farrell: Our decade from hell will get worse in 2012. Market crash, political gridlock, revolution, new class wars. Read more here-http://tinyurl.com/78zbhns

-Matthew Lynn: This slump won’t end until 2031. Our predicament parallels the Long Depression of 1870s. Read more here-http://tinyurl.com/c8kyo2d

-Felix Zulauf: Watch Out for These Events in 2012. Read more here-http://tinyurl.com/d763yxz

-Morgan Stanley Reveals Its Commodity Predictions For 2012. Read more here-http://tinyurl.com/c87fc4m

-Holiday Online Spending in U.S. Gains 15%. U.S. online retail spending rose 15 percent to $26.8 billion in the holiday season through Dec. 12, according to ComScore Inc. a sign more consumers are taking advantage of discounts available through e-commerce providers. Read more here-http://tinyurl.com/bmx9h8d

-The Simple Way To Save Big On All Your Christmas Shopping. Read more here-http://tinyurl.com/d956unq

-Norway butter shortage threatens Christmas treats. An acute butter shortage in Norway, one of the world’s richest countries, has left people worrying how to bake their Christmas goodies with store shelves emptied and prices through the roof. Read more here-http://tinyurl.com/dyja4cl

-A Russian Man Was Caught Trying To Smuggle 200 Pounds Of Butter Into Norway. Read more here-http://tinyurl.com/85lgyq3

-42% Of All Luxury Boats In Italy Are Owned By People Who Claim To Earn Less Than €20,000 A Year. Read more here-http://tinyurl.com/bt2manf

-A German Janitor Just Made The Discovery Of The Century. Read more here-http://tinyurl.com/85pzhx7

-Italian black cat becomes a fat cat after inheriting 10 million Euros. A black cat in Italy has lived up to its reputation for good luck after inheriting 10 million Euros (£8.5 million) from his adoptive owner, a widowed heiress. Read more here-http://tinyurl.com/cm87glq

-An Eerie Tour Of The Knockoff Disney World That China Abandoned A Decade Ago. See more here-http://tinyurl.com/csj66mj

-7 Predictions For The Year 2011 From 1931 Visionaries. Read more here-http://tinyurl.com/br7wnwc

-Time Magazine’s Person Of The Year Is The Protester. Read more here-http://tinyurl.com/cfyvqcf

-’Creative’ The Buzzword for 2011. Read more here-http://tinyurl.com/c3g7woz

-Poll Results: 1 in 3 Viewers Despises Television And Wants To See It Die. Read more here-http://tinyurl.com/7ebwve3

-TV Viewers Spared From Loud Ads as Stations Told to Watch Volume. Read more here-http://tinyurl.com/7gblrty

-Founding Apple Contract Signed by Jobs Soars to $1.6 Million at Sotheby’s. Read more here-http://tinyurl.com/7pch559

-Scientists Get Closer to Locating ‘God Particle‘ in Collider Experiments. Read more here-http://tinyurl.com/cyaakqy

-U.S. Winter to Miss Cold of Past Two Seasons. Read more here-http://tinyurl.com/bmojbl4

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RARECOLOREDDIAMONDS.COM

-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://tinyurl.com/6l4thaf

-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s diamond is a 1.52 carat cushion cut fancy intense Yellow internally flawless Diamond. Yellow Diamonds have had a great year at auction with more price appreciation to come in the years ahead, add a Yellow to your portfolio/collection today. Harold Seigel-See video of the Featured Diamond here-http://tinyurl.com/ce3usxp

-Diamonds to Rise as Demand Expands at Double Supply, Bain Says. Diamond prices are poised to rise as demand grows at double the pace of supply through 2020 because of expanding middle class populations in China and India, said Bain & Co. in a report for the Antwerp World Diamond Centre.

World demand is expected to expand an average 6.4 percent a year to almost 247 million carats by 2020 while production grows an annual 2.8 percent to 175 million carats, it said in the report. Output totalled 133 million carats last year, it said. “Historically such supply-demand imbalances have provided the foundation for firm prices in the industry,” the Boston, Massachusetts-based consultant wrote in the report.

Rough-diamond prices rose 49 percent in the first half, accelerating after two straight years of more than 30 percent growth as stagnant output failed to meet Asian demand, according to data from PolishedPrices.com. China and India will increase their share of world diamond demand to about 30 percent by 2020, from 21 percent, as middle class populations in the two countries will more than double to 469 million people, according to Bain & Co. World demand will grow to $23 billion in 10 years from $12 billion last year. Read more here-http://tinyurl.com/7bmbzcv

-Elizabeth Taylor’s Incredible Jewelry Collection Sold For A Record-Breaking $116 Million. On the first night of the sale for The Elizabeth Taylor Collection, the actress’ jewelry sold for $115.9 million a world record for a private jewelry collection sold at auction.

The famed Elizabeth Taylor Diamond sold for $8.8 million. The 33.19 carat ring, a gift from Richard Burton, was originally estimated at $2.5 million to $3.5 million. The proceeds will go to The Elizabeth Taylor Foundation. Read more here-http://tinyurl.com/d4bmy3q

-Bonhams London Jewelry Sale Garners $6M. Diamonds achieve strong prices. A rare, un-mounted, 3.64-carat, cushion-shaped diamond of fancy intense bluish-green sold for $395,000. Read more here-http://tinyurl.com/cy66ysq

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GOLD

-”Gold still up nicely for the year. Don’t forget gold plummeted then rallied in 2008-2009 and you had to keep buying.” Jim Cramer

-”Traders, hedge funds, proprietary desks of banks and more speculative players many of whom are driven by technicals and momentum, rather than fundamentals, have been selling gold and going to cash due to the real risk of a monetary and systemic crisis.” Goldcore

-”Gold fell after the Fed statement failed to hint at further quantitative easing despite acknowledging slowing global growth.” Suki Cooper, an analyst at Barclays Capital in New York

-”People are fearful of everything that’s going on, so once something starts selling off, selling begets selling. The safe haven of choice continues to be the U.S. dollar.” Rachel Benepe, portfolio manager at First Eagle Investment Management

-”Gold should be looked at as insurance. Selling your physical gold now would be like driving your car or living in your home without an insurance policy.” Greg Hunter

-”Those who were frightened by news out of Europe and dumped gold this week could soon wind up sorry, as a known seasonal period of strength for the metal is right around the corner.” Tom Aspray

-”The metal remains one of the top commodity picks for 2012 as “most of the factors that pushed gold higher in 2011 are not going away,” according to UBS AG, which expects it to average $2,050 an ounce next year. “So long as uncertainty abounds, gold has a fighting chance of outpacing many asset classes,” analysts including Julien Garran wrote in a report. Bloomberg

-Citi Predicts Gold At $3400 In “The Next Two Years”, Potential For Move As High As $6000. Read more here-http://tinyurl.com/8xdjna7

-Despite current commodity doldrums, Rob McEwen stands pat on $5,000 gold. Read more here-http://tinyurl.com/dxcbdkb

-Battle lines drawn in gold price direction predictions. While some headlines are predicting the end of the bull market for gold, many commentators remain bullish on the yellow metal and all agree that more volatility should be expected. Read more here-http://tinyurl.com/ccwrnoe

-”Not all is gloom and doom. A look at past periods when gold has closed below its 200-day moving average shows the metal has often rebounded, averaging gains with positive returns two-thirds of the time.” Bespoke Investment Group

-CHART OF THE WEEK: The Carnage Accelerates, As Gold Breaks Through A Level Not Seen In Years. The buzz today is all about gold, and how it continues to look like it’s running out of steam. Of particular note. Gold just broke through its 200-day moving average a line that a lot of people watch For the first time since early 2009. It’s undeniable that gold has had one crazy run: Not just over the last few years, but basically over the last decade. Suddenly people are wondering whether it’s over. Read more here-http://tinyurl.com/d9mr9ma

-CHART OF THE WEEK: Forget The 200-Day Moving Average, Here’s How You’ll Know The Gold Bull Market Is Over. Everyone is talking about this event, even people who don’t normally think technical analysis is a big deal. Well, forget the 200-day, according to Ron Griess of The Chart Store it’s the 300-day moving average that’s really proved to be a big support line for gold. And for what it’s worth, the current 300-day moving average right now is somewhere around $1538/oz. Read more here-http://tinyurl.com/c66m8su

-Death of Gold Bull Market Seen by Gartman. Gold, in the 11th year of its longest winning streak in at least nine decades, is poised to enter a bear market, according to Dennis Gartman, who correctly predicted the slump in commodities in 2008. Read more here-http://tinyurl.com/7juffce

-Dennis Gartman’s short term calls on gold and silver have been wrong more often than not in recent years. He tends to turn bearish after gold has already experienced a correction and is close to bottoming. Those wishing to diversify and add gold to their portfolio will use his call as a contrarian signal that we may be getting close to a low in this most recent sell off. Our advice is to ignore gurus, price predictions and noise up and down and focus on the real fundamentals driving the gold market. Having an allocation to and owning physical gold will again protect and preserve wealth in 2012. Goldcore

-Doug Short: Are We Really Seeing The Death Of The Gold Bull Market? Read more here-http://tinyurl.com/d74hb3p

-Jim Sinclair: Why Gold Was Smashed & What’s Next. When asked about the action in gold, Sinclair stated, “Statements made by Mrs. Merkel, in Germany, this morning, would have us believe that both the US Fed and Germany’s influence on the ECB would result in a willingness to accept a severe deflation, rather than willingness to accept a severe inflation.

The selling (in gold) sent some of the fundamental guys out of their positions in gold, which affected the technicals.” “Technical analysis, when looked at, is really everybody looking at the same thing. So the sellers are chasing each other trying to find the bid. I believe that what started all of this is purely political in nature.

I firmly believe there is no political will on the planet anywhere, but especially in the Western world, to invite a severe deflation. As the deflationary forces continue to surface you will see the absolute opposite. I firmly believe you are more apt to have QE to infinity than you are to welcome rising unemployment and declining business activity.”

When asked about the technical damage in the gold market, Sinclair stated, “It isn’t really longer-term. The technical damage right here and now is something that from today’s lows could be corrected in a few days, easily repairable. You’ve got support between $1,549 and $1,577. You’ve also got it overlaying $1,519 to $1,572.

There is every possibility that you’ve seen the absolute worst of this as we’re talking now. The most important thing is volatility. One thing this shows you, and it increases continually, is this is the wildest chop we’ve ever been in, in the history of trading gold, in terms of ups and downs. It means to me that gold is going to rise to prices even higher than I expected. “I don’t see gold trading significantly lower than it is trading at right now.” Read more here-http://tinyurl.com/d3kzjbs

-Mark Hulbert: The gold bugs are throwing in the towel. Contrarians detect strong wall of worry in gold market. There’s another reason to expect bullion to soon begin rallying: The end-of-year period historically has been a strong one for gold.

Indeed, Ned Davis senior equity analyst John LaForge told me that the bulk of gold’s return over the last decade has been produced in the last several weeks of the calendar year. We haven’t seen any such seasonal strength this year, needless to say. But gold’s seasonal tendencies are yet more evidence pointing in the same direction as contrarian analysis: Gold is due for a strong rally. Read more here-http://tinyurl.com/cqxqjm7

-Jeff Clark: Pullbacks in Perspective. If you’re bullish about the long term for gold and silver, it’s mouthwatering to watch them undergo a major correction after taking earlier profits that added to your deployable cash. For a little historical perspective on pullbacks, consider the following charts.

The current 15.6% gold decline, while considered a “major” correction, is not out of the ordinary, particularly following the late summer spike. And after each big selloff, there was a price consolidation phase that in every instance led to higher prices. The message: hold on, and buy the big dips.

Not surprisingly, silver’s biggest corrections are larger than gold’s. This is also true for the rebounds; they’ve been quite dramatic. If we apply the biggest three-month recovery of 44.3% to the current correction, that would take silver to $40.63, meaning we probably shouldn’t expect $60 silver by year-end. Read more here-http://tinyurl.com/cc9bmvf

-Greg Hunter: Is the Gold Bull Really Dead? I think Mr. Gartman is a trader at heart, but there is a big difference between a gold trader and a gold investor. Traders are usually looking at the short term, and in the short term, Gartman is probably correct. The price of gold will probably sell off some more before this move is through, but the gold bull is hardly finished.

I say this because of two main reasons. Unprecedented global debt is reason number one. Let’s not forget the war wild card. Countries such as Syria, China, Russia and Israel are all making news on a possible war in the Middle East. If you are a trader, then, by all means, listen to Dennis Gartman.

Short term, he may be correct. If you are buying gold for protection and insurance against calamity, then this price pull back is nothing more than an opportunity to buy more insurance. How much protection you need and can afford is entirely up to you. I think the wildcards are so extreme that it’s foolish to be without insurance. I hear a bull snorting in the distance. Read more here-http://tinyurl.com/c6bnpbo

-John Embry: This Gold Smash Will Pass, the Case for Fiat is Zero. “You’re always surprised at the viciousness of a decline like this. I mean this all started in the wake of the failed European Summit. At one point, after the initial communiqué, gold shot up to $1,760 and now it’s roughly $200 lower. The reality has barely changed, but the perception of the reality appears to have swung dramatically.”

When asked what he would say to calm the nerves of gold and silver investors globally, Embry remarked, “As I’ve said all along, if you don’t like gold and silver, you like the prospects for fiat paper currency. With a world that’s tens of trillions of dollars in deficit and can’t service the existing debt, the case for fiat paper currency is zero. You can’t make a case for it.

So on that basis gold and silver, which is the real money, can only do one thing in the future and that is move higher. I’ve been through this so many times with these guys (the cartel) who can take the gold market apart and scare the life out of most humans, and it’s just noise. It’s gone on over and over and over again. In the end this will pass like they all have and gold will move on to new highs.” Read more here-http://tinyurl.com/7gurpu9

-Michael Pento: When Extreme Volatility in Gold & Commodities will Hit. Investors should be aware that gold and other commodities will experience extreme volatility in 2012 even more than what was witnessed in 2011. However, the timing for the next move to new highs will hang on the ECB’s deployment of its ultimate plan of massive monetization of unsterilized European debt.” Read more here-http://tinyurl.com/czpnq8w

-John Hathaway: Media & Gartman Attacks on Gold are Bullish. “The gist of an article today was, ‘Is there a bear market in gold?’ I think the media is playing this up. Bloomberg is obsessing about the falling gold price. That’s generally the tone of what I see, so it is consistent with the sentiment numbers for gold and silver and to me it’s a pretty good sign.”

“This summer, when we got up to $1,900, gold was overcooked and sentiment was bullish. All of the front page stories were about the reasons to own gold. The usual suspects were bulling it like (Dennis) Gartman, to give one example. Now Gartman is calling it a bear market in gold and that is a good contrarian indicator. This is the time when you want to put some money to work, particularly in the metals.

Basically, we have to take our cue from gold when looking at silver. The things that are going to drive gold are going to drive silver, but as always, silver will get a bigger percentage move. Don’t lose sight of the long-term rationale for investing in precious metals and that is monetary debasement. I see nothing to suggest anything has changed. I listened to (Jim) Sinclair’s interview and he was saying there is no way that austerity is going to last as something that is politically acceptable.

I couldn’t agree more with him. Austerity is deflationary and it means people lose jobs, benefits are cut back. Uncertainty at the consumer level has to be undermined by a program of austerity. It’s kind of like the flavor of the month in political policy, but I give these guys about six months, the technocrats, and even Merkel in Germany.

We are not going to have an advance word of when they are going to turn on the printing presses. “Therefore you can’t time it if you are dispirited in gold or the mining shares. You just can’t get in ahead of that moment when everything goes ballistic. You have to be in already and endure the pain that we are all feeling.”

The bigger picture is gold continues to be in a long-term bull market. This correction is well within the confines of what you can tolerate to say gold is still in a bull market. Frankly, this is exactly what we need to set up a base for going to new highs. I think we are going to be done with this by the end of the year. Read more here-http://tinyurl.com/7ahwbmd

-Richard Russell: Gold Trading Above $1,500 is Bullish Action. Read more here-http://tinyurl.com/cu6hnl3

-Bill Fleckenstein: Gold Update. “I don’t know that anyone thinks corrections are that much fun, they are only healthy in hindsight. It just happens. This has happened over and over and over again. It’s just part of the process. It seems to me that sentiment is rather poor. There has been tremendous liquidation in the futures market, both for gold and silver.

Obviously more liquidation could take place. What has been interesting, though, is the fact that at least in gold the number of ounces held by the ETF continues to be near a peak, while the futures market keeps seeing the longs shrink.

So it would appear people who are buying the ETF, which is more of a physical mindset, continue to buy and hot money types continue to sell. So next time gold goes on a huge run you can be sure that some of the same firms that are selling it down here will probably be buying it up there, that’s the way it goes.” Read more here-http://tinyurl.com/bqxljx3

-Stephen Leeb: Gold Bull & Germany Flirting with Depression. “It doesn’t make a lot of sense to see the world coming apart and gold going down. We are seeing liquidation by some hedge funds and maybe even banks to some extent that need liquidity.

You have to go back to 2008 and I think the drop in 2008 was probably in the neighborhood of 30% and then gold just started taking off again.” “The catalyst after the drop in 2008 was recognition there were problems that had to be solved by extraordinary means. And once that was recognized, gold just shot up like a missile and really didn’t look back.

I think this is probably a similar kind of correction, except now it’s not the US financial system that is in peril, it’s the eurozone that’s in peril. The treaty or so-called treaty they struck last week is a joke. To assume countries that have been fighting for 300 years, and share absolutely nothing culturally, are suddenly going to come together and sign a piece of paper and all agree to think alike, it’s crazy.

What I think will happen, one way or the other, is Germany will decide it’s going to have to print money. That’s really the only way out. You have to have growth or you are never going to get rid of these deficits. My big picture is that Merkel and the Germans will allow the printing of money and once that happens, just as it happened in 2008, once you get a sign, that’s blastoff time for gold.

Gold and silver will shoot up like rockets. In my opinion gold will close 2012 at $2,500 or above, probably above. Gold could easily double from here in the next 12 months if you get the kind of money printing that I expect to happen in Europe. So how low gold will go here is literally meaningless.

My advice to investors is don’t try to catch a bottom and be a hero. It could happen any time. It could be happening as we speak, it could be happening today. But it’s really irrelevant. Let’s say gold is at $3000, $4,000 or $5,000 in three or four years, which I think is very, very likely are you really even going to remember that it went to $1,650 or $1,550? No.” Read more here-http://tinyurl.com/7m68jqo

-James Turk: Lehman II in Progress as Financial System Implodes. When asked about the implications for gold and silver, Turk stated, “I see the outcome of this mess as inflationary because central banks have only one answer to everything, and that is print, print and then print some more.

But even if I am wrong and some central bank keeps its currency from inflating and actually deflates, you will still be better off owning gold and silver. Their price may go down, but the price of everything else would go down even more, so you would still be better off owning the precious metals.

And even more importantly, physical gold and silver do not have a counterparty risk, so you never need to worry about the precious metals defaulting on some promise. As I see it, if you don’t own some physical gold and silver, you are going to be in a bad way as the impact of the MF Global collapse continues to ripple through the markets.

All of us are facing some difficult times in the weeks and months ahead as this global financial bust plays itself out, but trying to contend with this fallout without owning physical gold and silver is like going into a war without any bullets.” Read more here-http://tinyurl.com/cfky9ym

-Von Greyerz: Currency Collapse, Hyperinflation & Social Unrest. “It was very clear to me, for quite a long time, well before 2002, that this was going to end badly. There was no chance the world would survive with the banking system intact or even the financial system intact.” Read more here-http://tinyurl.com/c2lter7

-Frank Holmes: You Can’t Print More Gold. “When great nations mature and over-extend themselves, they revert to the paths of least resistance: borrow and/or print money. They all did it and they all failed; this time will be no different.” The beneficiary of this type of event has historically been gold. Read more here-http://tinyurl.com/c3xlt5a

-Chinese still buying gold big time huge imports in October. Chinese citizens continue to buy gold in record volumes with October the fourth successive record month for imports via Hong Kong. Read more here-http://tinyurl.com/d8wt7ov

-Gold bar sales outstripping jewellery in India. Retail demand for kilo and 100 gram gold bars is not just limited to India rich anymore, as savvy investors buy gold bars on dips and sell them for a profit. Read more here-http://tinyurl.com/7l5z7ac

-Indians increasingly monetize gold as collateral for loans. Read more here-http://www.gata.org/node/10764

-3 criteria for EU QE and why it would be explosive for gold. UBS believes that if three criteria are filled over the coming months, Europe could well see quantitative easing and that would be very good for gold. Read more here-http://tinyurl.com/7nfunzs

-Louis James: Gold: Supply Crunch? What Supply Crunch? Read more here-http://tinyurl.com/8xot4a5

-Gijsbert Groenewegen: JP Morgan, “Gold is money, everything else is credit” or no credibility! Read more here-http://tinyurl.com/c24p7q4

-Alix Steel: Deflation Can Be Good for Gold. Read and watch more here-http://tinyurl.com/cvobdlw

-European nations’ debts overwhelm their gold reserves. Read more here-http://www.gata.org/node/10772

-FT’s John Dizard: Gold borrowed from governments or ETFs may be propping up European banks. Read more here-http://www.gata.org/node/10771

-Just sold for $7.4 million, rare 1787 U.S. gold coin up 147% in seven years. Read more here-http://www.gata.org/node/10765

-The 10 Biggest Gold-Hoarding Countries In The World. Read more here-http://tinyurl.com/d8c8kf4

-Oil already may be getting priced in gold, analyst says. Read more here-http://tinyurl.com/bw9t87g

-Gold buyers tempt Greeks facing hard times. Greece has seen an upsurge in small companies and shops offering to buy gold, driven by record prices and the need many people have to raise cash during hard times when jobs are uncertain and money scarce. Read more here-http://tinyurl.com/c5skajz

-Market News International retracts report about central bank gold sales. Read more here-http://www.gata.org/node/10758

-Jeff Nielson: The bankers’ new gold. Read more here-http://www.gata.org/node/10783

-Weekly metals review, audio of Sinclair and Davies at King World News. Listen here-http://www.gata.org/node/10760

-Irked by GATA, Bank of England denies gold loans, swaps since 2007. Read more here-http://www.gata.org/node/10778

-No takers for Grandich’s million-dollar gold price challenge. Read more here-http://www.gata.org/node/10786

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SILVER

Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00

Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00

Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67

Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00

Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33

Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00

Gold to silver ratio at 40 to 1 with gold at $2,500 the silver price would be $62.50

Gold to silver ratio at 30 to 1 with gold at $2,500 the silver price would be $83.33

Gold to silver ratio at 20 to 1 with gold at $2,500 the silver price would be $125.00

Gold to silver ratio at 15 to 1 with gold at $2,500 the silver price would be $166.67

-Silver offers solid value. I see silver becoming a stand-out asset over the next two years. You can own it in physical form. It is a great asset to buy and simply wait for a higher price. If you store it yourself you avoid fees. One way to measure silver’s value is the gold/silver ratio; it currently takes about 53 ounces of silver to buy 1 ounce of gold. The ratio could get worse for silver enthusiasts, but the current ratio is at a level where silver represents very good long term value. Morris Hubbartt

-John Embry: Silver Update. When asked about silver specifically, Embry stated, “The physical silver market is as tight as can be. The people who are short the paper market (in silver) are bankrupt, almost to a man. Consequently, their actions are not those of rational men, they are those of desperate men.

JP Morgan is trying to protect their short positions and so this move down has a very finite life. So you are going to have days like this and I still say silver will be $60 within the next three to six months. As much as I love the gold story, the silver story is much stronger because of the lack of above ground supply. In the future, there won’t be enough silver to fill the demand for investment purposes and the price is going to go berserk to the upside.” Read more here-http://tinyurl.com/7gurpu9

-David Morgan: Balancing Small Silver with Big Payoffs. I do see silver’s price going above $50/oz in 2012. I forecast $65–75/oz silver by the end of 2012. I don’t foresee a big rush into price appreciation for gold or silver in the first quarter of 2012 (Q1-12), which is seasonal.

Typically, there is a very strong boost to the price of metals in the first quarter of every year. However, this year I’m suspect because of what’s going on in the Eurozone and all the paper pushing between the central banks of the world. I’m reserved about what’s going to happen over the next three months. Read more here-http://tinyurl.com/bqbzrg3

-David Morgan: Silver consolidation to continue as investors rush to cash. Morgan believes that while, longer term, silver prices will continue, we are currently facing a long consolidation phase for the metal. Read more here-http://tinyurl.com/cjxmbe2

-Matt Badiali: Buy Silver Now! Read more here-http://tinyurl.com/c3ypaja

-Fiona Bond and Darshini Shah: Silver set to shine in 2012. Read more here-http://tinyurl.com/6pg99kr

-Silver demand growing with old and new uses. Electronics, solar power, health care and nano-particles, along with more traditional uses, will keep silver a good investment despite latest setback. Read more here-http://tinyurl.com/cqm2kcz

-Hubert Moolman: Where Is Silver Going? Read more here-http://tinyurl.com/d3jrjs3

-Royal Canadian Mint considers offering silver bullion receipts. Read more here-http://www.gata.org/node/10777

-Dramatic new video cites paper market’s silver price suppression. Watch more here-http://www.gata.org/node/10762

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QE

-Bernanke Signals Risks From Europe Crisis Keep Fed Ready for More Easing. Federal Reserve Chairman Ben S. Bernanke signalled he’s concerned Europe’s crisis will hobble a 2 1/2-year U.S. expansion that may need another boost from the central bank. Read more here-http://tinyurl.com/6n353dr

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SOVEREIGN DEBT

-Ambrose Evans-Pritchard. What remarkable petulance and stupidity. The leaders of France and Germany have more or less bulldozed Britain out of the European Union for the sake of a treaty that offers absolutely no solution to the crisis at hand, or indeed any future crisis. It is EU institutional chair shuffling at its worst, with venom for good measure. Read more here-http://tinyurl.com/79nnzma

-Pondering a Dire Day: Leaving the Euro. It would be Europe’s worst nightmare: after weeks of rumors, the Greek prime minister announces late on a Saturday night that the country will abandon the euro currency and return to the drachma. Instead of business as usual on Monday morning, lines of angry Greeks form at the shuttered doors of the country’s banks, trying to get at their frozen deposits.

The drachma’s value plummets more than 60 percent against the euro, and prices soar at the few shops willing to open. Soon, the country’s international credit lines are cut after Greece, as part of the prime minister’s move, defaults on its debt. As the country descends into chaos, the military seizes control of the government.

This scary chain of events might never come to pass. But the danger that Greece or some other deeply damaged country in the euro zone could leave the single-currency union can no longer be ruled out. And it was largely this prospect that drove leaders last week to agree to adopt strict fiscal rules that they hope will wrap the 17 European Union nations that use the euro into an even tighter embrace. Read more here-http://tinyurl.com/clab2ny

-Eurozone crisis poses military risk, warns defence chief General Sir David Richards. Defence chiefs are drawing up plans to cope with the potential military fallout from the eurozone crisis, according to General Richards. Read more here-http://tinyurl.com/c2psqlu

-Italy risks “social explosion” over austerity: union chief. Italy risks a “social explosion” over the government’s austerity measures and unions plan more protests against them, said Susanna Camusso the head of the country’s largest labor federation CGIL. Read more here-http://tinyurl.com/78qn7×9

-Bernanke: No Fed Plans to Aid European Banks. Federal Reserve Chairman Ben S. Bernanke told Republican senators the Fed plans no additional aid to European banks amid the region’s sovereign debt crisis, according to two lawmakers who attended the meeting. Read more here-http://tinyurl.com/7lcqjsv

-No One Telling Who Took $586 Billion in Swaps With Fed Condoning Anonymity. For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank’s emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself.

As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008. While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent. Read more here-http://tinyurl.com/czlysfh

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U.S. DEBT-DEFICIT

-Everything You Need To Know About Federal Debt And Deficits In One Graphic. See more here-http://tinyurl.com/8935puw

-U.S. runs $137 billion deficit in November. The federal government ran a budget deficit of $137 billion in November, the Treasury Department reported, keeping its finances in the red in the second month of the fiscal year. The government spent $290 billion in the month and took in $152 billion, pushing the fiscal year-to-date deficit to $236 billion. The Treasury continues to project a deficit for fiscal 2012 of nearly $1 trillion. Read more here-http://tinyurl.com/6lh6zdv

-U.S. Debt Has Climbed $48,994.13 Every Single Second Under President Obama. Read more here-http://tinyurl.com/c64u3j6

-California’s Revenue Shortfall Will Force Brown to Seek $1 Billion of Cuts. California Governor Jerry Brown will cut $1 billion in spending from the current budget, saying the economy won’t produce revenue he built into the plan in June, triggering automatic reductions. Read more here-http://tinyurl.com/c8xyy5l

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INTEREST RATES

-Fed Says U.S. Economy Is ‘Expanding Moderately,’ Policy Remains Unchanged. Federal Reserve policy makers said the U.S. economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs.

The Fed left unchanged its statement that economic conditions are likely to warrant “exceptionally low” interest rates “at least through mid-2013.” The central bank lowered its target overnight interest rate to a range of zero to 0.25 percent in December 2008. Read more here-http://tinyurl.com/6mok86q

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MF GLOBAL

-Corzine Tells Senate Hearing He Didn’t Order Misuse of Funds at MF Global. Jon S. Corzine, the former chairman and chief executive officer of MF Global Holdings Ltd., told lawmakers he “never gave any instructions to misuse customer funds” and didn’t give orders that could be misconstrued.

Corzine made the comments today at a Senate Agriculture Committee hearing in Washington where lawmakers questioned him and two other top MF Global officials about the whereabouts of as much as $1.2 billion missing from customer accounts. Read more here-http://tinyurl.com/c4dgcym

-Corzine: MF Staff Said Fund Transfer Was Legal. Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., told lawmakers that the firm’s back-office staff “explicitly” informed him that funds transfers made before the company filed for bankruptcy were legal. Lawmakers and U.S. authorities are investigating what happened to as much as $1.2 billion in customer funds that is missing from MF Global accounts. Read more here-http://tinyurl.com/boe5rla

-Corzine Knew MF Used Client Accounts. Jon Corzine, the former chief executive officer of MF Global Holdings Ltd., knew that the company made a loan out of segregated customer accounts before it went bankrupt, CME Group Inc. chairman Terrence Duffy told the U.S. Senate.

Duffy, whose company is MF Global’s regulator and principal exchange, faced questions about a shortfall of some $1.2 billion in missing customer funds. CME and Commodity Futures Trading Commission staff had been told a discrepancy existed in the customer funds, which by law are required to be kept separate from company funds. Read more here-http://tinyurl.com/7zqxgol

-MF Global Probe May Weigh Illegal Use of Funds. Regulators are investigating whether MF Global Holdings Ltd. intentionally used customer funds to cover the bankrupt firm’s margin payments on European government bond trades, bolstering their ability to retrieve the missing money, people with knowledge of the probe said. Read more here-http://tinyurl.com/br92×2t

-Regulators know where MF Global funds went. Regulators now have a more complete picture of money transfers in the final days of bankrupt brokerage MF Global, but must sort out which transactions were legitimate before more money can be released to customers, a top official told Reuters. Read more here-http://tinyurl.com/738rk3c

-MF Global: A romance with risk that brought on a panic. Read more here-http://www.gata.org/node/10770

-MF Global collapse will push commodity trading to Asia, Rogers says. Read more here-http://www.gata.org/node/10767

-A Risk Once Unthinkable. Are customer accounts at brokerage firms safe? Until the collapse of MF Global, that’s a question I thought I’d never have to ask. Read more here-http://tinyurl.com/72b9p8z

-CME won’t guarantee funds that remain missing from MF Global. CME Group Chief Operating Officer Bryan Durkin said on Monday the exchange will not guarantee the funds that remain missing from customer accounts at bankrupt brokerage MF Global after they are reimbursed by the bankruptcy trustee. Read more here-http://tinyurl.com/cemaoka

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REAL ESTATE

-Realtors: We Overcounted Home Sales for Five Years. Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought. The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.

“All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought,” NAR spokesman Walter Malony told Reuters. “We’re capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list.”

The benchmark revisions will be published next Wednesday and will not affect house prices. Early this year, the Realtors group was accused of overcounting existing homes sales, with California-based real estate analysis firm CoreLogic claiming sales could have been overstated by as much as 20 percent. Read more here-http://tinyurl.com/dx4qgd8

-Foreclosures fall, but outlook isn’t bright. Foreclosure filings may have fallen in November but the number of homes scheduled for bank auctions grew significantly, indicating that a new wave of foreclosures are set to take place in the New Year. The number of foreclosure filings dropped to 224,394 properties in November, a 3% decline from October and a 14% drop year-over-year, according to RealtyTrac. Read more here-http://tinyurl.com/cdkgqfa

-The King of All Vegas Real Estate Scams. A twisted tale of how homeowners were bilked by those they least suspected: their neighbors. Read more here-http://tinyurl.com/br28blw

-Patrick Chovanec: The Chinese Real Estate Downturn: The Evidence Is Overwhelming. Read more here-http://tinyurl.com/bo3t3hp

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GEOPOLITICAL

-U.S. Worried Iran on Verge of Enriching Uranium. The Obama administration is concerned Iran is on the verge of being able to enrich uranium at a facility deep underground near the Muslim holy city of Qom, which may strengthen those advocating tougher action to stop Iran’s suspected atomic weapons program. Read more here-http://tinyurl.com/85ustsg

-Obama Says U.S. Has Asked for Iran to Return Downed Drone. President Barack Obama said the U.S. has asked Iran to return a drone aircraft that U.S. controllers lost contact with on Dec. 4. At a White House news conference with Iraqi Prime Minister Nouri al-Maliki, Obama said he wouldn’t comment directly on the loss of the pilot-less spy plane. “We have asked for it back,” he said. “We’ll see how the Iranians respond.” Iran said it is studying the craft and is close to accessing information stored in it. Read more here-http://tinyurl.com/7pfdmzc

-Iran hijacked US drone, says Iranian engineer. In an exclusive interview, an engineer working to unlock the secrets of the captured RQ-170 Sentinel says they exploited a known vulnerability and tricked the US drone into landing in Iran. Read more here-http://tinyurl.com/6tbdzw3

-Iran says Obama should apologize for downed drone. Read more here-http://tinyurl.com/brbg483

-U.S. drone crashes in Seychelles: embassy. A U.S. drone aircraft crashed at Seychelles International Airport on Tuesday, the U.S. embassy in Mauritius said. Read more here-http://tinyurl.com/7ml2g75

-The Iranian Army Says It Will ‘Practice’ Shutting Down The Strait Of Hormuz. Read more here-http://tinyurl.com/cs9ws3w

-Iran Lodges Complaint With Interpol Over U.S. ‘Assassination Threats.’ Read more here-http://tinyurl.com/bts6saw

-U.S. to leave Iraqi airspace clear for strategic Israeli route to Iran. The U.S. military’s fast-approaching Dec. 31 exit from Iraq, which has no way to defend its airspace, puts Israel in a better place strategically to strike Iran’s nuclear facilities.

Iraq has yet to assemble a force of jet fighters, and since the shortest route for Israeli strike fighters to Iran is through Iraqi airspace, observers conclude that the U.S. exit makes the Jewish state’s mission planning a lot easier. Read more here-http://tinyurl.com/8yv3sqf

-China-Based Hacking of 760 Companies Reflects an Undeclared Cyber Cold War. Read more here-http://tinyurl.com/cuam8vv

-Billionaire Prokhorov to Challenge Putin. Billionaire Mikhail Prokhorov plans to challenge Prime Minister Vladimir Putin for the Russian presidency in March elections after the biggest anti-government demonstrations in a decade emboldened Russia’s opposition. Read more here-http://tinyurl.com/7xw3klt

-Putin Hits Back at Opposition Protests. Prime Minister Vladimir Putin hit back at protests over alleged electoral fraud even as Russia’s biggest street demonstrations in a decade threaten to complicate his bid to return to the Kremlin next year. Read more here-http://tinyurl.com/7eorbl8

-U.S. Military Rushes to Ship Iraq War Gear. Read more here-http://tinyurl.com/cka4xdl

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World Financial Report – December 16th, 2011
posted by Rare Colored Diamonds on Friday, December 16, 2011