The World Financial Report

World Financial Report – January 6th, 2012

Radio Show Newsletter

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: 2011 Final Numbers. Read more here-http://tinyurl.com/7m4ydct

-CHART OF THE WEEK: Global Inflation Numbers. Reuters

-CHART OF THE WEEK: Iran Oil Exports By Country. Reuters

-What OPEC, the IEA Say About an Iran Embargo. Read more here-http://tinyurl.com/7clo9sj

-“Never in the history of the world has there been a situation so bad that the government can’t make it worse.” Henry Morganthau Jr.

-Just 55.3 percent of Americans between 16 and 29 have jobs. And earlier this year, Americans’ student loan debt surpassed credit card debt for the first time ever. CNNMoney

-Morgan Stanley Makes A Very Specific QE3 Prediction. We believe that a package of Treasury and MBS purchases of US$500-750 billion will arrive sometime between March and June. Read more here-http://tinyurl.com/6s9wntp

-$6.3 Trillion Wiped Off Global Markets in 2011. Almost $6.3 trillion was erased from global stock markets this year as the euro zone financial crisis reverberated across the world in the latter half of 2011, calling into question the future of the world’s largest currency bloc. Global stock market capitalization dropped 12.1 percent to $45.7 trillion. Read more here-http://tinyurl.com/83lvr4q

-World’s Biggest Economies Face $7.6 Trillion Bond Tab as Rally Seen Fading. Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs. Led by Japan’s $3 trillion and the U.S.’s $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show. Read more here-http://tinyurl.com/7yxm4f7

-‘True Revolution’ Ahead for US Fiscal Future: Greenspan. The United States faces a “true revolution” in the choices it will have to make to secure its fiscal future now that the welfare state has run up against a “brick wall of economic reality,” former Federal Reserve Chairman Alan Greenspan said.

“Cutting back on benefits that are ‘entitled’ is going to be a far harder political task than curbing federal discretionary spending. We have created a level of entitlements that will require a greater share of real resources to fulfill than the economy seems likely to be able to supply,” he said. Read more here-http://tinyurl.com/7rz5pgm

-30 Statistics That Show The Middle Class Is Dying Right In Front Of Our Eyes. Once upon a time, the United States had the largest and most vibrant middle class that the world has ever seen. Unfortunately, that is rapidly changing. The statistics that you are about to read prove beyond a reasonable doubt that the U.S. middle class is dying right in front of our eyes as we enter 2012.

The decline of the middle class is not something that has happened all of a sudden. Rather, there has been a relentless grinding down of the middle class over the last several decades. Millions of our jobs have been shipped overseas, the rate of inflation has far outpaced the rate that our wages have grown, and overwhelming debt has choked the financial life out of millions of American families. Read more here-http://tinyurl.com/83c6rck

-U.S. Companies Added 325,000 Jobs: ADP. Read more here-http://tinyurl.com/7hcwv3z

-Initial Jobless Claims in U.S. Fall to 372,000. Read more here-http://tinyurl.com/6v5p759

-El-Erian Says There’s No Appetite to Raise Global Rates in 2012. Policy makers are unlikely to raise borrowing costs in 2012, with benchmark rates to stay at or close to zero in the U.S. and Europe, according to PIMCO’s Mohamed A. El-Erian. “You’ll see policy rates in the U.S. and Europe floored at or near zero,” El-Erian said. “I don’t think there will be any appetite or need to raise interest rates in the U.S. and Europe.”

The Federal Reserve has said it will keep its target rate for overnight loans between banks between zero and 0.25 percent through mid-2013, and is now selling $400 billion of its short- term Treasuries and reinvesting the proceeds into longer-term government debt in a program traders dubbed Operation Twist. Read more here-http://tinyurl.com/7gggxhg

Gross predictsparanormal” market activity in 2012. Most developed economies have not, in fact, deleveraged since 2008 and credit remains resilient because of the multitude of monetary stimulus packages being made available through central banks in the U.S. and Europe, Gross wrote. This risks leading to unraveling of financial markets if policy makers are unable to foster growth and inflation accelerates, he said. Read more here-http://tinyurl.com/7kpbn9p

-Dollar’s Demise Exaggerated as 13% Gain Since 2008 Proves Currency’s Value. Moves by the Federal Reserve to flood the world with dollars are doing little to dent the currency’s value, bolstering the appeal of U.S. assets at a time when the government needs the support of foreign investors the most.

The U.S. Dollar Index has appreciated 13 percent from a record low in March 2008 even as the Fed kept interest rates at about zero and printed cash to buy $2.3 trillion of Treasury and mortgage-related bonds, and is little changed since 1991. The IMF said that the greenback’s share of global foreign-exchange reserves rose in the third quarter by the most since 2008. Read more here-http://tinyurl.com/6wgah34

Byron Wien’s Ten Predictions For 2012. Read more here-http://tinyurl.com/7h98l6k

-Jeffrey Gundlach: This Presentation Has Every Chart You Need To Understand The Global Financial Markets And Economy. Read more here-http://tinyurl.com/79w9lcu

-Barry Ritholtz: 10 Forecasts As To What The Forecasters Will Be Forecasting. Read more here-http://tinyurl.com/7f2yanu

-The spectre of 1932: How a loss of faith in politicians and democracy could make 2012 the most frightening year in living memory. Read more here-http://tinyurl.com/8ysuul2

-MF Global Sold Assets to Goldman Before Collapse. MF Global unloaded hundreds of millions of dollars’ worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co one of the sources said. Read more here-http://tinyurl.com/899rcwn

-Swiss central banker dumped francs on eve of devaluation. Read more here-http://www.gata.org/node/10847

-Hong Kong Keeps Ban on Some Chinese Poultry Imports After Flu Link Found. Poultry imports from the part of southern China where a man died from the H5N1 virus remain banned in Hong Kong after genetic tests linked the man’s strain of the disease to the version found in wild birds in the city. Read more here-http://tinyurl.com/7tvpy6l

-China’s ‘Demographic Tsunami’ Begins. Read more here-http://tinyurl.com/87y4esq

-NBC Gets $4 Million for Super Bowl Ads, Sells Out Inventory. Read more here-http://tinyurl.com/79odeot

-Anonymous exposes 75,000 credit card numbers. Hacker collective Anonymous has just dumped 200 GB of names, email addresses and passwords for around 860,000 Stratfor users. Anonymous also exposed credit card numbers for 75,000 paying customers of Stratfor. Stratfor, a security think tank, provides reports on international security and related threats to government and military personnel as well as to the private sector. Read more here-http://tinyurl.com/8xkvjkm

-Bentley Sells More Cars in China Than U.K. Volkswagen AG’s super-luxury Bentley brand sold more cars in China than Britain for the first time in its 92-year history and said it’s seeking to capitalize on wealthy customers reopening their wallets this year. Read more here-http://tinyurl.com/7bn9fl2

-Top executives take 3 hours to make an average worker’s yearly salary. Read more here-http://tinyurl.com/7brzurx

-Americans make up half of the world’s richest 1%. The United States holds a disproportionate amount of the world’s rich people. It only takes $34,000 a year, after taxes, to be among the richest 1% in the world. That’s for each person living under the same roof, including children. (So a family of four, for example, needs to make $136,000.) Read more here-http://tinyurl.com/78xmb26

Mark Cuban: There’s Only One Thing In Life You Can Control: Your Own Effort. Read more here-http://tinyurl.com/78yvteu

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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 .26 fancy intense Pink emerald cut VS1. Very rarely do you come across a pure intense Pink Argyle diamond that is an emerald cut and VS1 clarity. Most of the Diamonds from argyle are not even graded on clarity as most are not eye clean. This Diamond would be an excellent investment for any investor/collector. Harold Seigel-Watch video of the Featured Diamond here-http://tinyurl.com/73xwfq5

-Buckingham Palace to Host Diamond Exhibition. Exhibition held in honor of Queen’s Diamond Jubilee and displays unprecedented number of her personal jewels. Among the pieces in the exhibition is the Williamson Brooch which features a rare pink diamond set by Cartier in a jonquil-shaped brooch with 200 small diamonds. Read more here-http://tinyurl.com/6oz677k

-Check Out The $300,000 Rock LeBron James Put On His Fiancé’s Finger. Read more here-http://tinyurl.com/7f4ct8d

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GOLD

-CHART OF THE WEEK: Gold price rises again its 11th consecutive year. Gold has done it again. For the eleventh year in a row, the gold price rose in terms of US dollars. Gold’s rate of exchange to the US dollar climbed 10.2% in 2011, so an arithmetic average of its annual rate of appreciation for the last eleven years when measured in the world’s reserve currency is a truly remarkable 17.7%. Gold also rose in 2011 against each of the eight other major world currencies presented in the following table. Read more here-http://tinyurl.com/7m4pmhn

Dennis Gartman admits he made a bad call on gold. The investment letter writer has declared that he was wrong about gold. In his daily investment letter, Mr. Gartman officially reversed his outlook for gold, saying he now views the precious metal as being in a bull market. Read more here-http://tinyurl.com/7rkp2y6 and http://www.gata.org/node/10850

-“Gold gained 10 percent in 2011, rallying for an 11th year, as investors bought gold to protect their wealth from market volatility due to the Euro zone debt crisis.” Bloomberg

-“Unlimited government requires unlimited funding. The unfunded liabilities of the USA are staggering. Over the next 20-25 years there is probably a gigantic $75 trillion unfunded liability problem for the US government. Think of the move in gold against the dollar with a debt of $15 trillion. Can you imagine the action in gold with a debt five times the current size?” Morris Hubbartt

-“While nothing is a sure thing, this chart shows the potential for gold to move towards the $2300 area by around mid-year. This past summer saw gold up and out of a fairly large uptrend channel, with a push into the $1900 area. My expectations are to see gold blast into the super highway zone, and begin a new trajectory to much higher prices.” Morris Hubbartt

-Bart Melek, head of commodity strategy at TD Securities Inc. in Toronto, believes gold will trade around $1,550 (U.S.) in the first quarter as investors continue to favour the U.S. dollar for safety amid concerns over Europe’s finances and easing gold demand from China and India. He expects the metal to rise to around $2,100 (U.S.) in the fourth quarter after governments and central banks act to fix Europe and stimulate economic growth. Globe and Mail

Barclays Capital: Gold’s High in 2012 Seen At $2,200 Oz, Silver At $45. Read more here-http://tinyurl.com/7bvdpq7

-“Assets are flowing to the most liquid asset in the world right now, which is the U.S. currency,” said Paul de Sousa, head of business development at Bullion Management Group Inc. in Toronto. “Gold is always a haven in times of uncertainty, and what’s been happening in the past few weeks and months doesn’t negate that. Ultimately, the world’s reserve currency is issued by the world’s largest debtor nation. Isn’t that ironic?” Globe and Mail

-Commodities Rebound Seen as Economy Skirts Slump. Gold is predicted to reach a record in 2012, rising as much as 33 percent to $2,140 an ounce. Silver, the precious metal most used in industry, will advance as much as 44 percent to $42.20 an ounce, a price last reached in September. Read more here-http://tinyurl.com/77akztt

-Blackstone Group’s Byron Wien, who correctly predicted last year’s gain in gold, said the metal will rally 15 percent in 2012 to $1,800 an ounce. Silver will rise to $40 this year, said Wien. “Accommodative monetary policies throughout the developed world cause a renewed migration to hard assets by individual investors and sovereign-wealth funds,” Wien of Blackstone said in a report. Bloomberg

Gold may rally to $2,400 this year, Citigroup said. The record was $1,923.70 on Sept. 6. Bloomberg

Gold reserves increased in November at Belarus, Turkey, Tajikistan, Macedonia, Mauritius and Morocco, and declined in Mexico, according to data on the International Monetary Fund’s website. Turkey’s holdings increased to 5.758 million ounces from 4.429 million ounces and Mexico’s declined to 3.413 million ounces from 3.417 million ounces in October, the data showed. Morocco’s holdings were 710,000 ounces in November compared with 708,800 ounces in October, according to the data. Bloomberg

-Alena Bialevich and Jeff Clark: 2011: Dud or Springboard? 2011 was remarkable in many ways for the precious metals markets. Gold soared to new highs in early September, hitting at an intraday record of $1,920/ounce on the fifth. Silver screamed to within a hair of $50 on April 28. Corrections ensued, and the metals ended the year on a disappointing note for silver and an underwhelming note for gold. Equities for the sector were down, to way down for junior ventures, logging their worst annual return since 2008. Here’s a table of 2011 returns from most major asset classes.

The Fundamental Case for Gold Remains Rock Solid. Gold demand from investment and central banks grew tremendously last year. Further, the geography of gold buying was widespread, with big purchases coming from Europe during the initial bouts of their crisis and Japan after the Fukushima accident.

Small investors and monetary authorities alike purchased gold due to economic, financial, monetary, and political concerns. Quite frankly, we see none of these factors changing anytime soon. Further, many countries continue to debase their currencies at phenomenal rates.

While US Treasuries may be a good temporary parking spot for cash, don’t kid yourself about what’s behind it all: nothing. The dollar is a fiat currency, no more. A true safe haven is something that cannot be debased, devalued, or destroyed by any government. After accounting for inflation, your dollars are worth less every year. Read more here-http://tinyurl.com/7pgn5ko

Jeff Clark: Why Has Gold Been Down? After all, in spite of some short-term fixes, there remains no real resolution to the sovereign debt issues in many European countries. We’re certainly not spending less money in the US, and now we’re bailing out Europe via currency swaps with the European Central Bank. Shouldn’t gold be rising? Yes, but nothing happens in a vacuum. There are some simple explanations as to why gold remains in a funk.

  1. The MF Global bankruptcy, the seventh-largest in US history, forced a high degree of liquidation of commodities futures contracts, including gold. Many institutional investors had to sell whether they wanted to or not. This is similar to why big declines in the stock market can force funds and other large investors to sell some gold to raise cash for margin calls or meet redemption requests.
  2. The dollar has been rising. Money fleeing the Eurozone has to go somewhere, and some of it is heading into US bonds, which means first converting the foreign currency into dollars.
  3. It’s tax-loss selling season, something that’s also impacting gold stocks. Funds and individual investors are selling underwater positions for tax purposes. Funds also sell their big winners to lock in gains for the year and dress up quarterly reports.

These forces have all acted to depress the gold price. Notice I didn’t say that gold has suddenly become viewed as a poor safe haven. Nor that many of the world’s major currencies are no longer being debased. nor that global sovereign debt issues are resolved nor that interest rates are positive.

No, the fundamental reasons for owning gold are still intact. So don’t let the selling depress you. Let’s put gold’s recent price action into perspective. It peaked on September 5 at $1,895 and has thus been in decline for about three months. Yet look at the bull market’s biggest three-month correction in relationship to the ultimate trend.

Gold fell 20% from August 1 to October 31, 2008, the biggest rolling three-month decline in our current bull market. And yet, it eventually powered much higher, in spite of many investors and industry experts thinking it had peaked at the time. The final quarter of 2011 ended down 5.5% over the previous quarter. The point? Don’t confuse short-term volatility with long-term forces.

The investor who looks only at today’s headlines is prone to making ill-timed decisions. I realize that prices could trade lower but this is why we keep a high level of cash. By the time this bull market is over, our current pullback will probably look something like the small red box in the chart above, with far higher prices in the intervening months and years.

Which makes current prices a buying opportunity. I don’t know if we’re at the bottom of our recent decline or not but I do know where gold and silver are ultimately headed Casey Research’s Chief Economist and Editor of The Casey Report, Bud Conrad, is convinced gold will hit $2,000 in the first half of this year. If he is right, the opportunity to buy at today’s levels will be fleeting.

In the meantime, stay the course with your precious metals investments, no matter how the short-term picture looks. Gold stocks remain undervalued, and these are turbulent times. They appear to be far from over. Gold remains the #1 asset protector. Read more here-http://tinyurl.com/86uv544

John Embry: Gold Will Not Trade Below $1,500 Ever Again. “I do think there is a strong probability that the end of 2011 marked the bottom for gold and silver and that may be the lows that will ever be seen. That’s a strong statement, but the reality is gold and silver may never trade lower than that again.”

“When gold broke through $1,000, I said it would never trade below $1,000 again and it hasn’t. I now think that, unless we have a complete and total financial collapse in the world, I would be surprised if gold ever traded below $1,500 ever again.” Read more here-http://tinyurl.com/6qa7t64

James Turk; Gold in 2012. To end as I began, the future is unknowable. Consequently, we do not have solutions for today’s problems; we only have choices. For 5,000 years, gold has been the world’s preferred money. Being tested time and again over the millennia, gold’s proven record continues to make it the preferred choice for a future that is always uncertain. Read more here-http://tinyurl.com/7wo8ezh

Richard Russell: We are Watching Market History in Gold. “This year’s close for gold marks the 11th year for higher year end gold closing. To my knowledge this is the longest bull market of any kind in history in which each year’s close was above the previous year. This fabulous bull market will not end with a whisper and a fizzle.

I continue to believe that the upside gold crescendo of this bull market lies ahead. We are watching market history.” “I note the frustration and anger of the anti-gold crowd. To miss 12 years of rising prices is enough to make any investor furious with himself. I would guess that 99 percent of Americans have never participated in the gold bull market. Thus, sour grapes is the sentiment of the gold-haters.

Happy to say my subscribers who listened to me in the early years of the gold bull market have enjoyed the riches bestowed upon them by the greatest bull market in history. Below are the last day of the year quotes for gold. Read more here-http://tinyurl.com/7vdt5t6

John Hathaway: Decline in Gold & the Shares Has Run its Course. Read more here-http://tinyurl.com/79b8d7y

Jim Rickards: US to go to War with Iran, Oil & Gold to Spike. When asked about the call, from Egon von Greyerz, for gold to move into the $3,000 to $5,000 range in 2012, Rickards responded, “Well, it’s certainly possible, I would not rule it out. I definitely see it in that range, so I agree completely with Egon that’s where it is heading.

Timing is always tricky. I have the direction and the magnitude right, but I see it as 2013, then going into 2014, I can definitely see it (gold) getting to that level. 2012 might be a stretch, but it could happen. Look, I would absolutely not rule it out, but it’s probably more in the next two years, rather than in the next year.” Read more here-http://tinyurl.com/cbwzxb4

Jim Sinclair: Keep Your Eye On The Ball Of Gold Fundamentals. Read more here-http://tinyurl.com/86trn5m

Jim Sinclair: Negativity In Gold Reaches Epic Levels. Read more here-http://tinyurl.com/7lhe72k

-Michael Pento: Gold is The Last Reserve Chute to Be Deployed. Read more here-http://tinyurl.com/72eaaa3

Stephen Leeb: Gold Update. I’ll give you my target for gold at the end of 2012, it’s going to be trading somewhere between $2,500 and $3,000. This correction, in other words, is a non-event. The rubber band analogy applies here, for every dollar down on gold, it will mean an extra dollar on the upside when we get the reversal. It’s so important for investors that are not seasoned, it’s so important not to get shaken out of your position here. And if you have extra money on the side, this is a great buying opportunity. Read more here-http://tinyurl.com/6w6dokj

-China gold exchange restrictions will cut risk, not appetite. Read more here-http://www.gata.org/node/10837

-Indian Gold Imports Plunge in Fourth Quarter. Gold imports by India, the world’s top consumer, plunged 56 percent to 125 metric tons in the fourth quarter, cutting full-year imports by 8.4 percent as record high prices and high interest rates hit demand, the head of India’s leading bullion body said. Read more here-http://tinyurl.com/6tycngy

-India gold jewellery move may boost demand. India has made hallmarking gold jewellery mandatory, a senior government minister said, a move that could boost demand in the world’s biggest gold market by taking care of quality worries. Read more here-http://tinyurl.com/7jy7hne

Jim Rogers: Gold could go to $1,200-$1,300/oz. Rogers believes investors are currently a little too bearish on the euro and that gold is overdue for a correction but, he remains bullish on commodities in general. Read more here-http://tinyurl.com/7hkwgbh

-Peter Schiff: Was 2011 The End of the Gold Rush? Read more here-http://tinyurl.com/6ntfsvk

Peter Brimelow: Gold bugsunmerry Christmas. But radical bugs say they know why. Read more here-http://tinyurl.com/7naa6ck

-Weekly precious metals market review at King World News. Read more here-http://www.gata.org/node/10841

-Paul cites ‘shenanigans’ with loaned gold. Read more here-http://www.gata.org/node/10840

-Ex-Fed Governor Warsh again confirms gold price suppression. Read more here-http://www.gata.org/node/10839

-American Banker notes GATA’s efforts to clarify Blinder’s position. Read more here-http://www.gata.org/node/10844

-Lars Schall: A gold exercise in futility, Thank you for contacting the New York Fed. Read more here-http://www.gata.org/node/10846

-‘Financial repression’ is gold price suppression. Read more here-http://www.gata.org/node/10835

-GoldSeek Radio interviews GATA Chairman Bill Murphy. Listen here-http://www.gata.org/node/10849

-Peter Grandich: The big crime isn’t being wrong but staying wrong. Read more here-http://www.gata.org/node/10851

-Peter Grandich doubles his gold price challenge to Kitco’s Jon Nadler. Read more here-http://www.gata.org/node/10838

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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

-CHART OF THE WEEK: Silver in 2011. Even though its price declined last year, silver has generated average annual rates of appreciation in all nine currencies that are higher than gold. So silver also fits well within a long-term accumulation plan, but only if you are prepared to accept the volatility that comes with it. That volatility is evident from the above table. But the reward for accumulating silver will be its continuing outperformance against gold over the long-run. Read more here-http://tinyurl.com/7m4pmhn

-“Silver is a volatile metal, but there is a compelling opportunity to transfer other assets to silver in these times of extreme weakness of silver against the dollar. Silver is currently my favorite investment. I prefer to buy the physical metal and store it securely. Buyers of silver are in good company, because the net positions of the commercials traders are now actually larger than 2008 when price got as low as about $9! Buy the metal and wait patiently. If you are looking for triple digits, as I am, it is important to hold physical metal because the volatility is probably as “here to stay” as silver itself!” Morris Hubbartt

-“Silver is likely to be subject to strong incoming liquidity flows because this is an election year. Government people want to “juice” the stock markets higher. Silver is an industrial metal as well as a precious metal, and 2012 could see silver mount a very big rally against the dollar.” Stewart Thomson

-“The big commercial silver shorts had a near death experience when the price approached $50 in April. They were at the end of their rope and needed to do something in a hurry. That’s why they rigged prices lower; so that they could buy and save themselves. These well-connected commercials knew, perhaps for the very first time, just how tight the silver market had become and how close we were to a profound physical shortage.

The key is that the silver shortage wasn’t caused by excessive speculative buying or a bubble or a mania. The extreme tightness and near shortage in silver was as a result of the gradual and cumulative impact of normal investment buying over the past five years. There is nothing to suggest that the long term and steady silver investment buying has ended.”

“Because there was no bubble or mania in silver, there was no bubble to burst. The orchestrated takedowns of the price by the big commercial interests were simply so that these commercials could buy and rid themselves of silver short positions. That’s done now. That means that the silver market is now in the best possible shape.”

“What lies ahead for silver is exciting. While we have not witnessed a bubble in silver yet, we will some day. The silver story and the dynamics of the market are too compelling for an investment mania not to emerge at some point. If anything, speculative sentiment has been completely wrung out from silver, clearing the way for speculators and investors to enter the market with a vengeance.

At some point, enough of the world’s industrial silver users will panic as prices climb and attempt to build physical silver inventories. This user buying, something that never kicked in during the run to $50 will create a silver shortage, the likes of which never witnessed before. It seems that the big commercial interests have come to learn the real silver story and they appear to want no part of the short side again. The major pressure of selling has passed and the way seems clear for higher prices. By the time the next chapter in the silver story plays out, $50 could look cheap.” Ted Butler via Ed SteerCasey Research-Read more here-http://tinyurl.com/7kp2bj4

-James Turk: Gold is Great, But Silver is the Next Apple. “Whenever I look at silver I keep going back to the wonderful blog piece you wrote on October 18th, titled, ‘Is Silver the Next Apple?’ That long-term chart of Apple conveys an important message. Despite five major corrections, over ten years, shares of Apple, nevertheless, rose 70 fold.

If you were shaken out on any of those corrections, you would have missed one of greatest bull moves in history.” If anything, the pattern has now become stronger because silver is now testing support in the high 20s and looks like it is forming a double bottom. I still think this flag pattern will send silver to $70 in three months, once silver has broken out to the upside.

Because it is a descending flag pattern, the breakout pattern has now moved down to $37.50, but $35 is the more important resistance level. Once theses two levels are taken out, that three month move to $70 begins. So, as I see it, just keep accumulating physical silver here. The fundamentals for silver continue to remain very bullish and only time will if silver is the next Apple.

I continue to expect that silver will go much higher and reach my $400 per ounce forecast. “If we go back a decade ago in silver and start the bull market in the mid 4s, and silver reaches my long-term target, it will have actually outperformed shares of Apple.” Read more here-http://tinyurl.com/775cbmo

-John Embry: Silver Update. “I think the smash in paper has made the physical silver market that much tighter. I’m a huge believer in the gold/silver ratio dropping significantly as we move through this bull market. I think the next leg up in the gold price will be accompanied by a falling gold/silver ratio to a level of 10/1 or 15/1.

That just means the silver price will run three times faster than the gold price. The potential in silver is enormous and people are discouraged because of the smash the cartel laid on it. I wouldn’t be, I think it’s a great time to buy physical silver.” Read more here-http://tinyurl.com/6qa7t64

-Stephen Leeb: Expect $5 Gas, $60 Silver & $3,000 Gold in 2012. Segueing into silver, silver is even better here. The Chinese have started to stockpile silver, sort of hidden in an announcement they made the other day. They are not going to export any silver. China is not going to export, according to their latest announcement, not even one ounce of silver. So, if I were to target silver for the end of 2012, I’m going to be very, very conservative and say silver will finish 2012 at $60. It’s going to make new all-time highs.” Read more here-http://tinyurl.com/6w6dokj

-The Possibility of $1,000 Silver before Hyperinflation. 2011 was both an amazing and disappointing year for silver investors. The most disappointed of all are those who bought in during the April highs, when silver almost reached $50. However, what these investors need to remember is that not too long ago, people were fretting over changes in prices of ten cents or less. Not too far down the road, the difference between $29 silver and $50 silver will also seem rather minimal. Read more here-http://tinyurl.com/8abzj7f

-Silver Sales Up As Supply Slips. Read more here-http://tinyurl.com/6rke7th

-Silver’s average annual price reaches record high in 2011. With a 74% gain over 2010, silver outperformed all other precious metals last year in terms of average annual price increases boosted largely by investment demand. The average annual silver price of $35.12 per ounce last year, set a new price record, a 74% gain over the 2010 average annual price of $20.19 per ounce.

The Silver Institute observed Wednesday silver’s average annual price has increased an astounding 703% since 2001. Silver outperformed all other precious metals in terms of average annual price increases. Palladium recorded a 39% gain last year, while gold was 28% higher and platinum rose 7% over 2010 data, the Silver Institute reported. Read more here-http://tinyurl.com/85j5x6d

-Wealthy to Invest More in Commodities: Survey. Wealthy investors plan to increase their allocations to commodities and private companies while decreasing their cash holdings this year, according to a survey released. Read more here-http://tinyurl.com/7u93dag

-Indians innovate to keep a shine as silver prices soar. Read more here-http://tinyurl.com/7sjv5yt

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SOVEREIGN DEBT

-CHART OF THE WEEK: Europe Bonds in Biggest Rally Since Euro Start. Euro-area government bonds had their best month on record in December as Spanish and Italian debt surged in response to unprecedented action from the European Central Bank and political leaders to stem the debt crisis. Read more here-http://tinyurl.com/84hxv5n

Papademos: Greece Faces Default Without Deal. Greek Prime Minister Lucas Papademos told business and union leaders today that a disorderly default in March was possible if his government didn’t secure agreement with international creditors on a new economic plan.

“In mid-January, talks begin with the troika which focus on shaping a credible economic adjustment plan for 2012 to 2015,” Papademos said. “The implementation of the agreement to reduce the debt and continuation of financing of the country depends on that. Without this agreement with the troika and subsequent financing, Greece in March faces the immediate risk of a disorderly default.” Read more here-http://tinyurl.com/8xrlzc2

-Papademos Warns Fellow Greeks Economic Collapse Looms Without Sacrifice. Prime Minister Lucas Papademos told Greeks that cuts in income are the only way to stay in the euro and get more financing from international creditors to avert an economic collapse that may otherwise come as soon as March. Read more here-http://tinyurl.com/77p39lg

Greek, Italian cash heads for hills, or under pool. Greeks and Italians are taking their money and running, moving it abroad or even burying it underground for fear the euro zone crisis will topple banks and wipe out what remains of their savings.

Bankers in Greece say worries about the resilience of local banks, coupled with a rise in burglaries, has helped trigger a surge in demand for safe deposit boxes for those who have yet to set up accounts outside in the country. Some are even building their own. Read more here-http://tinyurl.com/77okvjc

-Paul Mason: Three big questions for the eurozone. Starting from where we are now, there are three big questions:

Right now my answers to these questions would be yes, yes and yes. Read more here-http://tinyurl.com/7ds8fxh

-Alasdair Macleod: Europe’s future. We are probably witnessing the death-throes of the European Union in its current form, as “the project” to gradually replace national governments and currencies has hit a brick wall. The stark choice between massive government spending cuts and full-scale default are likely to make governments inward-looking and protectionist, and the real fear for the “Eurocracy” is the eventual collapse of the union. Read more here-http://tinyurl.com/7hxfpss

-Ambrose Evans-Pritchard: 2012 could be the year Germany lets the euro die. So we enter Year IV of the Long Slump, the cruellest yet though not the most acute. Read more here-http://tinyurl.com/6qeny2g

-Eurozone is closer to break-up, warns Standard Chartered’s Peter Sands. The chief executive of Standard Chartered has warned that there is an increasing likelihood of a country falling out of the eurozone because of the inability of politicians to resolve the crisis. Read more here-http://tinyurl.com/76qg6ut

-Everyone Is Starting To Realize The Size Of Britain’s Debt Crisis. Read more here-http://tinyurl.com/732y3jl

Back to Top

U.S. DEBT-DEFICIT

-CHART OF THE WEEK: Yes, It’s A New Year And The United States Is Still Broke. The U.S. ran a $1.3 trillion budget deficit in 2011, flat with 2010 and the third year in a row of deficits over $1.3 trillion. The U.S. federal debt load continues to climb as a percentage of GDP and is expected to explode over the next few decades. Read more here-http://tinyurl.com/7vsumzg

-Falling home values mean budget crunches for cities. Baltimore collected $815 million in property taxes during the most recent fiscal year, according to Bill Voorhees, Baltimore’s director of revenue and tax analysis. Next year, the figure is predicted to shrink to $803.5 million. The following year, $773 million. The year after that, $735.7 million. The year after that, $729.4 million. Read more here-http://tinyurl.com/7mao4ba

-Bailout concerns mounting for federal housing agency. Concerns are growing that the Federal Housing Administration will need to be bailed out by taxpayers. The agency’s latest monthly outlook report revealed a spike in serious delinquencies for FHA-insured loans, posing a further threat to the agency’s already depleted cash reserves. Read more here-http://tinyurl.com/884qn5e

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REAL ESTATE

-“Tom Porcelli, chief US economist at RBC Capital Markets, says he is not buying the recent positive data on US housing. He sees US home prices dropping another 10%–30% in 2012.” Watch more here-http://tinyurl.com/78hhpvf

-Manhattan Apartment Sales Fall 12%. Manhattan apartment sales fell 12 percent in the fourth quarter from a year earlier as Europe’s debt crisis and sluggish U.S. job growth dimmed buyer appetites. Read more here-http://tinyurl.com/786a2xn

-Renter Nation Rages On As New Reality. Despite record low mortgage rates reported today and rising affordability in most U.S. housing markets, rent is the new reality for former home owners and new households alike. Read more here-http://tinyurl.com/6qpo6zf

-6 Reasons Why Buying A Home Is Like Throwing Away Money. Most people see buying a home as a part of the “American Dream”, well for most it’s become a nightmare. Buying a home is pretty much the best way to throw your money away and here’s why. Read more here-http://tinyurl.com/8949zgo

-FHA says: Flip that house. Flippers, the real estate investors who buy homes on the cheap and quickly resell them at a profit, just got a reprieve from the Federal Housing Administration. In an effort to help stabilize housing prices and unload some of the foreclosures that are flooding low-income communities, the mortgage insurer extended a waiver of its anti-flipping regulations through 2012. Read more here-http://tinyurl.com/7gzse8t

Back to Top

GEOPOLITICAL

-Iran Makes First Nuclear Fuel Rod. Iran produced its first nuclear fuel rod, state-run news agencies reported, as the country offered to restart international talks over its atomic program. Read more here-http://tinyurl.com/7wkyu5p

Iran Warns U.S. Against Sending Aircraft Carrier Back to Gulf. The head of Iran’s army warned the U.S. against sending an aircraft carrier back to the Persian Gulf after it passed through the Strait of Hormuz a week ago. “We usually don’t repeat our warning, and we warn only once,” Ataollah Salehi was cited as saying by the state-run Fars news agency. “We recommend and emphasize to the American carrier not to return to the Persian Gulf.” Read more here-http://tinyurl.com/8aa37ms

-U.S. Spurns Iran’s Demand to Keep Aircraft Carrier Out of the Persian Gulf. The U.S. rebuffed Iran’s demand not to return an aircraft carrier to the Persian Gulf, a “warning” from Tehran. Read more here-http://tinyurl.com/7h7y4tn

-Pento: Expect $7 or $8 a Gallon Gasoline if Iran Closes Straits. Read more here-http://tinyurl.com/6qcgcd3

-Sanctions imposed on Iran. U.S. President Barack Obama signed into law new sanctions against financial institutions dealing with Iran’s central bank, which if fully implemented could hamper Tehran’s ability to sell oil on international markets. Read more here-http://tinyurl.com/7jyzdux

-In major blow, EU agrees embargo on Iranian oil. European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said Wednesday, dealing a potentially heavy blow to Tehran that crowns new Western economic sanctions imposing real pain just months before an Iranian election.

The prospective embargo from the European Union, along with tough U.S. financial measures signed into law by President Barack Obama on New Year’s Eve, form a concerted Western campaign to impose sanctions over Iran’s nuclear program.

Iran says its nuclear program is strictly peaceful, but Western countries say a November U.N. report shows it has sought to build an atomic bomb. Talks between Tehran and major powers broke down a year ago. Read more here-http://tinyurl.com/8y4k5yh

-Iraq War Lives on as U.S. Conflict Fuels Debt. The war in Iraq is officially over. The costs will go on. Eight years of dodging improvised explosive devices, repelling insurgent ambushes and quelling sectarian strife already has drained the U.S. of more treasure than any conflict in the nation’s history except World War II. Even though the last U.S. combat troops have left Iraq, American taxpayers will face decades of additional expenses, from veterans’ health care and disability benefits to interest on the debt accumulated to finance the war. Read more here-http://tinyurl.com/77ozgvh

-Palestinians Weigh ‘Harsh Measures’ for Israel If Talks Fail, Abbas Says. Palestinian Authority President Mahmoud Abbas said he may take “harsh measures” if talks with Israel that started today in Jordan do not lead to a halt in West Bank settlement construction by Jan. 26. Read more here-http://tinyurl.com/82vx627

-Pentagon Emphasizes Asia-Pacific, Cyber. President Barack Obama presented a revamped U.S. military strategy for an era of budget cuts that pledges to emphasize Asia and space and cyber capabilities while preserving missions such as defeating al-Qaeda. Read more here-http://tinyurl.com/8xt8wkn

-After Tumult of 2011, Here Are Some Global Hotspots to Watch in 2012. Could the world in 2012 surprise us more than it did in 2011? Certainly, after Japan’s earthquake, the Middle East’s upheavals and Osama bin Laden’s death, the bar on shockers will be high. Read more here-http://tinyurl.com/76eud8a

Investing In Fancy Colored Diamonds

Investing in rare colored diamonds is a long-term investment. The economic cycles of the past 15 years have seen colored diamonds reach new heights in value as price records were broken.

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1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 1980
  • Total Price: $50,000
  • Price per Carat: $50,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 1990
  • Total Price: $150,000
  • Price per Carat: $150,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2000
  • Total Price: $500,000
  • Price per Carat: $500,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2008
  • Total Price: $1,000,000
  • Price per Carat: $1,000,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2009
  • Total Price: $1,090,500
  • Price per Carat: $1,090,500
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2020
  • Total Price: $2,828,187*
  • Price per Carat: $2,828,187*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2025
  • Total Price: $4,361,506*
  • Price per Carat: $4,361,506*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 1980
  • Total Price: $1,000
  • Price per Carat: $1,000
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 1990
  • Total Price: $3,000
  • Price per Carat: $3,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2000
  • Total Price: $9,000
  • Price per Carat: $9,000
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2008
  • Total Price: $23,500
  • Price per Carat: $23,500
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2009
  • Total Price: $26,300
  • Price per Carat: $26,300
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2012
  • Total Price: $32,000
  • Price per Carat: $32,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2020
  • Total Price: $53,993*
  • Price per Carat: $53,993*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2025
  • Total Price: $74,873*
  • Price per Carat: $74,873*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 1980
  • Total Price: $60,000
  • Price per Carat: $60,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 1990
  • Total Price: $200,000
  • Price per Carat: $200,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2000
  • Total Price: $600,000
  • Price per Carat: $600,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2008
  • Total Price: $1,350,000
  • Price per Carat: $1,350,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2009
  • Total Price: $1,494,000
  • Price per Carat: $1,494,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2020
  • Total Price: $4,555,497*
  • Price per Carat: $4,555,497*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2025
  • Total Price: $7,561,708*
  • Price per Carat: $7,561,708*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Red

  • Year: 1950
  • Total Price: $13,800
  • Price per Carat: $13,800
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 1987
  • Total Price: $927,000
  • Price per Carat: $927,000
  • Source: Auction

1 Carat Radiant Cut Fancy Red

  • Year: 2008
  • Total Price: $2,000,000
  • Price per Carat: $2,000,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 2009
  • Total Price: $2,074,600
  • Price per Carat: $2,074,600
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 2020
  • Total Price: $3,103,720*
  • Price per Carat: $3,103,720*

*Estimated value based on current market trend