Monday, September 21, 2009

Gold is due a correction – but then it will hit $1,400

Gold closed last week above $1,000 an ounce, its highest ever weekly close. Yet who was reporting this fact in the Sunday papers?

I was reading The Telegraph, whose financial coverage is generally ahead of the curve compared to the other broadsheets. I was delighted to see that, far from being on the front pages, gold's milestone got barely a passing mention.

The fact is, the mainstream still don't get gold. The longer this continues (and long may it) the longer this bull market has to run. (more)

California’s Financial Depression: Unemployment and Underemployment rate at Great Depression Levels. 23 Percent Unemployment for Biggest State in the

California has now reached Great Depression unemployment levels. Many are now calling the end of the recession but there is no sign that California is inching closer to prosperity. Last month the unemployment rate shot up to a post-World War II high of 12.2 percent. This is only the official headline number. The unemployment and underemployment rate is up to 23 percent putting California into its own mini depression. The great housing bubble is still beating down on the state economy. Alt-A and option ARM products are staring us squarely in the eyes for 2010. Many of the banks and lenders were probably assuming that somehow by this point in the cycle that the economy in California would be bottoming out. It is not. What this means is housing will take another leg down. (more)

2 Nobel Economists Confirm that Credit is NOT Created Out of Excess Reserves

We've all been taught that banks first build up deposits, and then extend credit and loan out their excess reserves.

But critics of the current banking system claim that this is not true, and that the order is actually reversed.

Sounds crazy, right?


But take a look at the following quotes:

“[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts."
- 1960s Chicago Federal Reserve Bank booklet entitled “Modern Money Mechanics” (more)

International Monetary Fund to sell over 403 tons of gold

The International Monetary Fund said its executive board endorsed the sale of 403 tons of gold, worth an estimated 13 billion dollars, to boost its lending capacity to poor countries.

The IMF said in a statement the sales would be “in a volume strictly limited to 403.3 metric tons, with these sales to be conducted under modalities that safeguard against disruption of the gold market.”

The 186-nation institution said the decision was a core element of a new income model to make it less dependent on its lending revenue to cover expenses, such as surveillance of members’ economic and financial policies, that the board had approved in April 2008. (more)

Has the Gulf Coast become a Ponzi haven?

The list of failed Southwest Florida investments keeps getting longer.
Arthur G. Nadel faces 15 federal counts in an alleged scheme that cost investors nearly $400 million. Beau Diamond has been hit with wire fraud and money laundering charges, accused of preying on Sarasota's New Age community. John and Marian Morgan have traded their bayfront mansion for Sri Lankan jail cells while awaiting indictment over an alleged get-rich-quick prime bank scheme.

None of the four have been convicted of anything, but losses associated with what federal investigators say are Ponzi schemes in Southwest Florida have already claimed about double what Sarasota County will spend next year on its 1,000-person sheriff's office, fire and ambulance service, libraries, parks, beaches and other day-to-day services. (more)

History of US Banking

Technically Precious with Merv, Sept 18, 2009

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World Financial Report, Sept 18, 2009

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