Monday, January 11, 2010


Technically Precious With Merv, Jan 8, 2010

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One more nail in the coffin of the gold bears

The bullish case for gold continues to build. The old adage ‘more dollars chasing fewer goods’ is particularly apt for gold.

  • For the first time in history practically every Central Bank is adding to the money supply of its respective country.
  • Despite a record high gold price, new supply from mines is declining, due to the fact that the ‘easy to find gold’ has already been found.
  • Comparing the current gold rush to the price rise in 1980 we find that there are currently 2.4 billion people in the world who were not alive in 1980. That is an increase of 53%.
  • A large percentage of this huge increase has occurred in China and India. By coincidence the people in those two countries love to own gold. (more)

Copper Correction

Copper has enjoyed a spectacular run higher. In calendar 2009 as it emerged out of the stock-panic-induced commodities-price crash, it rocketed 153.2% higher! Such performance is just staggeringly good, even by the high post-panic standards. Over this same span the flagship CCI commodities index (which includes copper) only rallied 32.1%. And gold, which captivated traders in recent months, was only up 24.3% in 2009.

Ordinary copper, a common and cheap metal, was last year's commodities superstar. It brilliantly outshined the precious metals and even easily eclipsed 2009's massive 86.3% gain in crude oil. Investors and speculators like our subscribers who were long base-metals stocks rode this copper surge to tremendous gains. It's been an exceedingly fun and profitable rally. (more)

Walk Away From Your Mortgage!

John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay. (more)

The Military-Industrial Compex is Ruining the Economy

Everyone knows that the too big to fails and their dishonest and footsy-playing regulators and politicians are largely responsible for trashing the economy.

But the military-industrial complex shares much of the blame.

Nobel prize winning economist Joseph Stiglitz says that the Iraq war will cost $3-5 trillion dollars.

Sure, experts say that the Iraq war has increased the threat of terrorism. See this, this, this, this, this, this and this. And we launched the Iraq war based on the false linkage of Saddam and 9/11, and knowingly false claims that Saddam had WMDs. And top British officials, former CIA director George Tenet, former Treasury Secretary Paul O'Neill and many others say that the Iraq war was planned before 9/11. But this essay is about dollars and cents. (more)

The Surge in U.S. Personal Bankruptcies, Foreclosures and Job Losses

The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.

And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.

The changes were designed to make it more difficult for people to shed their debt, particularly in a Chapter 7 filling. A "means" test, for example, was introduced to separate those who could afford to repay their debt from those who couldn't. A Chapter 7 filing is off the table if the means test determines a person is able to pay back at least a portion of the debt after it is restructured.

The worst U.S. recession in a generation is testing the effectiveness of these laws. The economic downturn also has prompted more middle-class Americans to file for bankruptcy protection. (more)

EXCLUSIVE: Inside China's secret toxic unobtainium mine

Last week it was reported that China - which has a global monopoly on the production of rare-earth metals - is now threatening to cut off vital supplies to the West. A shortage would jeopardise the manufacturing and development of green technologies such as wind turbines and low-energy lightbulbs. RICHARD JONES is the first Western journalist to visit the rare-earth mines in Inner Mongolia to discover why China is unwilling to give up its precious elements...

It looks like a scene from an apocalyptic science-fiction movie. High on the frozen plains of Inner Mongolia, giant trucks rumble across the floor of a lunar-like crater so vast that it looks as if it might have been gouged out by a meteorite.

As we peer down at the eerie spectacle from the crater's edge, a security guard behind us barks out in Mandarin: 'Explosives! Move away!' Seconds later, a deafening crack rings out and part of a 660ft high rock face is brought crashing down. (more)

Ludwig: Real Estate to Kill Hundreds of Banks

Commercial real-estate woes will push a plethora of banks belly-up, says Eugene Ludwig, former Comptroller of the Currency.

“Losses from commercial real estate will be quite high by historic standards,” Ludwig, now chairman of consulting firm Promontory Financial Group, told Bloomberg.

“Hundreds of banks will fail or will be resolved over the course of the cycle.”

Last year, 140 banks failed.

Problems abound for real estate loans involving malls, office buildings, hotels and apartment/condo buildings.(more)