Friday, September 16, 2011

Gold price capped by move to 'risk' trades

Renewed hope that key eurozone nations will agree to a new bailout for Greece encouraged gains on world stock markets yesterday, with German chancellor Angela Merkel and French president Nicolas Sarkozy standing by commitments to help Greece remain in the eurozone. The yield on 10-year Greek government bonds now stands at over 25% – a cost of borrowing that is clearly unsustainable without financial help from other European countries.

The gold price continues to consolidate above Jim Sinclair’s key price level of $1,764, though both it and silver came under selling pressure yesterday as hedge funds moved back into stocks on the “good” news regarding France and Germany’s support for Greece. With regards silver prices, as the Got Gold Report notes in its analysis of the latest silver COT report, there appears “much less confidence on the part of the commercials for lower silver prices than last year when their net short positioning was much higher and silver prices were much lower.” The silver price is a coiled spring ready to shoot higher.

The continuing problems in Greece have many analysts and investors fearful of the kind of credit crisis that could make 2008 look like a mere warm-up act. As Poland’s finance minister Jacek Rostowski has noted, Europe’s sovereign debt crisis threatens not just the survival of the current eurozone, but the actual European Union itself. If – owing to the strains of the debt crisis – countries were to leave the eurozone, this would deal a serious blow to the ambitions of those who favour continuing European political integration. This would call into question the EU’s entire raison d'être, leading to a loss of legitimacy that could have profound political implications for the continent.

For this reason, EU officials will be straining to maintain the eurozone in its existing form, with European Commission President Jose Manuel Barroso putting forward proposals for “Eurobonds” that would be issued jointly by eurozone nations. But this is of course a politically toxic proposal in Germany, with many Germans understandably annoyed by the notion that they should pay to support more profligate EU states. Thus, it seems only a matter of time until the European Central Bank is forced to resort to money printing on a massive scale in an effort to maintain the eurozone.

In other news yesterday, the UK’s Consumer Price Index (CPI) rose last month and now stands at 4.5%. Establishment economists in Britain are of course talking about this as a “temporary” surge in prices that will subside in the coming months. But with the Bank of England said to be ready to embark on another round of money printing, this looks unlikely to say the least.

The $1 Trillion Student Loan Market Begins To Implode

We seem to have entered an era of perpetual and unshakeable financial bubbles and the next ripe bubble to burst is in the student loan market. Student loan debt has become the fastest growing debt sector throughout the economic recession. Growth at for-profit colleges has been incredible and tactics used at these institutions reflects patterns seen with the subprime mortgage operators. They target low income markets and exploit government backed loans and pump them through local area lenders. It is a bubble of mammoth proportions and it is no surprise that data released by the Department of Education only a few days ago reflects a default pattern reminiscent of the subprime crisis. Default rates on student loans at for-profit institutions are absolutely abysmal. There is no question now that the student loan bubble is now the next market to pop. What will be the consequences of the $1 trillion student loan market contracting?

For-profit student loans the new subprime

subprime debt college debt

Source: RortyBomb

“(Department of Education) The U.S. Department of Education today released the official FY 2009 national student loan cohort default rate, which has risen to 8.8 percent, up from 7.0 percent in FY 2008. The cohort default rates increased for all sectors: from 6.0 percent to 7.2 percent for public institutions, from 4.0 percent to 4.6 percent for private institutions, and from 11.6 percent to 15 percent at for-profit schools.”

This rate is horrifying. The ways these are measured are reflected by two-year default cohorts so you have 15 percent of the entire group defaulting within two-years! The real default rate is much worse if we tracked these out for the life of the loan. In other words, you have many going to for-profit paper mills and coming out with very little job prospects but with the added burden of massive student loan debt. Clearly the student did not benefit but the profits at these institutions are enormous. The government backing is the only way these lenders and schools even survive. If a bank had to lend their own precious money you think they would give someone $40,000 or even $100,000 in student loans to pursue a degree at an unranked paper mill? Reminds you of people buying tiny condos in Florida for $500,000 with no verifiable income. (more)

That IPO Pop? Majority of 2011 U.S. Listings Are Underwater: P, EPOC, LNKD, Z


More than half of the U.S.-based companies making their domestic stock-market debuts this year are trading below their offer price, an ominous backdrop for any companies hoping to come public.

For any investor who bought—and held—these so-called underwater stocks in their portfolios over the course of the year, it is a painful reminder that even deals that did well their first day in the spotlight can crater later.

Among the companies trading below their IPO prices are Internet radio firm Pandora Media Inc., which popped 8.9% on its first day of trading during its debut in June, and physicians' hand-held software maker Epocrates Inc., which gained 37% in its first day in February.

The poor year-to-date performance among U.S.-based companies—so far this year, 63% of the 76 new listings are underwater, according to data tracker Dealogic—can be blamed primarily on the overall stock market, which itself has been sinking for the past two months. When stocks in general aren't doing well, IPOs suffer in turn and companies reconsider the listing plans.

Standard & Poor's 500 since early July that is weighing on IPOs, but also the stomach-churning ups and downs that have racked the market in recent weeks.

"It's not so much the level of the market but this kind of volatility that makes it difficult to price" new issues, said Tim Curry, a lawyer at Jones Day who works on technology-company IPOs in Silicon Valley.

Case in point: Earlier this month Groupon decided to cancel a roadshow it had planned and put its IPO on temporary hold because of stock-market volatility. It is reassessing its timing on a week-by-week basis,

"Until volatility settles down, it's going to be a while before the IPO market comes back in a meaningful way. I think the IPO market will be very selective, at best, and we're advising most clients to wait at least until" the Federal Reserve meeting Sept. 20-21, said Brian Reilly, head of U.S. equity capital markets at Barclays PLC.

Dealogic, which tracks stock and bond deals, says the current IPO backlog of 144 deals valued at $28.3 billion is the highest year-to-date number of deals since 2007.

The IPO market is seen as important to the economy because public stock offerings are a key way growing companies can raise large sums of capital that can be spent on advertising, new offices, new employees and other expenses.

And yet the biggest hindrance to the IPO market picking up may be the economy itself.

Sanjay Unni, who leads the securities practice at Berkeley Research Group, said the biggest issues weighing on stock prices and the ability to launch IPOs appear to be "larger macro issues that will determine how profitable companies will be once they float."

"Much of the movement on the downside has been, and continues to be, unanswered systemic risks in the global economy," such as Greece's sovereign debt crisis and the direction of the U.S. economy, Mr. Unni said. "Until those issues are resolved, we won't see a recovery in IPOs."

However, there is a bright spot for new issuers: Though the majority are underwater, the performance to date for IPOs is better than stocks in general. IPOs that came out in 2011 are down 6.5% on average from pricing as of the close Tuesday. The IPO stocks collectively performed better than Standard & Poor's 500 index, adjusted for the time period each company was public. Exactly half of 2011 IPOs are trading below the respective S&P 500 performance.

Also, some of the best new stocks have managed to stay above their IPO prices, though they have declined from their first-day pops. Professional-networking site LinkedIn Corp., which gained 109% in its May debut, ended Tuesday above its $45 IPO price but below its first-day closing price of $94.25.

Some have even managed to push higher: real-estate site Zillow Inc., which popped 79% on its first day in July, closed Tuesday above both its IPO and its first-day close.

Still, the news that the bulk of listings so far this year are underwater follows a nearly empty August for IPOs in the U.S. as companies cautiously evaluate the environment for new stocks.

With only two IPOs completed amid a declining broader market in August—the slowest month since July 2009, according to Dealogic—issuers and investors alike are keenly attuned to economic concerns and their effect on major stock indexes.

Observers have said they believe issuers that were considering a late-September launch now are more likely to delay those deals until October and November, depending on market conditions.

"It's a challenging decision to make. What they hope to avoid is completing their roadshow and not pricing the deal," says Rick Kline, a partner in law firm Goodwin Procter's Silicon Valley office who specializes in IPOs and capital markets transactions.

Huge Surge in Bank of America Foreclosures

Bank of America is ramping up its foreclosure processing, sending out far more notices of default to borrowers in August than in previous months, well over 200 percent more month-to-month.

A notice of default is the first stage of the foreclosure process in non-judicial foreclosures states, that is, where foreclosures do not go before a judge.

The notice of default is usually sent when a borrower is 90 days or more overdue in payments, but that timeline has been extended significantly during this housing crisis, due to the so-called "robo-signing" processing scandal and the sheer volume of troubled loans.

Mortgage and housing analyst and strategist Mark Hanson alerted me to unusually high legal default filing activity, and his research points to Bank of America [BAC 7.33 0.28 (+3.97%) ] as the primary driver. I contacted a Bank of America spokesman, who responded:

"It appears the numbers you noted to me this afternoon generally track with our own numbers for key categories. It should be noted it’s driven more in key states like California and Nevada than overall, and certainly the progress we’re seeing is limited to non-judicial states. Judicial states continue to move very slowly, with key states like New Jersey only beginning to start processing foreclosures again this month."

The foreclosure numbers are down very slightly year-over-year, but only because August 2010 was one of the highest foreclosure months on record, and of course was just before the "robo-signing" scandal was uncovered. Delays in processing have artificially lowered the foreclosure numbers over the past year, so this new surge is likely addressing loans that have been long delinquent, but unaddressed.

In other words, the foreclosure pipeline is filling again.

RealtyTrac, a widely followed foreclosure sale and data site, is also confirming a surge in overall notices of default in its August numbers, to be released later this week. They do not cite Bank of America specifically, which bought Countrywide Financial, taking on millions of troubled loans.

"We've been seeing REO [bank-owned property] sales, and processing of loans through foreclosure. This increase may simply be the lenders and servicers starting the next cycle. August traditionally is a high month for foreclosure actions, so part of the increase might be seasonal," says RealtyTrac's Rick Sharga. "Could be any number of reasons - but with 3.5 million delinquent loans, this had to happen sooner or later."

The question of course is, is this a one month catch-up purge or will it continue at high levels for a while? And if the latter, will other banks follow suit quickly? Because if other banks see Bank of America pushing more loans to foreclosure, which will inevitably means more properties heading out for sale, they may want to get in before that glut of properties pushes prices down even further.

"This proves once again that "credit" as measured by legal defaults and foreclosures is not necessarily about borrowers missing payments, rather about what the servicers chose to do about it," notes Hanson.

5 Steps to a Secure Retirement

It's time to size up your plan. You may be in better shape than you think.

If you're like many Americans whose retirement savings took a major hit during the market meltdown a few years ago, you're probably wondering if you'll ever be able to retire. The eye-popping stock market drop in early August and the downgrade of the U.S. credit rating no doubt add to your jitters. Or maybe investment performance isn't your major worry. A spate of unemployment or depressed home values can make yesterday's vision of retirement seem like an im­possible dream.

Don't be discouraged: Recent statistics on recovering 401(k) and IRA balances suggest that many savers are already back on track. Plus, "Americans have proved themselves to be both resilient and resourceful," says Jay Wintrob, president of SunAmerica Financial Group, which recently released its "Retirement Re-Set" study. More than 80% of respondents to the survey said they learned important lessons in the past several years. "They are course-correcting—intending to work longer, save more, spend less and adjust their lifestyle expectations," Wintrob says.

Laraine Schigotzki is a classic example. With successful careers in commercial real estate, property management and corporate sales, Schigotzki, 46, was surprised when she became a victim of a faltering economy. "I never thought I'd get laid off, but now I look at it as a blessing," she says. After losing her job in 2008, Schigotzki enrolled in a U.S. Department of Labor retraining program to become a licensed skin-care specialist and went on to become certified as a holistic health professional. In 2010, she opened To Your Health Holistic Spa and Wellness Center, in Brick, N.J., where she offers organic skin and body treatments, health and nutritional counseling, and yoga classes. (more)

Top SocGen analyst warns: "Killer wave" forming in stocks

Über bear Albert Edwards has abandoned his empirical approach for (shock horror) the mystical world of technical analysis.

Behold the killer wave.

For those of you not familiar with the Coppock indicator here’s a quick primer, via the authoritative source that is Wikipedia:

Coppock, the founder of Trendex Research in San Antonio, Texas, was an economist. He had been asked by the Episcopal Church to identify buying opportunities for long-term investors. He thought market downturns were like bereavements and required a period of mourning. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.

A buy signal is generated when the indicator is below zero and turns upwards from a trough. No sell signals are generated (that not being its design). The indicator is trend-following, and based on averages, so by its nature it doesn’t pick a market bottom, but rather shows when a rally has become established.

And Edwards says it a reason to be afraid, very afraid.

For those looking for a reason or a technical signal that the cyclical bull market has ended and that we are firmly back in the icy grip of the structural bear market, we would highlight the analysis of Dominic Picarda of the Investors Chronicle and the FT. He identified the S&P as having just made a “killer wave”. He has identified eight killer waves in the S&P 500 over the last 83 years. All have been followed by substantial losses. The average fall following a killer wave has been 40 per cent over 20 months.

Here’s why for all you rune watchers.

As Dominic Picarda explains in his article, a killer wave is formed as follows. The Coppock indicator gives an initial sell signal (which it did last summer). However, the indicator subsequently turns up once more, without first having registered a reading of below zero. This happened in April 2011. The killer wave is then completed once a further sell-signal occurs, forming a sort of “double-top” pattern in the Coppock indicator (for Dominic’s article click here for a little video explaining the signal click here – you might have to click more than once)

Not convinced?

OK. Here’s Edwards on more familiar ground:

Gavyn Davis, in another well-argued article, highlights that the IMF has shown conclusively that G4 monetary easing has in the past transferred itself almost completely to the emerging economies, whether or not their own economic circumstances warranted it (link). EM foreign exchange intervention is the key mechanism for this transmission.

Inevitably, the monetary effort to maintain a dollar peg ebbs and flows with the strength of the dollar (see chart below). Hence when the dollar is weak the monetary pump is at full stretch and conversely in periods of dollar strength (as in H2 08) that monetary pump is effectively switched off. Back in H2 08, the monetary consequence of the dollar’s strength massively caught out those who thought EM and commodities could de-couple. And if, as many believe, the dollar has once again broken upwards, EM and commodities are set to slide again.

You have been warned. US dollar strength will drain liquidity from emerging markets.

Latest sign of hardship: Families unable to bury loved ones

The economic downturn has left many families across the nation unable to afford burials.

As funeral costs rise and the economy continues to founder, many communities are seeing a rise in unclaimed bodies and funerals for indigent people.

The trend has been seen "everywhere," says Jacqueline Byers, director of research and outreach for the National Association of Counties.

"The reality is, it's gotten worse," she says.

Many coroner's offices report increases in the number of unclaimed bodies, according to a survey of members of the National Association of Medical Examiners. A little more than half of nearly 50 respondents cited an increase, according to the association's data.

Johnnetta Moore, administrator for the indigent burial program in Jacksonville, says the economy is to blame for an upswing in cremations of indigent people this spring.

"We've all seen an increase," she says of hers and other indigent burial programs in Florida.

The city cremated 306 indigent people this fiscal year through July, with two months yet to go. That number is up from a total 297 and 241 in the previous two years.

Nevada's Clark County has recorded a nearly 11% increase in indigent burials and cremations over the previous fiscal year, according to public information officer Dan Kulin.

Increasingly, counties are turning to cremations as a more affordable option than burials, Byers says, as fiscal hardships continue for state and local governments.

"It's hitting everybody at the wrong time," Byers says.

Even families who don't qualify for indigent assistance programs are looking to spend less for burial costs.

Many families are looking for ways to reduce funeral expenses, says James Olson, a spokesman for the National Funeral Directors Association and a funeral director in Sheboygan, Wis. "We've certainly seen that families don't have the funds available" and more often are opting for less expensive funeral options.

"This is the worst that I've seen, and I've been doing this kind of work since the late '60s," said Walter Hofman, coroner for Montgomery County, Pa.

Questions and answers about the crisis in Greece

Its economy is smaller than that of many U.S. states. It's better known for olive oil and souvlaki than high finance. It last strode global affairs 2,400 years ago, when men wore togas.

Yet everyone is suddenly worried about Greece.

Stocks have whipsawed on signals that the country will or will not default on its debt. Economists are adjusting their estimates for economic growth in Europe and the U.S. based on what happens by the Mediterranean Sea.

The fear is that if Greece defaults, it could plunge Europe into recession and set off a cascade of mistrust and selling akin to what happened during the financial crisis in 2008.

How likely is that? No one is sure. Greece says it won't default, and Germany and France have pledged support. But the news keeps getting worse, and amid the confusion and uncertainty, investors are frightened.

Here are some questions and answers to cut through the swirl of figures and rumors and, perhaps, better assess the risks:

Q: What's a default?

A country is considered in default when it stops paying principal and interest to its lenders. For Greece, those lenders include European banks that own its national bonds. If Greece defaults, the banks would have to absorb big losses. That would make it more difficult for them to loan money, and that could push Europe, already weak, into a deep recession.

Q: What's being done to make sure it doesn't happen?

A: Bailouts and more bailouts. Last year, other European nations and the International Monetary Fund agreed to lend Greece 110 billion euros, or about $150 billion. A second aid package hammered out in July would help Greece avoid having to ask jittery bond investors for more money. But the bailout needs approval from 17 European legislatures, and that is not assured. German voters, in particular, are wary of sending more money to their free-spending neighbor.

On Thursday, the European Central Bank, the U.S. Federal Reserve and three other national central banks announced they would supply European banks with unlimited three-month loans.

Q: How did Greece get into this mess?

The government spent too much, didn't collect enough in taxes and had to sell lots of bonds to make up the difference. For most of the past decade, Greece has run up budget deficits well beyond limits set by the European Union, a group of 27 nations that allow goods and workers to cross their borders freely.

When Greece fell into recession two years ago, bondholders worried they wouldn't get their money back. To make sure they do, the EU is lending money to Greece, essentially allowing it to use new debt to pay off old debt.

Keeping Greece afloat will be tough. Like a loan officer at the bank who checks your salary and what you owe before deciding how much to lend to you, bond investors and other lenders to governments like to look at how much a country makes each year. And Greece looks like a bad bet. Its publicly held debt is more than 140 percent of its annual economic output, or gross domestic product. U.S. debt is 67 percent.

Q: What can Greece do about it?

A: Governments, unlike companies, have an easy way to raise money to pay their creditors: taxes. Greece announced a temporary property tax Sunday. Unfortunately, Greece's economy is shrinking faster than previously estimated, and new taxes won't bring in much more money if the people and businesses paying them are making less money themselves.

Investors are so nervous about Greek finances that they are demanding more than 100 percent interest to lend money to Greece for one year.

Q: Why should I care if such a small country can't pay its bills?

A: Greece is a tiny player in Europe. It has a $305 billion economy, about the size of Maryland's and 2 percent of the whole EU's. And if it does default, it will have plenty of company. In the past 30 years, 20 European and Latin American countries have stiffed their creditors, some repeatedly. The list includes Turkey in 1982, Mexico in 1994, Russia in 1998 and Argentina in 2001.

But Greece shares a currency, the euro, with 16 countries. "It's not just a country floating out there that happens to default," says Steve H. Hanke, an economist at Johns Hopkins University. "The whole monetary union gets thrown into doubt."

Most important: If Greece defaults, investors will worry that two much larger EU members, Italy and Spain, might follow. And whether a default happens or not, just the fear of it could lead investors to sell a country's bonds, which would drive up their yields, or what that country has to pay to get investors to buy them. Countries need to sell bonds to finance their budget deficits or to pay off old bonds that are maturing. If they have to pay higher yields, it just makes the financial mess they're in worse.

Q: But China, India and Brazil are supposed to be the new economic engines of world growth. Doesn't Europe matter less now?

A: Those economies may be growing fast, but they're still not as big as the EU, which together accounts for 20 percent of the world economy. China, the second largest national economy in the world, accounts for less than 10 percent.

Q: How does all this affect the United States?

A: For the U.S., a European recession would come at an especially bad time. Europe buys about 20 percent of U.S. exports. And exports have been a big driver of U.S. economic growth recently. With the U.S. slowing, it can't afford a downturn in such a crucial market.

Q: What about the euro? Does having a common currency help or hurt Greece's chances?

A: On balance, it's helping. One reason Greece is getting so much help from its neighbors is that their fates are tied to the euro, too. In exchange for the first bailout, last year, Greece agreed to spending cuts and other fiscal reforms. But it hasn't held up its side of the deal, and it is running out of money again.

But the euro hurts Greece, too. If Greece still had its old currency, the drachma, it would be plummeting in value now as investors pulled money out of the country. But that would also make it easier for Greece to sell goods abroad because they would cost less for foreigners in their stronger currencies. A surge in exports would help Greece grow again.

Q: Is fear of a repeat of the global financial crisis in the fall of 2008 making European troubles seem worse than they are?

A: Maybe. What happened then was frightening, but rare. Like a body suddenly short of oxygen, the economy suffered because banks stopped making short-term loans to each other. If banks can't get loans, they can't lend to companies, and if companies don't have money to do business, they can't buy supplies or pay workers. International trade can stop. That's why some people thought not just stocks but capitalism itself could collapse.

Banks can't just use cash from depositors to loan out to companies. The deposits are a small fraction of what banks need to lend.

Three years after the crisis, investors are worried whether banks can get short-term loans again. U.S. lenders don't want to give money to European banks, and those banks are wary of lending to each other, too. So some have had to turn to the European Central Bank for cash.

"We're talking technical plumbing issues," says Johns Hopkins' Hanke. "But beyond that, it's a confidence thing. If everyone gets afraid, no one will spend."

Q: Aren't banks in better shape than they were during the financial crisis?

A: Generally, yes. But the threats to American banks keep changing. Earlier this month, for instance, the U.S. government sued banks for selling bad mortgage securities to U.S.-controlled housing agencies. It's unclear how much the banks might have to pay. A hit from Europe would come at a bad time.

"Our financial system is still very frail," says Kenneth Rogoff, an economist at Harvard University. Bank stocks are nearing their levels during the financial crisis. "They're not in a position to take big losses."

The good news is that U.S. banks hold much less in Greek government bonds than European banks do. But the financial crisis showed that danger can lurk in unexpected places. For instance, banks have sold investors a type of insurance policy known as a credit default swap that will trigger billions of dollars of payouts if Greece defaults. They've also used the swaps to wager billions of dollars more that Ireland, Portugal and Spain will keep paying their bonds, too.

The use of these swaps has fallen a lot since the financial crisis, so losses may not amount to much. But in a complex and interconnected financial system, it's difficult to assess the bets riding on Europe and who made them. And that uncertainty means investors are prone to sell first and ask questions later.

The Deep Value Play In Reinsurance Stocks: ALL, BRK.B, KIE, MRH, PIC, PRE, RE, RGA, RNR, WTM

Insuring oneself from disaster is financially prudent, whether you're a corporation or individual. To that end, the global insurance market has grown to be a $4.3 trillion dollar industry. Analysts expect that growth to continue, reaching over $5 trillion by 2014. However, one question does remain; who insures the insurers? Providing that backstop is a specialized group of reinsurance firms. When catastrophes strike, it's up to these companies to protect the losses of the better-known primary insurers like Allstate (NYSE:ALL). With the recent earthquake/tsunami disasters in Asia, robust damage from hurricane Irene in the Northeast and the tornado damage affecting the Midwest, the reinsurance sector has seen their stock prices plummet. In spite of the losses, the reinsurers could be one of the better "deep values" in today's market. Investors may want to take notice.

Looking Past the Storm Clouds
Despite the recent losses for the reinsurers, many analysts now think the sector could be a 'buy' going into the final quarter of the year. Currently, firms in the sector are trading at 85 to 90% of their book value. This is well below the historical long-term average of 120 to 130%. The industry is also seeing rising rates for catastrophe insurance. After 15 months of events such as 2010's Chilean earthquake and 2011's Japanese tsunami disaster, the industry has finally been able to significantly raise rates. Already in Asia, rates for large property reinsurance policies have risen nearly 60% since March. Analysts estimate that 2012 renewal rates for both Europe and North America will see large increases as well.

The sector is also benefiting from strong capital positions and conservative investments. Reinsurers within the Aon Benfield Aggregate (ABA) index, report total capital reserves of $242.4 billion as of June. Despite the robust climate for disasters over the last year or so, total reserve capital only fell by 1.7% since 2010. Analysts at Standard and Poor's said it would take a natural disaster that erodes 5 to 10% of reserve capital of the whole sector, before it would change its stable rating. Similarly, rating agency Fitch estimates that it would take a further $75 billion in insured losses over the next 24 months to cause concern in the sector.

Finally, the sector could be seeing increased sales in the next few months. Europe's massive financial regulatory overhaul (called Basel II) will require more companies to purchase additional reinsurance policies. This ultimately will enhance returns that reinsurers generate when they invest premiums, despite the low investment yield environment.

Reinsuring a Portfolio
With the reinsurance sector trading at historically low levels, now could be good time for investors to add to the sector. Funds like the SPDR KBW Insurance (NYSE:KIE) or the PowerShares Dynamic Insurance (NYSE:PIC) allow investors to bet on wide swath of the insurance industry. However, there are plenty of individual picks for those wanting more reinsurance focus.

Hurricane Irene left an estimated $7 billion to $13 billion of damage in its wake, far less than the initial predictions. To that end, the trio of Everest Re Group (NYSERE), RenaissanceRe (NYSE:RNR) and PartnerRe (NYSE:PRE) have the greatest sensitivity to hurricane season and could be good buys on the news.

Despite its recent losses due to the Midwest tornados, Montpelier Re (NYSE:MRH) could make an interesting buy. The company is undergoing a transformation by shedding its mono-line property catastrophe reinsurer yoke and moving towards a more diversified global reinsurer. Montpelier also remains focused on returning value to shareholders through share buybacks and dividends. Shares of the company yield 2.5%.

Finally, for those who want more safety from their reinsurance investments, there's everyone's favorite value investor, Warren Buffett. Via Berkshire Hathaway (NYSE:BRK.B), Buffett is one of the world's biggest reinsurers. Similarly, White Mountains (NYSE:WTM) boasts a variety of reinsurance lines among its operating subsidiaries.

The Bottom Line
In the wake of an unprecedented year of natural disasters, the reinsurance sector has seen many of their share prices plummet. However, due to this decline many stocks within the sector - like Reinsurance Group of America (NYSE:RGA) - are now trading at historic lows relative to book value. For investors, the time may be right to pounce on the values.

The Raids Continue and the Banking Cartel facing a Brick Wall/French banks downgraded

The world is now realizing that manipulation and control of the gold and silver price is mandatory by the bankers. I am afraid that they will continue to bash gold and silver until Greece implodes.
Many are starting to question the obliteration of free markets.

The price of gold was hit early in the session but rebounded nicely before comex closing time. Gold finished the comex session at $1823.50 for a loss of $3.30 and silver finished at $40.47 for a loss of 66 cents.
The world continues to burn as Moody's has just downgraded two of the major French banks (discussed below). It seems that nobody is allowed to default as one default will bring everyone down.

Let us head over to the gold comex and assess today's damage.

The total gold comex open interest fell by 5003 contracts despite the fine showing by gold yesterday.
I guess a few bankers covered their shorts as they did not like witnessing the turmoil the world is facing. The front options expiry month of September saw its OI fall from 292 to 95 for a loss of 197 contracts. We had 214 deliveries yesterday so the entire loss in OI was due to those deliveries and we still have an increase in gold ounces standing. The October front delivery month in gold hardly budged falling from 33,207 to 32,606 with a little over 2 weeks before first day notice. The big December contract saw its OI fall from 344,222 to 338,916 and it was here that the bankers lighted up on their shorts. The estimated volume today was quite good at 164,971. The confirmed volume yesterday was also pretty good at 198,669

The total silver comex continues to trade in a narrow open interest channel. Today we got a reading of 112,726 for a loss of 390 contracts with a rising silver price yesterday. The bankers are starting to realize that they are banging their heads against a brick silver wall. It seems that nobody wishes to vacate their longs.
The big December contract saw its OI fall by 600 contracts from 76,447 to 75,890 as some bankers thought the arena was too steamy for them. The estimated volume today was very very light at 35,186.

The confirmed volume yesterday was also light at 40,064. (more)