Saturday, June 9, 2012

2012 Will The World Economy Take The Greatest Plunge

Sheikh Imran Hosein - 2012 Will The World Economy Take The Greatest Plunge .Sheikh Imran Hossien Starts Speaking At 32 Minutes In our time, a barbaric superstition born in antiquity and nurtured through the ages by a semi-secret priesthood, has returned to plague us in the form of a political movement supported by great wealth and power in all great capitals of the world. Through the two methods used, revolution from below and the corruption of governments from above, it has come far towards success in a fantastic ambition of achieving world dominion, using these two instruments to incite nations against each other.

Imran Nazar Hosein is a leading International Islamic Philosopher, Scholar and author, specialising in world politics, economy, eschatology , modern socio-economic/political issues and expert on international affairs. He is best- selling author of Jerusalem in the Qur'an. Imran Nazar Hosein was born on the Caribbean island of Trinidad in 1942 to parents whose ancestors had migrated from India as indentured labourers. He studied Islam, Philosophy and International Relations at several universities and institutions of higher learning. Among them are al-Azhar University in Cairo, Egypt, the Institute of International Relations of the University of the West Indies in Trinidad, the University of Karachi in Pakistan, the Aleemiyah Institute of Islamic Studies in Karachi, Pakistan, and the Graduate Institute of International Studies in Geneva, Switzerland.

Eric Sprott: Gold Alert (June 8, 2012)

There have been key devel­op­ments in the phys­i­cal gold mar­ket over the last few weeks which we feel are worth highlighting:

1) The Chi­nese gold imports from Hong Kong in April, 2012 surged almost 1300% on a YoY basis. Total gross imports for the month of April were 103.6 tonnes and the net imports were 66.3 tonnes1. It is not the data for April alone which has caught our eye. There has been a stun­ning increase of gold imports through Hong Kong for export into China over the past 2 years. Between May 2010 and April 2011, China imported a net 66 tonnes of phys­i­cal gold through Hong Kong. Between May 2011 and April 2012, that num­ber jumped to 489 tonnes. This rep­re­sents an increase of 640%.


Source: Cen­sus and Sta­tis­tics Depart­ment of Hong Kong

2) Cen­tral banks from around the world bought over 70 tonnes of gold in April, 2012. Data from the IMF showed devel­op­ing coun­tries such as the Philip­pines, Turkey, Mex­ico and Sri Lanka were sig­nif­i­cant buy­ers of gold as prices dipped2.

3) Iran pur­chased $1.2B worth of gold in April, 2012 through Turkey. As the devel­oped nations con­tinue devalu­ing their cur­rency at the expense of devel­op­ing nations, coun­tries such as Iran, China and Mex­ico are forced to look at alter­na­tive stores of value3.

4) After twenty years of lack­lus­ter returns and stag­nant bond yields, Japan­ese pen­sion funds have finally dis­cov­ered the value of invest­ing in gold. The $500M Okayama Metal and Machin­ery pen­sion fund placed 1.5% of its assets into gold bullion-backed ETFs in April in order to "escape sov­er­eign risk"4.

5) Bill Gross writes5, "Soar­ing debt/GDP ratios in pre­vi­ously sacro­sanct AAA coun­tries have made low cost fund­ing increas­ingly a func­tion of cen­tral banks as opposed to pri­vate mar­ket investors. Both the lower qual­ity and lower yields of pre­vi­ously sacro­sanct debt there­fore rep­re­sent a poten­tial break­ing point in our now 40-year-old global mon­e­tary sys­tem. […] As they (investors) ques­tion the value of much of the $200 tril­lion which com­prises our cur­rent sys­tem, they move mar­gin­ally else­where — to real assets such as land, gold and tan­gi­ble things, or to cash and a fig­u­ra­tive mat­tress where at least their money is read­ily acces­si­ble". Is the bond king rec­om­mend­ing gold? YES, YES YES!

6) The Gold Min­ing ETF, GDX, has seen strong inflows in the past 3 months. The num­ber of units out­stand­ing have increased from 162.5M6 to roughly 187M7 between March 1, 2012 and May 31, 2012. This rep­re­sents an increase in assets of almost $1.2B in a span of 3 months. It is worth point­ing out that for a major­ity of this three months period, GDX, and by exten­sion the gold min­ing com­pa­nies were expe­ri­enc­ing sig­nif­i­cant declines in their mar­ket values.

We believe there has been a mate­r­ial change in the gold invest­ing land­scape. The HUI, which is the Gold Bugs Index, is now up over 20% from its lows since May 16th, 2012. The slide in gold equi­ties seems to be sub­sid­ing as a foun­da­tion for a strong move upwards is set. New buy­ers, rep­re­sented by the Chi­nese, cen­tral banks, Japan­ese pen­sion funds and the Ira­ni­ans, bought almost 140 tonnes of gold in April alone. To put this into per­spec­tive, the annual gold pro­duc­tion is approx­i­mately 2600 tonnes8. China and Rus­sia pro­duce around 500 tonnes of gold annu­ally, which never makes it to the open mar­ket. This leaves about 2100 tonnes of gold pro­duc­tion annu­ally for the rest of the world.

When buy­ers rep­re­sent­ing 140 tonnes of new demand enter a mar­ket which only has 175 tonnes of monthly sup­ply, we are left won­der­ing about two things:

1) In a bal­anced mar­ket, where is the source of sup­ply to the new buy­ers going to come from?

2) How can a new buyer of size get into the gold mar­ket, which is already bal­anced, with­out sig­nif­i­cantly impact­ing the price of gold?

The answer is fairly obvi­ous. When demand out­strips sup­ply, prices move higher. These sig­nif­i­cant macro changes in the sup­ply­de­mand dynamic of the gold mar­ket should pro­pel the price of gold to new highs.

What the Bible can teach you about investing today

Ron Blue has an investment philosophy you don't hear very often these days. Specifically, the Founder and Managing Director of Kingdom Advisors says the old proverbs found in the Bible hold the keys to today's investment success.

Blue began reading and studying the bible only after becoming well-versed in the tenets of financial reporting as a Certified Public Accountant. What surprised him was the degree to which doing either effectively came down to the same basic rules. Blue recently came on Breakout to share some of these proverbs and how their meanings apply to investors of any faith.

1) Establish Written Financial Goals

"The plans of the diligent lead to profit as surely as haste leads to poverty." -Proverbs 21:5

Write down your end target then determine your steps towards getting there. A little bit at a time, all of the time, is a wiser plan than taken frantic all-or-nothing shots.

2) Save and Invest Before You Spend

"Put your outdoor work in order and get your fields ready; after that, build your house." -Proverbs 24:27

As Blue puts it, "don't spend in the short-term because you won't have it in the long-term."

3) Keep a Long Term Perspective

"Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?" -Luke 14:28

In other words, know what you need to set aside to reach your savings goals. Your time frame is going to vary depending what your personal goals. Saving for college may be a 15-year strategy while retirement planning could involve more than 40 years. The runs are different depending on the size of your intended tower.

4) Diversify Your Portfolio

"Divide your portion to seven, or even eight, for you do not know what misfortune may occur on the earth." -Ecclesiastes 11:2

Even when Ecclesiastes was written 2,500 years ago people needed to have diversification. Blue suggests not just a range of stocks but assets: some venture capital, stocks, bonds and real estate for example, though readers needs may vary. The goal isn't eliminating failures but anticipating them by having an assortment of investments.

5) Do Not Take on More Risk Than You Can Afford

"I have seen a grievous evil under the sun; wealth hoarded to the harm of its owners." -Ecclesiastes 5:13

If something sounds too good to be true, it probably is. Nobody knows where the stock market is going to go, says Blue. There is no free lunch. As Blue puts it, "You can't be guaranteed of returns, and if you're trying to get that you're probably taking more risk than you should."

London Trader – Staggering 515 Tons of Gold Sold in 4 Hours / by Eric King / June 8, 2012

With many global investors still rattled by the recent price action in gold and silver, today King World News interviewed the “London Trader” to get his take on these markets. The source told KWN that not only was a shocking amount of paper gold sold in just 4 hours yesterday, but it was also confirmed that the mainstream media is not reporting the staggering amount of physical gold that has actually been purchased by China recently. Here is what the source had to say: “China has purchased hundreds of tons of gold in the last couple of months. China is not disclosing what their true reserves are. Russia is delaying disclosure and so is Iran. We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.”

The London Trader continues:

“What we’ve seen is a dramatic acceleration of physical gold purchases as the price has been drawn down. Staggering amounts of physical gold are being purchased. The acceleration of physical purchases, at these lower levels, is the reason why gold has been holding firm and building such a nice base.

I want to be very clear about this, in addition to what is being reported by the mainstream media, we have seen hundreds of tons of additional physical gold being purchased by China over the last three months….


Europe's Currency Crisis: A Look at Possible Scenarios

by Tat­jana Michel, Direc­tor, Cur­rency Analy­sis, Schwab Cen­ter for Finan­cial Research

Key points

  • A Greek exit from the euro­zone has gone from "unthink­able" to a dis­tinct pos­si­bil­ity. Years of steep eco­nomic decline and unsus­tain­able pub­lic debt have increased the odds that the coun­try will once again default on its debt and pos­si­bly return to the drachma.
  • A Greek default/exit would present risks to the Euro­pean bank­ing sys­tem, could cause a severe down­turn in the Greek econ­omy and might trig­ger con­ta­gion that spreads to coun­tries like Spain, Ire­land and Portugal.
  • The Euro­pean Cen­tral Bank and other insti­tu­tions the­o­ret­i­cally have tools to lower con­ta­gion risk, but may lack the time and polit­i­cal will to use them.
  • Ulti­mately, the exit of one coun­try from the euro could lead to the exits of other coun­tries and a breakup of the euro as it's cur­rently known.
  • We sug­gest investors limit expo­sure to Euro­pean bond mar­kets and the euro, both of which are likely to expe­ri­ence more downside.

The May 6 elec­tions in Greece ousted the party that had nego­ti­ated and agreed to the bailout pack­age offered by the Euro­pean Cen­tral Bank (ECB), Inter­na­tional Mon­e­tary Fund (IMF) and Euro­pean Com­mis­sion (EC). This group, often referred to as the "troika," pro­vided bailout fund­ing to the Greek gov­ern­ment so that it could cover its debt pay­ments in exchange for a promise that the coun­try would bring its bud­get deficit and debt down by reduc­ing spend­ing and rais­ing taxes. Greek vot­ers have effec­tively rejected the agree­ment because of the neg­a­tive impact that spend­ing cuts have on their econ­omy, which is already in deep reces­sion. No party won a major­ity in par­lia­ment in the May elec­tions and a coali­tion could not be formed. There­fore, new elec­tions are sched­uled on June 17.

If the new gov­ern­ment insists on rene­go­ti­at­ing the terms of the cur­rent bailout plan, new talks with the troika will have to take place shortly after the elec­tion. If there is no agree­ment, the troika could decide to deny Greece its next chunk of bail-out money, which would likely lead to a default on Greece's sov­er­eign bonds.

Greece needs to form a new gov­ern­ment and reach an agree­ment with the troika before it runs out of money in July 2012. If they reach an agree­ment, Greece is likely to stay in the euro­zone but would need to stick to the new aus­ter­ity plan to con­tinue receiv­ing aid.

Greek opin­ion polls show elec­tions are wide open

Accord­ing to recent poll results, the June 17 elec­tions are wide open and could very well lead to a gov­ern­ment that meets Europe's terms for keep­ing Greece in the euro. How­ever, it could also put in power a coali­tion gov­ern­ment that's firmly against austerity—positioning Greece for an exit from the euro. (more)

Weak Technicals for Longer-Term Oil

Apart from all the chaos and confusion in the financial markets, one look at the ugly technical condition of the longer-term Crude Oil chart, and we have to wonder if the forces of economic contraction (deflation) are on the verge of becoming overwhelming, or overwhelming any ability of policymakers to do much about the situation?

Purely from a technical perspective, three aspects of the big picture chart analytics are VERY significant here: First, oil has violated its major support line off of the Dec 2008 low at $32.48, which cut across the price axis at $85.20. Second, my weekly momentum gauge confirms the lows, and third, prices are "threatening" to close the week right near the 6/04 low at $81.21, and beneath the aformentioned major support line, poised to press directly towards a test of the Oct.2011 low at $74.95.

What does this chart say about demand for oil, gasoline, the US consumer, and the US economy? Nothing good at the moment. ETF traders may want to keep an eye on the U.S. Oil Fund ETF (USO).

Financial Alert From International Banker-My Discussion With Him This Morning

June 7, 2012, Steve Quayle

SQ: What are you hearing on the cartel's breaking point on silver manipulation and when do you think it ends.

V's answer: As the Euro collapses whether this summer or fall, I think there will be a complete stop to silver and gold manipulation for the following reasons: 2 weeks is all that is needed for the Euro collapse to lay bare the dollar deception. At this point all (interest rate swaps) will cease, derivative swaps will implode and the truth of US dollar safe harbor will go up in flames.

When this occurs the ETF (paper markets) will reflect whatever the trading price is at point of market collapse. This price point level will be held as it would take a further 2 more weeks to liquidate all silver and gold in repository vaults. In other words, the insiders will receive their deliveries, Joe Investor (paper trader) will be told his physical SLV GLD are all lost.

Once chaos ensues and all ETF markets are shut you will see a price hyper shot of all physical silver and gold. See how this whole entire (market manipulation scheme) hinges on the Eurozone and how deeply important a Euro collapse is for the world in general. Western fractional reserve banking is finished. Look for manipulation end in 6 months.

SQ: What are you hearing on the Amero and what about the gold-backed Chinese Yuan?

V's answer: The Amero is dead in the water and China will back their Yuan with gold.

Weekly Commodity Update- A Turning Point

Energy: The first positive week in six weeks as Crude closed above $84/barrel after flirting with $80 all week. I think a base is being formed and we should start to see prices track north again into next week. $83 will need to hold on the downside and a settlement back over $86 should confirm an interim bottom. July RBOB held $2.65 but failed to get back above the 8 day MA on all attempts the last 3 sessions. I'd like to see that next week and then we should see a trade back near $2.90 in my opinion. Heating oil hung around the 50% retracement line on the weekly chart though we need to see progress higher next week. The further prices get above $2.63 the more comfortable I feel. If this week proves to be a turning point the first leg should lift prices to $2.85. Natural gas finished lower for the third week in a row as prices reversed mid-week. The 8 day MA serves as resistance in this market as well. If prices wander back near their April lows I may probe longs with clients...stay tuned.

Stock Indices: Just over a 50 point appreciation in the S&P and almost 500 points in the Dow on the week makes it a fairly positive showing. With a settlement back over the 20 day in the indices today my take is prices make their way to their 50 day MA; in the S&P at 1355 and in the Dow at 12770.

Metals: Gold ended the week down roughly $35/ounce but the weekly range was nearly $90 so trade small until things calm down. I like gaining long exposure in August under $1600/ounce. At this point I cannot rule out another challenge of $1530 so trade accordingly. Albeit tiny silver did close positive on the week for the fourth week running. As long as prices in July stay above $28/ounce I remain bullish. A settlement above $29.50 should lead to a trade closer to $32/ounce. I'm still looking for a dead cat bounce in copper but the last 48 hours action says otherwise. If $3.26 breaks in July look out idea of a bounce would be proven wrong.

Softs: September cocoa is having trouble getting thru the 50 day MA but I think we have more left in the tank. My take is prices still have further appreciation to come. The 100 day MA at 2300 would be my target on longs. Potential flag and pennant on the daily sugar chart. If prices can get above the down sloping trend line that has capped upside in sugar since March next week my prediction of a gain in sugar should become a reality. My target in July is a trade back over 21 cents. Cotton was positive this week for the first time in 8 weeks. Prices appear poised in the December contract to trade up to at least 77 cents. Coffee is ugly but until we get a bounce I'm just not interested.

Treasuries: 30-yr bonds traded lower all 5 sessions this week and 10-yr notes 4 out of 5...I cannot remember the last time that happened. The tide appears to be shifting and with a close below the 9 day MA for the last 3 sessions my take is traders should be scaling into bearish trade. Be willing to add to the position on a close below the 20 day MAs. In September 30-yr bonds that level is 147'30and in 10-yr notes at 133'00. My downside targets are 145'00 and 131'16 respectively.

Livestock: With three days of appreciation live cattle are approaching resistance from 2 weeks ago. If prices can get above those highs 122.00 in June should come into play. September feeder cattle should be on their way to their highs from 2 weeks ago and based on the slope I would not rule out a challenge of the March 1st highs. Aggressive traders could probe bearish trades in October lean hogs with stops above their recent highs. I think we see a 2.5-4% deprecation around the bend.

Grains: Corn is a buy as prices have put in an interim low and should see upside from here in my opinion. I prefer exposure in December contracts and could see a trade north of $6/bushel late this month into July. Traders can also work long into wheat but I would not give this trade as much room. If support gives way at $6.10 in July a challenge of the lows is likely so place stops just under that support level. This week's action erased three weeks of negative movement with soybeans up 5.5%. Aggressive traders can remain long if July stays above $13.80. I prefer soybean oil though as the risk to reward dynamic is more favorable. I think your looking at a 2:1 risk:reward.

Currencies: The first negative week in 6 weeks has the US dollar in the red. However the 20 day MA did hold the last two sessions. June will need to break 82.20 for extended downside. I do anticipate that so other crosses can be bought. My favored long remains the Loonie. As for bearish trade I think the Yen still fits that part. My target in the Yen is 1.2400 and in the Loonie at .9900.

Chart of the Day - Brookfield Infrastructure Partners (BIP)

The "Chart of the Day" is Brookfield Infrastructure Partners (BIP), which showed up on Thursday's Barchart "All-Time High" list. Brookfield Infrastructure on Thursday posted a new all-time high of $32.52 and closed up +1.21%. TrendSpotter has been long since April 27 at $31.92. Brookfield Infrastructure was last featured on "Chart of the Day" as of the close on January 4 of $28.58. In recent news on the stock, Brookfield Infrastructure on May 8 reported funds from operation of 58 cents, far above the consensus of 30 cents. BMO Capital on May 9 downgraded BIP to Market Perform from Outperform with a target of $33 due to valuation. Brookfield Infrastructure Partners, with a market cap of $4.2 billion, in an infrastructure REIT that owns and operates electricity transmission systems and timberlands in North and South America.