5 Reasons House Prices May Never Recover

House prices will eventually stop falling, probably in about two years. But will they ever recover to the levels we saw during the heights of boom? In some areas, prices might climb that high again. But for most markets, such a recovery will probably never happen, and would take decades it were to occur.

In an essay published today, Charles Hugh Smith explains that the bubble vaulations are probably never coming back.

1. Once the bubble in an asset class pops, it never reflates. "It is simply a truism that bubbles never reflate, ever. Tulip bulb valuations did not rise to stratospheric heights after the Tulip Craze popped, and the Nasdaq dot-com bubble did not reinflate, either, for the very good reason that bubbles are never based on rational valuations--they are based on the psychological state of mania which cannot be reinstated once lost," Smith writes. (more)
   

Buy the Dip: Silver's on Sale!

Silver Stock Report

by Jason Hommel, April 14th, 2009

Let's review the fundamentals of gold and silver.

The world gold mines produces 2500 tonnes per year, which is about 80 million ounces. With gold at $867, that's $69 billion worth of gold mined each year. That's a tiny market in the scale of world finance, where the USA has $14,000 billion in the US banking system at risk, and has added $11,000 billion of commitments in bail outs, and continues to issue $800 billion bail outs with increasing regularity, with a total budget exceeding $3000 billion, and a budget deficit approaching $1500 billion.

http://en.wikipedia.org/wiki/United_States_federal_budget

The silver market is a lot smaller. Way smaller than the $69 billion in gold produced. World silver mines produce about 600 million ounces, at $11.88/oz. is $7.1 billion. Unlike with gold, where 95% of demand is for investment purposes, most silver has industrial applications, and there is little relative investment demand. Investment demand in silver is about 10-25% of the market, perhaps headed towards about 150 million ounces per year now, rapidly increasing in 2008, and in 2009 now. 150 million oz of silver, at $11.88 = $1.7 billion market.

Gold Eagle production is 710,000 oz., while Silver Eagle production was about 20 million ounces for 2008. The silver Eagle market is thus only a $237 million market, extremely tiny in the scale of world finance. (more)

Faber Says S&P 500 May Rise to 1,000 on Bank Earnings

by Admin on 04/17/2009

The Standard & Poor’s 500 Index may rise 17 percent to 1,000 in the next three months as government spending boosts bank profits, investor Marc Faber said.

“You have essentially a government that gives financials free money at the expense of the taxpayer,” Faber said. “With this free money, they may actually have decent earnings in the near future.”

Banks in the S&P 500 are forecast to post an 86 percent drop in first-quarter earnings, according to analyst estimates compiled by Bloomberg. Profits are projected to fall 57 percent in the second quarter and 52 percent in the third before rebounding 277 percent in the year’s last three months. (more)

The Global State of Emergency Made Local: Live from Thailand

McAlvany Report

click here for audio

Traders, Not Investors, Fueling This Stock Rally: NYSE Chief

Friday April 17, 2009, 10:55 am EDT

Wall Street's stunning six-week rally has been fed more by traders looking to take advantage of quick swings in the market than investors with a long-term view, NYSE Euronext (NYSE:NYX - News) CEO Duncan Niederauer told CNBC.

Because of that, the rally likely is to run out of steam as low volume eventually comes back to the bite the market, he said.

"It feels to me we're in a trader's market and not an investor's market," Niederauer said in a live interview from the exchange floor.

Markets are likely to near their March lows after an upswing that has sent the major indexes more than 20 percent higher, he said. (more)

IMF predicts prolonged, deep global recession

The International Monetary Fund on Thursday forecast a prolonged, deep global recession, a "sluggish" recovery, and weak capital flows to emerging economies that would hammer eastern Europe.

"The current recession is likely to be unusually long and severe and the recovery sluggish," the IMF said in releasing two chapters from its twice-yearly World Economic Outlook (WEO).

The fund offered no timeline for a recovery from the first global recession in six decades.

The IMF also warned that "the decline in capital flows to emerging economies ... may be protracted, given the solvency problems facing advanced economy banks who provide significant financing to emerging economies." (more)

Business Week , April 27,2009

FREE PDF download