noworldsystem.com


Taxpayers to Pay Trillions for Fannie and Freddie Bailout

Fannie and Freddie Seized…Cost to Taxpayer: Over $1 Trillion

Contrarain Profits
September 8, 2008

Uncle Sam has finally taken over Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). Yesterday, the Bush administration placed the mortgage giants under a conservatorship, putting billions of dollars of taxpeyers’ money at risk in the process.

The Treasury says it will stump up $200 billion to back the companies in exchange for a 79.9% stake in each. The government is now the biggest player in the US mortgage market.

Don Rich warns that the government’s bailout spells trouble for anyone holding US dollars. A major issue is that the Congressional Budget Office’s estimation of the costs of the bailout is far too conservative…

This from last Thursday’s Daily Reckoning:

A recent study from the Congressional Budget Office (CBO) has zero credibility. It pegged likely taxpayer losses in the Fannie Mae and Freddie Mac bailouts at $25 billion. For those with a sense of history, it is worth remembering that the S&L bailout had a $160 billion price tag. The numbers diverge so far from reality as to be laugh-out-loud funny. Funny, that is, except that the CBO estimate demonstrates a willful disconnect with the actual consequences of federal government actions.

As demonstrated below, the real cost of the bailouts will easily exceed $1.3 trillion. In fact, the real cost is likely to range between $1.3 trillion to $1.6 trillion, and is not unlikely to reach $2.5 trillion.

Between 2001 and 2007, Fannie and Freddie purchased or guaranteed $700 billion of Alt-A and subprime loans. Given the default rates on these loans – and the fact that the price of the housing that is the ultimate security of the loans will, for reasons demonstrated below, fall by at least thirty percent – this alone implies a loss for Fannie and Freddie on the order of $210 billion.

Fannie and Freddie acknowledge already-impaired loans on the balance sheet of $19 billion, which they have used creative accounting to avoid deleting from the shareholder equity account. This means that Fannie and Freddie have a maximum of $64 billion in capital remaining.

Given the inevitable losses on the Alt-A/subprime portion of their portfolio, it must be the case that if the federal government, as it is doing, guarantees Fannie and Freddie’s solvency, the difference between the loss and the capital to be made up by the government (i.e., the taxpayers) must equal, not $25 billion but $147 billion.

That alone would mean that the CBO is blowing smoke with their estimated cost figures, and if you think back to the S&L cost of $160 billion, this is not a surprising result. The real picture is so much worse that it is pretty obvious the CBO is flat out inventing figures just to get the politicians through November.

It doesn’t take a genius to work out how the government is going to get its hands on such money: the Federal printing press…

I don’t know what those people in Washington are taking to sleep at night after all their electorally driven accounting and finance exercises, but I can tell you what they will be doing to keep the government open for business: printing a whole lot of money.

Chairman Bernanke has the discount window open to any collateralization not worth the paper it is written on, so in effect he has the helicopters ready to drop hundred-dollar bills over Wall Street – as he once famously described the ultimate policy instrument of a fiat-money system.

Of course, if he does that, we will have to change his nickname from Helicopter Ben to Hyperinflation Ben, which answers the question of who picks up the tab of bailing out Fannie and Freddie: anyone owning dollars.

Produce a lot of something, and it becomes worth less. And given the losses at Fannie and Freddie, the taxpayer guarantee, and the ongoing initiation of Boomer retirement, only the inflation tax will work to pay for keeping Fannie and Freddie afloat.

Like it or not, we are about to enter interesting times, and it is too bad our supposed professional civil servants at the Congressional Budget Office have failed to tell the emperor the truth: that he is buck-naked bankrupt and getting ready to take a lot of people with him.

P.S Don Rich is an instructor of economics, finance, and political science at Montgomery County Community College in Blue Bell, PA. He also teaches economics, government, and history at Delaware County Community College in Exton, PA. You can leave comments for Don on the mises.org blog.

 

Greenspan: U.S Economy in ’once-in-a-century’ financial crisis

http://www.youtube.com/watch?v=-t6dLePtyXQ

 

U.S. Is “More Communist than China”: Jim Rogers

CNBC
September 15, 2008

The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is “more communist than China right now” but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday.

“America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it’s just bailing out financial institutions,” Rogers said.

Stock markets jumped after the U.S. government’s decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence.

But Rogers said in the long term the move spelled trouble.

“This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I’m not quite sure why I or anybody else should be paying for this,” Rogers told “Squawk Box Europe.”

Read Full Article Here

 

Soros Compares Mishandling Of Current Crisis To Great Depression

Paul Joseph Watson
Prison Planet
September 17, 2008

Billionaire investor George Soros has slammed US Treasury Secretary Hank Paulson for behaving in the same manner as bankers in the 1930’s and mishandling a financial crisis that threatens a repeat of the Great Depression.

Soros told BBC Newsnight that the world was merely at the beginning of a financial storm and warned, “We mustn’t allow the financial system to collapse as it did in the 1930s.”

Referring to Hank Paulson, the US Treasury Secretary, Soros stated, “The way Paulson is handling the situation is reminiscent of the way the bankers handled it in the 1930s.”

He added: “The financial system has gone overboard and the financial engineering has grown to big, it takes up too big a share in the world’s resources.”

“Now it is shrinking. When it becomes regulated it will be less profitable than the last 25 years.”

Soros, a former member of the Board of Directors of the Council on Foreign Relations, is ranked by Forbes as the 99th richest person in the world with a net worth of around $9 billion.

Ironically, Soros made his name by reaping the dividends of another financial meltdown when he “broke the Bank of England” by short-selling the pound sterling before the currency dropped out of the European Exchange Rate Mechanism in 1992, landing Soros a profit of around $1.1 billion.

In 2006, the highest court in France upheld a conviction that Soros had practiced insider trading when he bought shares in French bank Société Générale after discovering that the bank was on the verge of a takeover.

Soros has repeatedly predicted fiscal armageddon, writing three books about a “superbubble” that is on the verge of collapse.

In response to those accusing him of crying wolf in an effort to panic financial markets and benefit from the fallout, Soros stated, “I have a record of crying wolf…. I did it first in The Alchemy of Finance (in 1987), then in The Crisis of Global Capitalism (in 1998) and now in this book (2008’s The New Paradigm for Financial Markets). So it’s three books predicting disaster. (After) the boy cried wolf three times . . . the wolf really came.”

Respondents to a Daily Mail article about Soros’ comments accused the financier of engaging in wanton hypocrisy.

“I don’t know why on Earth they interview Soros since he has been proven again and again to deliberately spread financial rumour for his own exploitation and gain,” wrote one, “Soros became a multi multi billionaire precisely through manipulating markets like this – if this man says that we are heading for a 1930’s style crash you can guarantee he already has plans to profit from it.”

Recent News:

China paper urges new currency order after “financial tsunami”
http://www.reuters.com/article/ousiv/idUSPEK4365020080917?sp=true

US authorities have now spent $900 billion to prop up the financial system
http://www.swissinfo.ch/eng/..d=9736054&cKey=1221686585000&ty=ti

Central banks pump £100bn into money markets
http://www.telegraph.co.uk/money/m..2008/09/17/cncentral117.xml

Treasury announces debt auctions for Fed
http://ap.google.com/article/ALeqM5jnS9Vm..m4iAD938I1A80

Fed Pumps $70B Into Financial System
http://news.yahoo.com/s/ap/20080916/ap_on_bi_ge/fed_credit_..E44U6Xfx.Fe7GUOQ.D1v24cA

Run On The Bank? Americans Could Lose Their Deposits
http://www.prisonplanet.com/run-on-the-bank-americans-could-lose-their-deposits.html

Merrill Lynch seals future with Bank of America deal
http://business.timesonline.co.uk/tol/bu.._finance/article4755438.ece

Rogers: Dollar To Lose World Reserve Status
http://www.prisonplanet.com/rogers-dollar-to-lose-world-reserve-status.html

Paulson: Congress Has No Authority Here
http://bigpicture.typepad.com/comments/2008/09/paulson-congres.html

Goldman profit plunges 70 pct amid market slump
http://news.yahoo.com/s/nm/20080916/bs_nm/goldmansachs_dc

August home starts seen at lowest level in 17 years
http://www.reuters.com/article/newsOne/idUSN1638353220080917

Russia halts trading after 17.5% share price fall
http://money.cnn.com/news/newsfeeds/articles..ORTUNE5.htm

Dow closed down 450
http://news.yahoo.com/s/ap/20..er=1;_ylt=Al5VvbZImvYKFj5hEtFaLktv24cA

Is Britain Heading For Worst Recession Since 1929?
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/15/bcnrecession115.xml

Washington Mutual Tumbles 30%
http://news.yaho..CZ6k2k2Rd38VKPgv6b.HQA

Now fear stalks British banks
Inflation rises to 4.7% and FTSE plunges ANOTHER 90 points as global markets tumble in wake of Meltdown Monday
Bush Claims Economy Can Weather Storm
Bailouts Will Push U.S. Into Depression

U.S. Economic Collapse News Archive

 



Fed Auctions Another $25 Billion To Banks

Fed Auctions Another $25 Billion To Banks

AP
August 12, 2008

The Federal Reserve has auctioned another $25 billion in loans to the nation’s banks and given them more time to pay the money back in an effort to combat a serious credit squeeze.

The Fed announced Tuesday that the money would be loaned at a rate of 2.754 percent. In the latest auction, the Fed offered the loans for an extended period of 84 days, rather than the 28-day period for the previous loans.

 



Fed Pumps Another $50 billion Into Banking System

Fed Pumps Another $50 billion Into Banking System

AP
April 8, 2008

The Federal Reserve, still working to combat the effects of a severe credit squeeze, said Tuesday that it had auctioned another $50 billion to cash-strapped banks.

Separately, some Fed officials said they were concerned about a “prolonged and severe” economic downturn when they cut interest rates last month.

The Fed auction marked the ninth in a series that began in December that so far have pumped $310 billion in short-term loans into the nation’s banking system.

Read Full Article Here

 

Bernanke: “Recession Is Possible”

Reuters

April 4, 2008

For the second time this week, a senior Federal Reserve official conceded the United States economy could slip into recession, but suggested the central bank should wait to see if more rate cuts are needed.

“The economy has all but stalled and could contract over the first half of the year,” San Francisco Federal Reserve President Janet Yellen, who is not a voter on the policy-setting committee in 2008, said on Thursday.

“Current indicators suggest that, starting in the fourth quarter, the economy, at best, slowed to a crawl,” she said, adding later that the Fed is still battling a “negative feedback loop” of tight credit conditions, falling house prices and low consumer confidence.

Yellen’s remarks, in a speech to the Stanford Institute for Economic Policy Research, echoed those from Fed Chairman Ben Bernanke during testimony to a Congressional Joint Economic Committee on Wednesday.

“Recession is possible,” Bernanke said. “There’s a chance that for the first half as a whole, there might be a slight contraction.”

But, like Bernanke, Yellen declined to point the way toward additional interest rate cuts to pull the economy out of its malaise.

Instead, she forecast a minor pickup in growth in the second half on the back of rate cuts already in the pipeline, and “timely” fiscal stimulus checks — even though the drag from falling house prices will linger into 2009.

Read Full Article Here

 

Fed rate cut plans up on weak jobs

Ros Krasny

Reuters
April 4, 2008

U.S. short-term interest rate futures rose on Friday on news that U.S. firms cut payrolls for a third consecutive month, as dealers raised bets that the Federal Reserve will make an aggressive interest rate cut this month and beyond.

The implied prospects for the Fed to cut its benchmark lending rate by 50 basis points at the April 29-30 policy meeting hit 40 percent against 20 percent late on Thursday.

A smaller, 25 basis point rate cut from the Federal Open Market Committee, which would take the fed funds rate to 2 percent, is fully priced.

Read Full Article Here

 

More than 50 percent chance of U.S. recession: Greenspan

Sonya Dowsett
Reuters
April 6, 2008

There is more than a 50 percent chance the United States could go into recession, former Federal Reserve chairman Alan Greenspan told El Pais newspaper in an interview published on Sunday.

However, the U.S. has not yet entered recessionary state marked by sharp falls in orders, strong rises in unemployment and intensive weakening of the economy, he said.

“We would have to see signs of this intensification: there are some, but not many yet,” he said. “Therefore … I would not describe the situation we are in as a recession, although the chances that we’ll have one are more than 50 percent.”

Read Full Article Here

Recent News:

Wall Street brokerages borrowing $38.1 billion a day from Federal Reserve
http://www.reuters.com/articl..wsAndPR/idUSL0539983320080405

Paulson Unveils 218 Page Bank Regulation Plan
http://www.telegraph.co.uk/money/m..8/04/01/cnusbanks101.xml

Huge Job Losses Set Off Recession Alarms
http://news.yahoo.com/s/ap/20080405/ap_on_bi_go_ec_fi/economy

81 percent of Americans think country on “wrong track”
http://www.reuters.com/article/newsOne/idUSN0348141520080404

Karl Rove Claims The Economy Is Only ‘Apparently Struggling’
http://thinkprogress.org/2008/04/02/rove-economy-struggling/

IMF gives gloomy economic outlook
http://www.reuters.com/article/ousiv/idUSL0553300520080405

Fed’s interest rate games could destroy the dollar
http://www.detnews.com/apps/pb..PINION01/804040313/1008

Carlyle Group’s Plan to Takeover the Banking System
http://www.economicanalyticsgroup.co..oups-plan-to-take-over.html

Bankrupticies Up 27%
http://money.cnn.com/2008/04/02..dex.htm?postversion=2008040212

BOE’s King Might Be Sleepwalking Into Recession
http://www.bloomberg.com/apps/news?..mnist_lynn&sid=aD237XXZ.Hok

IMF Says U.S. In Worst Economic Crisis Since Great Depression
http://prisonplanet.com/articles/april2008/040208_great_depression.htm

Federal Reserve Staff Moves Into Monitor Banks
http://business.timesonline.co.uk/tol/business/industr..ce/article3678053.ece

The Federal Reserve is a Private Financial Institution
http://www.globalresearch.ca/index.php?context=va&aid=8518

Banks Swamped By Foreclosures
Senate Sets Urgent Push For Housing Compromise
Bernanke Meets With House GOP On Economy
Bernanke Faces Scrutiny in Congress Over Bear Stearns Buyout
Fed Official Urges Tighter Wall Street Regulation
Ron Paul On Money Inflation & Government
Radical action to fight credit crisis discussed

U.S. Economic Collapse News Archive

 



Why Silver Cannot Lose

Why Silver Cannot Lose

Robert Kiyosaki
August 20, 2007

I believe the biggest opportunity today is in silver. I think this precious metal is about to become the most spectacular investment in recent history — bigger than oil, even bigger than Google.

Let me give you some reasons why:

Silver is a consumable industrial commodity.

It’s used in computers, cells phones, and electrical relays. This means that as countries like China, India, and Vietnam, and regions like Eastern Europe, become more modernized, the demand for silver will increase.

Silver is also applied in medicine. One little-known use is as a bactericide, a role silver has filled throughout history. Today, medical devices such as catheters and stethoscopes use silver, and every hospital in the western world uses silver sulfadiazine to prevent infections.

Silver is scarcer than gold.

Gold is hoarded. It’s estimated that 95 percent of all gold ever mined is still around. The exact opposite is true of silver: An estimated 95 percent of all silver ever mined has been consumed.

Forty-five percent of all silver mined is burned up in industrial uses. Jewelry accounts for 28 percent, and 20 percent has been consumed in photography. Only 5 percent is in coins.

Silver supplies are down.

In 1900, it was estimated that the world had 12 billion ounces of silver. By 1990 it had dropped to 2.2 billion ounces. By 2007, the supply was down to 300 million ounces.

Some of the more pessimistic forecasts estimate that the world will be out of silver in about 10 years. This could be catastrophic to the world economy. In 10 years, silver might have as much of an impact on the world economy as $200-a-barrel oil.

 

Strange Silver Price Gyrations and Shortage

Edgar Steele
Rense
March 23, 2008

It’s just like pro rasslin’, maw. He’s up … he’s down … he’s been thrown completely out of the ring and landed in the laps of New York’s governor and his … is that his wife? What’s this? Silver is down yet another dollar-something today, after being down over a buck and a half yesterday? So, the stock market must be up a gazillion points, eh? Nope.

Then, the dollar – they must have struck the world’s biggest gusher on the White House lawn? Nope. But the dollar is up – way up. Will it stay up? Nope.

This is a simple takedown, folks. Artificial manipulation by the big boys, designed to force out what they dismiss as “weak hands” holding silver. Well, don’t pay attention. We’re in this for the long haul. In fact, if yesterday was such a great time to buy more silver, then today must be an even better day, right? That’s absolutely correct! Go the head of the line and really load ’em up this time!

Aggravating this correction in the price of silver is the exit from paper silver of those who have gotten too nervous by this manipulated and phony downtake.

My pal the chart freak says that this is a standard Fibonacci retracement from a base price of $9.85. Meaning that those who bought in on paper (ETFs and futures) at around $9 or $10 now finally are selling and counting themselves lucky to have the profits they just booked. Standard stuff, he says, while silver consolidates and builds a new base in this area, preparatory to heading higher…much higher. And soon, at that.

One day soon, paper silver will be shown to be the fraud that it is when sellers are unable to deliver the physical that somebody bought. Then physical will rule. That is when the moon shot comes. And, to be on board, you have to be holding the real thing, physically…in your hands.

Meanwhile, local dealers have jacked their margin up from .50 an ounce to .85 and higher. APMEX pushed theirs up 9 cents yesterday and today, you can’t even buy anything from them except 100-oz bars, “generic” .999 silver and junk coins.

So, nobody wants silver so badly that its price takes a $3 nosedive in the course of about 24 hours. On the other hand, just try to find some to buy. When you do, the dealer is jacking up the price. Nobody wants silver so badly, you can’t buy any! Go figure. And go buy some, while you are at it.

Right now. This minute. Don’t ask why. Don’t ask what. Don’t ask when. Just do it.

Silver Shortage: 19 dealers reported “Sold Out”
http://news.silverseek.com/GoldIsMoney/1205995646.php

 



Gold Regains $954, Oil $108, Euro $1.58

Update: Gold Regains $954, Oil $108, Euro $1.58

AP
March 27, 2008

Gold prices edged slightly lower Thursday after the dollar gained against the euro, leading investors to sell the precious metal traditionally viewed as a haven against inflation.Other commodities traded mixed, with crude oil briefly rising above $108 a barrel and wheat and soybean futures retreating.

The dollar strengthened against the euro after the U.S. Commerce Department reported that the economy grew slightly in the fourth quarter. The euro bought $1.5766 in Thursday trading, down from $1.5815 in New York late Wednesday.

A stronger greenback often encourages investors to sell hard assets like gold and silver, which are seen as hedge investments during times of economic uncertainty and rising inflation. A stronger dollar also makes dollar-denominated commodities seem more expensive to overseas buyers.

Gold for April delivery inched 40 cents lower to settle $944.20 an ounce on the New York Mercantile Exchange, after earlier trading as low as $940.

“Gold seems to be following the euro,” said Scott Meyers, analyst with Pioneer Futures in New York. “I think it’s a brief pause in the upward trend but we have to keep an eye on the dollar.”

Other precious metals traded higher. Silver for May delivery rose 16.7 cents to settle at $18.55 an ounce on the Nymex, while May copper added 14.80 cents to settle at $3.873 a pound.

Gold had moved higher in the previous two sessions, breaking out of last week’s commodities slump that saw big drops in everything from corn to copper. Gold has gained 12 percent this year, driven up by U.S. interest rate cuts, record-high crude prices and nervousness about the economy. The metal reached a record 1,033.90 this month, and analysts say it could go even higher.

“We’re going to see sustained acceleration in the (gold) market,” Meyers said. “There’s enough nervousness about the dollar and I don’t know if there’s enough bullets in (Federal Reserve Chairman Ben) Bernanke’s gun to keep lowering rates.”

In energy markets, oil futures briefly rose above $108 a barrel after the bombing of a major oil pipeline in Iraq. Dow Jones Newswires reported that the attack cut off exports from the southern city of Basra, although oil officials said exports weren’t affected.

Light, sweet crude for May delivery added $1.68 to settle at $107.58 a barrel on the Nymex after earlier rising as high as $108.22.

Other energy futures traded mixed. April gasoline futures fell 2.66 cents to settle at $2.7163 a gallon, while April heating oil futures rose by 10.45 cents to settle at $3.1483 a gallon.

In agriculture markets, wheat prices fell after the dollar rebounded.

Wheat for May delivery dropped 19 cents to settle at $10.14 a bushel on the Chicago Board of Trade, after earlier falling as low as $10 a bushel.

Other agriculture futures traded mixed. Corn for May delivery added 3.25 cents to settle at $5.55 a bushel on the CBOT, while May soybean futures declined 24.75 cents to settle at $13.2725.

 

BlackRock says gold record high may be challenged

Reuters
March 26, 2008

http://youtube.com/watch?v=OvCVEsahhZo

Investment manager BlackRock expects tight gold supply and a gradual rising trend in the price which could lift the metal to new highs above the record $1,030 per ounce hit last week.

“We expect a gradually rising trend in the gold price and if that happens we will get to a new high. We are expecting that positive trend to continue, with volatility over the short term,” said fund manager Evy Hambro, who runs BlackRock’s $17 billion (8.5 billion pound) World Mining Fund and co-manages the $8.9-billion World Gold Fund.

Gold traded at $931.60 an ounce on Tuesday, well off a high of $1,030.80 hit on March 17.

“We think the replacement cost of gold today is much higher than where the market is right now,” Hambro said, adding that even if the price reached the desired level it would have to be sustained for gold companies to invest.

“Just because it reaches that number doesn’t mean it’s going to change anything. We’re not going to see all gold mining CEOs building new projects. The price needs to average that over a decent period of time for them to start investing shareholder capital into new production assets,” he said.

The Gold fund’s top three holdings as at the end of last month were Australia’s Newcrest Mining (NCM.AX: Quote, Profile, Research), Canada’s Barrick Gold (ABX.TO: Quote, Profile, Research) and Kinross Gold (K.TO: Quote, Profile, Research), which together accounted for over 22 percent of the fund.

“In the gold space we are very much in a situation where production will continue to likely decline. There are not enough new gold discoveries to replace the gold being mined,” Hambro said.

Recent News:

Bank Of England Won’t Follow Fed Rate Cuts
http://business.timesonline.co..economics/article3624591.ece

Wall Street To Shed 20,000 Jobs
http://www.telegraph.co.uk/money/..money/2008/03/26/bcnjobs126.xml

Paulson Says New Financial Rules Needed
http://news.yahoo.com/s/ap/20080326..4FpI27qGt34XERusSs0NUE

Next Stop $2000 Gold
http://seekingalpha.com/article/69710-next-stop-2-000-gold

Bush Actually Thinks Economy Will Get Stronger
http://www.reuters.com/article/politicsN..=RSS&feedName=politicsNews&rpc=22&sp=true

$5.40 Gasoline Spotted In California
http://www.nbc11.com/news/15701062/detail.html

Paulson: Social Security Unsustainable
http://www.breitbart.com/article.php?id=080325191211.f5erep3w&show_article=1

Banks Want You to Bail Them Out
http://www.ft.com/cms/s/0/a233faa2..0-000077b07658.html?nclick_check=1

Questions abound on Bear Stearns buyout
http://www.reuters.com/article/ousiv/idUSN1438930520080320

Goldman Sees $1.2 Trillion Global Credit Loss
Financial Destruction Of The Average Man
Food Stamp Use Hits All-Time High
Sterling falls as BoE highlights downside risk to pound
New Home Sales Fall To 13-Year Low
Hoarding by banks stokes fears on credit crisis
Gas Prices Skyrocket To All-Time High
Barrick Gold to invest up to $35m in Allied Gold
Chinese banks allowed to trade gold futures
Existing-Home Sales Rise, Prices Fall
Fed May Buy Mortgages Next
The four ‘new sheriffs’ of Wall Street

U.S. Economic Collapse News Archive

 



Ron Paul: Abolish The Fed

Abolish the Fed – Ron Paul on CNBC

http://www.youtube.com/watch?v=mBympCQcyzY

 

Financial Advisor to Glenn Beck: Ron Paul Gets It

http://www.youtube.com/watch?v=Es2SZ1Z2lW8

 



Marc Faber: ’Bernanke is gold buyers best friend’

Marc Faber: ’Bernanke is gold buyers best friend’

http://youtube.com/watch?v=5J-kNTKuy9s

 

Gold Advances in Asia on Inflation Concerns After Fed Statement

Dave McCombs
Bloomberg
March 21, 2008

Gold gained for the first time in five days as some investors judged yesterday’s decline to a one- month low had gone too far given prospects that inflation will accelerate, boosting demand for the metal as a haven.

The Federal Reserve as of March 19 lent $28.8 billion to the biggest U.S. securities firms to try to stabilize capital markets, in its first extension of credit to non-banks since the Great Depression. Pumping more money into the banking system may fuel inflation and demand for precious metals and other commodities.

“Fundamentally, the charge forward is still there,’’ Peter McGuire, managing director at Commodity Warrants Australia, said today in a Bloomberg Television interview. “The time to buy is on the dips.’’

Gold for immediate delivery gained $9.71, or 1.1 percent, to $920.24 an ounce as of 4:26 p.m. in Tokyo. Silver for immediate delivery gained 0.7 percent to $16.90 an ounce.

A weakening U.S. currency has also benefited gold. The dollar has lost 16 percent against the euro in the past year as the Fed lowered its target rate to 2.25 percent. The central bank is cutting rates and pumping money into the banking system to prevent the worst housing slump in a quarter of a century and widening losses in credit markets from tipping the economy into a recession.

The steps have also prompted concern U.S. inflation may accelerate. Excluding food and energy costs, consumer prices rose 2.3 percent in February.

Given the scale of gold’s rally in recent years and the pace of inflation, the precious metal “should be at $2,500’’ an ounce, on an inflation-adjusted basis, McGuire of Commodity Warrants Australia said today. “We think it’s got a long way to go.’’

Read Full Article Here

 

Metal Exchange Closes Website Due to Overwhelming Demand

The National Expositor
March 20, 2008

Don’t be fooled by the central banks dumping of gold and silver reserves in order to halt the rise in metal prices. The lowering of interest rates by the Fed this week only opens the door for more printing of dollars backed by nothing. The illusion the Fed is trying to create of a strong dollar while at the same time pushing a policy of printing unlimited quantities of cash can’t hold for long. The reality is driven by the market, and the market is running dry. Every supplier of silver and gold is running out due to huge consumer demand to trade in worthless dollars for something that will hold its value. Below is the statement from APMEX.Com, the American Precious Metals Exchange. They cannot keep up with demand and are begging people to sell them metal to keep up. It’s a great time to buy on this artificial dip in prices.