Investors shaken in November
Experts advise "hard assets for hard times"
Stocks: up week, down 6% in Nov. ... Gold up 13% in Nov.
GDP, housing, orders, spending plunge ... Bailouts: $7.4 trillion!
"9 ECONOMIC REALITIES of '09" CD ... $2,200 gold ahead -60 experts
How will we pay for $7 trillion bailout? ~ What's better than bullion?
Today's top financial stories ~ November ~ economic calender
By David Bradshaw ~ updated hourly ~ email ~ links ~ wisdom
Editor, Real Money Perspectives ~ weekly email ~ daily email
Nov 28, 2008 ~ features ~ ((podcast)) ~ gold fraud alert!
* Gold prices rose over 1% Friday despite a stronger dollar in thin post-holiday month-end trading. Spot gold last traded up $11.30 to $817.40/oz., silver fell $.01 to $10.26/oz.
* Gold prices rose over 13% in November, the biggest gain since 1999. Savvy investors bought the precious metal at the lowest prices of 2008 as a safe haven on strong fundamentals. Silver prices rose 4%.
* U.S. retailers pulled out all the stops to lure shoppers into their stores on "Black Friday", the day which historically marks break even for retailers. On Wall Street the DJIA closed with gains for the day and week, but shed another 6% in November.
* "ANY time the stock market advances on lighter volume, that advance MUST be validated or refuted on heavier volume. We will see Monday how traders react to this rally when normal conditions resume. The strength in BOTH gold and the dollar make gold's gains that much more impressive today," reports Vrtrader.
* "Hard assets for hard times," reckons Frank McGhee at Gold Futures dealer Integrated Brokerage Services in Chicago. "Even with all the money central banks have thrown at the financial system, it's not enough to stop systemic risk. People are looking for something that's going to go up, and that's gold," reports Goldseek.
* "Stocks head into December with a tailwind, but the rally will quickly be put to the test by some gloomy economic reports and the next phase of efforts to save the struggling U.S. auto industry. December, on average, has been the best performing month for the Dow since 1915, averaging gains of 1.4%," reports CNBC.
* "Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world's monetary system with liquidity, according to an internal client note from the US bank Citigroup," reports Telegraph.
* "Gold's path higher will not be a straight line. I expect some corrections that could knock the yellow metal right on its shiny butt. But that's short term. Longer term, gold should march higher. The way things are going in Washington, I like physical gold, and silver, too. Gold is the gift you don't have to make excuses for," reports Money&Markets.
* "A blank gold disc was converted into an ultra-high-relief replica of the classic $20 gold piece at U.S. Mint this week. The double eagle is still generally considered the most beautiful American coin ever made. Today, the 1907 ultra-high relief $20 gold pieces are highly prized by collectors, not only for their beauty but also for their rarity. Fewer than two dozen survive, and they command six- and seven-figure prices," reports NYTimes.
* Durable goods fell in 6.2% and corporate capital spending is weakening in October. "Everything is in retreat" according to a Global Insight," reports MW.
* "Stocks rallied Wednesday as investors focused on deals in the battered technology sector following gloomy economic data and downcast corporate reports. Trading volumes were low ahead of Thursday's Thanksgiving holiday. The market showed little immediate reaction to reports of a series of attacks, including blasts and gunfire, in Mumbai, India's financial center," reports MW.
* "Obama announced he had chosen former Federal Reserve Chairman Paul Volcker to head a new White House panel to help create jobs and bring stability to the ailing financial system. Volcker, 81, will head the President's Economic Recovery Advisory Board. Volcker is a legendary central banker who raised interest rates and restricted the money supply to tame raging inflation in the 1980s. It was a painful prescription that helped send the economy into one of the nation's worst recessions," reports vrtrader.
* "Tuesday the U.S. Federal Reserve, in another massive life-support intervention for the U.S. financial system, announcing a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities," reports Reuters.
* "U.S. stocks turned again on Tuesday -- this time mostly higher -- as financials and consumer discretionary shares gained in the wake of the government's latest move to help revive the ailing economy. If the Fed and the Treasury are backing the U.S. financial system, who is backing the U.S.?" reports MW.
* "The Federal Reserve on Tuesday unveiled its new Term Asset-Backed Securities Loan Facility (TALF), a plan under which it will lend up to $200 billion to support the issuance of debt backed by consumer and small business debt like credit card loans, student debt, auto loans and loans backed by the Small Business Administration (SBA)," reports MW.
* "The dollar is doomed, thanks to Washington. U.S. government leaders have got it backwards, and their policies risk the dollar’s long-term role in the world economy. They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term," says commodities bull Jim Rogers, reports MoneyNews.
* "The dollar is not secured by anything. The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998 it had exceeded $2 trillion. Now it is more than $11 trillion. This is a pyramid that can only collapse," said Professor Igor Panarin in an interview with the respected Russian daily IZVESTIA reports Drudge.
* "The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year. If you mark to market today, the banking system is bankrupt," reports Bloomberg.
* "The economy tumbled .5% in the summer as American consumers throttled back their spending by the most in 28 years, further proof the country is almost certainly in the throes of a painful recession. Meanwhile prices of U.S. single-family homes in September plunged a record 17.4% from a year earlier," reports CNBC.
* "The Fed's highly leveraged balance sheet will make it hard to fight inflation. To try to get in front of the crisis, many decisions have had to be made on the fly. "If the Fed had been [a savings-and-loan] ballooning its balance sheet so fast, the supervisors would have been all over it," says Ed Kane, a Boston College finance professor. Adds Walker Todd, a former Fed lawyer: "The Fed has stretched its authority farther and wider than it ever has in its entire history. The risk is that they won't be able or willing to mop up all this excess liquidity when it comes time to head off inflation a few years down the road," reports Barrons.
* "With the economy in crisis, President-elect Barack Obama pledged Monday to honor the commitments the outgoing Bush administration has made to rescue financial markets and urged the new, incoming Congress to pass a major stimulus package "right away" to restore growth and create jobs," reports AP.
* "Obama chose New York Federal Reserve President Tim Geithner to be his treasury secretary and Lawrence Summers as director of his National Economic Council. Christina Romer, will Chair Obama's Council of Economic Advisors. Melody Barnes, Executive Vice President for Policy at the Center for American Progress, will be Director of Obama's Domestic Policy Council. (Announcement transcript).
* "If the government wants to spend more money it should be for areas that will improve the nation going forward such as the power grid, nuclear plants, roads, bridges, alternative energy, etc. Not shopping sprees at the mall for trinkets that will end up in the trash. The last stimulus package went to pay down debt and ended up in saving accounts at the very banks that refuse to lend money," reports WND.
* "Crude-oil surged more than 9% Monday, gaining the most in nearly three weeks, as a weaker dollar and stronger stocks pushed commodities broadly higher. Crude surged $4.57, or 9.2%, to end at $54.50 a barrel on the New York Mercantile Exchange," reports MW.
* Stocks rallied Monday as investors cheered news that the government has agreed to backstop troubled bank Citigroup. The Dow finished up more than 300 points, or 4.5%, adding to Friday's nearly 500-point gain. The Nasdaq and S&P 500 index gained anothre 6% each. "The move will help the markets not implode today," said Rory Robertson, interest rate strategist at Macquarie in Sydney," reports Reuters.
* "Investors who were well-diversified right from the beginning are well aware that when equity fails to deliver, other asset classes can come to the rescue. And gold is the most prominent among these asset classes," reports EconTimes.
* Fears of the unknown long-term effects from the global financial crisis have sparked a new gold rush. "Speculation the Federal Reserve will lower interest rates to stimulate the economy, boosted the appeal of the precious metal as an alternative to the U.S. dollar," reports Bloomberg.
* "The IMF's chief economist has warned that the global financial crisis is set to worsen and that the situation will not improve until 2010. The IMF had spent a fifth of its $250 billion fund in the last two weeks," reports AFP.
Just last week...
* "U.S. stocks on Friday rallied on a report President-elect Barack Obama would nominate Timothy Geithner to be the nation's Treasury secretary. The market's message is Geithner is a good choice. After a volatile afternoon of indecisive trade, the Dow surged 508.63 points to close at 8,046.92, but still ended the week down 500 points," reports MW.
* Weekly U.S. initial jobless claims rose by 27,000 to 542,000 in the week ending Nov. 15, the highest since July 1992. The yield on two-year U.S. government bonds slipped a basis point to 1.06%.
* "The dollar dipped against the euro and yen on Thursday as currency investors monitored sliding global stock markets, dealers said. Global stock markets tumbled on Thursday, with Tokyo losing nearly 7% and European indices deep in the red," reports AFP.
* "Heavy selling by institutions has more than offset retail buying and pushed gold prices down to their lowest level in more than a year, according to the World Gold Council," reports MW.
* "Gold dealers and analysts are calling it an 'upside down' market where physical gold, including coins and bars, are in short supply and far more expensive than the price quoted on New York Mercantile Exchange’s COMEX division. What’s sparking the demand for physical gold? You need to look no further than the financial landscape surrounding investors," reports FoxBus.
* "Gold should remain a useful portfolio diversifier as stock markets are likely to remain highly volatile, perhaps even retesting lows in the short term," said Mark Harris at New Star to Telegraph.
* "Federal Reserve officials slashed economic growth forecasts through 2009 and hinted that further interest rate cuts may be needed if growth slows further, minutes of their October policy meeting show," reports CNBC.
* "U.S. consumer prices plummeted at the sharpest rate on record in October as a slowing economy caused energy costs to drop for a third straight month, according to a Labor Department report on Wednesday. The widely watched Consumer Price Index fell 1%," reports CNBC.
* "Construction of new homes plunged last month to the lowest level on records going back nearly 50 years as U.S. builders slashed production while Wall Street nosedived. Construction of new homes and apartments fell 4.5 percent in October, the fourth straight monthly decline," reports AP.
* "Adjustments to the dollar's role are certainly needed. The era of the dollar may not be over, but the special conditions under which it reigned during the last decades are being dashed on the rocks of the current recession and financial crisis," reports TheNewRep.
* "Slush fund" ... "banana republic" ... "Keystone Kops." That's how some observers are describing the government's effort to stabilize the financial system, including its centerpiece rescue mechanism, known as the TARP. Hatched hastily almost two months ago, the TARP (Troubled Asset Relief Program) was conceived to stabilize financial markets and restore investor confidence," reports CNBC.
* "Detroit's Big Three automakers are begging Congress for a $25 billion government rescue, while the legislation clings to life support on Capitol Hill and top lawmakers and the White House suffer from bailout fatigue. Democratic leaders want to tap the $700 billion Wall Street rescue package for new loans to U.S. auto manufacturers and suppliers, but the White House and GOP lawmakers say the beleaguered industry shouldn't get any new funds," reports AP.
* "Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July," reports Reuters.
* "Japan sank into recession in the third quarter and world leaders at a weekend summit gave investors little hope they could rescue the global economy. With the euro zone also in recession, the U.S. economy shrinking and China slowing sharply, markets shrugged off pledges to stimulate growth from leaders of the Group of 20 nations," reports AP.
* "A package of economic rescue measures agreed by the world's major governments fell short of calming investors jangled nerves on assessments that the meeting yielded no concrete moves to avert a looming global recession," reports CNBC.
* "The rumor circulating on the Internet this weekend that the 20 country meeting in Washington was going to change the way the world operates by raising the gold standard to $2500 per ounce and putting us back on something like the Bretton Woods accord from 1944 did not occur, but I'm sure it was discussed. Ultimately, this is the only viable solution to stabilize currencies and help prevent central governments from running their printing presses 24/7. However, in this current environment, central bank such as our Fed are determined to re-inflate world economies to prevent a possible repeat of the Great Depression of the 1930s," reports VRTrader.
* "This heralds a shift from the G-7/G-8 to the G-20 as the chief steering committee for the world economy. That may turn out to be the most important part of this event," said Fred Bergsten, director of the Peterson Institute for International Economics," reports USAToday.
* "Leaders from major advanced and developing countries sat down for several hours of tough talks Saturday, with plans to fix the financial system and keep the crisis from inflicting further damage to the world economy," reports WSJ.
* "The world's central banks will add more liquidity to unfreeze credit markets, spurring inflation and boosting the appeal of precious metal. 'Gold is probably $100 to $150 too cheap based on the liquidity already pumped into the system,' said Frank McGhee of Integrated Brokerage Services in Chicago," reports Bloomberg.
* "U.S. retail sales plunged a record 2.8% in October as sales of autos and gasoline plummeted. Sales were quite weak across a broad swath of the retail sector in October, an indication that the fourth quarter could be worse than the third quarter, when inflation-adjusted consumer spending fell at the fastest pace in 28 years," reports MW.
The week before...
* "U.S. stocks on Friday fell sharply to tally a second consecutive week of losses as a record decline in retail sales and a warning of falling mobile-phone sales hammered home the ongoing fallout of the ailing economy," reports MW.
* "This has been Wall Street's year of the fallen idols... a shocking bloodbath. There are three long-term lessons here for ordinary investors; you can't anticipate a crash, remember investing is a long-term game, and look for value, prefer unfashionable assets over fashionable ones," reports WSJ.
* "The U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system," according to CreditSights, a research firm in New York and London, reports Forbes.
* "The dollar's days as the world's reserve currency are numbered. The greenback faces serious devaluation as spiraling national debt and a worsening economic crisis undermine it. Commodities are one of the only viable investment opportunities left and are set to rebound," famed investor Jim Rogers told CNBC Friday.
* "Government officials involved in the management of China's trillion dollar reserves are beginning to see gold as an attractive place to park some of these funds. They see it as a real, tangible asset that will not lose its value over time -- in stark contrast to the greenback, which is becoming more disconnected from economic realities as more bills are printed," reports GATA.
* "The Treasury will now use the remaining bailout money to buy securities backed by credit card debt, student loans, auto loans, housing and government agency debt. The intent is to help unfreeze those markets, where interest rates have soared and consumers often are unable to get credit for purchases," reports CNBC.
* "There just doesn't appear to be an end in sight to the bad news," said Anton Schutz, portfolio manager at Burnham Financial Services Fund. "The selling is relentless," reports AP.
* "Stocks in the West are still expensive on any historic valuation method, bonds are going to be a terrible place to be for the next 10, 20 years," investor Jim Rogers told Bloomberg.
* "The DJIA is heading for a new low of 6,000 as Barack Obama prepares to assume the presidency in January, according to a new report from Dr. Jerome Corsi, who accurately predicted the Dow would hit a pre-election bottom of 8,000, a forecast fulfilled Oct. 10," reports WND.
* "China must finance its plan by either selling its holdings of roughly $1 trillion of U.S. securities or by slowing its accumulation, which could raise U.S. borrowing costs, such as mortgage rates, which are benchmarked to bond yields," reports MW.
* "The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral," reports Bloomberg.
* "The U.S. Treasury will invest $40 billion in preferred shares of AIG under the new Troubled Asset Relief Program (TARP), while the Fed will create two new lending facilities to help AIG sell some of its mortgage-related assets," reports MW.
* "General Motors Corp., Ford Motor Co. and Chrysler LLC, strapped for cash as sales plunge, are seeking $50 billion in federal loans to help them weather the worst auto market in 25 years," reports Bloomberg.
* "The US government could be entering a bottomless pit of bailouts if it starts propping up failing companies outside the financial sector—including the struggling auto industry, economists tell CNBC.
* "The world's developed countries, hard hit by the financial crisis, have already entered a recession that will last at least through the first half of 2009. This weekend's meeting of the Group of 20 industrialized and emerging economies is expected to discuss coordinated tax cuts or spending boosts around the world," reports AP.
G-20 summit: historic or symbolic?
* The United States hosted a summit of the G-20 leaders Saturday and Sunday in Washington to discuss the underlying causes of the credit crisis and start developing principles of reform for financial regulators and institutions.
* "The Group of 20 major industrialized nations will gather the leaders of 85 percent of the world's economy and two-thirds of its population to try to solve the current global financial crisis. At its worst, the G20 could fizzle out as just another prestigious kaffeeklatsch, especially considering the lame-duck status of George W. Bush," reports UPI.
* "Prime Minister Gordon Brown will set out a five-point plan to create a 'stronger and more just world order' in the wake of the worst financial crisis since the Great Depression," reports Telegraph.
* "France’s president Nicholas Sarkozy is trying to organize a New World Financial Order... based on something other than the dollar. Perhaps the biggest delusion of the financial world now is that the dollar... and dollar-based Treasury obligations... are a safe refuge. In an emergency, the government can always just print up the money. But that’s the problem. An emergency is coming," reports DailyReckoning.
* "It seems as if no one now expects the meeting to achieve anything sweeping. 'I think it will be difficult to accomplish much given that they’ve had little time to prepare for this. It is more symbolic than substantive,' said Mark Zandi, chief economist and co-founder of Moody’s Economy.com, reports Wharton.
* "Behind the scenes at this weekend’s G-20 meetings, a fundamental fix is being discussed — the possible revaluation of gold and the birth of an entirely new monetary system. I believe the end result will make my $2,270 price target for gold look conservative, to say the least," reports Money&Markets.
* "The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money," reports Telegraph.
* "Asian and European countries should banish the U.S. dollar from their direct trade relations, relying only on their own currencies, said a front-page commentary in the People's Daily. A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order," reports Reuters.
* "This crisis is global in reach -- and addressing it will require agreeing on common principles to reform regulators which is essential to preventing another disaster," said President Bush last Saturday.
* Question: How can the nations of the world agree on "common principles to reform" given the wide diversity of worldviews each nation represents? This global credit meltdown appears to be pushing the U.S. toward an "Economic New World Order" which seeks to replace free market principles with socialistic principles.
* "Former Fed Chairman Alan Greenspan said the financial crisis will get worse before it gets better. Accused of contributing to the meltdown, but denying it was his fault, Greenspan told a House panel the crisis left him -- an unabashed free-market advocate -- in a "state of shocked disbelief," reports AP.
* "This disaster shows the fallacy of former Fed chief Alan Greenspan's belief in not preventing bubbles and instead working to clean up the aftermath. As everyone who lived through the 1920s learned, bubbles should be avoided at all costs. Bubbles cannot be fixed. They can only be prevented," reports MSN.
* "You date the recession all the way back to December 2007 because that's when the slip began," says Robert Brusca, chief economist at Fact And Opinion Economics. If so, this recession will be one of the longest in modern times. The question is how nasty," asks CNBC.
"Nation Hopes for Another F.D.R.
* "President-elect Obama plans to use his executive powers to make an immediate impact when he takes office, perhaps reversing Bush administration policies on stem cell research and domestic drilling for oil and natural gas," reports AP.
* "Mr. Obama’s task, like F.D.Roosevelt's, is to persuade everyone that we are better served by helping our neighbors than by watching them drown in a sea of debt. He needs to draw out our best selves. During the campaign, certainly, he showed he had that capacity. Now he has to put it to good use," reports NYTimes.
* "Millions of Americans chose a new president for the next chapter of the greatest experiment in world history based more on a symbolic image rather that a substantive track record. We’ve been warned to expect everything from a “new era” … to a “new order”… to a “new world economic order”," writes Craig R. Smith.
* "Like Franklin Delano Roosevelt and Ronald Reagan, the new president will get a rare opportunity to leave a sweeping and long-lasting imprint on the U.S. economy. The U.S. is facing the deepest recession in more than 20 years, the worst financial crisis since World War II and a wave of foreclosures," reports Bloomberg.
* "The swooning frenzy over the choice of Barack Obama as President must be one of the most absurd waves of self-deception and swirling fantasy ever to sweep through an advanced civilization. At least Mandela-worship – its nearest equivalent – is focused on a man who actually did something," reports DailyMail.
* "Mr. Obama will enter office with the U.S., and most developed countries, in a recession, which accelerated in September when the financial crisis worsened and the investment bank Lehman Brothers was allowed to collapse. Businesses and consumers slowed their spending drastically," reports NYTimes.
* "World leaders quickly hailed the triumph of Barack Obama in the US presidential election as the start of a new era but there were also calls for a new deal with the global superpower. Celebrations erupted in capitals around the world. A national holiday was declared in Kenya -- where Obama's father was born -- to welcome the first black US president," reports AFP.
* "Congressional Democrats plan to use their momentum from Tuesday's victory to quickly pursue big plans to tackle economic woes, including doubling aid to U.S. auto makers and redrawing the regulation of financial companies," reports WSJ.
* "It is not just that the Democrats will win a crushing victory in both houses of Congress,it is also that the incoming class of 2008 is of a new creed. Many no longer believe – or actively reject – the free trade and free market catechisms. No matter that statist policies were responsible for this global crisis in the first place," reports Telegraph.
* Obama's first decision as president-elect was to ask fellow Chicagoan Rahm Emanuel to run his White House staff. "Emanuel is "new New Deal" guy. Here is what he proposed several months back concerning the creation of a "new social contract" between government and workers," reports USNews.
* "Reflecting on his own foul-mouthed, attack-dog style, Mr Emanuel has said: "I wake up some mornings hating me too." Commentators have suggested that Mr Obama, who ran a lofty campaign based on national unity and bipartisanship, has recognized the need to employ a tough enforcer to push through his policy program," reports Telegraph.
* Meanwhile, former Clinton Treasury Secretary Larry Summers is the lead contender to be the next Treasury Secretary in the Obama Administration. "American society is falling apart because of economic policies that enrich the wealthiest Americans, while saddling the rest of the population with onerous tax burdens," said Lawrence Summers to BosHerald.
* "The nation's unemployment rate bolted to a 14-year high of 6.5% in October as another 240,000 jobs were cut, stark proof the economy is almost certainly in a recession. The new snapshot, released Friday by the Labor Department, showed the crucial jobs market deteriorating at an alarmingly rapid pace," reports AP.
* "Total jobless rolls climbed to the highest level in 25 years as more Americans filed first-time claims for unemployment benefits last week, indicating further deterioration of the labor market," reports Bloomberg.
* "The Bank of England cut interest rates 1.5% Thursday and said global banks are in the worst disruption for almost 100 years as policy makers tried to contain the damage caused by a recession," reports Bloomberg.
* "Global stock markets tumbled for a second day running on Thursday as investors shrugged off Barack Obama's election as US president to focus on growing recession fears. Tomorrow's employment report from the US may well remind markets of the potential scale of the slowdown coming, traders said to AFP.
* "Surging prices for oil, copper and gold sent commodities rallying as a U.S. Election Day plunge in the dollar boosted the appeal as a hedge against inflation. "With the Democrats, there's the assumption of the potential of more inflation, given their spending plans," said William O'Neill, of Logic Advisors in New Jersey, reports Bloomberg.
* "Gold is far too cheap today relative to its bullish fundamentals and the incessant fiat-currency growth all over the world. This anomaly is a great opportunity for capital to move into gold. As TRILLIONS of new dollars are created, the dollar will lose more value," writes Jim Carrillo, Sr. Swiss America broker.
* "The dollar's rally has topped out as the U.S. money supply rockets. Monetary inflation will soon destroy what's left of the dollar's store of value. This is a rare opportunity for long-term investors to buy gold under $800/oz.," said Craig R. Smith, Swiss America CEO.
* "The dollar's rise is temporary, and its prospects are bleak. The toxic American derivatives were marketed worldwide by Wall Street. The harm done to America's reputation by the financial crisis, has led to numerous calls for a new financial order in which the United States plays a substantially lesser role," reports Creators.
* "The U.S. Treasury said it would seek to borrow a record 550 billion dollars in the October-December period to help stabilize the financial sector hammered by the global credit crisis. The Treasury said the federal government had borrowed $530 billion from the markets in the third quarter," reports AFP.
* "The market has come to the conclusion that Armageddon is off the table. The elimination of the uncertainty of the campaign typically results in an end-of-year rally and you're starting to see that today," said Philip Orlando, chief equity strategist at Federated Investors Inc. in New York, reports Bloomberg.
* "In a deeply divided nation, on the first dawn after we choose a new leader, every ray of victory's sunshine brings a corresponding thundercloud of defeat and bitterness. "There are going to be a whole bunch of people who are distraught and who won't know what to do - no matter which side wins. There's going to be a lot of soul-searching to do," reports AP.
Post-election gold rush?
* Gold ended October with a 20% decline as the dollar rocketed to 2-year highs. "Speculative paper players using huge leverage continue to exit positions for the relative safety of cash due to margin calls on other bets," said Mark O'Byrne, executive director at Gold and Silver Investments.
* "The charts illustrate that while gold bullion prices are now down 8.5% year-over year, Mint-State 63 $20 Liberty gold coins are up 50%. So in addition to offering safety, liquidity and growth potential equal to bullion, historic Mint-State $20 gold pieces also offer 100% privacy of ownership and excellent growth over the last year," according to Swiss America CEO Craig R. Smith.
* "So, why isn't the price of gold bullion responding? Supply/demand is the first law of economics right? Methinks the invisible hand is at work again... Holding US dollars at a time when the Federal Reserve is expanding its balance sheet quicker than Democrats can get to the polls to vote early may not be a good strategy," reports SeekAlpha.
* "Once the economy finds its track, dollar weakness is going to drive gold above past record levels, and demand for tangible assets like gold will continue to grow. Fundamentals will re-establish themselves as the driver of the gold market, and we believe we'll see $1,250 gold during this period," said Donald Doyle, CEO of Blanchard and Company to MineWeb.
* "Despite government moves around the world to allay the financial meltdown, it's not over yet, and in the meantime, gold and silver may offer the best bets for capital protection," reports Mineweb.
* "Here is a financial scorecard since the turn of the 21st century (2000 -2008). Eight years invested in these markets, your money is...
* Dow Jones DOWN 25% (This even factors in that 5 of the 30 Dow Stocks did so poorly they were replaced!)
* S&P 500 DOWN 45% (Many of the 500 have now gone bankrupt and have been replaced with others!)
* U.S. Dollar DOWN 30% (Mass creation after 9/11 created a free fall, what will a larger mass creation do now?)
* Gold UP 260% (Has NO DEBT, NO liabilities and can NEVER go bankrupt)," says a new special report.
* "Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any. 'Virtually every mint in the world is sold out of product and as fast as we can produce it there is more demand,' said David Madge of Royal Canadian Mint," reports CNS.
Sell stock rallies, buy gold dips
* "Sell the rallies in stocks. Buy the dips in gold. That has been our formula for this entire decade.
It still seems to be working," writes Bill Bonner at DailyReckoning.
* "Gold alone protects assets from economic crises because it's the world's ultimate store of value -- which restores confidence in contrast to paper assets which entirely depend on confidence. The #1 reason to own gold today is safety, #2 liquidity, #3 growth, " said Mr. Smith.
* "The fact that bullion dealers are paying and charging premiums to the spot price for gold is clear evidence that the spot price published each day is no longer an accurate representation of the price of gold, and its continuing publication as such must soon be identified as fraudulent, and corrected. The likelihood of that happening, however, is contingent upon the admission by various U.S. government entities that they have participated in the suppression of the gold price," reports MidasLetter.
* "In a stagflationary environment, stocks, bonds, and real estate are likely to underperform commodities and gold. This is the lesson of the stagflationary 1970s, when gold and energy outperformed all other asset classes and all other commodities. I have every reason to believe that the coming decade will be a repeat of the 1970s," reports FinSense.
* "The onset of a global recession and falling stock markets have triggered a stampede for gold – the traditional safe haven during times of uncertainty. Investors have rushed to buy gold bars and bought exchange traded funds, worth $2.8 billion – the biggest inflow on record," reports Telegraph.
Wall St. looking up?
* "U.S. stocks advanced last Friday, on track for solid weekly gains but the worst month in decades, as investors bypassed generally bleak economic data to focus on improvement in the troubled credit markets," reports MW.
* "Federal Reserve policymakers cut key interest rates by a half-point, as expected, pushing the federal funds rate down to 1%, a four-year low. The worst financial crisis in 70 years has forced the Fed to employ all the weapons in its arsenal to try to keep the country from plunging into a deep recession," reports CNBC.
* "Apparently more cheap easy money is in our future. The very strategy that caused the mortgage and credit mess is now being employed to try to fix the mess. The result will be a cut in the long-term value of the dollar," wrote Craig Smith to his brokers.
* "Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low in its 41-year existence, the Conference Board said Tuesday," reports MW.
* The Case-Shiller survey says home prices in 20 major U.S. cities are down a record 16.6% in the past year. Prices are "clearly nowhere near bottom yet," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics.
* "With financial markets around the world collapsing, about the only thing that still glitters is gold. Now, the market may start to shine. The yellow metal, which breached $1,000 an ounce in March during the Bear Stearns debacle, could well return to that level and head toward $2,500 as investors scramble for safety," reports Barrons.
* "Neither one of the men running for president can do anything to magically fix the mess we are in, unless one of them can find a way to create an atmosphere in where we will all once again believe in each other and the greatness of America. We don't need government programs, higher taxes, bailouts or cash injections into the system. We need a giant dose of confidence," comments Craig R. Smith at WND.
And the next bubble is...
* "Every bubble expands until it finds its pin. Real bear markets last 10...15...20 years. And judging by the meltdown in the financial sector...we have a real bear market on our hands. This bear market actually began in January 2000 when the tech sector crashed. But it was reversed when the feds opened a Hoover dam of liquidity, beginning in 2001-2002," reports Bill Bonner at DailyReckoning.
* "The fundamentals for commodities were not affected by government policies that are propagating inflation. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke should resign for keeping alive 'zombie banks' that should be allowed to fail, said Jim Rogers, CEO of Rogers Holdings, told CNBC Wednesday.
* "Ignore the negative press on gold, and recognize the current price weakness for what it is: the last time you’ll see gold this cheap in a long time, and therefore a huge opportunity. The massive repatriation of US Dollars as a result of de-leveraging globally is making the US Dollar look strong, while the gold manipulation cartel is exerting its utmost effort to keep the spot price of gold low through concentrated short positions on COMEX. The price of gold will emerge from this negative influence on the next leg down and the economy goes into a broader paralysis instead of being limited as it is now to real estate and financials," reports MidasLetter.
*"Gold, the king of stability, is still subject to volatility given the huge hedge fund liquidations in all areas of commodities. Well over one trillion dollars along with an unprecedented worldwide rate cuts have done little to sure up confidence, in fact, may be causing a loss of confidence," commented Craig R. Smith.
* "The search of a market bottom likely will continue through the rest of the year and into 2009, as signs begin to emerge that a turning point is near but not yet upon Wall Street. Market analysts have been racing to call a market bottom in recent weeks as stocks have shed more than 30% of their value from the highs of a year ago this month," reports CNBC.
* "The U.S. dollar surged to a 2-year peak versus a basket of currencies last month due to strong demand from financial institutions seeking a safe-haven despite a moderation in interbank rates and growing momentum for a second stimulus plan," reports Reuters.
* The dollar has served as the world’s reserve currency for more than 60 years, but never in history has the guardian of the world's reserve currency also been the world's biggest debtor. Those who've placed 100% faith in dollar-denominated assets still need a life jacket. Here are six tips to help you make smarter choices with your time, energy and money to thrive during tough times ahead.
* "All the currencies will slowly debase themselves against gold and keep the dollar as the currency for global trade. It appears we are now going through that inflection point moving from deflationary forces to an inflationary cycle," says Frank Holmes, CEO of U. S. Global Investors to AUReport.
* "As the world loses its faith in most investments, gold provides a primeval sense of security. As stocks and shares tumble, house prices crash and previously unassailable institutions crumble into dust, the sight of several thousand 28lb bars of 24-carat gold stored in the Bank of England's massive underground vaults is hugely reassuring. Securities and dodgy loans are turning out to be as solid as wet cardboard, but good old-fashioned gold has come back into fashion as never before," reports DailyMail.
* "What we are likely in for is an unprecedented period of price inflation, economic depression, and high unemployment, i.e., 'depflation' (inflationary depression). Purchasing power declines as prices for consumer goods increase faster than wages. Taxes increase when nominal incomes rise. Interest rates increase, hurts investments in capital goods, stocks and bonds," reports SafeHaven.
* "A second economic stimulus package gained sudden momentum after Fed Chairman Ben Bernanke urged Congress to consider a new plan and the White House said President Bush was 'open' to the idea. Any stimulus package would need to kick in quickly to entice people and businesses to boost spending," reports CNBC.
* "Ben Bernanke apparently wants four more years as Fed Chairman. Mr. Bernanke all but submitted his job application to Barack Obama yesterday by endorsing the Democratic version of fiscal "stimulus." Mr. Bernanke certainly knows that Mr. Obama and Democrats on Capitol Hill are talking about some $300 billion in new "stimulus" spending, while President Bush and Republicans are resisting," reports WSJ.
* "The economy's health improved for the first time in five months in September as supplier deliveries and new orders strengthened, a private research group said Monday. 'The trend is downwards, and October's index will plunge, consistent with recession, it has not hit bottom yet,'" reports AP.
* "With little question the U.S. is in the grips of a recession, investors this week will lean on a stream of earnings and economic reports to help determine exactly how prolonged and painful the downturn might be," reports CNN.
* "The world stole prosperity from the future for year after year, with the full collusion of governments, regulators, and central banks. Now the future has arrived. The commodity and emerging market booms are breaking in unison, leaving no more bubbles left to burst," reports Telegraph.
* "'Follow the money and own more gold', is my best advice to investor's whose confidence in banks, the Fed, and the Treasury has been shaken to its foundation. There is presently a quiet gold run in process as demand swamps supply of U.S. gold coins. Let's hope it's not a precursor to a U.S. bank run, as dollar supply swamps demand, in response to multi-trillion bailouts," said Swiss America CEO Craig R. Smith.
* "A tri-polar global currency system is developing between Asia, Europe and the U.S. and that he's skeptical the U.S. dollar's centrality can be revived. European governments have pledged at least $1.7 trillion to guarantee loans and take stakes in lenders," said European Central Bank council member Ewald Nowotny to Bloomberg.
* "History teaches us that asset deflation usually follows asset inflation in the historical boom-bust credit cycle. The bigger the boom, the bigger the bust. This is just common sense. Millions of investors are now looking for alternatives to the U.S. stock and housing markets. Many are now rushing into cash, thinking the U.S. dollar is (and will remain) "king", Bailout Nation, Swiss America special report.
Bailouts won't stop market cycles
* "The final $800b bailout plan pushes Washington's potential tab to $1.8 trillion, to absorb bad mortgages and other toxic assets from bank or other institution balance sheets to keep the financial system from "collapsing", according to "Bailout Nation".
* "Unless we want to inflate our way out with additional government spending of money we do not have, which will require taking on more and massive amounts of debt to be passed on to future generations, this is the time to just say no. If we are serious about adopting the changes necessary to make this economic contraction produce long-term positive effects on the market we must:
1. Reduce government spending by 15% across the board over the next four years.
2. Reduce corporate taxes from 35% (world's 2nd highest) to 25% with targeted incentives to create new, high paying jobs.
3. Freeze personal income taxes at current levels so proper tax planning can occur.
4. Have a capital gains tax holiday for any company or individual who purchases distressed real estate from a lender to clean up the lender's balance sheet.
5. Ease the "mark to market" rules now in place to provide breathing room for lenders.
6. Ease the capital requirement currently in place at the banks.
Not one of these suggestions requires a dime of tax dollars and thus doesn't have a snowball's chance in Phoenix to be implemented," writes Craig R. Smith.