Dec 19, 2003
MARKET NEWS DIGEST
->Strong Dollar Policy Unenforceable -Bloomberg
->Dow and S&P 500 Up 4th Straight Week -Bloomberg
->Dollar Drops to Record on Deficit News -Bloomberg
->Gold futures, metals shares ease back -CBSMW
->IBM to export programmer jobs to Asia -USAToday
->Audit inspectors to focus on fraud in '04 -DowJones
->TRUE WEALTH IS TANGIBLE -Craig R. Smith
->HUMILITY, DEAR READER. HUMILITY. -Bill Bonner, DR
->The $44 Trillion Abyss -Anna Bernasek, Fortune
->Gold price is going up a lot -John Embry, TheAUReport
->Avoid the home equity hangover -Sarah Max, CNNfn
HAPPY HOLIDAYS! FROM THE STAFF AND BROKERS AT SWISS AMERICA.
MAY 2004 BRING YOU CLOSER TO YOUR DREAMS!
-CRAIG R. SMITH, CEO Swiss America
FROM THE STAFF AND BROKERS AT SWISS AMERICA.
MAY 2004 BRING YOU CLOSER TO YOUR DREAMS!
-CRAIG R. SMITH, CEO Swiss America
WEEKEND SPECIAL: HOLIDAY FOOD FOR THOUGHT
** The Story of Chanukah -Holidays.net
** Movie Review ** THE RETURN OF THE KING -Dr. Ted Baehr
** "WALL STREET IS A NET ZERO SUM GAME" -Craig R. Smith
** The Playboy philosophy at 50 -Cal Thomas
** History of The 12 Days of Christmas
NEW: EXCLUSIVE SWISSAMERICA.COM FEATURE ARTICLES
2004 U.S. RARE COIN MARKET TRENDS -Kevin Lipton
-- OVERALL RARE COIN DEMAND IS UP -- at every level; wholesale, retail and auctions. I see more retail buyers at auctions shopping for value. Supply is not keeping up with demand which will drive prices higher in 2004 and beyond...
THE INSANITY CONTINUES -Richard Spohr, SATC
-- Call the markets whatever you like - a Ponzi Scheme, a Crooked Casino, a Manipulated Mess, an Irrational Financial Orgy...This appears to be a 'pump and dump' scheme that is stuck on the 'pump' phase.
* * *
A billion is a difficult number to comprehend,
but one advertising agency did a good job of putting that figure into perspective...
A billion seconds ago, it was 1959.
A billion minutes ago, Jesus was alive.
A billion hours ago, our ancestors were living in the Stone Age.
A billion dollars ago was only 8 hours and 20 minutes, at the rate Washington spends it.
MARKET NEWS DIGEST
Treasury Nominee "Strong Dollar Policy Unenforceable" -Bloomberg
Dec. 18 (Bloomberg) -- The Bush administration can't enforce its stated desire for a strong dollar, Samuel Bodman, the president's choice to be deputy U.S. Treasury secretary, told manufacturers in June.
Bodman, currently deputy secretary at the Commerce Department, told a private forum on U.S. manufacturing on June 24 that ``if you just look at the economics of it and (the) wherewithal that the United States Treasury has to affect the value of the dollar, it is very modest.''
President George W. Bush nominated Bodman to be No. 2 at the Treasury last month. He has yet to have a confirmation hearing before the Senate Finance Committee, and disclosure of his remarks may prompt speculation about the administration's commitment to maintaining the dollar's value. The currency has fallen 15.5 percent against the euro this year.
``The President has stated the policy and that is the policy, but if you start to look behind it, what is it that we could, in fact, do?'' Bodman said, according to a transcript obtained by Bloomberg News from the Commerce Department. ``This is a free market and there are a lot of dollars and it's really the opinion of the traders as to what and where'' the dollar is.
[Ed. Note: Read from The New Gold Rush, Pt. II, 'Strong Dollar' Hides Weak Policy - INSIGHT]
Dow and S&P 500 Advance Fourth Consecutive Week -Bloomberg
Dec. 19 (Bloomberg) -- The Standard & Poor's 500 Index and Dow Jones Industrial Average gained for a fourth straight week, the longest streak in three months, on optimism economic growth will bolster earnings.
``The economy is clearly improving and corporate profits are going to be up,'' said Edmund Cowart, who helps manage $8 billion at Eagle Asset Management in St. Petersburg, Florida. ``As they go higher, they ought to drag stock prices up.''
The Dow climbed 30.14, or 0.3 percent, to 10,278.22, finishing at a 19-month high for a fourth consecutive day. The S&P 500 lost 0.52 t0 1088.66 for its first decline in four sessions. This week, the Dow has climbed 2.4 percent and the S&P 500 has added 1.4 percent.
The Nasdaq Composite Index shed 5.16, or 0.3 percent, to 1951.02. It has gained 0.1 percent since last Friday.
About the same number of stocks rose and fell on the New York Stock Exchange today. Some 1.59 billion shares changed hands on the Big Board, 17 percent above the daily average of the past three months.
The number of Americans filing first-time applications for state unemployment benefits fell to 353,000 last week, matching an almost three-year low and suggesting the economy will add jobs for a fifth month in December.
Initial jobless claims fell by 22,000 in the week that ended Saturday, the first drop in three weeks, from a revised 375,000 a week earlier, the Labor Department said in Washington. Economists expected 365,000 claims, according to a Bloomberg News survey.
[Ed. Note: Detroit Free Press reports, "Job seekers give up, so jobless rate goes down"Michigan's unemployment rate dropped to 7.0 percent in November from a worst-in-the-nation rate of 7.6 the month before. But the lower rate in November was due mostly to people leaving the workforce, not to the creation of new jobs ... it was primarily due to labor force withdrawal. Many individuals without a job left the workforce in November while employment continued to decline."]
Dollar Drops to Record on Deficit Concern -Bloomberg
Dec. 16 (Bloomberg) -- The dollar dropped to a record against the euro in New York on concern the U.S. is too reliant on foreign central banks to fund the deficit in the current account, which is near an all-time high.
Without central banks, purchases by international investors of U.S. government securities would have declined $7.1 billion in October, the Treasury said in a report yesterday.
The current account gap may have been $136 billion last quarter, according to the median forecast of economists surveyed by Bloomberg News before a Commerce Department report today.
``Today's figures will be seen as a reminder of the size of the U.S. financing gap,'' said Francesca Fornasari, a currency strategist in London at Morgan Stanley. ``Most foreign investors already own a lot of U.S. assets, so there's little incentive to buy more. This will continue to weigh on the dollar.''
Against the euro, the dollar dropped to $1.2332 at 7:30 a.m. in New York, according to EBS, from $1.2322 late yesterday. It earlier slid to $1.2362, the lowest since its debut five years ago. The dollar will ``be pushing toward'' $1.30 per euro next year, said Nick Parsons, a currency strategist at Commerzbank AG.
``The dollar is in serious trouble,'' Parsons said in a televised interview with Bloomberg News in London. ``In the short-term, this move is developing a momentum of its own.''
Gold futures, metals shares ease back -CBSMW
By Myra P. Saefong, CBS.MarketWatch.com
Dec. 18, 2003
SAN FRANCISCO (CBS.MW) -- After touching a fresh eight-year high near $413 an ounce in the previous session, gold futures closed lower Thursday and took shares of most metals companies along with them.
Elsewhere on the metals futures market, copper prices jumped to a fresh six-year high as a fall in weekly domestic jobless claims signaled a recovery economy.
Gold for February delivery closed at $411.10 an ounce on the New York Mercantile Exchange, down $1.60. The contract clinmbed more than $4 Wednesday to close at a level it hadn't seen since early 1996.
The "stronger euro, firm gold equities and geopolitical events are making gold an outstanding performer in 2003," Andy Maag, an analyst at UBS, said in a note to clients.
But "December remains the month to be cautious as liquidity will suffer [the] closer we [get] to year-end," he said.
The euro stabilized against the U.S. dollar Thursday, after earlier touching a multi-year high, while other currencies weakened -- sending some investors back to the broader stock market and away from the precious metals market.
CRAIG SMITH COMMENTARY: The gold market took a major hit on Monday morning and then came roaring right back. The stock market, on the other hand, had a huge pop early in the trading day and then faded all day. Oil dropped and then came right back as it looks like OPEC is going to hold back production. These are all things that should NOT have happened in light of the "good news" of the capture of Saddam Hussein. I'm incredibly impressed with gold and how it has held up when the powers to be have attempted to talk it down and sell it down. Gold looks strong to me. Mr. Bush reinforced his administration's position on the "Strong Dollar" policy, yet the Dollar dropped dramatically today. Either he is not telling us the truth -- or this White House had no ability to keep the Dollar strong. If that be the case, you can expect a much lower dollar, and therefore, much higher gold prices. Read "True Wealth is Tangible" below to discover which type of gold offers the best growth potential.
IBM to export programmer jobs to Asia -USAToday
Dec. 15, 2003
NEW YORK (Reuters) — International Business Machines (IBM), the world's largest computer company, will move the work of as many as 4,730 U.S. software programmers to India, China and elsewhere, The Wall Street Journal is reporting.
The unannounced plan, which the newspaper said it viewed in company documents, would replace thousands of workers at IBM facilities in Southbury, Conn., Poughkeepsie, N.Y., Raleigh, N.C., Dallas, Boulder. Colo., and elsewhere in the United States.
The Wall Street Journal says about 947 people will be notified during the first half of 2004 that their work will be moved overseas. It was not yet clear how many of the other 3,700 jobs identified as "potential to move offshore" in the IBM documents will move next year or later, the newspaper said.
IBM, which has about 315,000 employees around the world, has already been among companies that have moved traditionally higher paid services jobs to low cost centers such as India in recent years. The company has said it will continue to build its services business abroad, because it makes IBM more competitive, saves customers money and frees up money for other purposes.
IBM did not immediately return calls for comment on the report.
Audit inspectors to focus on fraud in '04 -DowJones
Judith Burns, Dow Jones Newswires
Dec. 15, 2003
WASHINGTON - Fraud will be a top priority for accounting inspections in 2004, Public Company Accounting Oversight Board Chairman William McDonough says.
In remarks Friday to the American Institute of Certified Public Accountants, McDonough said inspectors will focus on whether auditors are uncovering fraud at public companies.
Compensation for audit partners and employees also will get close scrutiny in 2004, according to the PCAOB.
Congress created the new oversight board in 2002 to register, inspect and discipline public company accountants.
TRUE WEALTH IS TANGIBLE -Craig R. Smith, SATC
Dec. 15, 2003
So far, very few investors have noticed that gold was the best performing market sector in 2001-2003, and more importantly, that gold's uptrend is just beginning.
The last time we saw this major shift into hard assets was in the early 1970's when gold rocketed from the low $140/ounce to $850/ounce in January 1980. Bullion rocketed 600% and U.S. rare coins jumped over 1000%!
Remember: All gold is NOT created equal, nor does it perform equally! High quality U.S. gold pieces ($20 Liberty and $20 St. Gaudens) prices exploded upwards during the last gold rush in 1979. Prices have already quietly creeped up 42% to 80% -- just since January 2001. (See charts)
... but prices are still less that one-half of the market highs during the last bull market in 1989.
High quality U.S. gold pieces are 100% private and very liquid. So, over the last (nearly) three years; a $20 Liberty in Mint-State 65 condition has grown 80% ... while gold bullion grew by 50%.
This historical growth differential clearly underlines why I feel that the best way to take advantage of the emerging bull market in gold, as well as having personal financial protection, is by purchasing investment-grade U.S. gold numismatic coins.
In 2001, we said is was time to Rediscover gold ...
In 2002, we said The New Gold Rush was on ...
In 2003, we've said Gold is The Color of Hope ...
In 2004, we're saying "True Wealth is Tangible!" ... AND YOU CAN QUOTE ME ON THAT!
Please, don't put it off another day, register today to request any of our FREE educational resources ... to help you "do your homework" in preparation for the next phase of The New Gold Rush! To help with your education read our other Special Reports and visit our Multi-Media Archives to listen and watch interviews with CNNfn, Michael Savage, Chuck Harder, Lars Larson and many more.
May 2004 bring you closer to your true purpose in life and by grasping the meaning of true wealth may God grant you the wisdom to gain financial prosperity -- no matter what the future may bring. -CRS.
HUMILITY, DEAR READER. HUMILITY. -Bill Bonner, DR
Dec. 18, 2003
NEWS FLASH: $146,000 is the average baby boomer's net worth, according to the Wall Street Journal. About half of that is in real estate equity. How will the boomer ever retire? Sell his house? Rent? And hope to drop dead before reaching 70... ?
Humility, dear reader. Humility. Whatever happens, remain humble.
Why? Because it is the only way to keep from making a fool of yourself.
The thought crossed our minds the other day when our book made it to the Number One spot on the NY Times bestseller list. For a nanosecond, we felt the warm flush of fame... fortune... success...
And then we came to our senses, and realized that we were still the same pathetic scribbler we had always been... with no more of a clue about stock prices, the war in Iraq, church attendance, or the subjunctive mood than we had yesterday.
The advantage we have over our fellow scribblers - if we have any at all - is that we glory in our ignorance. We're proud of it to the point of arrogance.
We know we know nothing. The other poor schlep thinks he knows not only what will happen - but what is best for everybody. It makes no sense, generally, to buy an expensive stock. But this fellow is sure they're going up - so why not? He thinks there is some federal agency in charge of making stocks go up. And if there isn't, he's ready to vote to establish one. He's ready to send troops to Iraq because he's sure he can do a better job of running the place than the local incompetents... and he knows good and well what will happen if he doesn't.
And now he's sure that the economy is looking up. It is improving because his fellow meddlers at the Fed have twisted the right knobs. And if the economy fails to response, they'll jerk on some other lever. One way or another, they'll get it right, he thinks.
*** The know-it-alls got a boost in the New York Times recently - the leading rag of know-it-all-ism - in a column by David Brooks, whom we have mentioned in these pages before. Mr. Brooks cites "two long economic booms" as evidence that government works. "They are a 'howling refutation'" says he, of "those anti-political cynics." He did not mention your editor by name.... FULL STORY
[Ed. Note: Here are two of 16 favorite quotes from Financial Reckoning Day -- both of which are supported by the Fortune article below ...
#8. “In 1960, there were nearly 7 working age people for every person over 65. In 2000, that number dropped to 4.5. By 2030, the OECD expects only 2.5 people working for every dependent elderly in the developed world.”
#9.”Three little numbers at the end of the world: 1) Average age of American baby boomers on Jan.-1-02: 46. 2) Average amount in retirement plan $50,000. 3) Number of years at 6% growth to reach comfortable retirement income: 63. Eighty per cent of the population has no more than eight months worth of financial reserve.”
Read my review of "the most dangerous book of 2003": Financial Reckoning Day!
The $44 Trillion Abyss -Anna Bernasek, Fortune
Dec. 1 -- The baby-boomers are about to retire, and it's going to cost us-big. Here's what the government doesn't want you to know.
Last fall Paul O'Neill, then Secretary of the Treasury, wanted a simple answer to a thorny question: How prepared was the nation today to pay all its future bills? Two government experts worked for months to calculate the answer. Their findings, which shocked even them, were never published-the Bush administration made sure of that. The reason for the silence was that by the time the two researchers had completed their study, O'Neill had been thrown out of the Treasury and replaced by the more politically astute John Snow. No savvy administration power player would dare point out, right in the middle of tax-cut season, that there was a huge hole in the country's finances - a $44 trillion hole.
That's the kind of Washington tactic that makes Larry Kotlikoff angry. So angry, in fact, that the normally composed and carefully spoken academic starts ranting about a government conspiracy to keep us all in the dark. He even refers to this particular episode as "the great Treasury cover-up." And once you start Kotlikoff on the subject, it's hard to stop him. "I hate politicians," he says, without pausing for breath. "These people are so... FULL STORY
Gold price is going up a lot -John Embry, The Gold Report
Dec. 13, 2003
"At this juncture I am much more comfortable with gold bullion than I am with gold stocks. I think gold stocks have had an enormous run - they started percolating a bit May and June and then went ballistic. Subsequently, my fund is up 90% [since April]. Clearly stocks have done really well. I think that the stocks are okay only if the gold bullion price can exit this trading range it's in - currently between $370 and $400 - and clear $400 with some momentum and blast up to $420, which a lot of technicians are calling for.
"I'm concerned about two things: First, hedge funds are long . . . and second, the central banks, who are managing the gold market - make no mistake about that - do not want to see the gold price going up significantly here because it would imply more inflation in the system. It might lead to higher rates in the U.S., which would kill the mortgage market. So, there's a real battle going on right now. So, I really don't know in the short run what the gold price is going to do.
But I do think that over time the gold price is going up a lot, because it has become evident that the United States, in particular, has no choice but to create as much liquidity as necessary to keep the whole debt picture intact. And at the same time, because the U.S. dollar is vulnerable, I don't think any of the foreign countries really want their currencies going up a lot against the U.S. dollar, so if the U.S. dollar is showing some overt weakness, I think these countries will print money - they will buy dollars, they will lower their interest rates - they will do everything to prevent their currency from rising sharply against the U.S. dollar, and weakening their competitive position.
So, I see an ongoing, accelerating global monetary debasement as being the major factor in the gold market, and the only currency - and gold is most assuredly a currency and has been for centuries- that can't be debased is gold. So, as all these other paper currencies are created at an ever more rapid clip, the price of gold as denominated in these currencies is going skyward. It's just a matter of how long it's going to take.
As far as stocks are concerned, everything I look at, very simply, is in terms of risk and reward. In the case of gold let's say the 200-day moving average is in the neighborhood of 360; the current price is just under 380. So, I keep 20 bucks as downside max in my mind, and I see upside over the next 18 months of approximately 120 bucks, and over the next five years, of maybe 600 dollars. So, I look at that; I say, "Gee, that's not a bad risk/reward."
I look at a lot of the stocks, right now, and they have had an enormous run; some of them are just trading on the moon, in relation to what their real fundamental assets are worth. And accordingly, I think that I can lose, in the short run anyway, as much money as I can make. So I am a little less comfortable with stocks, certainly since the last time we talked when I was quite bullish about stocks.
But I could be wrong. If the bulls win out, and the gold price roars through $400, stocks are going to do just fine.
I have one stock that I am really keen on. It's called Queenstake Resources Ltd. (TSX:QRL). It's currently 66 cents to 67 cents Canadian; but when you take all the shares and warrants, there's a market cap of about $250 million, or just under $200 hundred million U.S. They bought the Jerritt Canyon Mine from Anglo Gold and Meridian Gold less than six months ago. This is a mine that produces 300,000 ounces a year-I believe it is the fifth largest producing mine in the United States. And when they bought it, it was on the premise, according to the seller, that there was only two years of reserves left. But in fact, they had already made up their mind to close this mine in 2004, and they really hadn't been pursuing new reserves and resources aggressively. The new management, whom I know well, claims that there is all sorts of ore that is in a resource category that was never pursued. They think that they can get six years reserves built up in the next couple of years.
The capital spending is all done. It's a very well-functioning mill that should top 300,000 ounces a year. It probably has a minimum of six years reserves and may have 10. It's a big property - 110 square miles of just east of the Carlin Trend in Nevada. And it's been producing since 1980 - it's produced six million ounces. So there's lots of ore there, and I think as the market gradually realizes that this is not a short-life mine, that this is a major ore body that is going to be continued to be developed, there will be a huge reevaluation of this stock. And it won't have a market cap of less than $200 million U.S.; it will have a market cap of two to three times that, with no change in price of gold. Of course, if the gold price goes, then it will be seen as a leverage play, and it will go up even more.
Avoid the home equity hangover -Sarah Max, CNNfn
Debt in lines of credit has jumped 31 percent this year. Don't let equity become a license to spend.
December 15, 2003: By Sarah Max, CNN/Money Staff Writer
BEND, Ore. (CNN/Money) - For American consumers addicted to spending, the home equity line of credit looks to be the drug of choice.
As of the third quarter this year, homeowners had $315 billion in outstanding debt from home equity lines of credit (HELOCs), according to the Federal Deposit Insurance Corporation, a 31 percent increase from the same time last year.
"For some people a home equity line of credit is a brand new shovel for digging themselves further into debt," said Keith Gumbinger, vice president for HSH Associates.
The average line of credit available as of June 2003 was about $69,500, according to a survey by the Consumer Bankers Association. Homeowners with lines of credit drew down 3.7 times for the year, taking out $13,142 each time, on average.
"Lenders are allowing people reasonably unfettered access to their equity," said Gumbinger, noting that banks are increasingly offering lines of credit at the time of closing on a first mortgage.
Unlike home equity loans, which pay one lump sum and have a fixed repayment schedule, HELOCs let homeowners tap their equity as they see fit by either writing a check linked to the account or, more recently, by using a credit card.
Momma "Rae" Savage passed away on Sunday, December 14, 2003 at 5:50PM EST and is now in GOD's hands.
Michael Savage is establishing a Memorial Fund in honor of Momma Savage. All contributions are tax-deductible. The funds will go towards a fitting memorial possibly at a hospice.
[Ed. Note: The Swiss America family extends our condolences to the surviving Savage family. Behind every great man and woman is a great mother!]
BLAST FROM THE PAST ... NOV. 2002 ... MEGATRENDS READ MORE FROM THE REAL MONEY PERSPECTIVES ARCHIVES
ABOUT THE EDITOR
David M. Bradshaw is Editor of Real Money Perspectives, publisher of Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (7/01) and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 1997, he produced a one-hour TV documentary, "Preparing Wisely for the Next Millennium," which was distributed free of charge at Blockbuster Video nationally. In 1999, he produced a one-hour radio special, "The Big Picture: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE...