|
-- Posted Thursday, 7 April 2005 | Digg This Article
THE INTERNATIONAL FORECASTERAPRIL 2005 (#1) Vol. 9 No. 4-1 P. O. Box 510518, Punta Gorda, FL 33951An international financial, economic, political and social commentary. Published and Edited by: Bob Chapman E-mail Addresses International_forecaster@yahoo.com (for correspondence) IF_distctr@yahoo.com (for information regarding your subscription or renewals) CHECK OUT OUR WEBSITE - ADDRESS IS: US MARKETS Real estate rates are finally asserting themselves and the leveraged play known as the carry trade is finally coming to a conclusion. Inflation is about to race ahead as the budget and current account deficits spin out of control. We won’t see the reign of real interest rates until Sir Alan Greenspan leaves office. We doubt he will increase interest rates more than 3/4’s of an additional point prior to his departure. Thus, the profligacy will last until next February. We have no idea at this point what his successor will do. Measured tightening via higher interest rates is being offset by monetary creation, excessive credit creation via the banking system and now persistent inflation. The only way to cease the madness is to allow real interest rates to move considerably higher. This will allow the system to be purged. In addition, using bogus official figures, a move in inflation from 2 to 3.3% has offset about 75% of the 1-3/4% increase in Fed rates over the past nine months. As we said in previous issues, Sir Alan is 9 to 12 months behind the curve and he has been there for several years, This, needless to say, does not instill confidence in the so-called science of macro policy, which is no more than guess and by golly. Economics like the stock market is not a science – it is an art form. Sir Alan has blown it and he knows it. Unfortunately, the world won’t realize it until he is gone. The way we figure it we’ll get another 3/4% increase in Fed funds’ rates by yearend. Next year you can figure on an increase of 3 to 3-3/4%. That would put the 10-year US Treasury note at 7-1/2% to 8-1/4% and that would put 30-year fixed mortgage notes at 8-1/2 to 9-1/4%. Those numbers could pull the system into some sort of balance, dependent on political, monetary, fiscal, financial, economic and world events, a tall order for an art form. If the elitists really wanted to purge the system the 10-year Treasury note would go to 12-1/2%, or higher. Yes, we would have depression, but that is what the system will have sooner or later anyway. Between now and the end of 2006, the budget deficit and current account deficits will get worse and gold and silver will trade much higher as inflation soars. During 2006, the dollar will finally fall through 80 on the 4/7/05 Dollar Index. That will bring the unwinding of the dollar from the four corners of the world. The Fed, for these past five years, has engaged in reckless monetary accommodation with interest rates that created a housing bubble and a free ride for the carry trade. It’s like Wall Street, the banks, insurance companies and hedge funds as well as the overstretched American public - all were subsidiaries of the Fed. A time of milk and honey never to be seen again in our lifetimes. While all that debt and speculation is liquidity, little money will be saved. It will be economic survival, debt liquidation and gold and silver related assts. You won’t see a 5% savings rate for at least five years and without that there will be no recovery. No foreigner will lend Americans money again for some time to come. He who has the gold will make the rules. It is not a case of the Fed throwing in the towel. It is a case of the Fed’s role being abolished and its role being assumed by the US Treasury. The Fed has been a disaster since its inception. Don’t think for one minute the rest of the world is going to get off any easier than we are. The suffering will be universal. Rebalancing will take many years. If the Fed doesn’t follow at a minimum, our interest rate recommendations and the cessation of excess money and credit, our system will totally collapse and revolution will follow. Investors who are lucky enough to exit the market and bonds in time, have to have the sense to move to gold and silver related assets, because they will be the only safe harbor in the storm to come. European socialists have again abused their system by abandoning the stability pact and creating the possibility of political, fiscal and economic failure. If fiscal conservatism is not followed and European governments follow the lead of George and the neocons, Congress and the Fed, they will be every bit as doomed as the US is. The barometer will be when the euro price of an ounce of gold trades convincingly above 350. That is on the short term. On the long term, higher gold prices versus the euro and the dollar are a lock. Owning euros or euro treasuries probably will be tenable until the end of 2006, and then everything has to be in gold. In the meantime, the euro will trade to $1.60 to $1.65, but when that is attained you have to see where the euro stands versus gold. The euros 15% gold backing will help, but it won’t save it versus gold. As the price of gold breaks out in euros it will attract more gold buying in euros. Gold will have already broken out over $500 an ounce in dollars. As this unfolds, gold will also attract money from all currencies and the next phase of the bull market in gold will have begun. The Arizona State House of Representatives have agreed to build on Proposition 200 by denying illegal aliens childcare subsidies, adult classes, public housing and other government-funded benefits. Revised Bull 2030, bans immigrants here illegally from attending any of the state’s universities or community colleges. It bans them from public housing, utility subsidies, family literacy classes, adult education courses and government-funded childcare. The move has begun full force, in spite of our president and Congress, by the states to rid themselves of this financially unfair burden and move toward sending these people home. We know all the reasons why they re in America and we know most illegal aliens are fine decent people, but it is unfair for our government to protect these people and keep them here in the false hope they might be allowed to stay. It is up to the wealthy of Mexico to assume their rightful burden of helping their own people. They can help by educating them beyond the sixth grade and encourage them by creating jobs for them by investing in their future instead of keeping their wealth in some offshore bank. It deeply disturbs us every day that we are told Iran is our enemy and that they are preparing WMD, when they are interested in using nuclear power like so many other nations have. The problem really is that in June Iran is preparing to open an oil exchange that will trade oil in euros as well as dollars. That probably will bring about the demise of the dollar as the world’s reserve currency. That is why our President and his accomplices want to attack and destroy Iran. Due to systemic problems, a lower dollar will not give any assistance to the trade deficit until the Dollar Index hits 65 to 70. It is currently close to 84. Higher interest rates at current levels will not appreciably bite into the economy. A Greenspan compromise will see rates 3/4% higher by January. That will affect the general economy only slightly. It will begin the beginning of a profound effect on the real estate market. If our forecast is correct, you will see the 30-year fixed mortgage at 6-3/4% to 7% by the end of the year. That will cause a leveling in housing prices and a flat to 10% correction dependent on the housing circumstances. By the end of 2006 we see a 10-year treasury note at 7-3/4% to 8-1/4% and a 30-year mortgage rate of 8-3/4% to 9-1/4%. Rates will not be rising to slow the economy, they will be rising to dampen inflation and support a falling dollar. As problems become manifest, gold will break out on its own. It will still be influenced by the fall in the dollar, but will be influenced by other negative domestic events, the housing collapse being one of them. Gold will also begin to appreciate against other currencies, especially the euro. Scandals will get bigger and more damaging. We may well have a Selective Service Draft and an extension of warfare in other theaters. Every world economic and monetary depression has had wars to divert the attention of the masses, why should this planned fiasco be any different? All of you investors who have left gold coins and shares will be very unhappy. Reading the reports of traders and market timers has destroyed your balanced thinking process. The markets are manipulated. You cannot effectively trade them. Your charts are next to useless. Get long and stay long. The shares are dirt-cheap. The elitist suppression of gold prices has given you an unbelievable opportunity to buy shares at 70% discounts. Coins should be selling at double today’s prices. The deteriorating fundamentals of the dollar are horrid and those of many other currencies are not much better. As interest rates rise, economies will slow as will tax revenues exacerbating governmental debt. At least until 2007 oil will remain very expensive. Stocks are finally about to correct. This week’s repo pool action will be very important. Long term the course is set. Long term should be your major concern. Remember, if you are not in the game you cannot win. China has about $450 billion in dollar assets and Hong Kong, we might add, has about $180 billion, or a total of $630 billion. If the dollar drops by 33%, that is a loss of 14% of GDP or about $210 billion. This will be a massive loss for the Chinese. Military analysts warn that if American forces are not pulled out of Iraq in a year, a draft will be needed to meet manpower requirements. The breaking point will be mid-2006, agreed Lawrence Korb, a draft opponent and assistant defense secretary in the Reagan administration. George and the neocons are a disgrace to our country. More for subscribers.... ittle has
GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS It might interest you to know that there are 25 to 45 times as many derivatives against gold as against other commodities, given its portion of the commodities market. There can only be one answer for this gigantic distortion and that is manipulation. Gold in euro terms tightly continues to work its way higher. It was $330 earlier in the week; $355 has been resistance several times. If there is a breakout – watch out. Silver stocks late last week and early this week dropped to 101,453,481, which is a multi-year low. In the face of Marxist labor unions and massive layoffs, the National Union of Mineworkers say, “They shouldn’t get less than a 10% raise. Our view is there is no crisis.” They are totally out of their minds. The industry has hemorrhaged billions of rand in cash over the past 24 months, amid an appreciating rand. Harmony has laid off 9,000 and has another 4,900 lined up for layoffs at four mines. DRDGold is ready to cut 5,600. In 1987 there was a major strike of 300,000 and after it was over 30,000 were fired. A strike will cut gold production and press gold prices higher. Here is another deliberate leak designed to suppress gold prices from the Frankfurter Allgemeine Zeitung: The IMF is mulling the sale of 25-66% of its 3,217 tons of gold reserves in order to provide debt relief to some developing nations. Of course, this stalwart newspaper heard this rumor from an unnamed source. The socialists in Germany want to dump German-held gold so they can give the proceeds to the unemployed, because their tenure in office has been a failure. We also believe Germany has secretly leased lots of gold they cannot get back and they want to make false sales into the market to even out their positions. We also believe the same thing may be going on at the IMF or they could be sellers to allow London bullion banks to cover shorts. They are all running out of physical gold and the scam will soon be up and gold will quickly go considerably higher. Desperate people do desperate things. A group of brokerage firms announced creation of what they call the Counterparty Risk Management Group, whose aim is to manipulate the prices of certain securities and derivatives. This points out the vast criminal conspiracy that is going on with the planning and assistance of the US government. You cannot have law enforcement when your own government is breaking the law with impunity. This would be our opportunity to file a civil suit against these brokerage houses and in the discovery process find out exactly what they are doing and who is running the show. It is our belief the Counterparty Risk Management Group is an extension of The Working Group on Financial Markets. That means a certain secret group led by the Treasury and the FED not only rig all our markets, but the brokerage firms have a license to steal from the public. At the G7 meeting in April a discussion will be held on selling 13 to 16 million ounces of IMF gold in a manner that would be communicated clearly to the markets and not be disruptive. The sales, if approved, would be spread over a reasonable period of time. They would need US and near universal support of 184 countries. We believe the exercise is an attempt to suppress gold prices and, if sales were approved, they could be to cover previous undisclosed leasing, or to bail out London bullion dealers who had to deliver and return borrowed gold. We remind you again, Pierre Lassonde, CEO of Newmont and now leader of the World Gold Fantasy Council; last November took $15 million in profits selling his Newmont stock. He currently owns 45,000 shares worth about $2 million. He has no confidence in the gold market. He not only sold his stock, now he is selling out owners of gold related assets. ***** From an interested reader who calls a turncoat a turncoat. You could entitle this Benedict Arnold Lassonde. Greetings Mr. Chapman; Chris Powell sent me your fine and most refreshing piece. I thought I was the only one screaming from the rooftops re. P. Lassonde. You nailing him to his own wall of deceit was much appreciated! Here's a guy that is conspicuous by his absence, of comment and opinion relative to the rigging scam of precious metals. What's his problem?! Could it be the enticement of a dollar bill? Oh no, not the author of "The Gold Book?" (Penguin Books 1990. ISBN O-14-013397-6) Ch. 6 tells the readers what they should buy; (bullion and gold coins lead the list.) And get this: Ch.9 tells of the "scams," associated with investing in the sector. He describes "dirt pile swindles" "The making of a fools gold mine" and "The packaging of the scam." If I was reading that for the first time, I would think he was describing the image of the WGC and their phantom ETF gold fund. Wow! Talk about scams, by fools for fools. P. Lassonde is a filthy-lucre-loving Benedict Arnold of the noble metal sector; a bullion price predator in league with the enema of manipulation. (that reads correctly) I wonder what his price was to switch allegiance? To think that supposedly sane sober mining executives that annually donate to the registration membership coffers of the WGC, $60+ Ml., so these twisted minds can force-feed brain washing jewelry pabulum dialectics in return, is a riddle not even Rubick could understand. Your pen is a mighty weapon Bob; keep firing your lethal ordinance. ***** All 35 pages for paying subscribers.... ** Receive an Introductory Copy of the IF -- See Below ** SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $129.95 U.S. Funds. Make check payable to Robert Chapman (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$129.95 for a one-year subscription. Note: We publish twice a month by surface mail or 3-4 times a month by E-mail. Correspondence to Bob Chapman international_forecaster@yahoo.com, or for subscription information IF_distctr@yahoo.com Foreigners please use foreign U.S. dollar denominated checks or Money Orders. *****
-- Posted Thursday, 7 April 2005 | Digg This Article
Previous Articles by Bob Chapman
Special Offer:
CGI Central - custom CGI and PHP scripts
** Receive an Introductory Copy of the IF -- Please Use the Form Below**
Please allow 24 hours for a response to your request.
|
