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-- Posted Thursday, 5 October 2006 | Digg This Article
The following are some snippets from the most recent issue of the International Forecaster. For the full 21 page MidWeek Reading, please see subscription information below. WEDNESDAY, OCTOBER 4, 2006THE INTERNATIONAL FORECASTERMIDWEEK READING P. O. Box 510518, Punta Gorda, FL 33951-0518 An international financial, economic, political and social commentary. Published and Edited by: Bob Chapman E-mail Address International_forecaster@yahoo.com CHECK OUT OUR WEBSITE www.theinternationalforecaster.com
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 33951-0518. 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. Foreigners please use foreign U.S. dollar denominated checks or Money Orders. Note: We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com ***** RADIO APPEARANCES: To check out all of our radio appearances click on this link below: http://www.theinternationalforecaster.com/radio.php US MARKETS Our new Secretary of the Treasury, having been assigned by his handlers in the Illuminati to leave Goldman Sachs and take his new post, is as arrogant, greedy and obnoxious as anyone in the present neocon administration. Three of his important projects are - to slash Social Security, Medicare and Medicaid. These are the government’s three major domestic soft spots. At this juncture we have not heard how Henry Paulson will solve these problems. We have heard nothing from the Treasury on how it hopes to deal with the housing collapse or the possibility of a credit derivative collapse or a number of hedge funds collapsing. Our Mr. Paulson doesn’t discuss inflation. He forces us to use official government statistics, which he knows are flights into fantasy. He boasts about America’s economic strength, which he knows is being floated on a sea of liquidity, supplied by the Fed. Of course, don’t forget the tax cuts most of which went to the rich. Nowhere do we hear that confidence is being created by a mountain of debt by government, consumers and business. Nor does he discuss the collapse of American industry and services by free trade and globalization where high paying jobs are being replaced by jobs offering wages that cannot support their recipients. Now that the tax base has been gutted and debt is unsustainable, he wants to chop Social Security, Medicare and Medicaid into small pieces. He wants SS privatized so Wall Street can further loot the American public. While all this transpires, Mr. Paulson wants a strong dollar, which he and the Fed manages to make it attainable. The professional community on Wall Street looks the other way and accepts the guaranteed profits provided by our Treasury and the privately owned Fed. Mr. Paulson is a menace to our economy and our way of life... We want to remind you that foreign purchases of US securities fell to $32.9 billion in July from $75.1 billion in June. That means July had a shortfall, which we believe was made up by the Fed monetizing the debt. That is a direct infusion of money into the system, which is immediately inflationary. In the first quarter foreigners sent $528 billion into the US and in the second quarter $336 billion. Non-Treasury purchases fell as well from $186 billion in the first quarter to $122 billion in the second quarter. The only reason the deficit did not grow larger was that the outflow of funds from the US fell to $212 billion from $356 billion in the first quarter. The dollar may be strong now, but we do not believe that the fall in outflow can be maintained. If this overall trend continues, that is diminishing inflow, you can expect downward pressure on the dollar. Another factor is if the dollar slides and foreign holders of Treasuries sell, there could be a stampede to get out the door. That would also affect all dollar-denominated assets. The way we see it the dollar is finally again headed down. The alternatives are gold, silver and Swiss francs. The slowing US economy and the fall in the housing market are further extenuating factors. US GDP growth fell from 5.9% in the first quarter to 2.6% in the second quarter. The estimate for the third quarter is 1.8%. The slowing, which really began in the first quarter unfortunately is accompanied by official inflation of 4.1% and real inflation of over 10%. Over the past two years mortgage debt has risen 30%, 112% over the past seven years and 12.7% last year. Total mortgages increased by $1.168 trillion over the second quarter to $12.758 billion. That is close to the size of our GDP. Thus, mortgage debt rose from $6.1 trillion seven years ago to $12.758 trillion. The infusion of capital has kept the US economy afloat. As you have seen from our weekly bank credit figures that as well is increasing at a 9.5% rate. The issuance of credit for the last month has slowed. The question is will it continue to do so? We are sure house values will fall. In August, they fell 1.7%. If the Fed does not continue to pour vast amounts of money and credit into the system, the system will decline into contraction. Will people continue to accumulate debt that is so readily available? That debt load is already 320% of GDP and its servicing takes 17% of the economy’s earnings. The economy cannot handle that, especially a slowing economy... The world’s five most competitive economies are Switzerland, Finland, Sweden, Denmark, Singapore and number six is the US. The 2006 fiscal year ended for the federal government on 9/29/06 and public debt increased $574.3 billion versus $553.7 billion in 2005, an increase of 3.7%. The total cash debt is now $8,506,973,899 trillion. Just three weeks ago the CBO predicted $260 billion and a decrease in the annual debt of 14.1%. It looks like the CBO forgot Social Securities’ $191 billion surplus and the off budget items for Iraq and Afghanistan. Another of the administrations’ little tricks was to suspend Medicare payments for the last nine days of the fiscal year... GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS People have been complaining that Schwab and CIBC and perhaps other brokerage firms are hypothecating (lending) un-marginable gold and silver securities. They are aiding and abetting the suppression of these shares. If you have a brokerage account you should find out if your firm is lending your securities. If they are have your account transferred to another brokerage that doesn’t do that. On Monday, gold traded higher in London and traded up $2.80 into the NY opening. From there gold met pressure all day long closing off $1.10 at $597.60. Silver was up $0.30 early on and had to settle for a $0.09 gain to close at $11.50. We found it mystifying that gold attracted so much pressure and at the same time the euro and pound traded strongly higher. The December close was $603.30, -$0.90 with silver at $11.64, up $0.10. Copper closed at $3.43, off $0.03. The access aftermarket was off $2.60. Gold open interest rose 2,704 contracts to 326,828. Silver OI fell 923 contracts to 99,007. Last week silver stockpiles increased 2,077,496 ounces to 105,220,239 ounces as most of North American production goes to the Comex. America doesn’t export silver - it imports silver, as domestic production is only 28.5% of supply. Tocom gold moved higher today on lower volume. On Friday, Comex OI rose 2,204; CBOT fell 669. On Friday, the big Tocom shorts increased their total net short positions by 1,058 contracts to 106,407 contracts. Goldman covered 451 contracts taking their total position to 34,744. The big Tocom shorts added 76 silver contracts on the long-side taking their total short to 2,049 contracts...
Turkey imported 26.604 tons of gold in September, 20.6% above the August volume and up 46.7% y-o-y. Prices for purchases were 5.1% below August and 31% above a year ago. We still do not know who the real heavy gold seller was in September. We’ll find out on Thursday if it was the ECB. They could have sold more than 100 tons continuing to reduce the gold cover on the euro. Our government and others came back to slam gold and silver on Tuesday in a powerful fashion. Oh! The benefits of a corporatist fascist society. It wasn’t only the gold and silver markets, it was commodities as well. Hedge fund selling assisted this downward move. Our spies tell us two more big hedge funds are going to bite the dust momentarily. It forced them to sell everything including the kitchen sink. The attack comes and the support for the dollar, stock and bond markets is a move of desperation by George and the elitist neocons, Republicans and all incumbents are in serious trouble. Woodward’s revelations, particularly about Kissinger and his footprints all over US foreign policy, which we noted 2-years ago, and the vile Foley homosexual scandal, will affect everyone in Congress, whether they like it or not. Republicans know if they lose one or both Houses, George Bush will be impeached. It is go-for-broke. We might also apprise you that the Working Group on Financial Markets had a meeting on Monday as a prelude to today’s attack. Those who do not believe that all markets are manipulated are just plain dumb. Can’t everyone with a brain see it? Interest rates have been capped at least to the election to hold an imploding real estate market and hold bond values up as the market is managed to new highs. Energy prices are crushed and gold, silver and commodities are bashed. They call this ruthless suppression. While this was going on the dollar lost more ground today falling .15 to 82.35, pushing toward that magic number of 80 and long-term support. Normally gold would have been strong with a weak dollar. This fall is all the more puzzling because the funds have cut their longs 50% and the shorts have covered their shorts by 50%. Even more mysterious is the commercials are buying and gold is falling. The PPT and the Fed obviously didn’t even tell their own partners in crime what was going down today. Open interest lost 1,194 contracts on Monday to 325,634 and silver open interest rose 204 contracts to 99,211. In fact, we bet the funds are shorting and that means we could be again reaching a support level at $550 to $560. In addition, derivatives are raising havoc in all markets. They are uncontrolled and unregulated, so anything can happen. Alternatively, the European central banks could already be sellers of some of their 2006-2007, 500-ton gold tranche. That’s our guess. We will find out, believe me. The gold buyers in India, the Middle East and China have to be very happy. In Tokyo on Monday gold fell only slightly, but on Tuesday PM it will surely be down limit. Yesterday on Comex OI fell 1,194 contracts and on CBOT 1,236. On Wednesday, we’ll see what the European Central Bank balance sheet has to say about gold sales. We’ll soon learn if they were the malefactors...
-- Posted Thursday, 5 October 2006 | Digg This Article
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