|
-- Posted Sunday, 15 October 2006 | Digg This Article
The following are some snippets from the most recent issue of the International Forecaster. For the full 18 page issue, please see subscription information below. SATURDAY OCTOBER 14, 2006THE INTERNATIONAL FORECASTEROCTOBER 2006 (#2) Vol. 10 No. 10-2 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 Massachusetts voters in 139 cities and towns, or 1/3 of its communities, will get a rare chance to register their opinion on the wars and occupations in Iraq and Afghanistan when they consider a ballot question on whether the US should immediately withdraw all troops. About 22% of the states’ voters will get a chance to have their say on the issue. The issue has been presented so that voters can express their disgust with the immorality and criminality of the war and the huge loss of life. The American Friends Service Committee says it has to start somewhere and why not Massachusetts. They expect the results to be overwhelming. The average American family has $3,800 in cash in the bank, no retirement account whatsoever, owes $90,000 on their mortgage and owes $2,200 in credit card debt. We don’t exactly call that being prepared for economic hardship. A German citizen, Khaled al-Masri, 43, testified this week in a Spanish court that he was kidnapped and tortured by US intelligence agents in 2003, having been flown by the CIA, via Spain, to Afghanistan. Earlier this year the Kuwaiti-born al-Masri testified before German lawmakers and a European Parliament panel. This is why our Congress and President passed their torture legislation, hoping to cloak their evil in legality. As scandal after corporate scandal breaks, our new Secretary of the Treasury Henry Paulson, wants to ease or do away with the Sarbanes-Oxley Law, a corporate-governance law. Mr. Paulson wants to curb investor lawsuits and make corporate prosecutions harder so that corporate America can more easily loot American citizens. The revocation of this law is part of Paulson’s package of destroying Medicare and Social Security. Both Republican and Democrat lawmakers want to revise a rule requiring auditors to certify that a company’s internal financial controls are in order. Businesses, which finances these politicians’ campaigns want relief from lawsuits, fewer criminal prosecutions and amend to overlapping state and federal rules. They really want to gut the most important part of the legislation so they can again continue to run roughshod over Americans. Paulson and corporate America have made their fortunes on the backs of American investors and they want to continue to do so. The latest statistics from Arizona tell us the price of existing homes dipped 3.1% in Scottsdale from August to September and are down from their peak in June of 9.4%. If you remember this was the market that was bulletproof. Home and condo sales fell 47% YOY. Prices fell as well in Paradise Valley off 3% to $1.62 million. Workers have not had a wage increase since 1972. A worker earned $334.60 a week, 24 years ago and that figure is now $277.96. Families managed because wives went to work and that is how families stayed even. That is until they couldn’t survive anymore and they increased debt and removed equity from their homes. Those days will soon be behind us and a day of reckoning will be at hand... The Fed says the economy grew 2.5% in the third quarter and that it would stay at that level in the fourth quarter. The drag on the economy is housing, which as Fed Chairman Ben Bernanke says is going to undergo a substantial correction, which is lopping off 19% of GDP. Where were all these forecasters in June 2005 when the real estate market topped out? They were all lying to keep the public buying. The Fed is mad if they expect GDP growth to be over 1-1/2% next year and it could be zero. Anything under 2% is recession. Homebuilding will probably fall 25% for the year and 25% to 50% next year. Inventories of new and used homes will remain very high and the wealth effect on consumption will die as will the psychology of higher house prices. The Fed sees a savings increase to 1% to 2%. They are dreaming with the debt out there and the rising unemployment. Real income, even with wage increases cannot grow, with inflation over 10%. As the Fed pumps money and credit into the commercial banking system at a 13% rate some Fed regulators are becoming concerned especially with the concentration in commercial real estate, which should top out in late 2007. The Federal Agricultural Mortgage Corp. (Farmer Mac) will restate three years’ worth of financial statements to account for derivatives losses. Specifically, the lender will no longer apply hedge accounting to derivatives it uses to manage interest rate risk. In the future they will mark derivatives to the market, rather than deferring or offsetting them. The adjustments will not materially affect the balance sheet says the agency. We have heard that before... All those genius economists and analysts are predicting the Fed will reduce interest rate by June. That is the new party line. They have discovered house prices are dropping for the first time in 11 years. Of course, none of them had the guts or the brains to call the top of the real estate market in June 2005. If they did they would in all likelihood lose their jobs. These are 82 economists who sometimes are taken for sheep. They are all apologists. Real estate agents or would-be agents are always some of the last to know that their industry is in recession. That is why in California in May, 500,000 people had real estate licenses or one for every 55 adults in the state. They may still be employed but many have no income coming in. In all of the 30 hot bubble markets building continues unabated as inventories of unsold new and used homes reach 1990 heights. That is why in August the sale of used homes fell 1.7% nationwide. They are going to keep on falling making it harder for owners to tap the equity in their homes as unemployment rises. This will affect retrial sales and expansion. Next it’s lower sales at strip malls and department stores. Offshoring and outsourcing are still the corporate rage. No one gets the message, not even Wall Street. Three weeks from now the Dow begins its decent along with the economy. This is a trap – don’t get caught in it. The trade deficit widened in August 2.7% to a record $69.9 billion and no one seems to care. That is over 4% higher than the consensus experts predicted. So much for experts. For the first 8-months of the year the deficit was $522.8 billion, up from $457 billion YOY, or up 13%. The trade deficit with China has widened to a record $22.0 billion in August, versus $18.5 billion YOY. The US imported a record $26.7 billion in goods from China in August. The yuan has not been revalued and Schirmer & Graham have not renewed their bill in the Senate to put punitive tariffs on Chinese goods. That is why we need people like them out of Congress. The median price for a new home will probably drop 0.2% to $240,500 in 2006 says Bloomberg, the first decline since a drop of 2.4% in 1991. Used homes will probably rise 1.6% to $223,000, the smallest gain on record. The inventory of homes on the market rose to a record 3.92 million in August. There were 568,000 new homes for sale just below July’s 570,000... We still can’t get over Sir Alan Greenspan’s stupid comment regarding the housing boom. “The housing boom was due to global integration and because the Berlin Wall came down in 1989,” some 14 year’s before the housing boom. Mr. Greenspan made lots of mistakes and he is not dumb, but he is solely guilty of the monstrosity we face today. Needless to say, his excuses are lies. He has gotten so accustomed to The Street and the financial media extolling his ridiculous statements and theorems he still believes he can issue absurd observations and theories that people will swallow. What Alan was all about was debt deflation. He did anything possible to avoid recession and depression. In 1996 all he had to do was raise margin requirements to cool off the stock market and in the late 90s the same plus higher interest rates. He did the same thing in the 2000s as he did in the late 90s. He pumped out money at a 12-14% clip, just as Ben Bernanke is now doing. Greenspan, Bernanke, George and the neocons and Henry Paulson and his Goldman Sachs gang have lost their way. The Treasury Department has become Goldman Sachs, South. When negotiations were held with China the Chinese government thought they were just dealing with Goldman, not a sovereign nation. The Chinese rolled them. They came back with absolutely zero. These meatballs are in a quandary. They do not know what to do. These people are high-priced thugs with suits on who have been allowed to cheat the American people and get away with it. They are so out of place they do not know who is on first base. The worst part is we get to pay for their mistakes. Corporatist fascism marches on. A new bigger and better monopoly. A merger of AT&T and Bell South shows George and the neocons have again abdicated responsibility for protecting consumers when huge companies combine. This does not instill competition and weakens the core of our economic strength and at the same time takes advantage of users. Anti-trust doesn’t exist anymore. We have another monopoly, but what else would you expect from George and the neocons? As you can see, as Cole Porter said, “Anything Goes.” The last merger was between Whirlpool and Maytag, which now controls 75% of the home appliance market and is as a reward, shipping all their production to Mexico and putting thousands of Americans out of good paying jobs. This administration and the Republicans have made their bed and now they will have to sleep in it. They can expect 20 years of being out of power again... GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS On Wednesday, gold moved up $5.00 and as it did the HUI was hit. Thus, gains were taken away and gold ended the day up $0.40 at $572.50. Silver held in at plus $0.11 to $11.23. The December contract month finished about the same. Gold open interest fell 1,153 contracts to 334,329, while silver OI was up two contracts to 100,304. All base metals finished higher with copper at $3.41, up $0.03. On Tuesday, the gold OI net of Comex and CBOT was a loss of 268 contracts. On Tocom on Tuesday the big gold shorts increased their net short position by 5,702 contracts to 98,294. Goldman increased contracts by 462 to 32,395. The silver net short increased by 12 contracts to 1,980 contracts. On Wednesday, the Dow fell 15 points to 11,852; Nasdaq fell 42-Dow points and S&P 27. Oil fell $0.93 to $57.59. Gasoline $1.45, down 0.02 and natural gas fell $0.32 to $6.15. The euro was $1.2513 minus .19, the pound minus $0.04 to $1.88533 and the dollar index rose .12 to 86.29. The 2-year Treasury yielded 4.85% and the 10-year 4.78%. South Africa’s Marxist government has cut the royalty rate from 3% to 1.5% on refined gold and platinum, but they still refuse to change the formula from a tax on revenues to a tax on profits. The rate on diamonds was cut from 8% to 5%. According to the ECB, central banks in the European Gold Agreement sold 40 million euros ($50.1 million) or 2.7 tons of gold in the week ended 10/06. Somebody is not telling the truth. South Africa’s mining production for the 3rd quarter increased 2.6% versus the 2nd quarter. Gold production increased 0.6% for August YOY. After a seasonal adjustment production decreased 2.5%. The Hulbert Gold Newsletter Sentiment Index is at 25%, not far off its all-time low. Thursday was jackrabbit day in the gold market. Gold was up $4.00 and in London trading, the sellers took the gain out. Near the opening in NYC the price was +$1.10. Gold ended the day up $3.50 to $576.00 and silver rose $0.04 to $11.27. The trade figures were released and they were as bad as they could be and gold literally went nowhere. Finally at the end of the day the producer shares rose, but they and the exploration stocks and juniors were soft all day. Gold open interest fell 1,108 contracts to 333,221, although silver OI rose 1,341 contracts to 101,645, which was quite good. Some Swiss refineries are operating 24/7 and the physical off-take from India is strong and wild. Yesterday net open gold interest on CBOT and Comex fell 321 contracts. The markets are like a see-saw with a slight tilt to the soft side. The Wednesday Tocom big shorts reduced their shorts by 3,439 contracts to 94,855. Goldman covered 1,218 contracts to cut their net position to 31,177. The silver shorts fell 87 contracts to 1,893. December gold rose $3.80 to $580.30, silver rose $0.05 to $11.38, copper fell $0.02 to $3.39 and the rest of the base metals rose. The gold shorts continue to cover and all the signs say we are on a fundamental bottom. We should trade sideways to slightly higher over the next three weeks, working our way to $600. Then in the next rally we’ll test $730 again. Finally the XAU gained 3.17 to 125.31 and the HUI boomed 7.08 higher to 294.61 on its high. Thursday could have been a very important turnaround day. They let the Dow loose again on Thursday, up 96 to 11,948. The S&P was up 130 Dow points and Nasdaq was up 228 Dow points. Oil ended up $0.27 to $57.86, gasoline rose $0.01 to $1.46 and natural gas fell -$0.37 to $5.78. The euro rose $0.34 to $1.2554 and the pound was up $0.45 to $1.8588. The dollar index fell .18 to 86.71. The 2-year Treasury yielded 4.84% and the 10’s 4.77%. In August US gold exports rose 55% and YOY they are up 83%. This is non-monetary gold. Kazakhstan produced 6,662 kilos of refined gold in the January-September period, 6.7% less than in 2005 in the same time period. Silver production fell 1.6% to 593,376 kilos. The Vice Secretary-General of China’s General Chamber of Commerce told silver experts China’s annual demand for silver will reach 3,000 tons by 2010. Current world supply is 20,000 tons. Mr. Wang said the gap in supply to usage is still 100 million to 125 million ounces worldwide. He said China would increase silver export from 3,500 to 4,000 tons in 2007. Nineteen percent of Chinese sales will be jewelry and silverware. Secondary film consumption is also a big market in China that means continuing large consumption. Jewelry demand out of Asia is phenomenal. Imports from India have popped up over the past 3-4 weeks. The gold suppression cartel is being defeated by the women of India, the Middle East and China - they do not want paper money, they want gold and silver. Booming economies have sent gold and silver sales wild. The central banks have been swapping gold in what is called quality gold swaps. The quality factor is the varying fineness. The only country with large amounts of 22-carat gold from coin melt is the US Treasury, as a result of the 1930s confiscation. Thus, when Herr Weber of the Bundesbank says swaps, he means swaps with the US Treasury. The South African mining industry has blamed government policies for decline in investment since 2004, which has resulted in the loss of 20,000 jobs. Now you know why we do not recommend any kind of investment in South Africa. Empowerment is a Marxist disaster. Incompetence is the order of the day. Friday started with gold up $4.20 and before we knew it the price was $12.20. It sold back to plus $7.80 and rose from then on to close up $12.90 at $588.90. Silver rose $0.30 to $11.57. Close for the December contract month was up $12.40 to $592.70 and silver up $0.30 to $11.68. Copper closed in December, up $0.03 to $3.41. The access aftermarket was up $1.00 on gold and $0.04 on silver. All day long the cartel sold and the physical market bought. Today India and Turkey were the featured physical buyers again. They may be keeping the price down but the third world is buying all they can get their hands on. It won’t be long now before the central banks are out of gold. What are Europeans and North American doing – nothing? They are idiots. As we wrote yesterday, we thought the correction was over and that we’d challenge $600 soon. We also said we’d be up today, and so we were. The shorts have covered about 60% of their short positions and the commercials have been going long. That leaves specs, hedgies and other funds generally short and they will have to cover. The COT report showed large specs decreased longs by $1,359 contracts and increased shorts by 5,626. “The commercials increased longs by 6,440 contracts and reduced shorts by 2,952.” The small specs reduced longs by 6,903 contracts to 334,842, which tells us there is a very large spec short position. We could soon, that is by 11/15, see a massive short covering rally. Silver open interest rose 473 contracts to 102,118. The HUI closed up 8.76 to 303.37 and the XAU rose 3.61 to 128.92. Thursday on Tocom the big shorts added 1,080 contracts to their total short for a total, of 95,935 contracts. Goldman increased their short by 489 contracts to 31,666. They also added 66 silver contracts making the total 1,959. On Friday, the Dow finished up 13 to 11,961, S&P rose 27 Dow points and Nasdaq rose 79 Dow points. They hit the energy complex just before the close. Oil had been up $1.18 and finished up $0.79 to $58.65, gasoline was up $0.02 to $1.47 and natural gas lost $0.09 to $5.69. The dollar index was up 16 to 86.87, the euro and pound were higher all day, yet the euro ended down $.048 to $1.2511, the pound off $0.33 to $1.8561 and the Canadian dollar off .30 to 87.93. The 2-year Treasury note was 4.87% and the 10’s were 4.80%...
-- Posted Sunday, 15 October 2006 | 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.
|
