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-- Posted Wednesday, 6 June 2007 | Digg This Article
The following are some snippets from the most recent issue of the International Forecaster. For the full 19 page MidWeek Reading, please see subscription information below. WEDNESDAY JUNE 6, 2007THE INTERNATIONAL FORECASTER06_06_07_MW_IF 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
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US MARKETS ... The foreign flow of funds into US dollar based assets continues to slow and interest rates climb. As rates climb consumption should contract, imports will fall and the whole world will be effected, especially China, Japan, Canada and Mexico. That should send world stock markets lower. These nations have copious amounts of US Treasuries and they’ll be sellers, which will drive interest rates higher. In 1998, when Asia was selling Treasuries, the IMF stepped in and made them loans so they wouldn’t have to sell, so in essence the Treasuries are really loans and the dollar really isn’t a reserve currency. Such a state of affairs could lead to the US either devaluing their currency, reneging on dollars outside the country and a moratorium on external debt payment. ... At least in the Boston area lower prices are bringing out some buyers. In the suburb of Wakefield a home that was for sale over the last two years for $370,000 sold for $319,900. That is a 14% correction from the top of the market just two years ago. In April the state had a 10.3-month supply of single-family homes, compared with nine months in 2005 and 7.3-months in 2004. Overall new sale prices are 10% to 18% lower than their peak prices. In Barron’s for the second consecutive week, the venerable Alan Abelson highlighted the folly, which we have been highlighting for years and that is the duplicity of the BLS’s Birth/Death model. We quote, “this exercise in statistical fantasy added 203,000, that is 46,000 more than the entire gain reported in the official tally.” A job that is strictly an illusory statistic. Incredulously the B/D model manufactured 40,000 jobs in construction in May, an increase of 3,000 from May 2006, and it created 135,000-construction jobs yoy. This is totally implausible. Our question is where was Alan and all the other experts in 1986 and all the years that followed? It should be noted that MZM growth has accelerated to 12.8% annualized over the past three months, or 8.1% yoy. US equity mutual fund liquidity fell to 3.7% at the end of April, a record low. The net long positions in hedge funds are 62% up 1.5% in the last week and up 52% from the end of April. The number of people working in real estate finance during April fell by more than 10,000 from March says government data. They must have forgot to tell the mugs at the BLS. ACC Capital Holdings laid off 2,600 people in six states. That is the old Ameriquest. Option One cut 600 and National City Mortgage is offshoring more Ohio jobs to India. Net Bank cut 120 South Carolina jobs. Late last week Tim Griffin, formerly right-hand man to Karl Rove, resigned as US Attorney for Arkansas just hours after BBC-TV “Newsnight” reported that Congressman John Conyers requested the network’s evidence on Griffin’s involvement in “caging voters.” Griffin arranged the caging lists for state party leaders. This, of course, was a Karl Rove operation. Over the past year food prices are up 3.7% and are on track to jump by as much as 7% by year’s end. That is double the rate of 2006. In addition, gas is up 2.9%. Eggs alone are up 18.6%, chicken 6%, bread 6% and beef steaks 5.5%. Syria became the second Middle Eastern nation in two weeks to say it will dump its currency peg to the dollar to curb rising import costs and inflation. The shift away from the dollar is a sign of waning attraction of the currency for central banks around the world. The dollar made up 64.7% of global foreign exchange reserves in the fourth quarter, down from 65.8% in the prior three months. The euro’s share was 25.8%, the highest since its 1999 debut. The next possible shifter is the UAE. Orders placed with factories rose less than forecast, up 0.3% following a 4.1% gain in March. An index of pending sales of existing homes in the US unexpectedly fell to the lowest level in more than four years in April, a further sign that the real estate slump will linger for sometime to come. The index of purchase agreements, or pending home resales, fell 3.2% to 101.4, the lowest since February 2003, after a 4.5% decline in March. The index was down 10.2% from April 2006. Homebuilders are cutting staff. Pulte Homes is about to fire 16% of its staff. In just the last year about 250,000 construction related jobs have been lost and the figure could be much higher because the first fired are the illegal aliens who are not carried on the books. Housing related jobs peaked at about 8 million in April 2006, which represents 6% of US workforce. Such jobs represented about 18% of the growth in payrolls between 2003 and 2006. Illegal aliens are bearing the brunt of this slowdown, and the social implications could be explosive. Crime is going to skyrocket. We expect housing starts to fall 60% before this is over. That means 3 to 4 million workers could lose their jobs. Just to give you an idea of how many are without work, remittances grew at a 0.6% annual pace in March, down from a 27% rate in March 2006, according to the most recent Mexican central bank data. Options in the Federal Fund Futures at the Chicago Board of Trade indicate a 41% chance the central bank will lift its target rate for overnight loans between banks to 5.5% from the current 5.25%. It was just a month ago that there were no expectations for an increase. Just one year ago we predicted there would be no rate changes until this month or beyond and we were dead right. The Fed is still in the same box and with interest rates rising worldwide there is great pressure for the Fed to raise rates as well, if just to keep Treasuries and agencies competitive. If rates are raised the economy will accelerate to the downside pulled by the housing collapse. Over the last six weeks the odds of a cut in rates has dropped from 83% to 29%. It shows you how wrong the pros can be. Most of them really do not understand what the elitists are up to. ...
GOLD, SILVER, PATINUM, PALADIUM AND URANIUM In gold we hear all about seasonal markets. That was true until about 10 years ago when the gold suppression cartel started to get serious about keeping the gold price from rising to where it would reflect inflation and the fall in the dollar since 1980. In the recent correction, gold went a little lower than we anticipated, but it looks like we are able again to call the bottom and the turn back upward. We are not waiting for a new trading range. We are looking for a breakout over $700. Gold is in a bull market and has spent a year more or less between $600 and $700. It’s time to move upward and breakout. Yes, stock markets throughout the world are booming because of massive injections of money and credit. Corporate stock buybacks are the rage. If they continue at the current pace they will surpass $1 trillion, which sets up for a major market correction. The fundamentals simply are not there. That is what higher bond yields are telling us. Both the 2’s and the 10-year treasuries are about to cross 5% and head higher. That is an ominous event for stocks, but you would never know it. Not a peep out of the media, Wall Street or corporate America. While this transpires the dollar remains under severe pressure. The Fed and the carry trade have held down interest rates for a long time and they are still far from where they should be in the US. As we said in the last issue ¾% to 1% higher or 5.65% to 5.90%. Now we have the ECB inform us they won’t sell anymore gold for four months. We figure the other central banks have 8.2 tons a week to sell. The markets can easily absorb that. Many expect war with Iran, but we do not. We expect extended warfare in the Sudan. We expect rampant hyper-flation, a condition that we have already entered. Official Fed money and credit is up well over 10% plus private credit has the expansion well over 15% and the ECB, the Bank of England, Russia, China and many others are in the same league. Then there is political pressure coming from every direction. If you are not in gold and silver related assets, buy now. If you have them, buy more. Monday early was aimless with a slightly downside bias. Interest yields were up again with the 2-year Treasury bill at 4.97% and the 10’s at 4.96%. The Dow was -30, S&P -34, Nasdaq -29 and FTSE -38 Dow points. CAC was -32 and DAX -22. The yen was +.13, the euro +.15 and the pound +.50. Oil was -$0.34, gas -$0.01, natural gas +$0.02. Gold was -$0.80, silver unchanged and copper -$0.01. The fiat medium of exchange known as the dollar continues to remain under pressure as bond yields, gold and silver and the market moves higher. For four years all major central banks have been lightening up on dollar holdings and recently Kuwait dropped its dollar peg and as you all know, China is investing dollars as fast as possible in alternative investments with the elitists as is Dubai. For the reporting week ended 5/29, Comex reported a decline in the commercial short gold position of 5,521 contracts for a net total of 118,695. This is the lowest since January when gold traded close to $620. The short covering began at $652, and over a 6-week period the commercials covered 55,903 lots and added about 35,000 longs. The short position was for 173.9 tons as gold fell $30.00. With all that shorting, naked shorting in London, and the central bank sales of 141 tons over 11 weeks, it is very significant that gold fell as little as it did in what were coordinated sales. What doesn’t kill you makes you stronger. That is true for both gold and silver over the past 11 weeks. Of those contracts, 55,903, covered over 6 weeks, 47,458 were covered over 4 weeks. This past week open interest added 8,875 lots to a net total of 425,688. This is the largest long position since January of 2005. That means there is a titanic struggle going on between the longs and the shorts. Holdings of the gold ETF GLD rose a net 5.54 to 477.77 tons worth $10.2 billion. The silver ETF remained about unchanged. For the last year mining shares have been in a consolidation phase, as has gold. As we saw liquidity has been building up in the gold bullion market and we expect the same to occur in the gold share market particularly in the HUI stocks. That will be followed by a liquidity move into exploration issues. When this happens the move will be swift and violent. South Africa’s biggest mineworker’s union, the National Union of Mineworkers (NUM) says it has demanded a 15% increase from the Chamber of Mines for its members in the gold and coal sectors. Another union Solidarity wants 20%. If the US holdings of gold are marked-to-market, it’s worth $175.369 billion, which would bring their total assets to $230.879 billion of which gold accounts for 75.9% of its value. Much of this gold is labeled deep storage, which is a euphemism for gold really held for other governments. We haven’t had a gold audit since 1954, so besides deep storage, which is held at West Point, we have to take the word of crooks in government that the gold is there. Both Japan and China have foreign exchange reserves of about $1.3 trillion and Russia that was broke just nine years ago has over $400 billion. This is lies, lies and more lies. After having been up $2.60 during Monday, spot gold finished up $0.20 at $670.80 and silver fell $0.05 to $13.64. Open interest gained 13,508 contracts to 378,430. Silver OI was up 1,117 contracts to 113,680. The September gold contract closed off $0.60 to $676.30, silver was up $0.01 to $13.75 and copper rose $0.06 to $3.47. We wonder if they’ll be an investigation on the commercial traders covering almost 58,000 shorts ahead of the ECB announcement, which denotes trading on inside information? The CFTC won’t do anything, the public is oblivious and the mainstream gold world refuses to confront the US government. On Friday Tocom’s big shorts added 3,652 contracts to be net short 119,643 as Goldman covered 159 to be net short 25,637 contracts. The same group reduced silver shorts by 31 contracts to 6,221.The XAU lost 1.156 to 141.36 and the HUI fell .31 to 342.53.
... 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
-- Posted Wednesday, 6 June 2007 | Digg This Article
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