LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
International Forecaster June 2009 (#5) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster



-- Posted Wednesday, 17 June 2009 | | Source: GoldSeek.com

The following are some snippets from the most recent issue of the International Forecaster.  For the full 26 page issue, please see subscription information below.

US MARKETS

 

The next major move in the stock market will be down. We are seeing the last vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to 8500 will end as soon as all the financial institutions that need to sell what stock is necessary to bolster their balance sheets. Our guess is the rally has been aided in a big way by short covering and the participation of the US government. Those who believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken during the summer as volume dries up during the vacation season. In addition, second quarter earnings will be very disappointing, especially in the financial segment. Unemployment continues to worsen and capacity utilization is at its lowest level in years. Banks continue to cut credit lines and not lend nearly as much as they did before. Citigroup’s earnings should turn down again. They won’t have another $2.7 billion gain or another $400 million mark-to-market fictitious gain. Absent those gains they would have lost $2.8 billion.

 

The credit crisis certainly isn’t over after 23 months. The credit markets are still very tight and the residential and commercial real estate markets are still in a state of collapse. In the midst of this ongoing fiasco the Fed is monetizing $2.2 trillion in treasuries, Agencies and CDOs, collateralized debt obligation, otherwise known as toxic junk. Our fiscal deficit for this year ended 9/30/09 will be between $2 and $2.5 trillion, followed by more than $2 trillion in 2010.

 

Times are tough, everywhere and export nations are determined to keep their products cheaply devaluing their currencies.

 

When all is said and done the Fed will have to remove hundreds of billions in toxic assets from lender balance sheets, get consumers to spend and allow banks to lend again. Ben Bernanke at the Fed would really like to see a lower dollar, to get consumers to spend. But if that happens interest rates will move higher hurting real estate sales. As Ben dreams, unemployment increases adding more downward pressure on home prices, causing lower prices and reducing equity. Congress is pushing to have returned TARP money back to the Treasury and the PPIP program looks like a nonevent, because it could cause insolvencies. Public funds would be used to protect bondholders of mismanaged companies. Ben and Tiny Tim want to reopen securitization markets that caused the problem in the first place. They have to be insane. They want to bring back leverage that caused this monstrous problem we have.

 

The TALF, Term Asset-backed Securities Loan Facility, makes non-recourse loans, willing to buy AAA bonds backed by consumer and small-business loans, in a market that is frozen. Then for private investors there is a guarantee because the loan recipients cannot pay the loans back. This would cost taxpayers hundreds of billions more dollars.

 

The public is de-leveraging, which means less consumption, less profits and more savings. The bear market is far from reversible. The rally is over. Dow 6600 will be retested. The basis and support for growth no longer exists. Credit markets are still semi-frozen and the financial system is no better off now than it was 23 months ago.

 

The big foreign lenders have brought a new global dynamic into the game. Rising yields are a signal that the unusual dollar rally that should never have been, is over. The safety of the dollar is no longer sacrosanct. In fact, it is being in some quarters perceived that the dollar is no longer safe and it has to vie with gold as the safe haven go to asset. Fiscal deficits are projected this year to be $2 to $2.5 trillion and well over $1 trillion annually for years to come.

 

Commodity prices have surged over the past several months as the dollar has weakened, which reflects anticipated future inflation as well as rotation. We have seen this reflected in precious metal prices as well. The leeway the Fed experienced some months ago via deleveraging has past making it much more difficult to employ quantitative easing, monetization. The job of pegging long-term as well as short-term interest rates will be difficult and very injurious to the value of the dollar, as more and more money and credit are made up out of thin air. Trillions of dollars of MBS, ABS and CDO being purchased by the Fed incurring long-term losses can’t be tolerated indefinitely.

 

Sadly as the Fed and the Treasury go so does most of the nations of the world. In that case most all currencies depreciate against gold. Yes, the Fed can drive rates down, but for how long? Especially as the economy fails to perform and taxes rise as do borrowing costs. Import costs are already rising as well. Foreign lenders, with each passing day, become more skeptical of monetization, the damage it will do to the dollar and the Fed’s ultimate ability to retire dollars from the financial system. Dollar selling will feed on itself under those circumstances pushing the dollar lower versus other currencies and gold. It is now only a question of when will the system break? We do not know that, but we do know it will break and the only safe haven to preserve wealth is in gold and silver.

 

Higher interest rates have to have caused great consternation in the banking community concerning their IRS and CDS swaps. This is an unregulated market so no one except the players know what is going on inside. For a number of years these contracts have caused interest rates to be abnormally low. If these swaps were to blow up interest rates could and probably would move substantially higher.

 

The big loser in all of this will be the dollar as more and more dollar owners become fearful and sell dollars. If you look at a USDX chart you will see what we mean. A total breakdown as the dollar struggles to begin momentum and break out over 81 again. It is not going to happen. The question is how long will it take to get to 71.18? We can list all the reasons for pressure on the dollar, but you already know them.

 

The Fed is monetizing about $2.3 trillion in Treasuries, Agencies and CDOs. We said week’s ago that these monetizations would be followed by an additional $2 trillion if not by the end of this year, by March 2010. The Fed has no other choice. This is going to go on indefinitely until the dollar reaches 40 on the USDX and at that point no one will want to buy dollar denominated securities or to even borrow dollars. That is when we’ll have our next Bretton Woods type conference where all currencies will devalue and default and gold and silver will reach great heights. We saw all this coming when we warned you earlier in the year that you had until June to refinance debt. We hope you did so. We are now entering a new stage in real estate. Price pressure is going to press a further downward bias that will last a minimum of 3-1/2 years. How long we will be on the bottom no one knows.

 

This is why you do not want to own US Treasuries or US corporate or municipal bonds. A better currency is the Canadian dollar if you must have money in Treasuries. All your funds should really be in gold and silver related assets.

 

Interest rates have now become a dummy’s game driven by derivatives. They are going to explode. It is only a question of when. All the major banks, holding 75% of US deposits are insolvent, and they will collapse when the derivative bomb explodes. In addition there are lots of other losses on the way as well. The ability of the Fed and the Treasury in the misuse of “The Working Group on Financial Markets” will come to an end. Much of what they have been up too will be exposed by an audit of the Fed, which we believe is on the way. As a result legislation will follow that and will bring an end to the criminally misused executive order number 1263, which Bill Keene and Sue Herrera tell us on CNBC doesn’t exist. It will be discovered that the swaps market has little or no collateral and as a result Goldman Sachs, Citigroup, JP Morgan Chase and Bank of America will meet their demise. The biggest positions reside with JP Morgan, thus they should be first to bite the dust. The losses are going to be in the trillions. The loss of capitalization when the bomb explodes will engulf the entire world financial system.

 

The Ron Paul strategy in HR 1207, now with 225 co-sponsors, the Federal Reserve Transparency Act of 2009, and the companion Bill in the Senate S604, The Federal Reserve Sunshine Act, sponsored by Bernard Sanders (I-VT) will uncover what the Fed and its owners – the major banks – have been up too; particularly in rigging markets.

 

It looks like HR 1207 will be passed in the House. Now train your guns on the Senate. Hit every Senator with:  Dear Senator, Please co-sponsor S604, the Federal Reserve Sunshine Act of 2009, and make it become law. Sincerely, etc.  Short and sweet and to the point. No comments or opinions.

 

The Fed is in a box and cannot get out. We have to make sure they do not get out by investigation, exposure and destruction. The Fed is the core, the nexus of the Illuminati. Few in the media or in business will tell the truth because they are either in on it or they are terrified to talk about it for fear of being destroyed. This is the kind of world we live in. You can still do your part by contacting the Senators. We want them buried in emails. This is our chance to finally win without bloodshed.

 

President Obama has begun selling his healthcare program. He presents it as a reduced cost, guaranteed choice, quality plan for all. The reality is government programs will result in higher costs, no choices and inferior care. The legislative vehicle for this health care deception is planned to be in the budget reconciliation bill, which requires only 51 Senate votes for passage instead of the 60 needed to authorize new programs.

 

The Kennedy Plan promises that all Americans will have health care, employers will have to contribute to the costs. A government program will subsidize premiums for people up to 500% of the poverty level, that is $110,000 for a family of 4, and private insurers will have to pay out a specified percentage of their premium revenues in benefits. There is no provision for funding the program, so it looks like perpetual deficit spending to cover the costs.

 

Healthy people will be forced to pay more for their insurance in order to subsidize those not as healthy, those who have ruined their bodies and minds and the old.

 

Fines will be imposed if you do not provide health care for employees. That means the employers will not insure employees and pay the cheaper fine, or just go out of business.

 

That means 100 million people happy with their programs will have to take an inferior government plan. Then, of course, is the bureaucracy, which dictate treatment and who will live and who will die.

 

Part of the proposal includes a proposal to tax these health benefits with current employer-based health insurance.

 

We are promised cost savings by putting all Americans’ health records on a uniform computer system, which will be eventually mandatory for all countries. These totalitarian controls will be forced on all doctors and terminate all medical privacy.

 

Healthcare will be rationed letting bureaucrats decide who gets treated and how and who will be allowed to die. Seventy percent of medical lifetime costs occur in the last year of life. We already experienced this with a doctor and I asked him which side of his head he’d like his brains blown out of.

 

Part of the legislation would provide healthcare for illegal aliens, which 80% of American voters are opposed too.

 

It would be far more constructive to begin to fix the problems in Medicare and Social Security then try to create an expensive new system.

 

On the other side of the spectrum are those who want a single-payer-approach like those used in Europe. Congress has said they won’t even consider it, this in spite of the fact that any other plan will leave the big insurance companies in charge and keep hurting patients. Someone should tell these poor ignorant souls that both parties are promoting corporatist fascism.

 

The real deep-seated problem is that the health insurance companies and related industries are major campaign contributors to members of Congress on both sides of the aisle. Senator Grassley is a good example. Since 2005, he has collected $1.3 million in donations from industries related to the health insurance debate.

 

In a different perspective on healthcare the US will spend 15.4% of GDP both state and private. With that it gets 2.6 doctors per 1,000 people; 3.3 hospital beds and its people live to 78.2 years.

 

The question is how do we cut down medical costs? There has been some pressure to do so, but costs go relentlessly higher. Senators and congressmen receive hundreds of millions of dollars from the industry to continue their gravy train. Then there are the investors, bureaucrats and preexisting conditions.

 

Mr. Obama doesn’t have the answers and neither does the industry.

 

How can anyone not expect interest rates to rise? Mandated programs such as Medicaid, Medicare, Social Security and the FDIC and the Pension Benefit Guarantee Corp., and a host of others have us over $100 trillion the short-term.

 

We have been in a crisis financially and economically for 23 months. We were in recession from February 2007 to February 2009, and we have been in depression since this past February. The budget deficit for the fiscal year ended 9/30/09 should be about 15% of GDP the largest deficit since WW II or five times last year’s deficit. The Treasury and the Fed have created money and credit of some $14.8 trillion and next year we project over $20 trillion - this as our government acquires large stakes in banks, brokerage houses, insurance companies, health-care, mortgage companies and auto and truck manufacturers.

 

As a result of this dreadful profligacy last month in May we began the beginnings of inflation resumption that will soon become hyperinflation. Interest rates will continue to rise as will gold, silver and commodities and bonds, stocks and the dollar will decline against other currencies and gold and silver. Business will be forced to pass on price increases or go out of business. Currency in circulation, which nominally is 10%, is now 50% of the monetary base and bank reserves have risen by 20-fold. Banks have this huge position as a reserve against their liabilities. This allows banks to float or extend the day they’ll have to write off their losses.

 

Banks are able to expend their loan making abilities, but they have not done so as yet. As this loan constriction continues the expansion of money and credit is running at about 18% annualized. This will in time result in higher interest, which are underway and higher inflation, which we’ve begun as well. By way of example, M1 is near 15% the highest level in 50 years.

 

We are looking at a monetary policy far more inflationary than in the late 1970s, we know we were there. That wasn’t a pretty picture and neither will this be. We saw inflation at 13.5% and the prime rate at 21.5%. We saw gold rise from $35.00 to $850.00. This time it could cross $6,000.

 

We’d like to see the Fed purge the system, something they should have done six years ago. We hear talk of contraction, but that is not going to work even if the FED wanted to do it, which they don’t. They contract and the whole house of cards collapses. Some talk of raising reserve requirements, but if the FED does that the system will implode due to the continuing deflationary drag. Real estate is still a long way from the bottom and it will experience trouble for years to come. The bottom won’t be hit until 2012 or 2014. The demand for liquidity by the Fed and the Treasury is so great that just over the coming year it will be close to $5 trillion. There you have it and it is not a pretty picture.

 

Quite frankly, we have a once in 100-year opportunity to destroy the Federal Reserve. The House should pass Ron Paul’s HR 1207, so we have to now make sure S 604 is passed in the Senate. After the investigations begin it’s terminate the Fed.

 

The Fed has done as it pleases for 96 years looting the American public. They are almost totally secret and when a federal judge demanded the Fed to disclose where funds went, why, and how they were used, they told the judge to drop dead – it was a state secret. There is so little transparency congress just had to subpoena the Fed over the Bank of America affair, where our Treasury Secretary Paulson and Fed Chairman Bernanke told Mr. Lewis, BoA Chairman and CEO that if he didn’t take over Merrill they’d destroy him and his board. These people are criminals and should be treated as such. Let’s begin the charges and let’s pass HR 1207 and S 604 and follow that with terminating the Fed and return our monetary policy where the founding fathers directed it – to the US treasury. The Fed is fighting a battle behind the scenes against new accounting rules that would make banks move more assets onto their books. The issue is toxic assets. The banks instead of lending 8 to 10 dollars for every dollar on deposit lent 40 to 60, made bad decisions and lost. These banks, some of whom own part of the Fed are insolvent. That is why the Fed does not want rule changes. They cannot deal with the toxic waste that runs into the trillions of dollars. The Fed has been buying this worthless waste in anticipation of the American taxpayer paying for it. The Fed cannot stand transparency because they are criminals and don’t want the public to know what they are up too. The mortgage market is frozen and may never be unfrozen. That is why the Fed is trying to clear the banks books. We find it of interest that the Fed won’t tell us what they are paying for this garbage. Yes, what did they pay and what are they worth? Who has gotten bailed out by the Fed shareholders? Americans have a right to know.

...

THE INTERNATIONAL FORECASTER

WEDNESDAY, JUNE 17, 2009

      061709(5)_IF

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

 

Published and Edited by: Bob Chapman

NOTE: NEW E-MAIL ADDRESSES

For correspondence to Bob: bob@intforecaster.com

For subscription and renewal: info@intforecaster.com

 

CHECK OUT OUR WEBSITE

www.theinternationalforecaster.com

 

1-YEAR $159.95 U.S. Funds

US AND CANADIAN SUBSCRIBERS: 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.

Or:

We accept Visa and MasterCard charges.  Provide us with your card number and expiration date.  We will charge your card US$159.95 for a one-year subscription.

 

You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.

 

NON US OR CANADIANS SUBSCRIBERS:

Due to the time that it takes for your mail to arrive to us from a foreign country, we would like for you to email us as above the CC information in two separate emails.

 

Note:  We publish twice a month by surface mail or twice a week by E-mail. bob@intforecaster.com

 or info@intforecaster.com

 

RADIO APPEARANCES:

To check out all of our radio appearances click on this link below:

http://www.theinternationalforecaster.com/radio
-- Posted Wednesday, 17 June 2009 | Digg This Article | Source: GoldSeek.com



Special Offer:
CGI Central - custom CGI and PHP scripts

** Receive an Introductory Copy of the IF -- Please Use the Form Below**

Required Fields marked with *
*Name
Please enter your first & last name.
*Email
E-mail where free issue will be sent


Please allow 24 hours for a response to your request.



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.