1000 = new floor

Well dear reader in this post you find the following information

Gold
- 1,000 new floor
- several pieces of information about China buying gold and silver
- China can no longer afford to let gold or silver price slump
- 13 reasons why gold will go up
- Barrick supposedly closing it’s hedge book
- IMF gold sales

Economy
- mine fields
- The Double Dip Recession, or the “W”
- Remark from the last GEAB report
- Shipping activity down
- Unemployment close to 20%
- Housing, foreclosures on the rise

Banks and Banksters
- accounting rules
- FDIC needs money

Equity

USD RIP

Oil The Aftermath of the Great Recession



Let’s start as usual with the overview found on www.prudentbear.com

For the week, the S&P500 gained 2.5% (up 18.3% y-t-d), and the Dow rose 2.2% (up 11.9% y-t-d). The Banks surged 5.0% (up 7.6%), and the Broker/Dealers jumped 3.9% (up 53.8%). The Morgan Stanley Cyclicals increased 1.5% (up 58.3%), and Transports added 0.1% (up 12.5%). The Morgan Stanley Consumer index added 1.1% (up 16.1%), and the Utilities advanced 3.6% (up 1.0%). The broader market remains quite strong. The S&P 400 Mid-Caps jumped 3.3% (up 30.3%), and the small cap Russell 2000 surged 4.1% (up 23.7%). The Nasdaq100 gained 2.4% (up 42.4%) and the Morgan Stanley High Tech added 1.7% (up 58.2%). The Semiconductors gained 1.6% (up 53.9%). The InteractiveWeek Internet index rose 2.7% (up 62.9%). The Biotechs jumped 3.1% (up 47.9%). Although Bullion gained $2.30, the HUI gold index slipped 0.5% (up 40.2%).




Gold

New floor 1000. Well dear reader the mainstream gold analysts believe that we are at the top of this up-move up. They believe that gold will fall below 1,000. Well as long as the mainstream media believes so, I am comfortable believing it is NOT so. We had now several closings above 1,000 over the past days, which leads me to the conclusion that 1,000 is now the NEW floor and not the top.

Regarding the mainstream media I would like to mentioned that many of the analysts use the COT report and especially the high short position of the commercials as an argument that the exchange rate of gold and silver will head down. Apparently the commercials are smarter than the speculators and in fact in the past a huge short position of the commercials resulted in lower gold and silver exchange rates. The commercials are the bullion banks that short the market on behalf of the Central Banks in order to control rising exchange rates of gold and silver. As funds from the Central Banks had (and maybe still have) no limitation, the bullion banks were able to increase their shorts and push exchange rates down until the longs gave up and sold. This allowed the shorts to cover their short positions with huge profits. Well indirectly the taxpayer was already paying for corrupt banks since a long time ago and not only since last years crisis. It’s just that now it is more obvious and these banksters do not do it in a hidden way anymore.

Well the question now is if this huge short position will have the same effect as in the past? Well it might be of course. However I believe that this time it will not work and that we might be closer or even at the beginning of a short squeeze and a commercial failure because of these short positions. With China and other countries being on the buying side the shorts might run into deep trouble. Maybe more IMF gold is needed to bail them out too. A very interesting time ahead of us indeed.




By Ambrose Evans-Pritchard
The Telegraph, London
Monday, September 7, 2009

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100000821/china-bernanke-and-the-price-of-gold/

China has issued what amounts to the "Beijing put" on gold. You can make a lot of money but you really can't lose.

I happened to see quite a bit of Cheng Siwei at the Ambrosetti Workshop, a gathering of politicians and global strategists at Lake Como, including a dinner at Villa d'Este last night at which he listened very attentively as a number of American guests tore President Obama's economic and health policies to shreds.

Mr Cheng was until recently vice chairman of the Communist Party's Standing Committee and is now a sort of economic ambassador for China around the world -- a charming man, by the way, who left Hong Kong for mainland China in 1950 at the age of 16 as young idealist eager to serve the revolution. Sixty years later, he calls himself simply "a survivor."

What he said about US monetary policy and gold -- this bit on the record -- would appear to validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.

He played down other metals such as copper, saying that they could not double as a proxy currency or store of wealth.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market," he said.

In other words, China is buying the dips, and will continue to do so as a systematic policy. His comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.

Investors long-suspected that it was China. We later discovered that Beijing had in fact doubled its gold reserves to 1054 tonnes. Fait accompli first. Announcement long after.

Standing back, you can see that the steady rise in gold over the last eight years to $994 an ounce last week -- outperforming US equities fourfold, even with reinvested dividends -- has roughly tracked the emergence of China as a superpower in foreign reserve holdings (now $2 trillion).

As I have written in today's paper, Mr Cheng (and Beijing) takes a dim view of Ben Bernanke's monetary experiments at the Federal Reserve.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

This line of argument is by now well-known. Less understood is how much trouble the Fed's "quantitative easing" policies are causing in China itself, where they have vicariously set off a speculative boom on the Shanghai exchange and in property. Mr Cheng said mid-level house prices are now 10 times incomes.

"If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise."

"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

Of course China cold end this problem by letting the yuan rise to its proper value, but China too is trapped. Wafer-thin profit margins on exports mean that vast chunks of Chinese industry would go bust if the yuan rose enough to close the trade surplus. China's exports were down 23 percent in July from a year before even at the current exchange rate, and exports make up 40 percent of GDP. "We have lost 20 million jobs in this crisis," he said.

China's mercantilist export strategy has led the country into a cul-de-sac. China must continue to run its trade surplus. It must accumulate hundreds of billions more in reserves. Ergo, it must buy a great deal more gold.

Where is the gold going to come from?

By Ambrose Evans-Pritchard
The Telegraph, London
Sunday, September 6, 2009

http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html

CERNOBBIO, Italy -- The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing."

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como. "If they keep printing money to buy bonds, it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.

"This is where Greenspan went wrong from 2000 to 2004," he said. "He thought everything was alright because inflation was low, but assets absorbed the liquidity."

Mr Cheng said China had lost 20 million jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.

China's task is to switch from export dependency to internal consumption, but that requires a "change in the ideology of the Chinese people" to discourage excess saving. "This is very difficult."

Mr Cheng said the root cause of global imbalances is spending patterns in the US (and UK) and China.

"The US spends tomorrow's money today," he said. "We Chinese spend today's money tomorrow. That's why we have this financial crisis."

Yet the consequences are not symmetric.

"He who goes borrowing, goes sorrowing," said Mr Cheng.

It was a quote from US founding father Benjamin Franklin.





More about Gold and China
China can no longer afford to let gold or silver price slump
Chinese state endorsement of gold and silver as good investments means the country can no longer afford to let precious metals prices drop by any significant amount.
With Chinese state institutions hawking gold and silver to the general populace as a good investment (China pushes silver and gold investment to the masses) - the latest news on this front being that the biggest Chinese bank, the Industrial and Commercial Bank of China (ICBC), is setting up a special precious metals department to handle growing investor demand for gold and silver within the country, the corollary is that therefore the country cannot afford to let precious metals prices fall substantially and thus alienate millions of its citizens who have been taking state advice to buy them.
Read on
http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=88887&sn=Detail

More About Consumer "Gold Mania in China"

http://www.sovereignman.com/finance/gold-mania-in-china/


Nice story. Money quote: "Second- the government has stepped up its promotional campaign, and Chinese consumers have responded on cue. Gold demand has grown dramatically just this year, particularly as savvy local investors are starting to view Chinese stocks suspiciously. "

Here's a longer bit: "You can buy gold in China at any bank– even tiny banks in tier-3 cities sell gold. More importantly, however, the government is setting up official Chinese Mint stores all over the country.
On the inside, they look like jewelry shops– armed guards, glass viewing cases, etc. But instead of diamond crusted earrings and white star sapphires, you see bars. Lots of bars.
The government mints bars in sizes ranging from 5 grams (which are so tiny they’re actually cute) to 1 kilogram. The prices are updated instantly– they have a Bloomberg screen which tracks the spot price, generally indexed to the Renminbi price in Shanghai rather than New York or London (another sign of Chinese financial independence).
The bars are all serialized and 9999 purity, the same as you would get from Switzerland. They are also certified by the gold exchange, which validates the quality. There is no tax, and the premium runs 10 renminbi per gram, or roughly $30 (US) per ounce.
We went into several stores and saw Chinese people buying like crazy… all with cash. The most popular denominations were 10 grams and 50 grams– and I’m surprised the mint shops didn’t sell out at the rate those bars were flying off the shelf."


Gold
Jim Willie with an excellent essay a must read in my opinion
13 reasons for a major Gold breakout
http://www.24hgold.com/english/news-gold-silver-13-reasons-for-major-gold-breakout.aspx?article=2321968088G10020&redirect=false&contributor=Jim+Willie+CB





With his commentary today, financial letter writer Rick Ackerman (www.rickackerman.com) officially joins the gold price suppression conspiracy nuts. Ackerman makes this telling observation:

"Bernanke & Friends are probably throwing everything they've got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather merchants have repaid the government's kindness by sitting on gold futures prices. This price-fixing operation is all the more impressive because its perpetrators have managed so far to peg bullion to $1,000 even though the U.S. dollar has broken some key technical supports in recent days."

Ackerman's commentary is headlined "Gold Waiting to Pounce on Summit's Failures" and you can find it at GoldSeek here:

http://news.goldseek.com/RickAckerman/1252562460.php



Adrian Douglas on Barrick
Wednesday, September 9, 2009

Today Mineweb published a report by its writer, Dorothy Kosich, covering the announcement by Barrick Gold that it will eliminate most of its hedge book:

http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=88850&sn=Detail

But Barrick is not eliminating hedges by actually delivering gold. The company is instead raising cash to pay off its obligations. This is technically a default on the delivery of the hedged gold.

I recently wrote an article titled "A Run on the Bank of the Gold Cartel" in which I asserted that many factors are coming together to put stress on the physical gold market. See:

http://www.gata.org/node/7764

Paul Walker, CEO of the GFMS metals consultancy, said recently that the gold price has risen because there have been "large, lumpy transactions in a market that has a degree of illiquidity." I can't think of a better euphemism for a short squeeze.

A gold hedge is entered into when a gold mining company expects that the future price of gold will be lower than it is today. The company enters into a contract with a third party to sell some of its yet-to-be-mined gold in the ground. For this the company receives the cash value of the gold based on the prevailing spot price. The company then has an obligation to produce the gold and deliver it to the third party at some future date. If the gold price indeed declines, the company reaps a superior profit on its gold sales compared with selling the gold as it is mined at the prevailing spot price. But if the price of gold rises, the mining company has forgone some of its profit by having sold the gold in advance at a lower price.

Barrick has announced that the company is not delivering the gold it has sold forward. The company is raising cash from the sale of stock so it might deliver cash instead of gold. I don't know if this is a default under the terms of the company's hedge contracts, but it is technically a default because gold was sold for future delivery and the future delivery is not being made.

MineWeb's story says: "Barrick intends to use $1.9 billion of the net proceeds to eliminate all of its fixed price gold contracts within the next 12 months, as well as $1 billion to eliminate a portion of its floating spot price gold contracts. A $5.6 billion charge to earnings will be recorded in the third quarter as a result of the change in the accounting treatment of the hedges."

Essentially this means that some time in the past Barrick received cash for its yet-to-be-mined gold that the company now is having to pay back, along with considerably more, insofar as the company is recording a loss of $5.6 billion without a single ounce of gold being involved. This is not mining; it is gambling. And Barrick, and more importantly its shareholders, lost big-time.

MineWeb's story says: "The company's current gold hedges include 3 million ounces of fixed-price contracts where Barrick does not participate in gold price movements. The contracts have a negative mark-to-market position of $1.9 billion as of September 7. In addition the company has 6.5 million ounces of floating contracts where Barrick fully participates in gold price movements. The current negative $3.7 billion marked-to-market position of the floating contracts does not change with gold prices. No activity in the gold market is required to settle these floating contracts."

In theory Barrick should have to go into the market and buy gold to deliver into its obligations instead of paying cash. Of course this would blow the gold price sky-high and thus might bankrupt the company in the process. But this is not the end of the story because the counterparty to these hedges, probably JPMorganChase, no doubt also has obligations to deliver to some other entity the gold it was expecting from Barrick -- maybe a central bank. Will the counterparty also be able to settle its obligations in cash or will significant quantities of gold have to be purchased? Barrick may be getting off the hook but this technical default creates a shortage of physical gold.

Many other mining companies, such as AnglogoldAshanti, that had undertaken disastrously unprofitable hedges when gold was selling at multi-decade lows and below its cost of production have been delivering their production into their hedge obligations. Barrick's action is different -- a technical default on delivering physical gold that had been sold forward.

This is explosive news for the gold market. The run on the Bank of the Gold Cartel is unfolding. Much more gold has been sold than can be delivered. The implications for the gold price are mind boggling.


IMF informs us that they will sell part of their gold reserves
http://www.bloomberg.com/apps/news?pid=20601087&sid=aI4fr1DhjXRc

Sept. 18 (Bloomberg) -- The International Monetary Fund’s executive board approved gold sales of 403.3 metric tons valued at about $13 billion and pledged to avoid disrupting the market with the transactions.
The IMF said it would “stand ready to sell gold directly to central banks.” The sales could also be conducted in the open market in a “phased manner” over time, the Washington- based lender said in an e-mailed statement today.

Well dear reader once again we are told that the IMF will sell part of its gold reserve. Will this gold hit the market? My guess is not. Why? Well first of all there are several Central Banks that do want to get rid of their dollars and want more gold. Secondly it is rumored that the IMF is bailing out Barrick Gold which has huge losses on their gold hedge book. This could very well be the case as Barrick in fact is more a finance company than a real mining company and as Barrick is in my opinion used by the US Government to “manage” or manipulate the gold market.


Economy

First of all dear reader I like to mention the following. As I am actually traveling and meeting friends and clients, I am asked if the markets and the world economy really still is in a bad shape as I do say and write all the time. Well dear reader my answer is, "Yes it is". I simply cannot see any real and true improvement. The only thing that has changed since maybe February of this year, is that banks are allowed to show you through their balance sheets a better picture of their health than what it really is. In doing so, they and the governments who want us to believe that everything now is fine, were able to convince many that the crisis is over and this combined with the money the banks received and they used to prop up their own shares, helped to convince many that the situation is improving. Well dear reader it is clearly my opinion, that we are far away from a real improvement. We are still in the minefield that is now being referred to as economy. A few landmines blew up last year but most of the mines are still hidden in the field. Any of these mines could blow up at any time and that will lead to others blow up too.



How could an economy improve, dear reader, when in fact nothing else than printing money and injecting money into the economy has been done? This is like trying to cure a dead patients with a medicine that did not help before neither. The patient is the world economy and the medicine is printing money. How can anyone believe that that will help?


Don’t believe the numerous statistics repeated ad nauseam by the financial media showing that the recovery is near. In fact these same statistics (provided by
the Fed, ECB, IMF, OECD, and others) were presented in the best possible light in summer 2008 too. What followed we now know. Their ability to forecast the future has been fully tested during these last two years: those people who have lost their jobs and their savings have, sadly, been able to appraise that.
Well dear reader I have tried to communicate through this blog that one should ignore these useless statistics and concentrate on the true statistics (shows for example at www.shadowstats.com). They only reason why I still look at these manufactured and misleading statistics from time to time is to know what the broad public is made to believe.
However I must admit, that the con masters did a great job because most people still believe them. Only those with an open and critical mind do know what really is going on

The only function of economic forecasting is make astrology look respectable
—John Kenneth Galbraith

As mentioned before, dear reader, the economic health is still low. The slowdown in the speed of collapse of the global economy, at the origin of all the « good news », is only due to the world's enormous public financial effort of the last twelve months. But the « time saved » using taxpayers' money around the world should have been dedicated to redesigning the international monetary system at the heart of the current systemic crisis. Yet, besides a few cosmetic considerations and huge gifts to US and European banks, nothing serious has been undertaken, and, when it comes to the future, the « every man for himself » rule prevails.

"The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks."
"The US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. The blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people. There is no “economics” behind this latest global stock market rally, only fraud."
http://seekingalpha.com/article/160619-the-coming-consequences-of-banking-fraud

from the GEAB report
As anticipated in the previous editions of the GEAB, no one can now construct a true picture of today’s global economic situation as macroeconomic figures are more and more contradictory or simply absurd. Measurement data and instruments have been so manipulated and limited to a volatile US Dollar as sole benchmark, that no government, international organization or bank can now tell in which direction the global system is heading. The media reflect this chaos and contribute to their readers’/auditors’/viewers’ bewilderment: depending on the day, or even the hour, that they give contradictory news on finance, economy or currency. Policy makers, entrepreneurs, employees,… economists or analysts… are reduced to Pascal’s wager to assess what will happen in future months.


Shipping down

Well dear reader in order to find out about the worlds economy’s health one can look at the Baltic Dry Index which reflects the situation of the transport situation. The picture as shown below does tell us that the world economy is still in a bad shape and it does not look like a recovery is coming soon.


(to enhance picture, please click on it)

Unemployment

The US monthly statistic, the household survey, shows that almost one million Americans lose their jobs every month, can’t find full time work, or stop seeking work. Statistics that the media prefer to forget. The true unemployment rate (using the same calculation basis as that of the 1990’s) is already nearly 18%. We are reaching a rate of 20% faster than we expected. Also on this subject, let us note an interesting peculiarity in the employment numbers held back by the American media, that of businesses. It counts each job held by the same person. Now all the world knows that the crisis has caused, in the US in particular, an increase in individuals’ precarious circumstances which required people to have two or even three jobs to enable them to balance their monthly budgets. But that hasn’t unsettled the Bureau of Labour Statistics, nor the media, who use these numbers: little does it matter that more and more “workers” are counted two or three times in the monthly employment numbers. It is stated elsewhere, in the middle of the technical footnote describing this statistic: “In the “Households” survey, individuals are not double-counted, they are only counted once, even if they have several jobs. In the “Businesses” survey, employees having more than one job, and thus appearing on several payrolls are counted for each job held”. One can better understand why the “Businesses” survey is favoured by Wall Street and the US government. With such a statistic, if 50% of Americans needed to have a second job to balance their monthly budget, whilst 50% of the population is without work, the government would still be able to show 100% employment! This number certainly makes Wall Street climb, but translates into nothing other than a chase into the economic collapse of the country.


Housing

Foreclosures
Well dear reader the foreclosure crisis has not ended yet. More than 350,000 american households recorded a foreclosure in August. That means that one in every 357 US homes is in trouble. Well to me that does not show an improvement on the housing at all.



"Option" mortgages to explode, officials warn 
Thu Sep 17, 2009 7:49pm EDT 
By Lisa Lambert
WASHINGTON (Reuters) – The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.
"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways to combat mortgage scams.
"That’s the next round of potential foreclosures in our country," he said.
Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.
In Arizona, 128,000 of those mortgages will reset over the next year and many have started to adjust this month, the state’s attorney general, Terry Goddard, told Reuters after the meeting.
http://www.reuters.com/article/wtUSInvestingNews/idUSTRE58G5U320090917


(to enhance the picture please click on it)



Banks and Banksters

Accounting rules. Well as one can guess the banks do not like to be obliged to show or to value positions according the market price. The fight is going on. On one side those who correctly claim that the accounting should be more transparent and more accurate and between those who want to hide certain facts.
Please read on
Bankers Want G-20 to Rein in FASB, IASB
The American Bankers Association has written to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke asking them to raise accounting issues at the upcoming G-20 meeting in Pittsburgh in order to curb efforts by standard-setters to expand mark-to-market accounting to loans and debt instruments.
http://www.webcpa.com/news/Bankers-Want-G20-to-Rein-in-FASB-IASB-51667-1.html



The following I found on www.lemetropolecafe.com
"The Federal Deposit Insurance Corp. is considering tapping a Treasury Department line of credit as the agency examines ways to replenish a reserve fund depleted by 92 bank failures this year, Chairman Sheila Bair said." Here's the link: http://www.bloomberg.com/apps/news?pid=20601087&sid=anA40Xh8bco4
Some things to consider: Anyone find it strange that every week only 3 or 4 banks are closed? I know for a fact that the Government has the manpower to shut down only 3 or 4 per week, although hundreds need to be closed down. When a bank is closed, you need manpower FOR EACH BANK BRANCH to clear out all employees, secure the vault, secure the books, secure the cash and guard the door, plus all the beancounters to go over the books.

But it's not only lack of manpower, the FDIC is dragging its feet on closures to conserve cash, presumably praying for some kind of economic miracle. But the fact of the matter is that 100's possibly 1000's of banks need to be closed down or rescued and this going to be a multi-trillion dollar exercise. At some point, we may actually face a bank holiday in order to prevent an inevitable run on the banks. My advice would be to keep minimal cash balances at your local bank - your bank could be next - and move as much money as possible into gold and silver.

Prediction: Wells Fargo will be the next big bank to blow up
http://truthingold.blogspot.com/2009/09/taxpayer-bailout-of-fdic-on-deck.html

Following dear reader you can find a chart that is self explaining




Stocks

Well dear reader a couple of months back, when the DJI was at approximately 6,300 I wrote a post with the title Dow Jones at 9,000. I know that I surprised some of you dear readers as most of you know that I am rather negative for the stock market and that I believe we will see much lower prices than we had at that time. Well in that post I mentioned that we might see 5,800 before going to 9,000. This did not happen but yes we are above the 9,000. Those who believed in my message and bought stocks at that time have a nice profit. It is in my opinion the time to take these profits. Remember nobody ever got poor by taking profits from time to time. Where could the DJI go? Well the index is already higher than what I expected and it could go a bit higher for some days. However I do not see that there is much underlying power that could push the Dow higher apart from government money and the black box trading programs who kind of push prices up themselves. I cannot see that new buyers are entering the market. Although trading volume is high there is no fresh capital moved into stocks. In fact as mentioned in a recent post, insider selling is at its highest historically speaking. If insiders who know their companies well do sell, it is because they see not much upside potential for the respective stock and rather feel that the price will go down. So dear reader the record high number of sale by insiders shows us that we possibly are close to a move down. Therefore I would be cautious and not jump on the moving train. Maybe it is the time to reduce positions, especially positions in financial institutions as first of all these stocks have gone up too much and secondly the sector as a whole is still in deep problems. The patient is not in a coma anymore but certainly way away from being healed. I rather expect the patient to suffer a relapse.

For example, the fact of talking in percentage points is part of this summer's « euphoria » operation. Indeed, many banks, whose stock price was close to zero could claim « rebounds » of +200 percent, +300 percent or +500 percent. Taking a look at Natixis, Citi or Royal Bank of Scotland stock prices helps to understand the trap: regaining 500 percent when the stock fell down to 1, that makes 5... which would leave you holding a loss of 40 if you bought 2 years ago (or if you borrowed money on security). Never forget that an increase of a percentage is always less than a similar decrease (the greater the fall, the truer it is)… a reality that the financial world is keen on making you forget! But the evaporation of your investments and savings probably helps you to remember.
By the way, that is one of the obstacles on the way to the « recovery in sight » song sung by our leaders: for business to return to previous levels (« recovery »), people must forget the crisis and its consequences. This could happen with the « small crises » of the past decades, but not with this crisis, one which is literally « unforgettable » for the growing numbers of its victims: the intensity, duration and scope of the event and of its consequences, do not allow one to simply « turn the page ».


US Dollar RIP

Well dear reader the way of the US Dollar is down. The question is, "is the USD already dead"? Is what we see from time to time just the nerves that like with a killed animal move the dead body or part of it? Or might it be that the Dollar is still alive? To me it looks like the USD is already dead. The moves we see from time to time is like the nerves of the dead animal. The chicken that still runs around although having been beheaded.

Following an information from the European think tank GEAB
Now, as summer 2009 comes to a close, and as the three rogue waves start impacting the global economy hard (unemployment, bankruptcies and monetary shocks), the time to mend the system, or to prepare for a soft transition towards a new global system, is over. The first signs of a major decoupling are beginning to appear: the rest of the world is rapidly moving away from the Dollar zone. As shown by the chart below, there is a 95 percent chance that 1,000 billion new USDs will be printed in a very near future... not very attractive for the Dollar zone.


(to enhance the picture please click on it)

Oil

The Aftermath of the Great Recession
Today’s article is the first of a two-part series in which I attempt to forecast general economic conditions that will affect the oil market over the next 10 years. Despite Galbraith’s sensible warning, what we will experience in the aftermath of the Great Recession is not a complete mystery. Strong evidence suggests that during the next decade, the global economy will struggle to regain a sound footing supporting vigorous growth.
http://www.aspousa.org/index.php/2009/09/the-aftermath-of-the-great-recession-part-i/