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USAGOLD NewsGroup Archive
November 27th: Subprime
Worries Mount, Gold Glitters
Gold has predictably softened
a bit this morning, as is often the case the last tuesday prior
to an active contract month for COMEX gold. This day, known as
options expiration day, typically sees a counter-trend downdraft
in the price of the metal, that is often recovered in short order.
Today's newsgroup makes a strong case for buying the dips. As
the mounting sub-prime crises takes its toll on the dollar and
our economy, four figure gold prices become increasingly achievable.
 Forecast: U.S. dollar could plunge 90 pct
United Press International- November 9, 2007
"A financial crisis will
likely send the U.S. dollar into a free fall of as much as 90
percent and gold soaring to $2,000 an ounce, a trends researcher
said.
"We are going to see economic
times the likes of which no living person has seen," Trends
Research Institute Director Gerald Celente said, forecasting
a "Panic of 2008."
USAGOLD Comment: Not much more needs to be said about
this article. Its a short read, that sets the tone for today's
newsgroup.
______________________________
 The Financial Tsunami: Sub-Prime Mortgage Debt
is but the Tip of the Iceberg
F. William Engdahl - Global Research - November 23, 2007
"Here is where the Ohio
court decision guarantees that the next phase of the US mortgage
crisis will assume Tsunami dimension. If the Ohio Deutsche Bank
precedent holds in the appeal to the Supreme Court, millions
of homes will be in default but the banks prevented from seizing
them as collateral assets to resell. Robert Shiller of Yale,
the controversial and often correct author of the book, Irrational
Exuberance, predicting the 2001-2 Dot.com stock crash, estimates
US housing prices could fall as much as 50% in some areas given
how home prices have diverged relative to rents."
USAGOLD Comment: If you haven't yet heard about this
Ohio court decision, this article is an absolute must read. If
the Ohio decision were to hold up (one might reasonably assume
it will be appealed to a higher court), it would call to question
the value of the collateralized debt obligations held by banks
and hedge funds the world over. The challenge to the international
banking system would be difficult to over-emphasize. Given the
amount of time it would take to mount an appeal, one wonders
what will happen between now then including what might happen
to the value and liquidity of the billions in mortgage derivatives.
The Ohio decision casts a whole new light on the credit crisis
which the experts are telling us will stretch well into 2008
and probably beyond, and deserves the attention of our clientele.
Heads up!! What appears to be a small matter in Ohio could have
major systemic implications in the months ahead.
______________________________
A Generalized Meltdown of Financial Institutions
- Take a Look at Professor Roubini's Crystal Ball
Mike Whitney - Global Research -November 24, 2007
"It is increasingly clear
by now that a severe U.S. recession is inevitable in next few
months...I now see the risk of a severe and worsening liquidity
and credit crunch leading to a generalized meltdown of the financial
system of a severity and magnitude like we have never observed
before. In this extreme scenario whose likelihood is increasing
we could see a generalized run on some banks; and runs on a couple
of weaker (non-bank) broker dealers that may go bankrupt with
severe and systemic ripple effects..."
USAGOLD Comment: More bad news. It's that 'ripple effect'
that has us worried. As they say, no one's going to ring a bell
announcing the start of a severe banking crisis. We will wake
up one fine morning and it will be in progress. In reading this
article, I couldn't help but recall what happened in Argentina
a few short years ago. It could happen anywhere and Roubini offers
a reminder in the article linked here.
November 13th: Sovereign
wealth funds buying gold
Dear friends,
Upon returning to the city
and "real life" after a longish weekend along the Continental
Divide (winter has made its debut there), I thought to catch
up on my reading this morning starting with the Financial Times.
The weekend headline in the usually staid Times jumped from the
page -
Gloom envelops world markets
As you might have guessed,
the article had to do with the credit crisis and the hit the
world's stock markets took at the end of last week, but the gloomy
outlook certainly has implications for future gold demand, despite
the nearly $40 drop yesterday.
Tony James of the Blackstone
hedge fund makes reference to the mortgage problem as being akin
to a "black hole" (a phrase we have used at times referring
to the massive derivatives overhang) "deeper, darker and
scarier" than anyone had anticipated. Beyond the credit
crisis, the weakening dollar is wreaking havoc with policy makers
across the globe who, generally speaking, would like to see their
currency, not the dollar, plummeting against all others. The
net effect has been to project a kind of rolling chaos in the
forex markets which undermines investor faith in any of the major
currencies.
In a world where all currencies
are in a headlong dash for the bottom, what do investors do who
are interested in saving their money amidst the rolling chaos?
And not just individual savers, like you or me, but institutions
and even nation states?
This brings me to the purpose
of this short letter -- state owned sovereign wealth funds and
their interest in gold ownership. SWF's, as they are called,
are repositories for a portion of the wealth garnered in their
export trade including oil exporters and the Asian economies.
I have hinted at the possibility of their interest in gold bullion
at various times over the past year or so, but now we are beginning
to see actual front-line confirmation that their interest is
for real.
In this morning's Financial
Times under the otherwise benign heading "State funds diversify
into commodity investment," one senior Wall Street banker
is quoted as saying, "They [the state-owned sovereign wealth
funds] want to use commodities, and particularly gold, as a hedge
against further dollar weakness." He goes on to say that
most of the money going into gold is coming from the Middle East
and Asia.
I have commented occasionally
that "someone" or "something" with obvious
financial muscle is coming into the gold market on dips. Now,
we have found the likely suspect. "They want commodities
exposure exactly for the same reason as other institutional investors
-- diversification." Since these funds command multi-billions
[worldwide "state reserves" are pegged at $3000 billion
and rising rapidly], it would be hard to find a more compelling
long term argument for gold ownership.
http://www.ft.com/cms/s/0/285fe19c-9149-11dc-9590-0000779fd2ac.html
Regards,
Michael J. Kosares
USAGOLD-Centennial Precious Metals, Inc.
Author: The ABCs of Gold Investing: How to Protect and Build
Your Wealth with Gold
November 6th: The foothills
of a gold bull market
Every day from our offices
here in Colorado we certainly enjoy the view looking out over
the foothills toward the snowcapped peaks of the Rocky Mountains.
And to be sure, while there is no mistaking that they are indeed
there, the foothills are almost as nothing at all when
compared to those impressive peaks that rise majestically beyond.
And so it is from our vantage point that we believe John Dizard
of The Financial Times has struck upon exactly the right metaphor
when he explains why, in our latest NewsGroup, "we are only
in the foothills of the gold bull market." Read on...
Treading
the foothills of a gold bull market
John Dizard - Financial Times - November 5, 2007
"The relatively subdued
interest of the investing public, if not the investment newsletters
and columnists, is actually good news for those long the metal.
It means there are a lot of people left to buy the stuff, which
is not the case at bull market peaks...the low volatility and
low level of public interest both suggest that even with a short
or intermediate correction, we are only in the foothills of the
gold bull market."
USAGOLD Comment: With gold appreciating so rapidly
in price over the past few months, its hard for a lot of people
to belive that this bull market has only just begun. Dizard makes
a strong case to the fact though. This is a must-read, encouraging
piece for anyone kicking themselves thinking an $800 handle equates
to a "missing of the gold bull".
______________________________
Sinking Currency, Sinking Country
Pat Buchanan via Yahoo! news - Nov2, 2007
"Nor is there any end
in sight to the sinking of the dollar. For, as foreigners demand
more dollars for the oil and goods they sell us, the trade deficit
will not fall. And as the U.S. government prints more and more
dollars to cover the budget deficits that stretch out -- with
the coming retirement of the baby boomers -- all the way to the
horizon, the value of the dollar will fall. And as Ben Bernanke
at the Fed tries to keep interest rates low, to keep the U.S.
economy from sputtering out in the credit crunch, the value of
the dollar will fall."
USAGOLD Comment: This article is one of many to surface
in the past few weeks condemning the future of the greenback.
It is a scary road ahead, one that does not appear to have any
kind of viable solution in the works. While gold owners will
share concern for the future of the dollar, they rest a bit easier
than their peers knowing they have unparalleled safety with savings
in the yellow metal.
______________________________
The United States of debt
Christine Tatum - The Denver Post - November 5, 2007
"Unless Congress acts,
taxpayers are on the hook for $50.5 trillion in obligations over
the next 75 years, Walker says. Think of that as $170,000 per
person, $400,000 per full-time worker or $440,000 per household
-- all pretty steep figures given that the annual median household
income now stands at $46,326."
USAGOLD Comment: This is an excellent piece mirroring
our USAGOLD Disturbing Trends piece linked here.
It's awfully scary to think about the debt obligation of this
country coming due, and the subsequent burden on US citizens.
To say this situation is worsening is an understatement.
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