Snip:

“In Germany’s bucolic Baden-Württemburg region, there is a curious silence this week. All up and down the Rhine river, farm fields usually buzzing with bees are quiet. Beginning late last week, helpless beekeepers could only watch as their hives were hit by an unprecedented die-off. Many say one of Germany’s biggest chemical companies is to blame….”

“…..Germany’s bees are still in better shape than those in the United States, where the mysterious “Colony Collapse Disorder,” or CCD, has devastated the American beekeeping industry. “Bees in the US — with its huge farms — get a lot more attention than Germany, with its little fields the size of handkerchiefs,” Hederer says. “It’s sad, but true: There always has to be a huge catastrophe before people start to use their brains.”" (link)

SF: It doesn’t appear to me that anyone at the EPA is worried about this problem. The bees must be liberals…

Gold Gains Falter Shy of $890
May 09, a.m. (USAGOLD) — Gold edge closer to the $900 level in earlier trading, but have since retreated into the range on news that the US trade deficit narrowed more than expected in Mar. Nonetheless, the recent gains are encouraging. A softer dollar tone and another round of new record highs in oil should continue to support the yellow metal.

There was a very interesting article in the FT yesterday that suggests the “commodities boom may not be the bubble imagined.” The IMF has expressed considerable concern over global inflation.

John Lipsky, IMF deputy managing director said that the surge in commodity prices “appear to be fundamental in nature.” This is a point that was highlighted, with respect to gold, in Mike Kosares’ excellent article Golden Gut Check from 07-Apr.

Mr. Kosares concluded the following: The fundamentals lead us to the conclusion that there has been real substance to the gold rally of the past two years — a rally which has taken the price 75% higher. Those who have called gold’s up trend the latest in a string of speculative bubbles do so from a lack of perspective and understanding. Likewise, the fundamentals hold out promise for the future in that none of the trends in place are likely to reverse anytime soon. We are left with the impression that the gold bull market is likely to stay on course in 2008, even if we experience a short-term correction or two.

Those subscribing to the ‘bubble theory’ are placing far too much emphasis on US demand, or the anticipated slackening of demand as the US economy slows. As we have stated on numerous occasions, any drop in US demand has been and is likely to continue to be offset by growing demand from emerging economies such as China, India, Russia and Brazil.

The fact that the dollar remains in a long-term downtrend further exacerbates the problem, making dollar priced commodities comparatively less expensive to holders of other currencies, thereby increasing demand.

Investor demand may indeed be adding some froth to the market. However, if the underlying fundamentals for a wide array of commodities remain favorable — rising demand and tighter supplies — it discredits the ‘bubble’ scenario to a large degree and lends considerable credence to the ’super-cycle’ scenario.

The Russian economist Nikolai Kondratiev first put forth the theory that commodities move in 50-60 year cycles in the 1920s. He suggested that commodity prices rose during periods of increased capital investment and fell as those investments lose value. He observed that the average upswing lasted 24 years and the average downswing averaged 29 years, a complete cycle of 53 years.

Kondratiev noted three major commodity upswings: 1789 to 1814, during the French Revolution and the Napoleonic wars; 1849 to 1873, the age of European industrialization; and 1896 to 1920, when the US emerged as an economic juggernaut.

Kondratiev was killed in 1938 during Stalin’s purges, but if you project forward, an approximate 29-year drop in commodities was due between 1920 and 1949. This period included the Great Depression and the Second World War.

Another 31-year upswing would have taken us through the inflationary 1970s, to the peaks for oil and gold in 1980. Another 22 years beyond that would take us to the point from which the latest upswing began in 2001. Viewed another way, 53 years from 1949 would have projected the next cycle to begin in 2002.

Not a bad piece of forecasting for a young economist that never saw his 47th birthday.

Projecting forward once again, we might expect the upswing that we’re presently in to last 24 years. That would suggest that we’re less than a third of the way through the present upswing. Put in that context, $200 oil and $2400 gold seem to be fairly reasonable longer-term objectives. It also makes a sub-$900 purchase seem a relative bargain.

The necessary capital investment Kondratiev spoke of now seems to be coming from the explosive growth of developing countries. In 2025-2026 might we be looking back on the current upswing as the age of the BRIC nations (Brazil, Russia, India, China)?

Another important component of a super-cycle upswing is inflation compounded by the rampant growth of money supply. The IMF has made it clear, as has the ECB and the BoE that they are supremely concerned about the accelerating pace of inflation.

As for the rampant growth of money supply — well we’ve certainly seen that in spades in recent years.

When you do reflect back on the present market conditions from some point in the future, will you be looking back with a sense of satisfaction; knowing you made a sound decision to preserve your wealth with purchases of physical gold from USAGOLD - Centennial Precious Metals?

Gold Market Movers:

US trade deficit narrowed in Mar to $58.2 bln, versus $61.7 bln in Feb.

Canada trade surplus widened in Mar to C$5.5 bln.

Canadian employment for Apr +19.2k, better than expected. Unemployment rate 6.1%.

French industrial production for Mar came in weak at -0.8% m/m.

IMF warns on global inflation

Lots of froth does not mean a bubble

Call options bet on oil hitting $200

Stock index futures suggest a lower open on Wall Street.

(Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. Centennial Precious Metals, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD - Centennial Precious Metals does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.)

For anyone interested in the continued increase in oil prices I’ve posted a comment I made on another forum…….also, there’s an excellent article by Wm. Engdahl / Global Research that seems to nail it.

– Saudi Arabia has a definite impact on oil prices but there is possibly a much more significant factor in these historical increases…….namely unchecked speculation in offshore oil futures exchanges. According to a recent article by William Engdahl / Global Research even a June 2006 US Senate report suggests ” there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly raised prices”

He points out that in the past our CFTC regulated the trading action in commodities like oil but in June 2006 another exchange called ICE opened in London trading several commodities including oil that has nowhere near the checks and balances plus reporting requirements that are mandated in US trading floors. This lack of oversight has left the oil market wide open to be manipulated by any number of parties and I’m sure there are many who enjoy seeing Americans being squeezed financially……..who knows, it could be the oil companies themselves through intermediaries.

WTIC

CRB

Like golden girl, I am moving but to the states from Europe next month and have the same concerns. Carrying my precious, flying under the radar, and how to deal with (my fellow) federal employees. While I am travelling under Military orders with an official passport, I have all my receipts from CPM (proving I owned everything before moving over here), I would like to travel through with as little attention as possible. Both to myself and to my “coin collection”. Even with my silver and gold certificate fiat, the face value of all doesn’t exceed 10k. Face value. Still I want avoid ANY attention but barring that, I’d like to minimize socializing.

Thanks to golden girl for her post and to all who have offered up suggestions. Also if anyone at the Table Round has more insight, please feel free to add. Spring finally arrived in Germany so this evening I will prost a golden Krystallweizen to your Negra Modelo (or beverage of choice).

Calidore

[I used two less-then signs, and the forum truncated the post.
I reposted with a slash in front, and my orig post was toast]

Anyway, I watch the chart [l] too much.
But I also get a lot of email everyday.

The Apache webserver offers these as a level of logging:
Possible values include: debug, info, notice, warn, error, crit, alert, emerg.

Allow similar subscription levels, UG, and I’m in! [at ‘crit’]

gl0d

Tesla Motors, manufacturer of a high-end all-electric sports car opened their flagship retail store in LA this week. While their first model is a high-performance sports car aimed at the Porsche/Sports market, the marketing plan all along was to release the high-end model first, followed by a sedan in 2009. (link)

I’ve been watching Tesla Motors grow for a couple years, and it looks like they are holding to their business plan quite well. Battery technology is moving forward rapidly, perhaps due to both the proliferation of laptops and growing interest in electric vehicles.

If a Lotus-looking sports car flies by you on the freeway, with its only sound being that of a high winding electric motor, you’ve been “Tesla’ed”

Gold closes nearly $11 higher on day

The COMEX June gold futures contract closed up $10.90 Thursday at $882.10, trading between $866.40 and $887.00

May 8, p.m. excerpts:
(from MarketWatch, Bloomberg) — Gold futures closed with strong gains Thursday, as weakness in the U.S. dollar underpinned demand for the precious metal. Gold for June delivery rose $10.90 to end at $882.10 an ounce on the New York Mercantile Exchange. On Wednesday, gold closed $6.50 lower at $871.20 an ounce, after climbing nearly $27 over the previous three trading sessions.

The dollar was modestly lower Thursday, losing ground to the euro and the pound after both the European Central Bank and the Bank of England both decided to hold policy steady. ECB President Jean-Claude Trichet cited inflation risks in his statement, further bolstering the common currency.

The dollar fell as the U.K.’s London-based central bank kept its base interest rate steady at 5 percent after three 25 basis-point cuts from 5.75 percent in early December. The ECB, based in Frankfurt, has kept its benchmark refinancing rate steady at 4 percent since June 2007. The Federal Reserve in Washington has lowered the target U.S. bank-lending rate seven times to 2 percent from 5.25 percent in September.

“I am seeing the dollar catch a new wave of selling, which continues to push gold higher,” said Zachary Oxman, a senior trader at Wisdom Financial. “I also think we can’t discount the strong moves in crude and their staying power so far,” Oxman said. Crude-oil futures fell from record territory, pulling back after gaining nearly 10% in the past four sessions.

Crude oil touched a record $123.93 a barrel yesterday. Gold has trailed advances in oil since setting a record at $1,033.90 an ounce on March 17. The metal has gained 5.3 percent as oil rallied 28 percent this year.

“Gold is undervalued,” said Nick Ruggiero, a trader at Eagle Futures Inc. in New York. “There’s still some inflationary concern in the market. Overall, gold is cheaper to buy than crude right now.”

“We’ve seen strong buying each time gold has pulled back.”

see full news, 24-hr newswire…

Most Economists See Fundamentals Behind High Costs
excerpts
(Wall Street Journal) May 9, 2008 — The global surge in food and energy prices is being driven primarily by fundamental market conditions, rather than an investment bubble, say the majority of economists in the latest Wall Street Journal forecasting survey.

Fifty-one percent of the respondents said demand from China and India was the prime factor in soaring energy prices, and 41% said the demand was the chief contributor to rising food costs.

Constraint in supply was cited second most often; 20% blamed supply problems for higher food prices, and 15% for increasing energy prices.

…Although most of the analysts attributed the food and energy costs to fundamental trends, 11% of the economists see a potential bubble driven by speculation.

Despite concerns about rising prices, the majority of respondents — 60% — said the Federal Reserve is showing enough concern about inflation, and that its focus on the risks to growth is the right priority. The Fed has cut its key interest rate by 3.25 percentage points since last fall but recently signaled that it intends to pause.

“Worry about inflation after we’re sure this isn’t a depression,” said David Wyss of Standard & Poor’s Corp. Thirty-six percent of the economists think the credit crisis is over or mostly over, while 62% say it is about half-finished.

^_(from hyperlink)_^

In the article, a person is cited as saying, “Commodity markets have become a strange safe haven, with prices well out of line with underlying market fundamentals.”

I would ask, what’s so strange about it? After all, it is tangibles in either raw or value-added (finished) form that are the basis for all the economic strivings of mankind. If anything is to be called strange, it is that so many otherwise bright people have become so willing to indefinitely suspend seeking actual fulfillment, choosing instead to let their derived purchasing power chase paper tails in spiraling circles toward utter vaporous exhaustion.

It boils down to this — it’s much better to sit back and enjoy a real sandwich than to have numerical millions and nothing on the table (and no place to sit).

R.

excerpts
May 8, 2008; (MarketWatch) — India’s Forward Markets Commission, a regulatory authority suspended futures trading in soybean oil, potatoes, rubber and chickpeas Thursday… for at least four months…

Last year, India banned trading in rice and wheat futures.

The ban on futures trading comes as India confronts growing pressure at home to curb rising inflation. On Friday, official data showed that India’s inflation hit a 42-month high of 7.57% in the week ending April 19.

The ban also follows comments from India’s finance minister Palaniappan Chidambaram Monday, who said that he was considering a blanket ban on trading in food futures, because of worries speculation in the commodity markets as well as the food crisis India is facing.

Banning trading in food futures is unlikely to reduce inflation, according to Seema Desai, an analyst at the Eurasia Group.

“The key policy move that could genuinely reduce imported inflation would be to allow the currency to appreciate but there is little political appetite for that (as yet),” Desai said…

Soaring prices for agricultural commodities, including rice, wheat, corn, and soybeans, have stirred popular discontent and demonstrations around the world. The United Nations World Food Program has said that high food prices are creating “a silent tsunami” threatening to plunge more than 100 million people on every continent into hunger.

India … has taken a number of measures in response to soaring food prices. … has eliminated import tariffs on several commodities … has also raised the minimum rice export tax in phases after initially banning all rice exports in October 2007.

India has also tried to crack down on hoarding food.

^_(from hyperlink)_^

Food today, WHAT? tomorrow…

Take caution that your reliance on a favorite platform for seeking paper profits might be vilified into dysfunction.

Tangibles always trump derivatives when the chips are down, and an IOU is a ticket to stand in line leading nowhere.

R.

An interesting discussion of Admiralty Law vs. Civil Law by Jordan Maxwell and Jason Whitney and how it relates to commerce and government.

Thanks Goldilox……..the CAFR thing was really an eye opener…….for the longest time I could never figure out why a millionaire would run for public office to earn a fraction of what he could in the business world…….turns out when you can get access to mega-millions of surplus $ it’s the best way to become a MULTI-millionaire.

I appreciate your suggestion, but wouldn’t I look pretty funny with gold coins hanging all over me, especially since I’m not the type to wear jewelry! I might make one necklace though, as that would be a nice thing to have. golden girl

@ americanspirit,

Thanks for the link. Walter is very knowledgeable, and seems fearless.

I think this ties in with the information from Catherine Austin Fitts, who was blackballed from the Treasury for blowing the whistle on $1 Trillion of mis-allocated HUD money.

Walter’s gov’t employee statistic was very enlightening. In Russia, 1 in 8 work for the government. In the US, it’s 1 in 4.

@ BB,

The irony is that at the real hyperinflationary rate, it will be more realistic to eliminate BOTH the nickel and the penny before either of those compositional changes takes effect.

“Shaving coinage” returns to the Empire! Why not? The retail packaging is finding numerous ways to deliver less for more.

I was watching a baseball game today, and even with a proliferation of 2 for 1 deals, the stadiums are virtually empty. Not as much “discretionary” income for $45-50 seats right now, and premium seats are well over $100. Even parking at stadiums is $20-30 these days.

For anyone interested…..the best source on the CAFR scam is Walter Burien who’s site is www.cafr1.com Right now (4:23 CST) he’s being interviewed on www.republicbroadcasting.org

The move to continue minting coin in such small denominations illustrates the need of TPTB to perpetuate the illusion of sound (non-inflationary) money.

At a practical level, the question is: “Why mint pennies, nickels, dimes and quarters at all?”

Today’s dollar has a value of about $0.02 in terms of 1913 dollars. Therefore the 1913 level of monetary granularity could be accomplished today with just paper bills and half-dollars.

How soon before entire States start declaring bankruptcy? Didn’t California just warn the Country that it is running $20 billion in the red this year? What do you think that will do to the POG? just asking..

Gee…….just wondering if the city fathers of Vallejo CA have forgotten about their “CAFR” funds which usually contain a fair amount of $ that never seem to be discussed with the public. These funds usually represent surpluses that almost every city, county, school system have at their disposal with very little fanfare………has anyone ever heard a public official discuss CAFR surpluses?

Snippit:

The House voted for cheaper change Thursday. The unanimous vote advances the legislation to the Senate, but it’s prospects are muddled by objections from the Bush administration and some lawmakers.

The bill would require the U.S. Mint to switch from a zinc and copper penny, which costs 1.26 cents each to make, to a copper-plated steel penny, which would cost .7 cents to make, according to statistics from the Mint and Rep. Zack Space, D-Ohio, one of the measure’s sponsors.

It also would require nickels, now made of copper and nickel and costing 7.7 cents to make, to be made primarily of steel, which would drop the cost to make the five-cent coin below its face value.

The Mint opposes the House-passed measure.

Congress Run Amok

Black Blade: It was inevitable. When unbridled wanton greed in Washington DC is set loose and elected legislators are allowed to plunder the peoples treasury with no controls, it was only a matter of time before the money was no good. Gold and Silver backing of the currency was that control that reigned in the excesses of these wild-eyed simpletons. Personally, I thought they would have just eliminated the penny.

The Case Against the West | Kishore-Mahbubani | Foreign Affairs Magazine | May 1, 2008
http://www.foreignaffairs.org/20080501faessay87308/kishore-mahbubani/the-case-against-the-west.html

http://www.foreignaffairs.org/20080501faletter87369/naazneen-barma-ely-ratner-steven-weber/chinese-ways.html
Chinese Ways
Naazneen Barma, Ely Ratner, Steven Weber
From Foreign Affairs, May/June 2008 - May 1, 2008
Excerpts:
——————————————————————————–
“To the Editor:

In “The Rise of China and the Future of the West” (January/February 2008), G. John Ikenberry offers a compelling series of arguments for why China will not attempt to overturn the liberal order. But he is wrong to assume that the absence of confrontation implies gradual integration. It does not. China is pursuing a different strategy: forging a route around the West by constructing an alternative international system in the developing world…

What the Chinese offer as their version of an international system is very different from the one the West has come to accept.

Ikenberry suggests that China’s deep participation in the international system depends on, and is evidence of, China’s willingness to play by the United States’ rules. This analysis misses the degree to which the leaders of the Chinese Communist Party have, both domestically and internationally, effectively disaggregated economic and political liberalism…

China’s sheer economic might, in turn, has rendered the country far less susceptible to the political leverage the West has wielded over its economic partners in the past. Whose rules are really going to be in play when state-owned and state-directed Chinese investment funds bail out U.S.-based privately owned banks?

The weakness of Ikenberry’s analysis ultimately lies in the too simple way he asks the starting question: “Will China overthrow the existing order or become a part of it?” Beijing has other choices, and the Chinese are just as smart and energetic as the Americans are. The false dichotomy that Americans see (that China will either challenge or join the Western order) dangerously obscures the degree to which China can and is constructing a world without the West…”

Golden Girl here is another option for you. Take the coins that you purchased and turn them into jewelry, i took a coin i bought at USA gold and bought an enclosure for it and turned it into a necklace for my wife. She can pop the coin out at any given time.
You can also make bracelets (wrist and ankle, why not both) , you could make one out of at least 10 - 1/4 ounce pieces. Make 4 one for every limb , now you have 10 ounces right there. Take them off at security and put them back on. Remember MR. T, you could be Mrs G.

Cytek

@ mikal,

“Derivatives exchanges have great growth prospects for precisely this reason. You invent your supply,” Mr Steil says.

G’lox: This sentence says it all. They are merely casinos trading in thin air.

Derivatives trade expands amid volatility | Jeremy Grant | Financial Times | 05/07/08
Excerpts:

“The business of some of the world’s exchanges is increasingly driven more by derivatives - such as futures and options - than it is by share trading, the traditional mainstay of an exchange.
Benn Steil, director of international economics at the council on Foreign Relations in New York, says: “I’ve been yelling about this for years. The equities business is inherently slow growth compared to derivatives.”…

Derivatives have been growing faster because they feed off companies’ and traders’ desire for hedging and risk management tools at a time of market and commodity price volatility, and as monetary policy changes gear.
Thomas Eichelmann, Deutsche B�rse’s chief financial officer, told analysts on Wednesday: “We expect structural trends to continue and given the market environment we would also not be surprised if there were further spikes in volatility going forward.”
Mr Steil points out that cash equities growth is to an extent constrained by the number of companies coming to stock markets - a number that has dwindled in recent months amid economic and market gloom.
Yet exchanges with a derivatives business avoid - or at least can hedge against - this because the growth potential of derivatives contracts is limited only by an exchange’s ability to come up with innovating products.
“Derivatives exchanges have great growth prospects for precisely this reason. You invent your supply,” Mr Steil says.
For exchanges with either no or only a minimal derivatives business this should be cause for concern.”
L I N K

Gold Holding Up Despite Further Dollar Gains
May 08, a.m. (USAGOLD) — Gold is maintaining a consolidative tone, despite further upticks in the dollar. Oil is holding firm as well, having set yet another new all-time high at 123.53 on NYMEX.

The dollar climbed to an 8-week high against the euro in overseas trading on speculation that a slowing economy in the Eurozone will ultimately allow the ECB to cut rates. The ECB kept the refi rate at 4.0% today and is likely to confirm a neutral stance in the press conference.

Maintaining price stability is the primary mandate of the ECB and at this point price risks in the EU remain considerable. The Eurozone economy has also shown remarkable resilience this year. While a declared neutral stance by the ECB will help to underpin the dollar in the short-term, it still seems unlikely that a more accommodative monetary policy is on the horizon.

Officials in Europe continue to talk the dollar higher with some success. Mike Kosares suggests in a recent article that there may have actually been some intervention as well. However, such actions rarely have any lasting impact.

Intervention without participation by the US is almost assuredly doomed to failure. While the Fed may be on hold with further rate cuts, the strategy of inflating the economy out of a possible recession seems to be intact, much to the dismay of the rest of the world.

Treasury will continue to utter the words, “strong dollar policy”, but in reality supporting the dollar seems to fly in the face of the broader plan to stimulate the economy.

EUR-USD losses have been contained by the 100-day moving average thus far. If the euro begins to recapture some of the recent losses, the fact that the dollar remains in a long-term downtrend is going to become increasingly obvious.

The EUR-USD needs to regain the 1.5500 level to ease short -term pressure on the downside and to suggest that the dominant trend is re-exerting itself. A close back above 1.5400 today would be a good start.

Meanwhile, The Bank of England also held steady on rates today, despite expectations of a 25bp rate cut raised by a recent series of soft economic numbers.

While there were no comments made following the announcement, persistent inflation risks undoubtedly weighed heavily in the decision to maintain the repo rate at 5.0%. As the UK economy slows, it may bring inflation in check, allowing for further rate cuts later this summer. This expectation is likely to keep sterling fairly well contained, perhaps with a slight negative bias.

The dollar remains fairly well contained against the other two major currencies, the yen and Swiss franc. These low yielding currencies have suffered in recent weeks as a result of a heightened appetite for risk, which has benefited the dollar.

However, upside momentum for both the USD-JPY and USD-CHF rates has faltered more recently, suggesting either the dollar has become a little overbought or risk aversion may be on the upswing once again.

The DJIA was unable to sustain the recent push above 13,000. We also suggested in earlier commentary that recent buying interest in the financial stocks was likely short covering and perhaps a short-term speculative trade, resulting from further backstopping by the Fed.

In our opinion it did not appear to be any true conviction on the part of the market that the worst of the financial crisis was over. While you certainly hear the “worst is over” refrain on a fairly regular basis these days, the Fed’s recent significant expansion of the various liquidity facilities suggests they may not be convinced either.

If the stock market retreats below 12,600 it will confirm that the Dow remains vulnerable. That would likely spark a drop back to the 50-day moving average, presently around 12,400. If this level eventually gives way as well, we would expect further liquidation of long equity positions.

Such a move would weigh on the dollar and would be supportive of gold. The negative correlation of the dollar and gold would be a significant factor here, but we also believe that investors coming out of the stock market are going to be turning to gold in increasing numbers as a vehicle to protect their wealth.

Oil set a new record high again yesterday, just below the $124/brl level. The strength of oil is going to continue to have a supportive impact on gold. Recent projections that oil is headed toward $200/brl suggests, if nothing else, that the downside for gold is limited and the low of the corrective move may well be in place.

As noted in yesterday’s commentary, the gold/oil ratio is presently trading well below its historic norms. This ratio will come back in line at some point, suggesting that the current levels of gold are an excellent buying opportunity.

Based on the present ratio of approximately 7, if oil makes a run to $150, gold would be trading at $1050. If the ratio starts to widen back toward 10, potential for the yellow metal would be toward $1500.

The GLD ETF increased the total ounces in trust for a second consecutive session, gaining nearly 200koz on Wednesday. This too is a good indication that investors are coming back into the market.

Gold Market Movers:

US wholesale sales and inventories for Mar at 10:00 EDT.

US initial jobless claims for the week ended 03-May fell 18k to 365k, better than the market was expecting.

Canada housing starts fell in Apr to 214k pace

ECB leaves refi rate unchanged at 4.0%

BoE leaves repo rate unchanged at 5.0%

German IP for Mar -0.5%

SEC to require banks to disclose liquidity

Derivatives trade expands amid volatility

Stock index futures suggest a higher open on Wall Street.

(Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. Centennial Precious Metals, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD - Centennial Precious Metals does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.)

Snip:

“Toyota Motor stunned markets on Thursday by posting an unexpected 28% drop in fourth-quarter profit and forecasting a decline of similar magnitude in annual net profit in the current fiscal year.” (link)

SF: Even the mighty Toyota is hurting…

Snip:

“Vallejo has become the first city of its size in California to seek bankruptcy protection.

The decision to file for bankruptcy came in a unanimous vote by the city council Tuesday night as hundreds of residents watched.

The dramatic vote came despite a last-minute appeal by state Sen. Pat Wiggins, D-Santa Rosa, and an aide for Assemblywoman Noreen Evans for the city to avoid bankruptcy.

Mayor Osby Davis said he had “turned over every rock he could find to find a solution” but none came and there is no longer an ability for the city to pay its debts.

Vallejo has been slammed by increasing costs of its public safety contracts, the housing crisis and lower property values.

The city faces a $16 million deficit in the 2008-09 fiscal year that starts July 1. Tuesday night’s vote came after months of fruitless talks between city and labor representatives.

Chapter 9 bankruptcy will allow Vallejo to gain temporary protection from creditors and enable the city to continue to offer citizens necessary services.

The bankruptcy process will cost $750,000 to $2 million just in legal fees, city officials said.

Vallejo bankruptcy attorneys had recommended the city approve any bankruptcy filing at least a month before city coffers run dry, which could happen as early as June 30.” (link)

SF: It was only a matter of time. I guess the question is: which city is next?

Indian’s Rush For Gold On Auspicious Day Spurs Demand - By P. Vijian - Bernama - Yahoo! Malaysia News
05/08/08

Hulbert On Markets
When bad news is good news for gold
Mark Hulbert - Barrons Online
May 7, 2008

12:18a ET Thursday, May 8, 2008

Dear Friend of GATA and Gold:

If you could read German, Italian, or Russian and went
through the newspaper archives in Berlin, Rome, and
Moscow for the late 1930s and early 1940s, you would
have trouble finding a news story that was a more
brazen piece of official propaganda, manipulation, and
obsequiousness than the story appended here from
today’s Financial Times. Its headline might as well be
“Thanks So Much for Lunch, Mr. Secretary; Let’s Do
It Again Soon.” What Western central bank needs to
bother with press conferences and the risk of
inconvenient questions when the FT is around?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Europe and U.S. United on Stronger Dollar

By Krishna Guha and Ralph Atkins
Financial Times, London
Thursday, May 8, 2008

The US and Europe now have a united desire to see
the dollar strengthen against the euro, senior officials
have told the Financial Times.

Policymakers welcome the recent rebound in the dollar,
which at one point on Wednesday rallied to a six-week
high against the euro. They are concerned that the
currency markets have been paying too much attention
to short-term economic weakness and market stress in
the US, and not enough to the medium-term prospects
for the US and Europe, a senior US official said.

Senior eurozone officials believe that the dollar-euro
rate had reached levels unhelpful to both the US and
Europe. …

* * *

For the full story:

http://www.ft.com/cms/s/0/1f5097f2-1c6f-11dd-8bfc-000077b07658.html

Thank you for your advice. I have been in touch with CPM a number of times and they tell me that it is not possible to insure such a shipment. I certainly do not wish to carry the coins with me if I can find another solution. golden girl

Gold eases on firmer dollar while oil tops $123

The COMEX June gold futures contract closed down $6.50 Wednesday at $871.20, trading between $864.40 and $883.30

May 7, p.m. excerpts:
(from MarketWatch, Reuters & FinancialExpress) — Gold futures closed with a loss of more than $6 an ounce Wednesday with strength in the U.S. dollar against other major currencies prompting the precious metal to end a three-session winning streak. It closed $6.50 lower at $871.20, after climbing nearly $27 over the previous three trading sessions.

“Profit-taking is driving things … but the market is holding because of oil, which has been hitting a new record every day,” said Adrien Biondi, global head of precious metals at Commerzbank. Oil prices rose nearly $2 to over $123 a barrel, extending further into record territory on supply worries, boosting gold’s appeal as a hedge against inflation. U.S. crude ended up $1.69 at $123.53 a barrel. “Should oil stabilise or slip back, then we would expect gold prices to ease in the coming weeks. However, any weakening of the dollar or severe escalation in oil prices would quickly result in high gold prices,” investment bank Fairfax said in a report.

Jonathan Jossen, a COMEX floor trader in New York, said that the dollar’s rally was a main factor dragging gold lower. “The next support level (for the June contract) will be between $851 and $853, but I don’t think it’s going to happen though. You have to see the dollar up sharply to get there, I think,” said Jossen. On Wednesday, the dollar gained broadly on the back of hawkish comments from a Federal Reserve official and weak retail sales data in the euro area, weighing heavily on gold. All eyes were trained on the European Central Bank, which at a meeting on Thursday is expected to hold interest rates steady at 4 percent.

“Gold traded back on the defensive after the dollar reasserted itself in the European morning,” said analysts at Action Economics. The greenback’s rise came despite a drop in the National Association of Realtors’ index of sales contracts on previously owned homes. The index, considered a leading indicator of existing-home sales, fell 1.0% in March, and was 20.1% below the March 2007 level.

“As the dollar continued to show strength against the euro … so gold drifted lower closer to support again,” said Julian Phillips, an analyst at GoldForecaster.com. But the finance ministers from the Group of Seven industrialized nations “have made it clear that they do not like a weak dollar and will do something about it, which could be why the dollar is stronger,” he said in emailed comments. “We believe the gold price will soon reflect a bigger picture than simply the euro/dollar exchange rate,” Phillips said.

“With supply disruptions continuing to push oil to higher levels, gold looks set to benefit from further inflation-related hedging in the short term, while strong physical demand helps provide a strong base,” said James Moore, an analyst at TheBullionDesk.

For [India’s] gold retailers, it seems to be another glittering year in spite of the rising prices. On the eve of Akshaya Thritiya, the country’s biggest gold buying festival, sales were brisk as people flocked jewelers to buy the yellow metal.

“Crash in share market and scorching real estate prices have been driving the investors towards gold in recent times,” said K Shivaram, vice-president of World Gold Council.

While declining to give any sales projections, he said festival sales this year would cross last year’s mark of 55 tonne of gold. In addition, this time the festival is being celebrated on two days - May 7 and 8. What has come as a bonanza for the retailers is that this year, the festival falls in the first week of the month when the employees are cash-rich after getting their salaries. Last year the festival was celebrated during the third week of the month on April 18 when the yellow metal price was around 20% lower than the current levels.

see full news, 24-hr newswire…

No disrespect meant to the great posters here, but call the CPM office and ask the crack sales staff their advice. They ship PMs all over the world regularly, and should have all the details (including insurance) memorized. Carrying a lot of gold in your carry-on is an invitation to lost luggage, an airport security hassle, or much worse.

Their phone number is at the top of the page in bold letters.

@ DA,

94% expect $4 gas price?

I’ve been paying $4.15 for over a month. That’s like saying 94% chance of rain, when it’s pouring!

Thank you - yes, I am aware of the $10,000 reporting requirement and have the Treasury 105 form which I was planning to fill out if I do take any coins with me, but I’m not sure how to figure the value since my coins are European. golden girl

FWIW: I spoke with a customs official about the same thing a few months back, and this is what I learned:

- if coins have a denomination on them (like $50 or C$50 but probably not Krug) and if the total (of the indicated value) is over $10k, report as currency on a FinCEN 105 form to US Treas [link]

- if no denomination (like bullion bars, prob Krug), then it is considered a ‘commodity’. Exporting of excess of $2.5k should be reported on the US Census Bureau’s form 7525-V (Shipper’s Export Declaration) [link]. This one is kind of messy, one needs to know the commodity’s ‘Schedule B’ number and units, the form has to be printed on a goldenrod stock, etc.

HTH

Thank you for your response. I could certainly ship the coins to my family in Europe, but I had not thought it would be possible to buy insurance. I will need to find out about that and perhaps it will be possible to ship the coins in batches, to minimize the risk. golden girl

Feldstein: U.S. ‘Sliding’ Into Recession
Wednesday, May 07, 2008 | 03:30 AM
in Data Analysis | Economy | Video
Great piece by Martin Feldstein in the FT: Misleading growth statistics give false comfort

Click for Video
Bloomberg:

“Harvard University economist Martin Feldstein, a member of the committee that charts the American business cycle, said the U.S. economy is “sliding into a recession.”

“This is a weakening economy,” Feldstein, president of the National Bureau of Economic Research, said in a Bloomberg Television interview in New York. “If you compare where the economy is now, with where it began at the beginning of the year, just about every indicator is down.”

The comments by Feldstein, a Republican, go farther than anyone in the Bush administration has gone in publicly characterizing the severity of the U.S. slowdown. Treasury Secretary Henry Paulson in an interview last week said the economy is “still growing, albeit modestly.”

Sources:

Misleading growth statistics give false comfort
Martin Feldstein
FT, May 7 2008 18:54
http://www.ft.com/cms/s/0/4ae9ee60-1c36-11dd-8bfc-000077b07658.html

Feldstein Says U.S. Economy `Sliding’ Into Recession
Anthony Massucci and Kathleen Hays
Bloomberg, May 6 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLkqZ.fSIOdY&

just read through George Soros’ new book and conclude that his most important contribution is:
lose your blinders (he calls them “expectations”)
(p. 44) “The only experience that teaches you more respect for an external reality…than losing money…is death.”
——————-

just returned from NYC
Duane Reade is a very large chain of large drugstores throughout NYC
salegirl told me that they are about to raise prices on most items 15%
conclusion: US does not have inflation…but hyperinflation.
————————

spoke to some Brits and Germans…all of Europe has hyperinflation like the US
they expect US Recession to trigger a Recession in Europe but less severe
conclusions: US and Europe (and most of the rest of the world) have hyperinflation … Euro will stay stronger than Dollar
————————–

CNN poll (two days ago): 78% of Americans expect $5 gas price this year
94% expect $4 gas price
conclusion: people’s expectations are hyperinflationary
————————–

people in building (USA) tell me that building materials…
steel is rising 10% per month…concrete, PVC and copper are “crazy”

how can these prices be shooting up as home construction is closing to zero?
conclusion: the demand is coming from overseas and increasing
————————–

but what happens if US consumer buys less from China and India?
won’t they buy less building materials and so on?

exporters in China are now starting to sell much more to their own countrymen-consumers
and continue to buy foods, and building materials etc. (with US dollars still flowing over to buy their goods)

RHETORICAL QUESTION: what if oil does continue to rise? -if the American consumer is shutting down now, what will he do with $6 gallon gas?
Stop buying A LOT.
Stop driving A LOT.

If US buys not 10 or 20% less from China, but 30-40%+ less from China, what happens then?
How much less oil supply will China need?
And if the US drives A LOT less, how much less oil supply will be needed?
——————–

this afternoon:
-retired mortgage broker (and obviously well off) told me that his friend believes gold is at a bargain price
-financial specialist at a big bank said he was buying gold (there is nothing else to buy, R.E., stocks…it’s all going down)

conclusion: more Americans are buying gold
————————–

this afternoon:
Bob Prechter interview on Bloomberg: money is moving around from one asset to another…gold, silver, foods all peaked and oil will sooner or later
fall A LOT (this would take up to a year to happen)…Bob believes his “waves” are useful when people’s
emotions are strong
(my) conclusion: if oil shoots up much more, US/world is in for Depression/Deflation as Bob suggests…everything will go down and it’s anybody’s
guess what happens
—————————-

this afternoon:
headline on Bloomberg: Pres. Bush asking Saudi Arabia to produce more oil
—————————

to buy or not to buy….that is the question
I already own gold and silver…but I am considering buying more…and I need to sleep on this

Steve

Congratulations on your gold acquisitions and new home.
If I were in your place, and if I didn’t wish to risk customs (Sierra is right, unless you’ve convinced them they’re copper, for a show or just gold plated tokens, the considerable customs risk and aggravation seem needless and avoidable) and didn’t want to sell my cherished gold coin memories and substitute new gold purchases at my destination, with tax, and dealer commission expenses, and a possibility 7 kilos would be hard to acquire without searching and waiting, I would ship my gold UPS or insured air freight etc using the most reliable methods recommended by professional dealers such as Centennial Precious Metals, owners of UsaGold.
You may send it to a relative or have it held for you at your new post office or a UPS warehouse for example. It could be for a few days and possibly for one or two weeks if needed, depending on the particular policy each uses for customer mail and packages.

Goldendome, where I’m going the gold will not be enough to purchase any castle but perhaps a small house.
Sierra Madre, I really appreciate all your advice. I never intended to play any games, but was going to declare everything in a legal way. It never occurred to me that Customs might detain me because they would regard me as suspicious! I can see that might be a real problem, even though I’m a harmless old lady. Actually, I had also thought of selling my coins back to CPM and re-order them to be delivered to me at my new home in Europe, as that would alleviate all my concerns about carrying them around. I will definitely look into that possibility. Thanks.
golden girl

My advice is: don’t try to play games! The face-value argument might not impress Customs and your gold might be confiscated. In that case, a lengthy and costly court judgment in your favor might be your only hope of recovering your gold.

If you MUST go take this stuff to Europe, declare the value of your coins. Realize that you are already a CAPTIVE. Your options are limited.

You can hope that after you declare this gold, the information will be stored but disregarded; there are too many millions of people to keep track of everything they do. Mostly the tax people go after the big operations.

WARNING: Gold brings out the worst in people, especially in OFFICIALS. When the Customs people see this gold, their eyes will pop out of their heads, and who knows what crazy ideas they might get? I can think it quite possible that they would detain you as suspicious - no reason they must give for this. No, no, you do not want to face that risk! Just not worth the aggravation!

I recently brought a lovely Music Box home, from Switzerland. Twice I had to unpack it and play the music for OFFICIALS. They had never seen a music box.

I really don’t think you should do this.

Unless you have important reasons to want to have this gold in Europe, maybe you would do well to keep it right where you are? And keep quiet about it!

Idea: sell the gold to CPM (our host) and rebuy from CPM, when you are in Europe. I think the extra cost of doing this is preferable to the hassle you would likely get, from Customs and HSecurity people.

SIERRA

Knowing these guys, better go short, ’cause that’s what they are probably doing.

They have a reputation for playing games.

SIERRA

Sorry that I can’t be of help on international travel—maybe, some of the boys at Centenial know the ropes. Myself–like you–I’d beef up my shoulder strength, buy a heavy duty bag, tote it aboard if possible, then get some buff body builder type to help heft it into the overhead, and hope the shelf don’t cave in. –Best of luck. We’ll wait to see the advice. Check back later and let us all know which castle you’ve purchased.

@Golden Girl

My understanding is that when moving more than US$10,000 out of the country, the U.S. government wants to know about it. The same will almost certainly be true when arriving at your destination.

If the seven kilos is gold coins, and the coins were minted with a face value (like US$50), I have heard that the face value is used to determine the value. Otherwise, I believe the value is based on the weight and current price of the gold.

Seven kilos would be around 250 one ounce coins, so at US$50 per coin the gold would need to be declared either way.

Given the quantity, I recommend you find a lawyer or customs expert who specializes in this type of international move.

- Survivor

Hello, I’m the new kid on the block. I need your advice about bringing my gold to Europe when I move there in a month or two. I assume that the safest way to transport it is to bring it with me as carry-on luggage. It will be about seven kilos of gold coins. Do I need to report it to the Government? Any suggestions you have will be most welcome. Thank you.

Sir Homer 1,

I wished I lived out in the boonies. My wife and I initially settled in SoCal because my she wanted to be close to her mother who was having health issues. 10 years later, after she died, our kids were in school and both of us had good paying jobs. Now the kids are “almost” gone, but my wife is adament about staying close to the kids…

When I mention a ranch/farm/property, she bristles. For the most part, she is a wonder wife, so I am stuck in SoCal, for now…

SF

With respect to Michael Kosares’

Has Europe declared war on the weak dollar?

The response from new registrants has been stronger than we anticipated.

For all the new members of our NewsGroup, make sure you whitelist us on your spam filter. We have had a number of double and triple registrations over the past several weeks indicating that our mailings may not be getting through to some. Our first concern is that the e-mails are being filtered out.

So don’t forget to check your spam filter and whitelist admin@usagold.com to receive the USAGOLD NewsGroup!

Here is a must-read link:

http://www.zealllc.com/2000/goldinoil.htm

Note that the price of oil X 100 divided by the price of one ounce of gold ratio is at over 14 currently. This is 3 standard deviations higher than the 35 year norm of 7.2.

A quote from the link:

” As an oil producer, there is no better trade for the temporary asset of oil than the seemingly eternal asset of gold. Although OPEC loves to be able to buy almost 11 ounces of gold for each 100 barrels of oil they sell, this perspective also shows the current price anomaly. Historically, the average gold cost per 100 barrels has been in the 6 to 7 ounce range. There have only been two other times in modern history when the gold price of oil has exceeded 10 ounces, and each time was an incredibly short-lived spike that soon plummeted well below the historical average. The 55 year equilibrium cost of oil in terms of gold can not sustain such high oil valuations, and gold catapulted northward each time these high relative oil costs were seen in order to bring the gold cost of oil back in line with historical levels….”

So, let us challenge the Roundtable to determine where the pressure point is that will cause this catapult. A clue may be found whereby the price of gold started to correct until the FED opened the spigot to the investment banks at the repo windows. There in lies a tie?

Find the mechanism of control of gold prices at these levels and we find the pressure point… Thoughts?

SteveH