List of banks under stress keeps growing

The number of banks with risky levels of bad loans rose only slightly in the last quarter of 2009, partly because the FDIC closed so many failing banks, according to federal data analyzed by the Investigative Reporting Workshop at American University in Washington.

Four ways to check your financial institution:

A total of 389 banks had “troubled asset ratios” above 100 at the end of December, up slightly from 369 banks in September, according to the analysis. A ratio above 100 means a bank had more troubled loans than money set aside to cover potential losses.

The FDIC closed 140 failed banks in 2009, including 45 in the fourth quarter alone. Nearly all had very high levels of bad loans.

The new analysis relies on information reported by banks to the Federal Deposit Insurance Corp. as of Dec. 31. Journalists at American University calculated each bank’s troubled asset ratio, which compares troubled loans against the bank’s capital and loan loss reserves.

Troubled assets include loans that are 90 days or more past due, loans on which the bank is no longer collecting interest and real estate the bank already owns, usually through foreclosure. A similar measure, known as a Texas Ratio, is commonly used by bank analysts as an indicator of stress on a bank, though such ratios can’t capture all the nuances of a bank’s condition.

The number of banks with ratios above 100 has risen sharply, from 24 at the end of 2007 to 163 in the last quarter of 2008 and 389 currently.

During that same period, the number of banks has fallen by more than 500, from 8,542 banks at the end of 2007 to 8,008 banks at the end of 2009. Therefore, the percentage of banks with high ratios has climbed sharply to 4.9 percent, or one out of every 20 banks.

The FDIC said 702 banks were on its troubled bank list at the end of 2009, up from 552 just three months earlier. That list is secret. Analysts often use shorthand measures such as the Texas Ratio for one clue to the banks on that list.

“Recovery in the banking industry tends to lag behind the economy, as the industry works through its problem assets,” FDIC Chairman Sheila Bair said in the FDIC’s quarterly summary.

Depositors are protected
The rising troubled asset ratios show the increasing pressure that the recession and bad loans, particularly on commercial real estate, have placed on the nation’s banks.

The American Bankers Association opposes the sharing of ratios like these with the public, and cautions that a heavy debt load does not ensure that a bank will fail.

While the troubled asset ratio is not a predictor of bank failure, most of the banks that have failed do have high ratios. Still, banks with high ratios can recover, as borrowers resume making scheduled payments or the bank is able to raise more capital.

Even when a bank does fail, no depositor has lost a dime in insured deposits since the FDIC was created in 1934. That protection has its limits. The basic limit had been $100,000 per depositor per bank but has been increased to $250,000 through Dec. 31, 2013. The FDIC has more detailed information and a calculator to help you determine your level of protection.

In short, the FDIC’s advice boils down to this: If your deposits are under the FDIC limits, you’re protected even if your bank should fail. If your deposits exceed those limits, the best protection is to move deposits into smaller accounts at more than one FDIC-insured bank.

Along the same lines, the national median for the troubled asset ratio continued to rise: At the end of 2007, the median ration was 5 percent — half the banks in the U.S. were above that level, and half below. The midpoint rose to 9.9 percent at the end of 2008 and hit 14.5 by the end of 2009.

The total of badly past due loans and foreclosed properties at all banks reached more than $367 billion in December, up from $348 billion in September and $237 billion at the end of 2008. More details of the overall pattern are in the American University report.

Limitations of the ratio
The troubled asset ratio was devised in the early 1980s by journalist Wendell Cochran, now senior editor of the Investigative Reporting Workshop at American University Others do similar calculations.

The reports in most cases do not include the billions in federal money injected onto the balance sheets of bank holding companies in the form of so-called TARP funds.

The ratio does not include the value of non-loan assets that have caused so much trouble in the past year, particularly for some larger banks that moved away from traditional commercial banking. Nor does it reflect mortgage-backed securities, collateralized debt obligations, etc. In this way, the ratio may underestimate the real depth of problems.

And no ratio can get at all the detailed information — such as the individual loan files, quality of management, potential for raising other capital — that a regulator would use to evaluate a bank’s safety and soundness.

URL: http://www.msnbc.msn.com/id/35754096/ns/business-economy_at_a_crossroads/

Better late than never, I guess.

Gold Is The Ultimate Asset Bubble

Robert Lenzner

Forbes – It must still be early in the gold bubble. Two masters of the hedge fund universe, George Soros and John Paulson, have vastly increased their bets on gold.

Both men have substantially raised their holdings in a Canadian mining enterprise, NovaGold Resources. Precious metals entrepreneur Tom Kaplan, through his private family concern, New York-based Electrum Strategic Resources, holds about 40% of NovaGold shares. Kaplan also has a large position in Gabriel, a Toronto-listed gold miner with operations in Romania that the company boasts as one of the largest gold mines in the world.
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Then there’s Frank Giustra, a close friend of former President Bill Clinton, who is waging a takeover battle to gain control of a Guinean gold company named Crew. Crew is also a target of Russian business mogul Alexey Mordashov, who controls Severstal, a large Russian steel concern.

Here’s a compelling factoid in support of the early bubble thesis. Gold ETFs, led by SPDR Gold Shares, hold assets equal to only 1.5% of all the assets of money market funds. That indicates the public and the mutual fund industry, except in their precious metals funds, are still very small participants in gold.

I’ve met privately with veteran investment managers like Morris Offitt of Offitt Capital Advisers and learned that gold is fast becoming a more highly weighted asset in portfolios.

The gold bubble is a function of the growing unrest about the debasement of currencies, not only the dollar, but also the euro and other European currencies whose nations have too great a debt load and must raise gobs of money or risk default.

Gold’s investment glimmer is also a function of growing unease, specifically about the ability of the Obama administration to reduce the budget deficit and finance the extension of health care. The rising interest in gold reflects a concern about America’s place in the world, an expectation of slower growth in comparison to more dynamic economies in China, India and other developing nations.

In the spirit of the Greek historian and chronicler of the rise of Rome, Polybius, Kaplan, a 47-year-old precious metals entrepreneur with a Ph.D. from Oxford, tries to understand the life cycle of nations in terms of stages: first growth, then stagnation and finally decline. “Globalization,” he says, “has accelerated this cycle for the U.S.”

The attributes of gold are that it is a precious metal without a counterparty or credit risk. It should not trade in as volatile a fashion as oil, copper or other commodities dependent on the health of the economic cycle, suggests Kaplan.

The enigmatic Chinese should be considered a positive factor for the gold price, too. China, however, wants to avoid buying vast amounts of gold on the open market, and becoming the cause of the bubble is becoming dangerous. Yi Gang, vice governor of the People’s Bank of China and director of China’s State Administration of Foreign Exchange, indicated recently that China would face serious constraints if it wanted to increase its gold holdings. Supply is limited and aggressive Chinese buying would push up the price. China has indicated it can acquire gold more cheaply from domestic production and doesn’t want to push the price up in a way that will “hurt Chinese gold consumers.”
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There is a good deal of misunderstanding in the gold market, because many financial experts don’t believe gold is anything more than a volatile fad. They thought Soros was dissing gold when he called it some weeks ago “the ultimate bubble.”

Bubbles are thought to pop sooner or later, so timing is everything. In this instance, Soros’ point is that we are not at the “ultimate” stage yet, and buying gold early in the stage of a bubble is eminently rational.

Source Article

Key paragraph:

“All of our revenue is completely consumed by entitlements,” Bowles said. “This is today, not some forecast into the future. Every dollar we spend on the military, homeland security, transportation, education and research is borrowed,” and half of that comes from foreign sources, he said. “That is a recipe for disaster.”

Bowles Says Deficits Will Make U.S. ‘Second-Rate’

By David Mildenberg

March 9 (Bloomberg) — Erskine Bowles, co-chairman of the commission on U.S. deficit reduction, said entitlement programs such as Social Security will turn the nation into a “second- rate power” if their costs aren’t reduced.

“We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there,” Bowles said today in a speech to North Carolina bankers in Greensboro. “If we don’t make those choices, America is going to be a second-rate power and I don’t mean in 50 years. I mean in my lifetime.”

President Barack Obama created the commission last month, and named Bowles, 64, former Clinton White House chief of staff, and former Wyoming Republican Senator Alan Simpson, 78, to lead the panel. The commission’s recommendations to bring the budget deficit down to 3 percent of the economy by 2015 are due Dec. 1.

“All of our revenue is completely consumed by entitlements,” Bowles said. “This is today, not some forecast into the future. Every dollar we spend on the military, homeland security, transportation, education and research is borrowed,” and half of that comes from foreign sources, he said. “That is a recipe for disaster.”

The Obama administration is prodding banks to lend more to small companies to stimulate the economy and provide jobs.

Public debt “is going to crowd small business out of the marketplace and they aren’t going to have capital to grow and create jobs,” Bowles said. People who say the U.S. must invest more in education, research and transportation should understand “there’s not going to be any money for that or anything else unless we get the spending under control,” he said.

Value-Added Tax

Bowles and Simpson have said a value-added tax should be considered.

“A value-added tax ought to be something that’s on the table,” Bowles said in an interview last month with Bloomberg Television’s “Political Capital with Al Hunt.” There are “no sacred cows,” Simpson said.

Political leaders who say the budget gap can be closed mostly by cutting fraud and abuse in government programs are wrong, Bowles said today.

“Don’t listen to them,” Bowles said. “We’re going to have to make some very tough decisions and we aren’t going to come out of this very popular.”

Political Risk

Bowles recently announced his retirement as president of the University of North Carolina system. During the administration of former President Bill Clinton, Bowles also served as director of the Small Business Administration.

House Republican leader John Boehner’s suggestion that the group report its findings before the November elections is misguided, Bowles said in an interview after his speech today. “Alan and I agreed that if this was completed before the election, it would become completely politicized,” Bowles said.

Illustrating the difficulty of the task, Bowles said his 90-year-old mother, Jessamine Bowles Morris, had expressed pride that Obama named him to co-chair the panel. Then she added, according to Bowles, “Don’t you mess with my Medicare.”

Article Source

Buy Gold While Supplies Last, Says Fund Manager
by Peter Gorenstein in Investing, China

Lost in the headlines over the dollar’s resurgence in 2010 is the fact gold is still rising in most worldwide currencies. It is also still faring well in dollar terms. Gold is trading at around $1,120 per ounce, up about $60 in the last month.

Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.

He tells Aaron in the accompanying clip, “there are many compelling factors both from a supply side and then from the demand side that looks like gold will trade higher.”

Holmes’ reasons to bullish on gold:

– Massive federal deficits and low interest rates in the United States and elsewhere will raise inflation risks and keep downward pressure on currencies.

– Rising incomes in Asia, where affinity for gold runs deep, will have a sizable positive impact on demand; Holmes tells Aaron that China is now the largest producer of gold in the world but that won’t drive down prices because the government is “using it as a reserve currency for themselves.” However, bulls should note China’s chief for exchange official said this morning they would limit their purchases.

– Peak Gold? Gold production from mines is not adequate to meet demand. Production is dropping around the world. Holmes notes worldwide production ell 10% in 2008 and is especially dramatic in South Africa – the world’s largest producer.

Holmes, however, does have a few words of caution for those looking to get rich on gold. He only recommends a 10% allocation in gold that would be divided evenly between bullion and stocks. Among his favorite gold stocks is Randgold Resources Limited, a stock he owns and has recommended here in the past for its strong management.

Article Source

Hat tip for posting this video to “The Golden Truth”

Congressman Ron Paul interviewed on Fox Business.

“We are spending $1 Billion on an embassy in London…it makes no sense…”

Video:

Texas Straight Talk
by Ron Paul (R), Congressman

Last week I had the opportunity to bring up spending and transparency in two important hearings.  On Wednesday I questioned Federal Reserve Chairman Ben Bernanke on some highly questionable uses of funds at the Federal Reserve, and on Thursday I asked Secretary of State Hillary Clinton about exorbitant spending at the State Department.

It is extremely important to continue bringing these issues up, especially in light of our difficult economic times, when so many are out of work, as I saw up close in my district at the Oceans of Opportunity Job Fair in Galveston two weeks ago.  Those who are working live with the fear of losing their jobs as they struggle to pay bills.  Meanwhile, Washington is talking of increasing their taxes, something voters were promised, clearly and adamantly, would not happen in this administration.

Government also struggles with money, but the struggle centers on how to get more of your money into government coffers.  Rather than expanding the Federal budget in the face of economic downturn, we should be focusing on eliminating waste and being the very best stewards of public funds that we can possibly be.  Most businesses have had to streamline and cut back in order to survive, and so it is only fair for our government to do the same.

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Its only true if you cant be forced off of it, in some cases.

How food and water are driving a 21st-century African land grab

Farming Ethiopia

An Observer investigation reveals how rich countries faced by a global food shortage now farm an area double the size of the UK to guarantee supplies for their citizens

We turned off the main road to Awassa, talked our way past security guards and drove a mile across empty land before we found what will soon be Ethiopia’s largest greenhouse. Nestling below an escarpment of the Rift Valley, the development is far from finished, but the plastic and steel structure already stretches over 20 hectares – the size of 20 football pitches.

The farm manager shows us millions of tomatoes, peppers and other vegetables being grown in 500m rows in computer controlled conditions. Spanish engineers are building the steel structure, Dutch technology minimises water use from two bore-holes and 1,000 women pick and pack 50 tonnes of food a day. Within 24 hours, it has been driven 200 miles to Addis Ababa and flown 1,000 miles to the shops and restaurants of Dubai, Jeddah and elsewhere in the Middle East.

Ethiopia is one of the hungriest countries in the world with more than 13 million people needing food aid, but paradoxically the government is offering at least 3m hectares of its most fertile land to rich countries and some of the world’s most wealthy individuals to export food for their own populations.

The 1,000 hectares of land which contain the Awassa greenhouses are leased for 99 years to a Saudi billionaire businessman, Ethiopian-born Sheikh Mohammed al-Amoudi, one of the 50 richest men in the world. His Saudi Star company plans to spend up to $2bn acquiring and developing 500,000 hectares of land in Ethiopia in the next few years. So far, it has bought four farms and is already growing wheat, rice, vegetables and flowers for the Saudi market. It expects eventually to employ more than 10,000 people.

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My comments in blue.

China ready to end dollar peg

The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.

By Garry White

China ready to end dollar peg

At the annual session of the legislative National People’s Congress in Beijing, Zhou Xiaochuan, governor of the People’s Bank of China, said that the days of the “special yuan” policy were numbered. He described the dollar peg as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy. The currency has been pegged at about 6.83 yuan per dollar since July 2008.

Many economists expect China to allow the yuan to appreciate slightly this year, but the cautious tone by Mr Zhou means that any change may not happen for some time. He said that the central bank would maintain the “basic stability” of the currency. So, despite the fact that the Chinese economy grew by 10.7pc in the fourth quarter of last year, the country’s loose monetary policy looks set to continue.

Translation: Consider that China is the only government in the world who is responsibly managing their finances (they just increased the minimum reserve requirement of their banks to 16.5%) – we must slander them in the eyes of the global community so maybe we can get them to budge.

“If we are to exit from irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing,” Mr Zhou said. “This also includes the [yuan] exchange rate policy.”

China’s currency policy has been subject of fierce debate, particularly in the US and Europe, with the country’s central bank accused of keeping the yuan artificially low to promote a domestic exports boom.

Translation: I am trying to convince you that if China wasnt being such a “bad” global citizen their currency would debase itself, all by itself, I mean, why would a currency want to retain any value anyways?

An artificially lower currency makes the country’s goods and services more competitive, leaving other exporters at a disadvantage. Jim O’Neil, Goldman Sach’s chief economist, thinks the Chinese should allow their currency to appreciate by as much as 5pc.

Translation: With a petulant stomp, I say ITS NOT FAIR! Why should someone else be at a disadvantage just because China wont debase the crap out of their currency with the rest of us idiots!

In recent week President Obama has been vocal on the issue of the artificially low currency. “China and its currency policies are impeding the rebalancing [of the global economy] that’s necessary,” Mr Obama told Bloomberg last month.

Translated: More petulant foot stomping, this time by the “Most Powerful man on the Planet”…is he really?

“My goal over the course of the next year is for China to recognize that it is also in their interest to allow their currency to appreciate because, frankly, they have got a potentially overheating economy.”

Translated: I am so out of touch with reality that despite the fact that my own country’s economy is imploding in the worse financial disaster in human history, I think I should be giving these silly Chinamen advice.

As for the rest of the article: More free advice from people with no pot to piss in.

The relative value of the dollar is important to China, as the country is the world’s largest holder of US government debt. According to data form the US Treasury Department, China held $894.8bn (£591bn) of US Treasury securities at the end of December. Roughly two-thirds of the country’s reserves are believed to be in dollars and dollar-denominated assets such as gold.

“The US dollar is still an extremely important currency, playing a key role in international trade, cross-border capital flows, direct investment as well as in determining whether we can smoothly overcome the global financial crisis,” Mr Zhou said.

When China eventually abandons the peg, the country will have to manage its exit strategy carefully. If the central bank allows a gradual appreciation of its currency, which would be the best strategy for its exporters, there could be an inflow of funds from speculators betting on further appreciation. However, a one-off revaluation could deal a severe blow to the country’s manufacturing sector.

My summary: These people have gone completely nuts.

Once again, I am reminded of the saying that nothing is ever true until the government officially denies it.

Fed Audit Bitterly Opposed By Treasury

Ryan Grim

Tim Geithner’s Treasury is opposed to an audit of the Federal Reserve by the Government Accountability Office.

The Treasury Department is vigorously opposed to a House-passed measure that would open the Federal Reserve to an audit by the Government Accountability Office (GAO), a senior Treasury official said Monday. Instead, the official said, the Treasury prefers a substitute offered by Rep. Mel Watt (D-N.C.), and would like to see it enacted as part of the Senate bill.

The Watt measure, however, while claiming to increase transparency, actually puts new restrictions on the GAO’s ability to perform an audit.

Secretary Tim Geithner, Assistant Treasury Secretary Alan Krueger and Gene Sperling, a counselor to the secretary, held a briefing Monday with new media reporters and financial bloggers during which they discussed the Fed audit and other topics. Under the briefing’s ground rules, the officials could be paraphrased but not quoted, and the paraphrase could not be connected to a specific official.

HuffPost reporter Sam Stein lodged what he called a “formal complaint” against the ground rules. The complaint was noted and the briefing began.

(more…)

Always cracks me up when I hear individual investors tell me “why would I want to buy gold? it doesnt give any returns?”

These self same individuals seem to tend to have no history of understanding generational wealth, and are not in the mindset of “protecting wealth they own”, but more of the mindset of trying to become someone with wealth to protect.

The change in Central bank behavior from sellers to buyer marks a sea change that history shows took 15 years to run its full course, the last cycle gold rose from $35 / ounce to $850 / ounce (an increase of almost 2500%).

But hey, gold doesnt give any returns.

Venezuela Central Bank to Increase Gold Purchases, Khan Says

By Corina Rodriguez Pons

March 5 (Bloomberg) — Venezuela’s central bank will boost its gold reserves this year and will buy more than half the estimated 20 metric tons of domestic production, bank director Jose Khan said today at an event in Caracas.

The central bank, which has about $16 billion of its $30.6 billion of reserves in gold, purchased 1.08 tons of gold from domestic mines in the first two months of this year after buying just 2 tons in all of 2009, said Khan, one of five directors at the country’s monetary authority.

“We’re going to increase our gold reserves and buy more local production,” Khan said today. “Our objective is to increase reserves and help develop the local gold industry.”

Venezuela’s central bank is planning to provide $250 million of financing for gold production this year in an attempt to boost non-oil exports. The bank, along with the Mining Ministry, plans to build a gold refinery, bank President Nelson Merentes told reporters March 3, without providing details.

Gold futures for April delivery rose $2.10, or 0.2 percent, to $1,135.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal gained 1.5 percent this week.

Comments by Trader Dan over at JSMineset

Gold put in an impressive performance today from where I sit battling back from a barrage of selling linked to the ridiculous story circulating around the market today that China was not interested in buying gold. That initially emboldened the raiders at the Comex and sent the lemmings packing and heading for the hills before saner minds prevailed who began buying into the weakness. The result was a strong bounce from important technical support near the $1,110 level (see the chart for a view and read the comments there).

Let’s state the obvious here – the Chinese NEVER announce their intentions beforehand. Do the investors/traders in this nation believe that they are stupid? Anyone who follows the soybean market can attest to this. As we mentioned last time a story appeared announcing China’s intention to buy the remainder of the IMF gold sale; such a thing would be very uncharacteristic for them. After all, we are not dealing with a Gordon Brown here (the Prime Minister of England who at the time he headed the Treasury there announced beforehand his intention to sell England’s horde of gold thereby guaranteeing that the citizens of his nation would receive the lowest possible price). Rest assured that China has no intention of saying the least thing positive about gold purchases knowing full well that they will create a stampede of buying into the market which would guarantee them the worst possible purchase price.

You might recall that after copper collapsed from over $4.00 all the way down to $1.25 that it was not until it had recovered quite nicely off the bottom that word leaked out that China had been accumulating the red metal for its strategic stockpiles. Did China come in and announce beforehand that they were going to buy gobs of copper? Of course not –it was only after the market began moving higher and kept moving higher and traders were speculating as to what was going on that the truth came out. I remember full well the comments from the analysts at the time who were dumbfounded by the fact that the metal kept moving higher in the face of a collapse in the US housing market and an abrupt shutdown of the US economy. They were all sitting around scratching their heads trying to come up with reasons why the market was going up and not down.

It will be exactly the same for gold. China will buy it and you will not know it UNTIL AFTER THE FACT. The price chart will tell us when the buying is occurring but it will not tell us who is buying. I repeat, the East does not announce their intentions until after the fact. They will accumulate the metal on price weakness whenever Western-based hedge funds are in the process of selling it. If I had to bet on these funds against China, my money would be on the Chinese.

One last comment about this matter – China is still reeling from the fact the India beat them to the market on their gold buys late last year. And do not forget that India is going to be adding more gold to their official reserve holdings at an appropriate price level.

Even if you leave the Chinese out of the gold market – gold has not been making all time record highs in terms of the Euro and the British Pound and 30 year highs in terms of the Swiss Franc because China might or might not buy the metal. It has been doing so because it is functioning as a currency without any obligations attached to it. In other words, China’s actions in the gold market have nothing to do with gold’s string of all time highs in these major currencies. It is fear, uncertainty and a desire for a safe haven that have fueled the metal’s rise. China is just an added bonus which will serve to keep a floor under the metal on price retracements.

JSMineset

Excerpt:

It has been possible to extrapolate that the two banks that hold these large manipulative short positions on the Comex are JPMorgan Chase and HSBC because of their huge positions in the OTC derivatives market, whose regulator, the U.S. Office of the Comptroller of the Currency, does not provide anonymity when it publishes market data. (See Footnote 6 below.) In the first quarter 2009 OCC derivatives report, JPMorgan Chase and HSBC held more than 95 percent of the gold and precious metals derivatives of all U.S. banks, with a combined notional value of $120 billion. This concentration dwarfs the concentration in the gold and silver futures markets and should raise great concern about the lack of position limits on the Comex.

It is also disturbing to us that HSBC is the custodian for the major gold exchange-traded fund, GLD, and that JPMorgan Chase is the custodian for the major silver exchange-traded fund, SLV. It is a significant material omission to fail to disclose to GLD and SLV investors that the custodian banks of the two exchange-traded funds have an interest in falling prices in the futures and derivatives markets.

The thing that I find interesting about the above two paragraphs is that apparently COMEX contracts may now be settled not in gold, but in shares of the GLD ETF. Curious indeed.

Submitted by cpowell

3:55p ET Monday, March 8, 2010

Dear Friend of GATA and Gold:

GATA today delivered to the chairman of the U.S. Commodity Futures Trading Commission, Gary Gensler, a letter from GATA Chairman Bill Murphy, appealing to the CFTC to act against the concentrated and manipulative short positions in the precious metals markets. The commission is expected to hold a hearing this month on establishing position limits in those markets. Murphy’s letter is appended.

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

* * *

March 8, 2010

Gary Gensler, Chairman
U.S. Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st St. NW
Washington, DC 20581

Dear Chairman Gensler:

The Gold Anti-Trust Action Committee (GATA) was formed in January 1999 to expose and oppose the manipulation and suppression of the price of gold. What we have learned over the past 11 years is of great importance in regard to the CFTC’s forthcoming hearings regarding position limits in the precious metals futures markets. Our efforts to expose manipulation in the gold market parallel those of Harry Markopolos to expose the Madoff Ponzi scheme to the Securities and Exchange Commission.

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What would happen if Credit Default Swaps were demanded to be settled in gold? Is this the end game during this currency cycle?

Janet Tavakoli

Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these “financial weapons of mass destruction” levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull’s-eye.

(more…)

Gold has proved to be the best value investment over the last 10 years, new research has disclosed.

By Myra Butterworth, Personal Finance Correspondent

The price of the precious metal rose 277 per cent during the past decade, with investors particularly attracted to gold during the recession as they sought a safe haven for their money.

(more…)

Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.
-Benjamin Franklin

Europe Rejects U.S. Deal on Bank Data

By JAMES KANTER

BRUSSELS — The European Parliament on Thursday broadly rejected an agreement with the United States on sharing information about bank transfers that was aimed at tracking people suspected of being terrorists.

The European Parliament rejected the agreement by a vote of 378 to 196, with 31 abstentions.

The vote underlined differences between the United States and the European Union over how to balance personal privacy guarantees with concerns on national and international security.

The agreement, rejected 378 to 196 with 31 abstentions, would have freed the United States from having to seek bank data on a country-by-country basis. It went into effect provisionally at the start of February and was to last nine months while a more permanent arrangement was sought.

But many members of the Parliament complained that the agreement had failed to guarantee the privacy rights of European citizens.

Members also were angered when ministers from the body’s 27 national governments agreed on the provisional deal a day before activation of a treaty that gave members of the European Parliament greater say over data-protection issues.

Underscoring the importance of the agreement to the United States, Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner had promised to cooperate with the Parliament in negotiating the long-term accord.

Question about sharing bank data emerged in 2006, after The New York Times reported that a Belgian cooperative responsible for routing about $6 trillion daily among banks, brokerage houses, stock exchanges and other institutions had provided information about transactions involving thousands of Americans and others in the United States in the wake of the 9/11 attacks.

The cooperative, the Society for Worldwide Interbank Financial Telecommunication, or Swift, is based near Brussels.

American and European leaders had warned that rejecting the accord would leave a security gap. Some legislators said use of the Swift data had already made it possible to thwart attacks.

A statement issued on Thursday by the United States Mission to the European Union said the decision to reject the agreement “disrupts an important counterterrorism program which has resulted in more than 1,500 reports and numerous leads to European governmental authorities and has contributed significantly to collaborative counterterrorism efforts between the United States and Europe.” The statement said the “outcome is a setback for U.S.-E.U. counterterror cooperation.”

But a large number of European Parliament members complained that the agreement would have granted the United States far too much power to intrude into the lives of European citizens.

A German member, Martin Schulz, said this week that he was concerned the data on European citizens could be kept on file for nearly a century.

The accord was signed in November but needed parliamentary consent to be legally binding.

Cecilia Malmstrom, the European Union’s commissioner for home affairs, had argued in favor of the agreement, and on Thursday pleaded in favor of postponing a decision.

The United States could still rely on an agreement on mutual legal assistance to seek the data. But that could make the process of gathering the information more cumbersome.

Source Article

At approximately 3:10 PM on March 2nd, someone bought up to 2.3 million shares of the GLD Gold ETF, with prices starting around 111.20 per share.

This translates to roughly $255 million in one go.

I guess institutions are starting to get serious about this gold thing.

UPDATE

Several readers have pointed out that this must be some kind of fluke, as this volume spike does not appear via other trading platforms.

Thanks to our readers who pointed out the discrepancy!

As of this post, 66.9 Ounces of Silver buys 1 Ounce of Gold.

Silver still a great buy at this ratio.

Silver / Gold Ratio Explained

Tim Congdon, from International Monetary Research, said the scale of credit contraction since the bubble burst is deeply worrying. “What it tells us is that the crisis is not yet over. The process that made credit cheaper and more available for companies around the world is still going into reverse,” he said.

Bank for International Settlements reports further £235bn slide in global lending

Global bank lending contracted by a further $360bn (£235bn) in the third quarter of last year and issuance of debt securities tumbled yet again, almost entirely due to economic and credit strains in Europe.

By Ambrose Evans-Pritchard

The Bank for International Settlements (BIS) reports that cross-border loans have fallen sharply for the fourth quarter in a row, albeit at a slower pace. A tenth of global credit has evaporated in a year, cutting lending by $3 trillion.

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As many of you know, we have been big fans of owning things which produce something from the earth that humans need. These things can include minerals, precious and base metals, agriculture, and energy.

An excerpt from the article below that backs up our thoughts on future demand:

World food demand is expected to increase 100 percent by 2050 due to a rapidly expanding population in countries such as China, India and the United States. And, yet 963 million people, 14 percent of the world’s population, are already chronically hungry.

Ag expertise needed to feed, fuel world’s skyrocketing demands for food, energy

National Teach Ag Day was held Feb. 25, and communities across the nation were asked to consider the teachers that will be needed to prepare students for the increasing number and complexity of agriculture-related jobs expected to be available in the United States. “Perhaps most importantly–we will need qualified teachers to prepare students for these increasingly sophisticated professions,” said Jay Jackman, Ph.D., executive director of the National Association of Agricultural Educators.

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Anglo Far East Bullion- Review

By Goldstockmania.com

Not too long ago, I received a request to do a review on Anglo Far East Bullion as a potential option for gold/silver allocated storage.  Per the request, I have done some digging and would like to report my findings. First of all, I do not and have not used the storage services of Anglo Far East Bullion. However, based on my findings thus far they seem to be a legitimate option for gold/silver storage. I have not been able to dig up any dirt or any reason someone should avoid using them for allocated storage of their gold/silver, in fact, it is quite the opposite.

Anglo Far East Bullion seems like a good solution for those seeking extreme privacy and are looking to hold a substantial amount of silver or gold. Which can be problematic to do so safely at home, a bank, or even a relative’s place.  I would personally avoid holding any gold or silver in any bank! If you want to diversify and minimize your risk, it makes sense to spread it around at carefully chosen locations that have a history of respecting property and privacy.  Also, I would want the storage facilities to have rigorous security and 3rd party auditing.  Insurance and reasonable fees are to be expected with any of the companies chosen to hold my gold or silver.  Lastly, I like to always see some sort of recommendation from at least one of the industry veterans for additional confidence before proceeding.  Anglo Far East Bullion meets all of my requirements.

“Never buy a “pool” account of unallocated silver.  Never let others hold your silver, either in allocated or unallocated form……Maybe you can invest a little bit into allocated silver; as a way to diversify the location of your physical silver.  Two companies I would trust (but do not use) are goldmoney.com and the Anglo Far East Bullion Company; they will hold silver for you in allocated form….”

-Jason Hommel src: How to Buy Silver, & Avoid Getting Scammed

Before proceeding with them you should of course do your own due diligence.  You should also understand your strategy for securing your physical gold/silver storage.  One of the things to consider is, how much do plan to hold? Anglo Far East Bullion has a minimum amount to open an account of US $50,000. Anglo Far East prefers servicing higher end customers looking to make substantial gold/silver purchases although they do have an unadvertised account minimum of US $5,000 too.  If you do not fit into the higher end, don’t worry about it too much as there are other viable storage options that cater to smaller investors too.  For the one I use, you can see my review here.

WHAT IS THE MINIMUM AMOUNT REQUIRED TO CREDIT MY BULLION ACCOUNT?
For bullion accounts, AFE has a minimum account guideline of $50,000 USD.

src: Anglo Far East Bullion – FAQ

You can read more about Anglo Far East in the February 2009 issue of DGC Magazine where David Morgan interviews them.