December 2010

Gold trading lower early Tuesday, on profit-taking pressure from recent gains, with the U.S. stock market at a two-year high. Morning gold at $1,383. Silver just below $30.

Gold Forecast 2011; It starts with a New Year's Rally: "This decade will come to be known as the “Gold Rush” of the twenty first century, well at least the beginning of it! Gold compared to almost all other investments, outperformed brilliantly this decade. From a low of 255 per ounce to 1431, gold returned over 550 % in the past ten years. It took six years for gold to double from 250 to 500. It took only three years for gold to double from 500 to 1000. As we close out this decade we are at 1400. We have also been doubling the angle of accent. We are at a 45 degree climb as we bring in 2011. Gold has become the new 'Currency of Choice'," reports GoldIras. [Ed. Note: Sound familiar? Here's what we said last December Gold: Asset of the Century - Happy New Year!]

* Positive trends for Gold in 2011: "Historically January and February are good months for gold; in past years, buyers have bought back gold positions that they shed heading into the New Year. Continuing inflation concerns could help support gold prices in 2011. 'The two pillars of gold are, in any country’s currency, are negative real interest rates and deficit spending,' says Frank Holmes, CEO of U.S. Global Investors. Holmes thinks that low interest rates won’t be going anywhere anytime soon as it would be catastrophic for the financial system," reports IBTimes.

* Two Trillion Dollar Debt Crisis Threatens U.S. Cities: More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned. Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery. American cities and states have debts in total of as much as $2T. New Jersey governor Chris Christie summarizes: "We spent too much on everything. We spent money we didn't have. We borrowed money just crazily. The credit card's maxed out, and it's over. We now have to get to the business of climbing out of the hole. We've been digging it for a decade or more, reports Guardian UK.

* "Here we sit on the cusp of another year, where the bull market in gold and silver is now legislated into continuing, thanks to the sterilized tax base of the American government. There is now absolutely no doubt that gold and silver with both continue to power higher throughout 2011, as the crumbling U.S. Dollar, expanding sovereign debt crises, general economic deterioration in the G7 nations induces even more demand for the safe haven monetary metals. Gold will likely break through $1,700 an ounce by the end of 2011, and silver will likely see $35, and may even go through $40 an ounce. Ben Bernanke recently commented that the $600 billion ‘QE2” stimulus package might yet be expanded on if deemed necessary. That comment in and of itself is almost guaranteed to push gold through $1500 an ounce within the next two weeks. - James West, MidasLetter.com (More at GoldIRAs).

* Commodities Predictions 2011: "Overall, commodities markets will continue higher next year as the dollar weakens further and provides more support. Long-term investors, pension and investment funds, will continue pouring money into the asset class. Gold and silver prices will likely reach new highs in the first half of the year as Western economies will still face slow growth and investors remain eager to preserve their wealth," reports CNBC.

* US Treasuries hit by biggest sell-off since Lehman: "US Treasuries suffered their biggest two-day sell-off since the collapse of Lehman Brothers, following a torrid month that has seen borrowing costs for western governments soar. Germany, Japan and the US have all seen their benchmark market interest rates rise by more than a quarter in the past month while the UK’s has risen by nearly a fifth," reports FT.

* DERIVATIVES COULD WRECK WORLD ECONOMY, Cause "Doomsday" for U.S. Dollar, Warns Monetary Expert
12.13.10 -- "In a Sunday front page story, The New York Times reports that “Perhaps no business in finance is as profitable today as derivatives. Not making loans. Not offering credit cards. Not advising on mergers and acquisitions. Not managing money for the wealthy.” The Times story investigates nine secretive bankers who "share a common goal: to protect the interests of big banks in the vast market for derivatives....instruments which, like insurance, are used to hedge risk." "Derivatives are the 'dark matter' of the financial universe. These derivatives are largely unregulated pieces of paper, customized wagers designed to reduce or eliminate risk in buying and selling things such as mortgages and commodities," says Crashing the Dollar author Craig R. Smith. "Until these bets are called, nobody can be sure how much or little they are really worth, yet our entire global financial system now rests on them. What could be riskier?" says Smith.

* Why is gold dropping?: "1. It was overbought. It could have HUGE swings intraday. Support is at $1370.00 short term, $1300.00 midterm and $1180.00 long term.

2. Bonds are crashing! Despite the Feds massive intervention Bonds are falling rapidly IE interest rate yields are rising. This strengthens the dollar and makes loans more expensive. The exact opposite of what the Fed wants. We could be turning into Europe right now. 30-Year Bonds are trading at 121-15 support long term is at 115-25. Both short and mid term supports have been violated and now only the long term support is in tact. This is causing a mini panic among traders. If the Fed can't get control of the Bond market stocks will crash. Look for massive Fed intervention. BUY gold down to 1180.00 (if it ever gets there) The Fed will print, print, print to try to stop the Bond meltdown. We most likely are entering a VERY VOLATILE time. Buy the dips. Be calm, be confident, do your homework," reports Jim Carrillo, Sr. Account Manager at Swiss America.

* Dollar woes and what lies ahead - Washington Times
"As the dollar heads for the basement while the inflation beast hovers over America - and, in fact, the world - Glenn Beck warns of trying times ahead. Mr. Beck, author of Broke: The Plan to Restore our Trust, Truth, and Treasure, foresees this metaphoric dark night. Just in case anyone could possibly miss Mr. Beck's point, the book Crashing the Dollar: How to Survive a Global Currency Collapse flatly says we are "digging the biggest hole in U.S. history..."

"These two books complement each other very well. While Mr. Beck's strength is the fascinating history of how we got where we are today, Mr. Smith comes down hard as to what happens if we don't extricate ourselves from the mess. Our time is running short. Mr. Smith recommends that we diversify our savings so that up to 25 percent of it "is out beyond the greedy grasping hands of politicians." Think gold - a currency hated by politicians and central bankers because it hinders their ability "to create money out of thin air." Mr. Beck's policy proposals include a balanced-budget amendment, the line-item veto and a "binding" budget commission with political outsiders, primarily entrepreneurs and executives, meaning fewer politicians."

* "Fed Chairman Ben S. Bernanke said the central bank may boost Treasury purchases. European officials were split on containing the sovereign-debt crisis. Gold priced in euros and U.K. pounds also rose to records. 'Further currency debasement is the new norm. As long as that stands, investors are going to buy metals as a hedge against paper money. Gold has clear sailing to go much further from here,' said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago," reports Bloomberg.

* Swiss America Chairman Craig R. Smith labeled the Federal Reserve Board Chairman's interview on the December 5th episode of 60 Minutes, as “troubling.” In response to Mr. Bernanke's claim that the Federal Reserve is “not printing money,” Mr. Smith responds, “But the Fed is conjuring up $600 billion by printing money out of thin air!” Mr. Smith claims that the Fed's “quantitative easing” actions have in essence created the “largest de facto tax increases in history on Americans in the form of fast-approcahing, dollar-crashing inflation.” (Read more).

Daily Show Comments on Bernanke's Lies Regarding "Printing Money" -- "Leave it to the Daily Show to express in a humorous way the blatant lies of Fed Chairman Ben Bernanke about "Printing Money". The amazing thing is Bernanke exposed himself, in his own words. The clip notes an interesting discrepancy with what Ben Bernanke told 60 Minutes in his first infomercial on 60 Minutes in March of 2009 and what he said Sunday December 5, 2010," reports MISH.

* "The U.S. economy added fewer jobs than expected in November and the unemployment rate rose to 9.8%, its highest level since April, indicating the economic recovery remains weak 17 months after the recession ended. The weaker-than-expected data caused the dollar to weaken against the yen and euro and other major currencies," reports WSJ.

Gold Going to $1,750 by 2010: "Gold prices will likely continue to trend higher in 2011, supported by a fresh round of quantitative easing in the U.S., before recording a peak around $1,750 a troy ounce in 2012, Goldman Sachs said Wednesday," reports WSJ.

*China’s gold imports are on track for a sharp increase this year, with data for the first 10 months showing bullion shipments up more than four times (last year's total), amid rising interest among investors seeking out a hedge against inflation. Bullion imported into China from January through October 2010 totaled 209.7 metric tons, compared to 45 metric tons in all of 2009. “Uncertainties in domestic and global economies, and increasing anticipation of inflation, have made gold as a hedging tool very popular,” said Shanghai Gold Exchange Chairman Shen Xiangrong. Full article at Marketwatch.com.

* "We'll all be surprised at what gold can do when the jig is up for paper money, which is where I think we are. We'll see days when gold is up $100, and then down $100. We should start thinking three digits in terms of intra-day moves on the gold price," said John Hathaway of Tocqueville Gold Fund to KingWorldNews.

* "More investors are turning to silver to limit their exposure to the dollar. 'This is probably the strongest demand there’s been in the last 25 years,' said Lee Rosenbloom of Plaza Collectibles in NYC. Silver prices have soared 60 percent in 2010, driven in large part by a strong investment demand, particularly strong buying of exchange-traded funds, or ETFs, backed by the physical metal," reports CNBC.

"China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late Tuesday. Chinese experts said the move was to protect their domestic economies," reports China Daily ... More at CTD

* The Irish rescue package that Goldman Sachs estimates may total $130 billion failed to dampen speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the EU and IMF after the Greece rescue.

21st century Dark Ages ahead? "Economist says hope for the best but prepare for the worst...The recent move by Fed Chairman Ben Bernanke to infuse $600 billion of paper money into the economy is seen by the Obama White House — if not by Bernanke — as a means of ginning up the economy in time for November 2012. Let us understand that what we may confront is beyond a U.S. experience of anyone living today or in all American history. In the new book "Crashing the Dollar" Craig Smith and Lowell Ponte hold nothing back...," reports RenewAmerica

* Dollar to Become World's ‘Weakest Currency’: "The dollar may fall below 75 yen next year as it becomes the world’s 'weakest currency' due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co. The U.S. currency has declined against 12 of its 16 most-traded counterparts this year," according to data compiled by Bloomberg.

* Alternative Investing: Rare Coins: "Coins don’t always mean small change; in fact, some U.S. rare coins are worth a small fortune. A new CBNC slide show features the 15 most expensive U.S rare coins, including those considered priceless. [Note: Swiss America specializes in both rare U.S. gold and silver coins as well as bullion products. Read why In Gold Coins We Trust (2/06)]

* Weaker Dollar Seen as Unlikely to Cure Joblessness: "A weakening currency traditionally helps a country raise its exports and create more jobs for its workers. But the declining value of the dollar may not help the United States increase economic growth as much as it might have in the past. Though a weakened dollar would help exports to some degree, business executives and economists said that because of the ways American multinational companies operated, it was uncertain whether it would cause much of an increase in hiring," reports NYTimes/CNBC.

* Why You Must Own Gold: "Buy gold," says Mad Money's Jim Cramer. "Even with gold at $1,400, investors should allocate 20 percent of their portfolio to it. Maybe you’re wondering how high gold will climb before the run is over? That really isn't the right question. When gold gets to be about 5 percent of the world's portfolios, I will reevaluate this 20 percent gold allocation for you at home. Right now it's at about 0.3 percent," reports CNBC.

* A 24-Karat Safety Net for Investors: Gold is "in effect a protest vote that there's something amiss with current policies. People are almost acting as their own central banks because the advantage of gold is that it acts as a hiding place in times of currency turmoil,” said Abhay Deshpande, portfolio manager with First Eagle Funds to NYTimes.

* Gold rises over $1400 for first time ever-IB Times- "Gold prices rose above the $1,400 an ounce barrier for the first time ever on Monday. New fears sparked by the latest Irish debt problems drove investors to seek security in the eternal metal. Comments from World Bank President Robert Zoellicks earlier today, in which he suggested that major global economies should return to a new gold standard, helped push investors towards gold, where gold set a new record high at $1408.10 an ounce. The gold price is on the path that long-time experts forecasted. Craig Smith from Swiss America said last week that he expects the price of gold to reach $1,500 per ounce this year, and $1,750 in 2011," reports IBTimes.