Perez-Santalla: Gold To Fall $200/Ounce !!!

Mike Norman and Perez-Santalla give another perspective on gold claiming that it will fall by $200 an ounce
Santella says : " So in the short term, I could see gold in December coming down to around $700, and at that level the jewelry market will pick up again, so it will buoy it and hold it up between 700 and 800. In the longer term, it should come off, or if there’s inflation, maybe it will hold up around there. Those are harder things to see of course, so I’m just guessing.
as to the three industrial precious metals, which are silver, platinum and palladium. Silver consumption has been brisk and remains brisk, and part of that, I believe, is the jewelry sector, which is that people have turned to silver to buy jewelry. So there’s a lot of jewelry sales in silver, so silver remains brisk at these levels … even right now it’s trading above $13. It can remain there for a while, though I think silver will also trade down because it follows gold a lot of times, as there is also a percentage of people that buy for investment purposes.

Platinum and palladium are being held up by investment money at the moment, but their primary demand is industrial. Once people realize they’re not going to get any earnings if the metals stay stagnant in the price level, they will abandon it, and so I think platinum and palladium can still come off a bit." he added

Gold Battle Lines Drawn at $1,000 Again

By James West
MidasLetter.com
Monday, May 25, 2009

Here we go again. The forces of legitimate money versus the incumbent purveyors of the candy floss economy squared off at the $1,000 an ounce line over which yet another battle will be fought. Arrayed against either side are formidable new elements and tried and true old ones. As usual, the first volley has been catapulted over the walls of the hucksters by the defenders of the essential timeless truth of gold’s naturally stored value against the counterfeit paper currencies.

The liabilities of the enemy have increased, and the short positions in the COMEX market are sufficiently stacked that the big bank defenders simply cannot allow gold to win decisively. G7 governments are allied against gold to a man, while emerging economic behemoths China and Russia stand in opposition.

In particular, China’s revelations that it has been in a continuous accumulation mode for the last several years and is now the fifth largest sovereign reserve of gold has created an impetus in the gold camp that has been seen lacking in the past. Institutional and sovereign investment entities now perceive a floor in the gold price based on this information, and one must beg the question as to why China would make such a revelation when it threatens to undermine the value of its $2 trillion in U.S. debt holdings.

China has also been careful to avoid buying gold on the international market, for fear, it says, of creating a stampede into the precious metals that would immediately increase the cost of its stated intention to continue accumulating gold towards the backing of the yuan (renmibi) as a global reserve currency.

Yet that is precisely what has happened. Ostensibly, the justification for tipping their hand exists in the fact that they’ve resigned themselves to the fact that selling poison toys and pet foods to Americans in exchange for a currency that loses value like light into a black hole is an acceptable if imperfect transaction. With $50 billion a year in interest payments from the U.S., they can hedge the risk buy using it to buy gold.

With the perceived floor arguably at $850, downside risk is limited in gold far more so than in U.S. treasuries, which, if mainstream media is to be taken as remotely credible, is the current favorite of safe haven investors.

‘Safe Haven’ is about to get painted with same fragrant brush as ‘AAA-rated’ investments.

Goldbugs are salivating at the prospect of vindication, but seasoned veterans of the war know that the governments and central banks arrayed against gold are not fair fighters. Since the largest players in the futures market occupy both sides of the contract, and never take delivery of the physical gold, they can orchestrate a perpetual negative sentiment towards gold by driving the future price downward by simply amping up the short positions, thus making gold appear poised for a sell-off. This has been standard operating procedure for the last decade, and it is interesting to note that ever-bigger short positions are having less influence over shorter durations before the bulls shrug off the flimsy performance and take gold higher.

Critics and observers of this U.S. Dollar image management program point to the fact that such activity, while shoring up demand for U.S. Dollar debt in the short terms, effectively undermines the entire global economy, and is among the fundamental causes of financial crises such as the housing collapse and the whole current global financial fiasco.

Proponents of this manipulation, who are increasingly legion in number, correctly predict an inevitable bursting of the damn catalyzed by investment demand overwhelming the short positions, forcing them to buy and cover to limit losses, which will, in itself, stimulate the gold price even further.

With the limited oversight and feeble reporting standards of the CFTC, the ploy is facilitated by complicit (or ignorant) regulators who ensure data is obfuscated and disclosure limited. It has been this collective effort on the part of the Dollar Defenders that continuously defeats gold’s advances, repeatedly castrating the bulls and sending them whimpering to lick their wounds and regroup.

But China is now leading the charge, and the bet is that they’re willing to forgo the lost value of their USD holdings to decisively undermine the global reserve currency once and for all and replace it with the Yuan, a move that would effectively mark the beginning in the shift of the global balance of power from west to east.

The United States, overextended militarily across the Middle East and Asia, with new fronts threatening to open in Iran and Pakistan, is perilously close to an international nervous breakdown. China’s opportunity is to ride to the rescue bearing smiles and steamed pork buns while dividing up what is left of the American industrial asset pool.

Our leadership of the last decade (or more accurately, absence thereof), eager to lubricate the workings of multinational financial interests, have inadvertently played into the patient hands of their biggest creditor by prostituting the national currency shamelessly to the point where every nation in the world can see what used up piece of spent jet trash the old USD has become.

While mainstream media dismisses the idea of the Yuan replacing the dollar as the international monetary standard, those of us who have tuned out at the perception management program on CNN recognize the event as halfway accomplished.

The truly explosive moment for gold will occur when the Chinese, at their discretion, decide to spring the trap, and abandon USD completely in favor of gold, suddenly spiking the price of gold straight north in tandem with the complete collapse of the U.S. dollar.

Don’t pay any attention to the second rate hacks trying to claim credit for predicting the fall…its been predicted repeatedly throughout history from Nostradamus to Roubini. Any student of economic history with 20/20 vision could see this coming, and here it is. “I told you so” is a waste of time. Who’s offering a solution?

Whether or not this particular battle at the Great Wall of $1,000 an ounce is the mother of all battles remains to be seen. Desperate times call for desperate measures, and while G7 governments collude to retain power, the unforeseeable is the greatest threat to gold.

That being said, veteran observers are optimistic, to say the least.

According to Bill Murphy, intrepid soldier of gold wars and standard bearer for the Gold Anti-trust Action Committee,

"The Gold Cartel is giving it all they have no, as evidenced by the sharply rising gold open interest on the Comex ... up some 23,000 contracts on Wednesday and Thursday. They are doing all they can to counter new spec buying.

My hunch is the next time we see $1,000, and that could be very soon, gold ought to take off from there, giving us more upside dynamic daily moves. The reasons to own physical gold are off the charts ... HUGE investment demand, shrinking visible central bank supply (unrelated to the cabal), shrinking mine supply, shrinking dollar, concerns over sovereign wealth debt, a horrible US economy, and a US printing press that is going flat out and will have to for some time to come.

In my opinion, all gold has to do is to stay over $1,000 for a few days, and then all kinds of bells and whistles go off."
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Saudi warns of $150 oil within three years

By Giulia Segreti and agencies in Rome

Published: May 25 2009 18:59 | Last updated: May 25 2009 18:59

Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy leaders on Monday to call for more investment to boost production over the long term.

Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.
Saudi Arabian Oil Minister Ali Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come.

”We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” he said in prepared remarks at the summit.

”However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 200
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Hamptons Home Sales Drop Most on Record, Prices Decline

Hamptons Home Sales Drop Most on Record, Prices Decline
May 22 (Bloomberg) -- Bloomberg's Su Keenan reports on the housing market in the Hamptons of Long Island, New York. Sales have declined the most in the 27 years that broker Town & Country Real Estate has kept records for the Long Island beach towns about 100 miles east of Manhattan. The first-quarter median price fell 23.5 percent from a year earlier to $675,000, according to Miller Samuel.

Housing Hitting Bottom Means Fewest Starts Since 1945

By Kathleen M. Howley

May 26 (Bloomberg) -- The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups.

Existing home sales probably won’t reach pre-boom levels until the third quarter of 2010 and housing starts won’t surpass 1 million until 2011, a barrier last broken six decades ago, the economists said.

“There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s.

The rebound will be so anemic that 2009 building starts will total about 496,000 homes, the lowest since the end of World War II in 1945, according to the economists’ forecasts. Foreclosures on pay option adjustable-rate mortgages and a backlog of bank-owned properties will slow any revival and keep housing from playing its traditional role of boosting economic recovery.

Residential construction and home sales led the way out of the previous seven recessions, with housing starts improving an average seven months and resales gaining strength about four months before the economy picked up.

‘Green Shoots’

The world’s largest economy probably will grow 1.9 percent next year, according to the average estimate of 56 analysts surveyed by Bloomberg. After each of the last seven contractions, it expanded more than 3 percent on average in the first year of recovery.

Federal Reserve Bank of Dallas President Richard Fisher said earlier this month that the U.S. is on the verge of rebounding with “healthy signs -- the stirrings of what I call green shoots.” So did former Fed Chairman Alan Greenspan, who cited “seeds of a bottoming” in housing during a May 12 speech at a National Association of Realtors conference in Washington.

“If you are looking at prices relative to income and rents, you could argue that we are at the bottom, and I’m cautiously optimistic that we may be,” said Thomas Lawler, a former Fannie Mae economist in Leesburg, Virginia. “It’s possible, however, that we could have a second wave of foreclosures and the very small amount of support the economy might have gotten will turn into the reverse.”

Prices Fall

Data released today showed foreclosures are still weighing on the housing market. Home prices in 20 major metropolitan areas fell 18.7 percent in March from a year earlier as foreclosures rose, according to the S&P/Case-Shiller index. Economists forecast the index would drop 18.3 percent.

The recession started after U.S. banks and Wall Street firms securitized mortgage loans made to the riskiest borrowers to earn fees only to see homeowners default, prices fall and the value of the bonds dwindle.

Three of the biggest investment banks were brought down by home loan-related investments. The U.S. government committed $29 billion to engineer the takeover of Bear Stearns Cos. in March 2008 by New York-based JPMorgan Chase & Co. Six months later, Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history after becoming the biggest underwriter of mortgage- backed securities as real estate prices peaked.

Subprime Losses

Bank of America Corp. of Charlotte, North Carolina, bought Merrill Lynch & Co. in January after Merrill recorded more than $50 billion in losses and write downs tied to subprime home loans.

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Freddie Mac announces multifamily funding program

By: AFX | 26 May 2009
NEW YORK, May 26 (Reuters) - Freddie Mac said on Tuesday it will expand its multifamily mortgage funding by $1 billion under a new debt issuance program to investors. The sale of 'K Certificates' is expected to settle in June and is backed by 62 newly originated multifamily mortgage loans. (Reporting by Caryn Trokie; Additional reporting by Patrick Rucker in Washington; Editing by James Dalgleish) Keywords: FREDDIEMAC MORTGAGES/ANNOUNCEMENT (caryn.trokie@thomsonreuters.com; Tel: +1 646-223-6318; Reuters Messaging: caryn.trokie.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

An outlook on where crude is heading next

Crude Realities

An outlook on where crude is heading next, with Stephen Schork, The Schork Report editor and Joe Petrowski, Gulf Oil CEO.

Dollar Gains as North Korean Tests Spur Demand for Safety

By Anna Rascouet and Yasuhiko Seki

May 26 (Bloomberg) -- The dollar and yen rose against the euro on increased safety demand as Yonhap News reported North Korea carried out a missile experiment a day after conducting a nuclear test that drew international condemnation.

The U.S. currency advanced versus all of its major counterparts after the news agency said Kim Jong Il’s government test-fired two missiles. The euro fell for the first time in seven days against the dollar after Britain’s Daily Telegraph cited a German banking regulator as saying bad debt at the nation’s biggest lenders may increase.

“The market is still digesting the news from North Korea,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London. “The dollar is holding up, and the yen is also having reasonable gains. The defining factor is broad risk metrics.”

The euro fell 0.7 percent to $1.3918 at 9:04 a.m. in New York, from $1.4017 yesterday. The 16-nation currency depreciated 0.9 percent to 131.70 yen from 132.92. The dollar slid 0.2 percent to 94.60 yen from 94.83.

The dollar remained lower against the yen after a report showed home prices in 20 major metropolitan areas fell in March more than economists forecast. The S&P/Case-Shiller home-price index dropped 18.7 percent from a year earlier following a similar drop in February. The median forecast of 26 economists surveyed by Bloomberg was for an 18.3 percent decrease.

Norway’s krone fell against all of the 16 most actively traded currencies tracked by Bloomberg as oil prices fell and the central bank said the country’s financial institutions need to keep building up capital to weather the financial crisis.

The krone declined as much as 1.2 percent to 8.9780 per euro, its weakest level since March 31, from 8.8694 yesterday. It dropped as much as 2.2 percent against the dollar before declining 1.8 percent to 6.4430.

South Korea’s Won

South Korea’s won lost 1.1 percent to 1,262.88 against the dollar as the nation’s benchmark stock index slumped for a fourth day after Yonhap reported North Korea was preparing further nuclear tests.

“This kind of news may trigger a knee-jerk reaction among those short-term players who wanted to buy Asian currencies,” said Taisuke Tanaka, managing director and foreign-exchange strategist in Tokyo at Nomura Securities Co., a unit of Japan’s largest securities broker. “But given the fact that most Asian countries enjoy huge current-account surpluses, this type of event won’t change the overall international capital flow.”

The euro slid versus the dollar as the Telegraph quoted Jochen Sanio, president of the German regulator BaFin, as saying debt levels of banks will blow up “like a grenade” unless they participate in the government’s bad-bank plan.

German Debt

“The report over the German debt situation isn’t helping sentiment toward the euro,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., part of the world’s largest interbank broker. The comments sound “fairly dire.”

German banks have 200 billion euros ($280 billion) of bad debt, Sanio said last week, according to the Telegraph. Write- offs may reach 816 billion euros, the newspaper reported, citing an internal memo from the regulator’s office. In an interview with Bloomberg News last week, Sanio said Germany is “more than able” to cope with the 200 billion euros of toxic assets that its banks still hold.

Government bond sales this week may renew concern that a record supply of Treasuries will jeopardize the U.S.’s AAA credit rating, analysts said.

Ten-year Treasuries fell the most since June 2008 last week as the U.S. prepared to resume debt auctions after a two-week pause. The U.S. will increase debt sales to $3.25 trillion in the fiscal year ending Sept. 30, according to Goldman Sachs Group Inc., as President Barack Obama borrows record amounts to try to snap the recession in at least 50 years.

Standard & Poor’s lowered its outlook on the U.K.’s AAA credit rating on May 21 to “negative” from “stable,” raising concern that the same may happen to the world’s biggest economy.

“Given growing concerns about U.S. creditworthiness, capital outflows from the dollar-denominated assets may gain further momentum,” said Kengo Suzuki, manager of the foreign bond trading department in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest banking group.

Rising debt levels may jeopardize the AAA credit rating of the U.S. in the next three years, New York University economist Nouriel Roubini told Il Sole 24 Ore in an interview. “The situation may become risky in two, three years’ time,” Roubini told Sole. “The evolution of the crisis requires paying attention to this matter too.”

Australian Dollar

The Australian dollar fell for a second day, losing 0.9 percent to 77.54 U.S. cents and paring a gain from a five-year low of 60.09 cents reached in October to 29 percent.

Analysts are raising forecasts for the Australian dollar faster than any other major currency on optimism for a global economic recovery.

The median year-end Aussie forecast in monthly Bloomberg surveys rose 14 percent this year, the biggest increase among major currencies against the dollar, and is now 3 cents shy of the current price, half the gap in January. Strategists at BNP Paribas SA, Wells Fargo & Co. and 21 other companies raised estimates in May on speculation China’s demand for Australian exports, from iron ore to wool, will rebound.

“The bears are throwing in the towel, and the Aussie is undervalued,” said Paresh Upadhyaya, who helps manage $21 billion in currency as a Putnam Investments senior vice president in Boston.

Source Bloomberg.com