Friday, February 4, 2011

Keiser Report: Silver Stick for JP Vampire

Uncle Sam Hates Savings

Incomes continue to grow much more slowly than consumption and therefore the personal savings rate dropped once again. Personal Income increase .4%, while Personal Consumption Expenditures increased by .7%. More importantly, Real disposable income increased by a paltry 0.1% in December.

The chart below shows the decline in U.S. savings, which began in the early 1980’s, the bounce back during the recession of 2007-2009 and the quick drop back down again.

The savings rate recently peaked in May of 2009—which was where it had been for over two decades—and has now dropped to just 5.3% of disposable income. This chart provides “graphic” evidence of how the U.S. has learned nothing from the previous crisis.

The Chicago Institute for Supply Management said Monday its gauge of business activity rose to 68.8 in January from 66.8 in December. While that number is respectable, special attention should be paid to the prices paid index rose, which surged to 81.7 from 78.0.

Declining savings and rising prices. We’ve seen this movie before and the ending stinks.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Capital Controls imposed in Egypt

Capital controls and travel bans for significant govt. and business figures have been imposed in Egypt overnight. As is common in such situations of regime change, South Africa comes to mind, such measures are only introduced after the elite have already moved the gold and fled the country, such controls are only ever to stop the "dumb" money from fleeing. As reported earlier in this blog here, here & here, the elite and the gold has already fled.

Real money moves higher overnight

Both Gold & Silver had impressive moves in overnight trading, considering it was on the backdrop of a rising US$. The rise has been attributed by some commentators as short covering and a safe haven trade (along with US$). Maybe US traders have gotten around to picking up an atlas and then realising that the Suez Canal is actually in Egypt and that 8% of the world's trade and 500 million barrels of oil transit the canal each day.

China on track to be top gold buyer again


China’s gold imports are estimated to have more than doubled from a year ago in the run-up to Chinese new year, putting the country on track to overtake India as the world’s largest consumer of the precious metal.

The growth in demand is being attributed in part to Chinese families giving each other gifts of gold instead of traditional red envelopes filled with cash.

Fears of inflation have also driven demand for gold as a retail investment.

Precious metals traders in London and Hong Kong said on Wednesday they were stunned by the strength of Chinese buying in the past month. “The demand is unbelievable. The size of the orders is enormous,” said one senior banker, who estimated that China had imported about 200 tonnes in three on

Euro Slides as Trichet Damps Rate Speculation; U.S. Stocks Slip

From Bloomberg:

The euro retreated the most in two months against the dollar, while oil reversed earlier gains, as European Central Bank President Jean-Claude Trichet dimmed prospects for an interest-rate increase. Most U.S. stocks fell and 10-year Treasuries dropped for a fourth day.

The euro slid 1.2 percent to $1.3647 at 11:53 a.m. in New York after tumbling as much as 1.4 percent. Two-year German bund yields sank 14 basis points to 1.35 percent. Brent crude, the benchmark grade for two-thirds of the world’s oil market, was little changed at $102.40 after earlier reaching the highest price in 28 months. The Standard & Poor’s 500 Index fell 0.1 percent while the 10-year Treasury yield rose 3 basis points.

The shared European currency extended losses as Trichet said risks from rising prices are “broadly balanced,” causing investors to pare bets on an increase in borrowing costs even after euro-area inflation accelerated the most in two years in on