Baltic Dry Index. 3579 -154
LIR Gold Target by 2019: $3,000.
"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."
Hans F. Sennholz
With the G-7 world close to meltdown, and more and more analysts recommending getting back to cash and out of stocks, RBS’s leading strategist Bob Janjuah is even warning of a coming second “flash crash,” more of the world is starting to invest in precious metals. Below, London’s Telegraph covers developments with an offsetting negative comment from leading Elliott wave practioner Robert Prechter. I have no faith in Elliott waves, whose predictive ability, it seems to me, is matched only by disagreements as to the correct wave count of past history. I will leave my target of $3,000 for gold unchanged, although I am starting to think that we will achieve it by 2015.
"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
Gold price hits new record as it breaks through $1,250
The price of gold rose to an all-time high point above $1,250 an ounce on Tuesday, as investors nervous about the weak state of the global economy sought safety in the precious metal.
By Richard Evans Published: 11:59AM BST 08 Jun 2010
At about 09.25 GMT on the London Bullion Market, gold hit a record $1,251.85 an ounce.
"Gold rallied to a new all-time high this morning as worried investors continue to pile in to the precious metal," said Rajesh Patel, head trader at financial betting firm Spread Co.
We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil." Gold is viewed as a safe-haven investment in times of economic trouble.
-----Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: "If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.
"Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can't be created at the touch of a button. The gold market really does have the bit between its teeth at the moment."
Not everyone shares this bullish view, however. Robert Prechter, the president of Elliott Wave International, who is known for forecasting a big bull market in stocks in 1982 and for getting out before the 1987 stock market crash, told the Reuters Investment Outlook Summit in New York that the gold price could drop by 40pc because of bearish technical momentum and deflation amid a European debt crisis.
"The time to get excited about gold was back in 2001 when no one wanted it," he said. "And now everyone seems to want it, so I don't."
BMO Has A Simple Message To Its Clients: Go To Cash Now
In a surprising development, the most bearish, and easily most comprehensive, report that we have read in a long time on the broader markets, comes from Canada of all places, via BMO's Quant/Tech desk. The report's title is simple enough: Go To Cash - In Plain English. Not much clarification needed. Here is the gist: "We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital...We advocate a zero weight toward equity, and that investors convert their equity positions to cash."
Full report below, and here is a link to the original report with far more technical data.
http://www.zerohedge.com/article/bmo-has-simple-message-its-clients-go-cash-now
Prepare for flash crash II and $10 trillion of QE
Posted by Neil Hume on Jun 08 14:58
Ahead of the month’s coming G-20 meeting in Toronto, America moved yesterday to put more tariff’s of Chinese steel. At last year’s G-20 meeting everyone agreed on no competitive devaluations and no protectionism. It will be interesting to see what else gets agreed and ignored at the coming junket in Toronto. My guess is that China will not be very pleased. Flash crash anyone, or Uncle Sam’s bonds?
"It is the greenback which is unstable, and not the bullion."
Dr. Franz Pick
JUNE 9, 2010
U.S. Hits China With Steel Penalty
In a move that could escalate trade tensions between the U.S. and China, the Department of Commerce found that Chinese drill-pipe makers were selling roughly $200 million of pipes in the U.S. for less than their market value.
The ruling, while preliminary, places a 15.7% subsidy on finished and unfinished drill pipe, mainly used for oil and natural gas extraction, coming into U.S. ports beginning Wednesday. The subsidy is applied to the selling price of the pipe, not including ocean freight or insurance.
In BP news, Norway has banned deepwater drilling until we know what went wrong at BP’s Macondo well. My guess is that the UK will eventually be forced to follow suit. It seems rash to press on regardless if there are major lessons to be learned, and it rather looks like only a relief well will actually stop this disaster.
BP oil spill fears hit North Sea as Norway bans drilling
Norway has banned new deepwater oil drilling in the North Sea amid in a sign that panic over BP's Gulf of Mexico spill is spreading.
By Rowena Mason and James Quinn Published: 9:30PM BST 08 Jun 2010
As the political fall-out moved beyond America, US President Barack Obama attacked BP chief executive Tony Hayward, saying he should have been sacked for tactless comments after the spill.
Britain yesterday ruled out a moratorium "for the moment" on deep water exploration, but Norway, its North Sea neighbour, said it had sufficient concerns to halt all new drilling until a full inquiry is conducted into the cause of BP's leak.
Terje Riis-Johansen, Norway's oil minister said: "What is happening in the Gulf of Mexico is so unique, it's gone on for such a long time, the blow-out is so big, we must gather enough information from it before we move on."
The move will pile pressure on the British Government to put the North Sea oil industry under more scrutiny. Charles Hendry, Britain's new energy minister, said he wanted deep drilling due to start off the Shetland Islands to go ahead, despite concerns about industry safety standards.
He said yesterday that it was sufficient to increase inspections of rigs and set up a new industry body to probe safety, as new deepwater exploration gets underway.
Shares tumbled across the oil and energy services sector yesterday, amid unconfirmed reports of another Gulf of Mexico leak at a rig operated by Diamond Offshore and a fresh onslaught on BP by Mr Obama.
We end today with Middle East news, Turkey looks towards its largest trading partner, Russia. Doubtless furthered by Israel’s unwise and botched enforcement action off Gaza last week.
Russia, Turkey and Iran Meet, Posing Test for U.S. Diplomacy
By SABRINA TAVERNISE Published: June 8, 2010
ISTANBUL — Leaders of Russia, Turkey and Iran convened at a security summit meeting in Istanbul on Tuesday in a display of regional power that appeared to be calculated to test the United States just days before a scheduled American-backed debate in the United Nations Security Council on imposing tighter sanctions over Iran’s nuclear program.
In remarks at the gathering of regional leaders, the third of its kind dedicated to increasing cooperation and security in Asia, President Mahmoud Ahmadinejad of Iran said a nuclear agreement brokered by Turkey and Brazil last month was a one-time opportunity and other countries had called to express their support for it.
“We’ve seen a lot of support from the international arena,” he said, according to the Turkey’s official Anatolian News Agency. “This is the voice of everyone’s heart.” Mr. Ahmadinejad also maintained a defiant posture toward the United States.
“If the U.S. and its allies think they could hold the stick of sanctions and then sit and negotiate with us, they are seriously mistaken,” he told a news conference, according to Iran’s state-run Press TV satellite broadcaster. European and American officials say the vote on sanctions could come as early as Wednesday.
Mr. Ahmadinejad said Iran would not repeat its recent offer to send part of its stockpile out of Iran for enrichment. The accord, supported by Brazil and Turkey, was designed to break the deadlock over its nuclear program, according to Iran.
“The Tehran declaration provided an opportunity for the United States government and its allies. We had hoped and we are still hopeful that they use the opportunity well,” Mr. Ahmadinejad said. “I must say opportunities like this will not be repeated again.”
-------But the agreement infuriated the United States, which is trying to persuade other members of the Security Council, including China and Russia, to vote for tighter sanctions.
Mr. Ahmadinejad was to meet separately on Tuesday with the Russian prime minister, Vladimir V. Putin, at the conference, a move that is likely to worry the United States, which won the support of both Russia and China for sanctions this month.
Mr. Putin, speaking at the conference, said sanctions should not be “excessive” but gave no details on whether Russia would change its mind on the vote. He called Iran’s nuclear program peaceful, a characterization with which Washington disagrees.
-----The conference reinforces the shifting alignments in this complicated area, where regional powers like Iran and Turkey, a NATO member, are emerging as bigger players.
Turkey, whose relationship with its longtime ally Israel is fraying, has been mediating in the Balkans, the Caucasus and the Middle East in a new activist foreign policy that has sometimes placed it at odds with Washington, its closest diplomatic and military partner.
http://www.nytimes.com/2010/06/09/world/09iran.html?hp
"In the long run, the gold price has to go up in relation to paper money. There is no other way.”
Nicholas L. Deak
At the Comex silver depositories Tuesday, final figures were: Registered 52.19 Moz, Eligible 66.27 Moz, Total 118.46 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, back to BP again, and more news about the underwater plumes that BP’s gaff prone CEO says don’t exist.
06/08/2010
Hidden Menace in the Gulf of Mexico
Oil Spill's Real Threat Lies Beneath the Surface
By Philip Bethge
The Gulf of Mexico spill is vastly larger than the Exxon Valdez accident in 1989, but where is all the oil? While efforts to protect coastlines have been making the headlines, the real ecological catastrophe in the Gulf of Mexico is unfolding deep beneath the water's surface.
Samantha Joye was sure she was right. Somewhere down there, the toxic clouds were sure to exist. And now she was holding the evidence in her hands. A thin film of oil glistened in one of the small sample bottles Joye had filled with water taken from more than 1 kilometer (3,300 feet) beneath the surface.
"You could see it. Everybody saw it," Joye, a professor of marine sciences at the University of Georgia, wrote on her blog. Besides, the sample taken from the Gulf of Mexico smelled as if it had come directly from a gas station.
Joye made this important discovery a few days ago on board the research ship Walton Smith, near the location where the Deepwater Horizon drilling rig went up in flames on April 20.
The scientists are now referring to the site as "Ground Zero." They have spotted oddly shaped "pancakes of oil" floating on the surface there, Joye reports, as well as "bizarre orange and black stringers, as deep in the water column as you could see."
The scientist lowered her sample container into this toxic soup. The preliminary lab results show what many had already feared: Massive amounts of oil are billowing beneath the water's surface in the Gulf of Mexico. Several teams of scientists have spotted clouds containing oil in the depths of the ocean, a number of which are several hundred meters thick and extend for several kilometers.
The discoveries have added a new dimension to the fight to contain the oil spill. While thousands of workers and volunteers are currently defending the coastlines of Louisiana, Mississippi, Alabama and Florida against the reddish-brown scourge, what could be a far greater ecological catastrophe is taking shape out in the ocean.
According to new estimates, more than twice as much oil has flowed into the Gulf of Mexico in the last 50 days than was spilled from the oil tanker Exxon Valdez into Alaska's Prince William Sound in 1989.
------"We are now entering a different phase of this disaster," Samantha Joye, the marine biologist, told the news agency Bloomberg in an interview. "Everybody has been focusing on the surface impacts, which is normal. But now we've got to switch gears and start thinking about the deep water."
For Joye, it's also a matter of her reputation as a scientist. Her team discovered the first signs of the monstrous oil clouds in mid-May. But BP CEO Tony Hayward disputes that the clouds even exist. "The oil is on the surface," he said. "There aren't any plumes." He argues that, because oil is lighter than water, it will always float to the surface. BP scientists, at any rate, have found "no evidence" of underwater oil clouds.
The oil executive is trying to prevent the environmental damage from becoming more and more apparent. The US's entire Gulf fishing industry could be shut down for years if the scientists' fears turn out to be true.
-----The toxicologist fears that the chemicals that BP are using to fight the oil are actually promoting the formation of oil clouds. The company has already used about 3.8 million liters of the chemicals, about a quarter of which they released into the water directly at the wellhead.
"The oil alone would slowly rise to the surface," says Griffitt, "but when it becomes mixed with the dispersants, it remains in the water column." Although bacteria attack the emulsion there and gradually destroy the oil, the microorganisms consume much of the oxygen dissolved in the water in the process. The result could be that fish and zooplankton die off on a large scale due to the creation of an oxygen-deficient "dead zone." "The chemistry of the sea water is being completely turned around, and we have no idea what happens next," says Griffitt.
In fact, scientists know very little about the effects of oil deep in the ocean. Neither BP nor the US scientific authorities have attached much importance to the issue until now. For the first time, the National Oceanic and Atmospheric Administration (NOAA) has now dispatched a ship, the Gordon Gunter, to study the phenomenon.
http://www.spiegel.de/international/world/0,1518,699382-2,00.html
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."
F.A. von Hayek
The monthly Coppock Indicators finished May:
DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.
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