Saturday, 19 February 2011

Weekend Update February 19, 2010

A Silver Explosion Coming?

Baltic Dry Index. 1301

LIR Gold Target by 2019: $30,000. Revised due to QE.

If you jump off a Paris bridge, you are in Seine .

Just a brief update this weekend. Contrast and compare America and China. We open with real estate gloom in often forgotten tech heavy Seattle. Until US real estate hits bottom, any recovery in the USA is likely little more than Federal Reserve sophistry. Once on QE is it ever possible to stop?

You are stuck with your debt if you can't budge it

A third of mortgaged Seattle-area homes worth less than what's owed

The owners of one-third of the houses with mortgages in the Seattle metro area now owe more than their homes are worth, estimates estimates. That's up...

By Eric Pryne Seattle Times business reporter

The owners of one-third of the houses with mortgages in the Seattle metro area now owe more than their homes are worth, estimates.

That's up from less than 23 percent a year ago, the online real-estate database and marketplace said in an analysis released Wednesday.

At the end of 2010, 34.3 percent of all single-family homeowners with mortgages in King, Snohomish and Pierce counties were "underwater" on their homes, Seattle-based Zillow said. That was higher than the national figure, 27 percent.

This region's rate of increase over the past year — and especially over the last quarter — also topped the national increase.

"Negative equity" is rising faster now in the Seattle area largely "because of where we are in the housing cycle," said Stan Humphries, Zillow's chief economist.

Home values in this market kept rising for a year after values began falling in most of the rest of the country, Humphries said. Now Seattle is seeing steeper drops — leaving more homeowners upside down — as price declines in many other metropolitan areas are moderating.

"We're kind of where L.A. was in early 2009," Humphries said.

Negative equity can have a significant impact on both the housing market and the broader economy, especially if the gap between the home's value and the loan balance is large, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

It increases the likelihood that owners will default — even if they still can manage the payments, he said.

After that, they probably wouldn't be able to buy another house anytime soon, he added, "and that would hold the housing market back."

A "strategic default" — choosing to default on a mortgage — also damages owners' ability to obtain credit for other purchases, further curtailing economic activity, Crellin said.

Silver, is it all about China becoming an importer? Click on the link for some excellent copyrighted charts that show how China has gone from dishoarding silver in the 90s to becoming a massive importer of silver since 2007. Anyone naked short silver bullion is probably about to get wiped out. Stay long precious metals. I think that China has hardly begun to buy. Is JP Morgan Chase still short? Time to pass round the hat for Blythe Masters and Dimun? Is JP Morgan the next Lehman?

No matter how much you push the envelope, it'll still be stationery.

Silver Prices Just Starting to Warm Up

February 18, 2011

---- This is a quote from Eric Sprott taken from his ‘Markets at a glance’ article where he referred to the demand for gold and silver akin to a tsunami as follows:

We believe Asian demand for physical gold and silver is akin to a tsunami. While precious metals prices have corrected on the paper exchanges, the inflation resurgence in Asia is quietly driving new, unforeseen levels of physical demand for the metals. While the world continues to float on a sea of paper, this massive wave of physical demand silently threatens to crash into the physical gold and silver market, potentially wiping out tangible supply.

---- Turning towards the east, we have now witnessed the complete reversal by China from being an exporter of silver to an importer of silver as the following chat clearly shows, sent to us by one of our eagle eyed readers and is very much appreciated.


Normal service resumes Monday. The witticisms courtesy of a reader in Cape Cod.

A backward poet writes inverse.


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