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How Low Can You Go.....

Discussion in 'Financial Cents' started by Clyde, Sep 28, 2007.

  1. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Another New Low for the Dollar
    Friday September 28, 10:18 am ET <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
    </td></tr></tbody></table>Dollar Hits Seventh Consecutive Low With New Data Increasing Odds of US Rate Cut BERLIN (AP) -- The dollar hit another new low Friday as U.S. inflation data reinforced expectations that the Federal Reserve may cut interest rates again.The 13-nation euro reached $1.4207 in late afternoon European trading -- exceeding its previous peak of $1.4189, reached Thursday, and setting the seventh record in as many trading days. The euro had bought $1.4160 in New York late Thursday.
    The euro spiked above $1.42 after the release of data showing that a key measure of inflation in the U.S. eased last month to the slowest pace in 3 1/2 years.
    The 1.8 percent rise in core inflation over the past year, which excluded energy and food (Clyde aside, Why? Because it would F the damn statistic! [woot]), was within the Fed's comfort zone for core price increases of between 1 percent and 2 percent, meaning they could cut again.
    The data also showed that incomes rose by 0.3 percent last month, slightly lower than had been expected.
    In other trading, the British pound rose to $2.0353 from $2.0270 in New York late Thursday. The dollar was down to 115.21 Japanese yen from 115.59 yen.
    The dollar has been sliding since the Fed last week cut interest rates by a larger-than-expected half percentage point. Since then, disappointing U.S. economic data have stoked expectations that another rate cut is on the way.
    Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
    The European Central Bank held off on raising its rates earlier this month, but has shown no inclination to follow the Fed's course and cut the cost of borrowing.
    Higher interest rates are used to combat inflation. On Friday, the European Union's statistical agency estimated that inflation in the euro zone would hit 2.1 percent in September -- jumping from 1.7 percent in August, and putting inflation above the ECB's guideline of just under 2 percent.
  2. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Oh yes....this is simply unwatchable, just like the demise of the dollar

    <object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/BfaQuk5tEKE"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/BfaQuk5tEKE" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object>
  3. AlterEgo

    AlterEgo Monkey+++

    Chopper Ben said he will not allow the $$$ to deflate, hence the rate cut.

    But, he may have no control over it as it is 'out of hand'. A friend is the sales manager of a big Chevrolet dealership that usually sells 100+ cars a month. Speaking with him over the fence last eve he said that they only sold 3 this month. Talk of fire sale prices and layoff's were most of what he wanted to speak of.

    As I speak gold at 742 and silver at 13.7+ is an indication of the $$ demise.

    If you are holding cash it might be a good time to start deal hunting, because soon (after the first of the year) inflation might take off. (less goods more demand because of low inventories).

  4. Jonas Parker

    Jonas Parker Hooligan

    Great way to figure inflation. Now if we can figure out how to live without food, travel, heat and light, it all makes sense!
  5. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    UPDATE 1Fed's Mishkin-inflation low thanks to policy
    Thu Sep 27, 2007 7:01 PM ET

    (Adds details from speech)
    By Mark Felsenthal
    WASHINGTON, Sept 27 (Reuters) - Tight central bank monetary policies and well-grounded expectations of low inflation are to thank for low inflation in recent years, not globalization, Federal Reserve Governor Frederic Mishkin said on Thursday.
    "Inflation has come down in the old-fashioned way. Tighter monetary policy and a commitment to price stability by central banks throughout the world have led to lower inflation and an anchoring of inflation expectations," Mishkin said in remarks prepared for delivery to a conference on globalization hosted by the Fed.
    Mishkin said that on balance, the net effect on U.S. inflation from cheaper manufactured imports and higher commodity prices has been small in either direction. [LMAO][LMAO][LMAO][LMAO]

    "Many of the exaggerated claims that globalization has been an important factor in lowering inflation in recent years just do not hold up," he said.
    Discussing the effects of globalization on economic growth, Mishkin said global factors have the potential to be stabilizing for individual economies. Meanwhile, globalization has been a key factor in promoting economic growth, he said.
    Globalization may have helped desensitize inflation to the gap between an economy's economic speed limit and its actual rate of growth -- known as the output gap, Mishkin said. Global factors may mean an economy is less likely to develop bottlenecks as domestic labor markets tighten, he said.
    There is some evidence to suggest that foreign factors influence interest rates, Mishkin said. For example, a global savings excess has somewhat lowered long-term interest rates by reducing the risks associated with holding longer-dated debt, he said.
    "However, central banks still retain the ability to control short-term interest rates, which affect the domestic cost of credit and long-term interest rates, and so can continue to do their job of stabilizing inflation and output," he said.[fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny][fnny]
    Mishkin said globalization may have increased the role of exchange rates as a factor affecting inflation and growth.
    The larger the share of imports in the economy, the bigger would be the effect on growth of a change in net exports, he said. Also, the more a country imports, the greater the effect on inflation from a change in import prices resulting from a move in exchange rates.
    Increased integration of global markets could change the way an economy works and complicate the jobs of monetary policy makers, Mishkin said.
    "In practice, however, the behavior of the U.S. and global economies does not appear to have radically changed in recent years," he said. "The Federal Reserve and other central banks retain the ability to stabilize prices and output."[booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze][booze]

    I guess we don't take into account the demise of the housing market and the "stabilizing" affect the FED has had on that. I dare you to stop drinking your ****ing koolaid and answer me, Mishikin....You ****ing cocksucking, liar faced central banking ****! [own2]So much for stabilizing the disinflation of the housing markets, THANKS FEDERAL RESERVE ASSHOLES.
  6. melbo

    melbo Hunter Gatherer Administrator Founding Member

    In Zimbabwe, they still use cash to pay for lunch... It just takes a little more than we are used to. Same thing happened in Argentina and Mexico
  7. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <table cellpadding="0" cellspacing="0" width="740"><tbody><tr><td valign="top">October 03, 2007
    2008-2009: Rising Inflation Expectations Amidst An Inflationary Storm
    by Jordan Roy-Byrne
    </td> <td rowspan="4" align="right" valign="top" width="140">
    </td> </tr> <tr><td>[​IMG]</td></tr> <tr><td valign="top" width="600"> The average person isn't concerned yet about inflation. They have witnessed and experienced rising costs in food, energy, healthcare and tuition while the government and media consistently proclaim inflation to be low and well contained. Do these people have an ounce of decency? The roots of their corrupt and deceitful behavior can be traced back to a fiat monetary system that operates on debt and inflation, which is a form of counterfeiting. Joe Sixpack knows all this isn't right. But he doesn't know the true cause of rising prices in everyday living expenses, nor does he believe things are unmanageable. At least not yet. To date the Fed has succeeded in obfuscating inflation to the public. They have kept inflation expectations low enough. Though once the public wises up, their confidence game is lost.
    Last week the Fed faced, for the first time, the awaited problem. A handful of distinguished analysts have observed that the Fed was ultimately between a rock and a hard place. Their oversight of epic credit and monetary expansion since 1971, would lead to either deflation (massive contraction in credit and money) or continued inflation. In the words of the great Austrian economist, Ludwig von Mises:
    "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
    While it is the Fed's foremost job to "take away the punch bowl" and protect the currency, the reality is one of epic deflationary forces (credit debt, leverage, derivatives) that threaten the entire world financial system. Thus, the Fed and other central banks have to continue to inflate to maintain stability in the markets and economy. Given that today's deflationary forces are greater than those of 2001, 1998, 1990 and 1987, the inflationary medicine (to ward off deflation) has to be stronger and more painful.
    Last Tuesday, the Fed began the next great inflation with a ½ point rate cut. Unlike past inflations, this round will increase and exacerbate inflation expectations, which have been non existent for almost 30 years. Let's take a look at some forms or symptoms of inflation and how they will precipitate rising inflation expectations.
    Monetary Inflation
    This is the classical definition of inflation, which, over time has been neglected and lost to a definition of "rising prices." Inflation is an increase in the supply of money or currency in circulation. Monetary is an adjective as it helps specify inflation, since today's perception is that inflation is related to prices. Monetary inflation is what causes all other forms of inflation. The following graph from economagic.com shows M3 money supply growth (at an annualized rate) until March 2006 when the Federal Reserve discontinued reporting of it.
    Nowandfutures.com has reconstructed M3.
    Since the Fed discontinued its reporting in March of 2006, M3 annualized growth has soared from 8% in to as high as 14% this year. Except for 1971 and the abandonment of the gold standard, that is as high as monetary growth has been in the post World War II era. The public is far more likely to notice inflation in its symptoms, rather than its cause. Still, perceptive citizens who understand inflation, are aware that inflation, by its real definition, is set to hit levels not seen since World War II and World War I. There remains only one generation left (those born prior to and during the Depression) that can truly understand and explain what lies ahead.
    Commodity Inflation
    Since 2001, we have seen a major bull market in all commodities. While all commodities generally move together, if we zoom in, we can see that different groups have led at different times. This, in part, has helped to downplay the relationship between inflation and commodity prices.
    For most, the first commodity that comes to mind is oil. Oil's gains, and those of natural gas were most acute in 2004 and 2005. Pundits said it was only temporary. If it wasn't evidence of inflation, it was evidence of a strong economy. The metals led in 2005 and 2006. The significant rise seen in metals such as copper, zinc, and nickel was seen as evidence of a strong global economy. Amazingly, this same explanation was used to downplay the rise in gold. The thinking was that gold was rising due to Asian and Indian jewelry demand. It had little to do with rampant money and credit inflation. Since 2006 it has been the agricultural or the soft commodities that have led. The Dow Jones Agriculture Spot Index is up roughly 55% in the past 12 months and up 38% in the past five months. The weather is a common explanation.
    Many lose sight of the fact that not only are all commodities priced in dollars but also that monetary inflation creates more demand (be it artificial) for everything (stocks, real estate, consumer goods, commodities). Some on CNBC will say, "the Fed can't do anything about high commodity prices." Yes they can. They can tighten the money supply and in turn reduce demand.
    In the wake of the Fed's decision we saw new highs in oil, gold and a plethora of agriculture commodities including wheat. As opposed to as recently as last year, it is now difficult to ignore the impact of inflation on all commodity prices. Going forward, energy commodities, soft commodities and the metals are set to hit new highs together. This will certainly raise inflation expectations.
    Currency Inflation
    This could also be called foreign exchange inflation. This occurs when a nation's currency falls (in relation to foreign currencies) and the effect is significantly rising prices of imported goods. We, as Americans, have been fortunate that China and Japan, two of the largest importers to America, have maintained artificially weak currencies. If the pace of the dollar's fall grows more acute, it will substantially raise the prices of all foreign goods and services. Since we import much of what we need, it will be very noticeable to consumers. What is also noticeable is that the dollar has broken through substantial long term support and has hit an all time low .
    The greenback has broken down from a, normally bullish, falling wedge pattern. Typically this type of breakdown is severe as downside momentum explodes. The dollar has already broken below huge long term support at 80. Bollinger Band width is telling us that volatility is soon to pickup. MACD is in position for downside momentum to increase. After support at 72, 40 becomes the next target. You think inflation expectations might rise soon given this picture?
    Wage Inflation
    This occurred in the 1970s. This isn't so much of a problem now in the US because corporations can go offshore. True free market capitalism is deflationary as more workers, more efficiency and more production leads to falling prices. The problem for workers today is that competition and opportunities are increasing but at a time when most governments and central banks are flooding the world economy with excess money and credit. Dwindling job security for workers in the US makes it difficult to demand higher wages.
    However, workers in China (the new engine of global growth) have more clout. Inflation just hit an 11 year high in China. For workers to keep pace, wages will have to rise. In the past 10 years, we have been fortunate to export inflation (send money overseas) and import price deflation in the form of cheaper foreign made goods. Rising wages in China and other Asian countries will raise the prices of imported goods.
    Current Inflation Expectations
    While commodity investments have appreciated tremendously in the past five years, so have world stock markets. If inflation expectations had been rising, then we would see more of a disconnect (between real assets and paper assets) instead of a tight correlation.
    Since 2000, Gold has outperformed the S&P 500, but it is not even close to retracing 38% of its losses from 1980 to 2000. When inflation expectations rise, you will see this ratio soar as more money abandons financial assets for the safety of gold. Another sign of low inflation expectations is the ratio of gold stocks to the price of gold. Posted below is a long-term chart of the XAU index divided by gold. At the bottom we see the gold price.
    The gold stocks, despite gold rising from $250/ oz to $730/oz, have remained in a range when compared to gold. This range is actually lower than the 1980-2000 range, in which gold was in a bear market. You would expect the gold stocks to not only outperform gold in the current environment, but at least be valued higher than they were in the 1980s and 1990s. This is simply a case of low or absent inflation expectations.
    The Federal Reserve's ½ point rate cut triggered a 27 year high in the price of gold, and all time highs in Oil and Wheat, to name a few other things. Amazingly expectations of inflation are foolishly absent. The dollar just hit an all time low. Foreign currencies are hitting all time highs. Monetary inflation is at a multi decade high. Commodity prices are at multi decade highs. Inflation? Anyone? Bueller?
    The lack of inflation expectations should tell you that the commodity bull market and specifically the bull market in gold, has barely scratched the surface. It is my belief that the Fed's recent cut is the wake up call that will finally stimulate rising inflation expectations. Moreover, the public awakening towards inflation is coming at a time when monetary inflation, commodity inflation, currency inflation and wage inflation, already at significant highs, are set to rise even further. The key levels to watch are $1,020/oz on gold and 72 on the US Dollar. While the inflation trend has begun to accelerate, it will turn violent if, and when those levels are broken. Good luck and protect yourself!
  8. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    A warning:

    The Victims of Economic Advantages
    <hr>"Since the U.S. dollar seemed like the safest bet in the world, the Argentine peso seemed like a good bet too. Suddenly, everybody wanted to lend the Argentines money. Why not? The rate of return was good…"
    <hr>by Bill Bonner
    "This doesn't make any sense," said Gabriela.
    We stopped ourselves. We wondered whether it was the idea or the way we chose to express it. Spanish is not our mother tongue. In fact, it's no relation to us at all - not even a distant cousin.
    "Una economia es siempre victima de sus proprios ventajes," we had said.
    We hoped it meant what we thought it meant - that an economy is always the victim of its own advantages.
    "Oh, I see…it's a paradox…but what does it mean?" asked our Spanish teacher.
    Eduardo Elsztain knew just what it meant. Eduardo is the man behind IRSA and Cresud…Argentine companies that have learned to do business, invest, and profit from Argentina's many disadvantages. The firms were worth about $150 million during the crisis of 2002. Now, the stock market judges them to be worth about $800 million. Our friend Steve Sjuggerud thinks they're worth considerably more. Cresud controls 410,000 hectares of farmland in Argentina - and dozens of office buildings and shopping malls. So, yesterday, after our Spanish lesson in the beautiful Galerias Pacificas, we wandered down Avenida Florida to the Plaza Mayor. Eduardo's handsome office is just off the square.
    "You can learn a lot by looking at the Argentine economy," he said. "You don't learn anything from watching people who do things right; you learn from watching people who make mistakes. Down here, we make lots of them."
    The most recent lesson is what happens to a country when it borrows too much from foreigners. Back in the '90s, Argentina was flying. President Menem, with the help of American-trained economic advisors, had pegged the Argentine peso to the U.S. dollar. One to one. No questions. No second thoughts. No need to worry.
    Since the U.S. dollar seemed like the safest bet in the world, the Argentine peso seemed like a good bet too. Suddenly, everybody wanted to lend the Argentines money. Why not? The rate of return was good…and the currency was as solid as the U.S. dollar. What a great advantage. All that money coming into the country!
    The only little, teeny-weeny worry was that the dollar-peso peg wouldn't hold…that when it came to take that money back out of the country, it wouldn't want to leave. That is, there was some lingering doubt about how strong the peso really was. Not long before this, the country had had annual inflation rates over 1,000%. That was why they pegged the peso to the dollar.
    But at the time, with the dollar strong and getting stronger…Argentina was expensive. Our friend, Paul Terhorst, told us he had to leave - it was too expensive to live here. Argentina's exports were suffering too. The nation is one of the top producers of wheat, soy and corn in the world. Not to mention beef. The strong dollar was making the Argentine's food more expensive than its competitors.
    We recall putting the question directly to Carlos Menem himself. We were traveling with a group of American investors in the mid-'90s. Menem agreed to see us…and made a short pitch about what a great place Argentina was for American investors.
    "But will you be able to hold the dollar-peso exchange rate at one-to-one?" we wanted to know.
    "Yes…of course…" was his answer.
    No was the fact of the matter.
    On Christmas Eve, 2001, Adolfo Rodríguez SAá was sworn is as interim president of Argentina. His first, and only, important act as president (his term lasted only seven days) was to declare a default on the country's foreign debt. Then, another short-termer, Ramon Puerta, went home for the holidays and decided not to come back. The crisis deepened until Eduardo Duhalde was elected president - Argentina's fifth president in 12 days. He promised to save Argentines from the "neo-liberal" policies of his predecessors. Ordinary citizens had become "victims of the financial system," he said.
    (Hillary Clinton ought to go back and read some of the speeches from that era; they could be useful.)
    Five days later, the peso was devalued…it subsequently sank to about 3 to 1 with the U.S. dollar - where it remains today. Domingo Cavallo, the economist largely responsible for the dollar peg system was later arrested.
  9. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Listen while you read the article, much more fun with music:

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    MF says dollar ‘overvalued’

    By Chris Giles in London
    Published: October 17 2007 14:00 | Last updated: October 17 2007 14:00
    Currency traders were given a green light to continue selling the US dollar on Wednesday, as the International Monetary Fund said the greenback “remains overvalued” and rejected claims the euro had risen too far.
    Contradicting Rodrigo Rato, the outgoing IMF managing director, who last week said “right now the dollar is undervalued”, the fund’s staff conclude the dollar is still too high. The multilateral lender also forecast slower growth in 2008 at 4.75 per cent, compared with 5.2 per cent expected this year.
    The IMF’s new stance on the dollar will counter the arguments to the contrary made by France and some other eurozone members at this weekend’s meetings of the Group of Seven leading economies and the IMF’s governing body. They have been urging a change in language to temper the fall in the dollar, which dropped by more than 4 per cent against the euro in September alone.
    The IMF, however, has little sympathy for struggling eurozone exporters hit by the currency’s rise. It says that even after its recent rise, the euro “continues to trade in a range broadly consistent with medium-term fundamentals”.
    Apart from the dollar, the IMF’s economists also think sterling is overvalued, while the Japanese yen and the Chinese renmimbi remain too cheap compared with other currencies.
    In some of its strongest language to date, the fund’s officials call on China to let its currency appreciate. Repeating its demand for “greater flexibility” of China’s managed currency, the IMF added that such action was in China’s best interests.
    “Further upward flexibility of the renminbi, along with measures to reform the exchange rate regime and boost consumption, would also contribute to a necessary rebalancing of demand and to an orderly unwinding of global imbalances,” the World Economic Outlook argued.
    Even with slower growth forecast for the US and a weaker dollar, the IMF sees little improvement in the world’s huge trade imbalances, embodied in the US trade deficit and corresponding surpluses in Asia and in oil exporters.
    The Fund thinks that the US current account deficit will remain close to 1.5 per cent of world output until 2012, raising the likelihood of a disorderly plunge in the dollar and protectionism growing over the next few years.
  10. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <!-- headline start --> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td style="font-size: 20px; font-weight: bold;" valign="top" width="99%">IMF chief warns dollar may suffer 'abrupt fall'</td> <td rowspan="3" align="right" valign="top">[​IMG]</td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td valign="top" width="99%">Oct 22 11:42 AM US/Eastern
    </td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> </tbody></table> <!-- date/author end --><!-- article start --> The head of the International Monetary Fund, Rodrigo Rato, warned Monday there are risks of an "abrupt fall" in the dollar, linked to a loss of confidence in dollar assets. "There are risks that an abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets," Rato told the IMF board of governors.
    He also appeared to suggest that Europe could take steps to temper the strong appreciation of the euro.
    "There is a risk that exchange rate appreciation in countries with flexible exchange rates -- including the euro area -- could hurt their growth prospects, and that in these circumstances protectionist pressures could worsen," he said on the final day of the annual meetings of the IMF and the World Bank.
    The outgoing IMF managing director spoke as the European single currency hit a new high of 1.4347 dollars and global equity markets tumbled amid growing fears a US housing-related credit crunch could pitch the world's biggest economy into recession.
    "The uncertainty ... comes from downside risks that are much higher than they were six months ago. The turbulence in the credit markets is a warning that we cannot take the benign economic environment of recent years for granted," he said.
    "We still do not know the full effects of the decline in the housing market and the subprime problems of the US economy. Further disruption in financial markets and further falls in housing prices could lead to a global economic downturn."
    A crisis in the risky US subprime mortgage sector, where loans are given to homebuyers with poor credit histories, erupted this year as borrowers defaulted on mortgages amid rising interest rates and a sharp slump in US housing prices.

    The spillover of the US credit crunch into global financial markets roiled stock markets worldwide in August and although they have recovered somewhat, the uncertainties of the extent of the credit problems continues to weigh on investors.
    Rato warned that a downturn would exacerbate other risks that already exist in the world economy, citing some emerging economies' reliance on capital inflows and the potential that central banks may not curb rising inflationary pressures.
    "Some emerging economies that have relied on external financing to fund large current account deficits could be tipped into crisis by a combination of reduced demand for their exports and tighter financial market conditions," he said, adding that those developments would also worsen the prospects of low-income countries.
    "And there is a risk that central banks may falter in fighting the inflation which has been spurred in some countries by higher oil and food prices."
    Rato told the governors of the 185-nation financial institution aimed at fostering global financial stability that it was imperative to take action to avoid such a calamitous downturn from global imbalances.
    "All of these risks make action on already agreed policies more urgent," he said.
    "Major economies need ... to take supporting policy actions," said the former Spanish finance minister, who is stepping down nearly two years before the end of his five-year mandate.
    His successor, Dominique Strauss-Kahn, a former Socialist finance minister of France, takes office on November 1.
    In an apparent reference to recent pressures from France and other members of the 13-nation eurozone on the European Central Bank to take action to curb the euro's sharp appreciation, which is weighing on eurozone exports, Rato said: "Policymakers need to respect the independence of central banks and support their vigilance on inflation."
  11. Jonas Parker

    Jonas Parker Hooligan

    Good post Clyde! Mr. Rato's grasp of the obvious is overwhelming (or expressed in "redneck terms", "no sh*t, Sherlock!"). Why the citizens aren't holding their congress-critters' feet to the fire right now I'll never know...
  12. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    off to the bank to get more $ to buy more gold
  13. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    New Treasury documents reveal loans, swaps of U.S. gold

    <!-- begin content -->
    Submitted by cpowell on Tue, 2007-10-16 19:26. Section: Daily Dispatches 3:20p ET Tuesday, October 16, 2007
    Dear Friend of GATA and Gold:
    U.S. Treasury Department documents reveal that since May U.S. government gold has been loaned to bullion banks or swapped with other governments to suppress gold's market price.
    The documents were publicized today by the Freemarket Gold & Money Report, edited by GoldMoney founder James Turk, a consultant to GATA.
    Until now the U.S. government has denied intervening in the gold market or swapping gold with other governments. Pressed by GATA for an explanation in 2001,the general counsel to the Federal Reserve Board's Federal Open Market Committee, J. Virgil Mattingly, even repudiated the minutes of the FOMC's meeting of January 1995, which quoted him as saying that the U.S. government indeed had been engaging in gold swaps:
    Turk writes in the issue of FGMR published today:
    "The U.S. Treasury quietly made a subtle change to its weekly reports of the U.S. International Reserve Position, which includes the U.S. Gold Reserve. This change was first made on May 14. The differences can be seen by comparing the report's old format release on May 8 to the new format used the following week. Here are the links:
    "Note the additional description of gold provided in the new reporting format. It says the U.S. Gold Reserve is 261.499 million ounces and, importantly, that the gold is now reported 'including gold deposits and, if appropriate, gold swapped.' [Emphasis added.]
    "This description provides clear evidence that the U.S. Gold Reserve is in play. Gold has been removed from U.S. Treasury vaults and placed on deposit, presumably in the couple of bullion banks the Treasury has selected to assist with its gold price-capping efforts.
    "Gold placed on deposit gets loaned out by these bullion banks and then sold into the spot market to try capping the gold price. The same thing happens with swaps, but the vague language in the note to the Treasury reports makes it uncertain whether they are in fact being used at the moment.
    "It is noteworthy that this change of accounting occurred in May. Could it be that the gold cartel had to dip into the U.S. Gold Reserve to accommodate the big gold buybacks of hedge books that Lihir and others completed at that time?"
    Turk's disclosure adds to recent evidence, including disclosure by the London Bullion Market Association of defective gold deliveries from the Bank of England, that the Western central bank scheme of currency and commodity market manipulation is under great strain.
    The complete text of today's edition of FGMR has been posted at GoldSeek here:
    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.
  14. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <big class="pr">AP</big>
    Dollar Dives After Fed Rate Cut
    Wednesday October 31, 6:34 pm ET
    By Tali Arbel, AP Business Writer <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
    </td></tr></tbody></table>Dollar Slumps Against Euro, Pound, Canadian Dollar As Fed Announces Quarter-Point Rate Cut NEW YORK (AP) -- The dollar skidded to a new low against the euro Wednesday while the British pound broke through $2.08 after the Federal Reserve lowered a key interest rate by a quarter percentage point to 4.5 percent.The Canadian dollar bought more than $1.06 for the first time since 1957.
    The 13-nation euro soared to $1.4503, its fourth new high in as many trading days, while the British pound bought $2.0813, after having hit a high of $2.0822 Wednesday.
    The euro bought $1.4434 in New York late Tuesday, while the pound was worth $2.0679.
    The Canadian currency was trading at $1.0571, or 94.60 Canadian cents, shortly after the announcement, above the 47-year high of $1.0510, or 95.15 Canadian cents, it hit Tuesday. The dollar bought 95.35 Canadian cents late Tuesday. (AHHHHHHHHHHHHHHHHHH!)

    The dollar continued to plunge against the Canadian dollar in later trading, buying 94.16 Canadian cents. The Canadian dollar was worth $1.0620, the first time it broke through $1.06 in 50 years.
    "The stock market is going to think very highly of this (rate cut), but it will continue to undermine the dollar," said Michael Woolfolk, senior currency strategist at the Bank of New York. (THANKS SHERLOCK!)

    The Fed's statement was intended to signal a continued openness to cutting rates, while indicating that inflationary pressures made doing so risky, he said.
    Although lower interest rates can jump-start an economy, they can also weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
    "Currency traders are not buying into the relative hawkishness cropping up in this month's statement," said Ashraf Laidi, chief currency analyst at CMC Markets U.S. "While the outlook for the Fed is between further rate cuts and no rate cuts ... rates will remain unchanged if not go up for foreign banks," he said, causing currency traders to drop the dollar.
    The rate-cut announcement, while expected, drove the dollar down, even as new U.S. data showed the economy grew at a 3.9 percent pace in the third quarter, the fastest pace in 1 1/2 years. (RATE CUT DURING RECORD GROWTH >>>>>>> is that Normal?.....NOT!)

    A second report showed that construction spending rose 0.3 percent in September, the best showing in four months.
    The euro, the Canadian dollar and the pound have been climbing steadily against the dollar, regularly touching new highs since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.
    The euro has been helped by sentiment that the European Central Bank has yet to finish a gradual campaign of rate increases, while the pound has benefited from expectations that the Bank of England will leave rates untouched rather than follow the Fed in cutting the cost of borrowing.
    The Canadian dollar, a commodity-backed currency, has benefited as oil prices soared and demand for Canada's exports increases.
    In other trading, the dollar rose against the Japanese currency, climbing to 115.31 yen from 114.77 yen Tuesday. However, the dollar slid against the Swiss franc to 1.1565 from 1.1600.
    (This version CORRECTS in 2nd, 6th grafs that Canadian dollar broke through $1.06, not $1.60.)
  15. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    :shock:What commodity? I think I want some.:sneaky:
  16. tsiemens

    tsiemens Monkey+++

    What commodity? Oil perhaps? Ha ha.... non canadians are funny.
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