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PenncoCoins Michael Pennington comments on Today’s news headlines…
by: Michael Pennington
1. Gold Surges Past $700 per oz
http://www.businessday.co.za/articles/economy.aspx?ID=BD4A563711
http://africa.reuters.com/business/news/usnBAN454016.html
As the dollar declines, the price of gold continues to surge. Now that gold has closed over $700 for several days, $700 becomes support instead of resistance. The bullion market is still very strong as the supply and demand dynamics favor a continuing increase in the price of gold. Gold production around the globe is declining, while demand from countries like China, Russia, India and the Middle East are rapidly increasing. There is nothing now that can prevent gold from achieving unprecedented levels, probably $1,600-$2,000 within the next 12-24 months.
2. “Oil tops $80 per barrel or the first time in history”
http://www.kitco.com/ind/Wiegand/sep122007.html
This is not good news for the US economy and especially for the Stock Markets. Higher energy prices mean higher inflation on many products we buy everyday – food, plastics, transportation and even healthcare.The FED has been fighting this inflationary trend for over a year by raising interest rates. Unfortunately, though the FED now needs to lower interest rates to offset the liquidity problems brought on by the sub prime mortgage market. The stock market has already priced in an interest rate cut, so without a cut the Stock Markets would plunge significantly. The FED is in a no win situation. However, look for them to bow to their Wall Street Masters and cut rates on September 17. Be aware that this will help fuel greater inflation throughout the economy and help lower the US dollar against all other currencies. Both of these effects will definitely help to drive the prices of gold and silver higher.
3. US Heads for Recession as Foreign Investors Flee from US Dollars
http://news.bbc.co.uk/1/hi/business/2056587.stm
As the US Dollar continues to drop in value other countries have begun to diversify out of dollars. This makes perfect sense since their dollar holdings will continue to buy less goods and services. The problem for the US is that we depend on those funds to support our massive debt. If foreigners are buying less US Treasuries, the FED has to monetize its own borrowings and the dollar falls even further. As our credit expansion is restricted, a recession soon follows.
4. Greenspan says he didn’t foresee until late 2005 how significant sub prime lending problems would be.
This is political buck passing at its best. Mr. Greenspan was the architect of the sub prime lending problem we’re seeing right now. He was responsible for creating an environment of easy credit. He directly encouraged people who couldn’t afford it to borrow more. He, better than anyone, understood that the success of our entire economy is based on ever expanding credit. People were converting their mortgages to ARMS and using the funds to buy new cars, boats and other luxury items instead of paying off their mounting credit card debt. This spending was good in the short term for the economy, but in the long run debt has to be paid. Greenspan knew by then it would be someone else’s problem.
5. “The US Dollar loses its luster as the world’s reserve currency” – International Monetary FundAs the dollar continues its decline against other currencies, the IMF says the Euro is gaining in popularity. It is my opinion that this is being orchestrated by the world’s banksters to help bring the US down from its perch as the world’s most powerful nation. Everyone needs to understand their history. The world has never seen a fiat currency survive beyond 200 years without losing its full value. The US is on the road to complete dollar debasement as we speak. Behind the scenes the US government is working on plans to introduce the “Amero” at a time just before the dollar crashes. The only way the average hard working Americans can protect their assets is through buying gold and silver bullion. Know that the Fed, the Treasury and the elite banksters who control them, only care about protecting their interests.
6. Banks borrow $7.2 billion from the FED
This is a glaring example of the problems our economy faces right now. Some of the biggest banks in our nation are literally broke right now. These borrowings from the FED’s discount window are a sign of desperation. Due to sub prime forfeitures, losses on hedge funds, derivatives and non recourse loans, the banks have no new money to lend out now – even to their best, highest rated creditors.