India, Indonesia, China And Wider Asia Buy Physical Gold And Silver On Dip As Stagflation Threatens 

Submitted by Tyler Durden on 05/11/2011 07:11 -0400

Gold and silver have extended their recovery and may be headed for the fourth day of gains due to the continuing European sovereign debt crisis, Chinese inflation (+5.3%) and the real risk that rising oil and commodity prices are leading to an inflation spiral internationally and stagflation. German inflation data this morning was worse than expected jumping to 2.7% from 2.3% due to surging energy costs and despite recent strength in the euro. This has led to the euro falling against all currencies and especially against gold. The precious metals are likely to be supported later today when US trade deficit data is expected to be poor with still high oil prices leading to a very large expected deficit of $47.7 billion. This should see the dollar come under pressure and support gold. Stagflation or low economic growth, high unemployment and rising inflation is a clear and present danger to the UK, EU and U.S. economies and other economies internationally. This is especially the case in the UK where house prices have begun to fall again and may be set for sharp falls. Internationally, we are seeing significant debt deflation where the value of goods and assets bought with debt are falling (cars, property etc) while the value of finite, essential goods such as food and energy are rising. Safe haven and inflation hedging diversification into gold is likely to continue as inflation is deepening and there is a distinct whiff of stagflation in the air. It is too early to tell whether the recent sell off is over and a further correction is possible however global macroeconomic conditions suggest that gold and silver bull markets are very much intact. This is especially the case due to continuing Asian demand with gold again being bought on all dips in China, India and the rest of Asia. 

 

 

 

 

Steve Forbes: "The US Will Likely Have A Gold Standard Within The Next Five Years" 

Submitted by Tyler Durden on 05/11/2011 09:22 -0400

And another advocate for the only logical outcome out of the disastrous monetary and fiscal catastrophe the US finds itself in emerges in the face of billionaire, and open administration critic, Steve Forbes. From Human Events: "A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills. “What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said. Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said. The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added." Of course, for this to happen the US would first need to allow a full public audit of its gold 8,000+ ton reserves held at Fort Knox and elsewhere. And that may be problematic. 

 

 

 

 

 

Today's Economic Data Docket - Trade Balance, JOLTS, New POMO Schedule, More Bond Issuance 

Submitted by Tyler Durden on 05/11/2011 07:54 -0400

Today, we get the March trade balance and JOLTS reports. Also, the Treasury continues its exercises in debt ceiling breach by issuing another $24 billion in 10 Year notes, while the Fed explains its monetization intentions for the next month as it releases the latest POMO schedule at 2 pm EDT. 

 

 

 

 

 

U.S. post has $2.2 billion loss, warns of Sept insolvency (Reuters)

 

 

 

 

March Trade Deficit Jumps To $48.2 Billion As Imports Surge 

Submitted by Tyler Durden on 05/11/2011 08:40 -0400

And just as Citigroup predicted, US imports surge even as US exports jump to a record $172.7 billion. But the story is once again in the GDP reducing imports which jump by a whopping $220.8 billion, a $10.4 billion jump M/M. The total deficit of $48.2 billion is the highest since the June 2010 spike which hit $49.9 billion. From the release: "Exports increased to $172.7 billion in March from $165.0 billion in February. Goods were $124.9 billion in March, up from $117.8 billion in February, and services were $47.7 billion in March, up from $47.2 billion in February. Imports increased to $220.8 billion in March from $210.4 billion in February. Goods were $187.0 billion in March, up from $176.9 billion in February, and services were $33.8 billion in March, up from $33.5 billion in February. For goods, the deficit was $62.1 billion in March, up from $59.1 billion in February. For services, the surplus was $13.9 billion, up from $13.7 billion in February." Ah, financial innovation being exported as per usual. Look for another round of Q1 GDP downgrades as this number takes out a few basis points in growth. As we know from China that April exports to the US jumped even more, this import surge will likely carry over into Q2 and result in more GDP cuts. 

 

 

 

 

 

Greece Stages Another 24 Hour Strike (Complete With Teargas) As European Officials Arrive To Enhance Austerity: Live Webcam From Constitution Square 

Submitted by Tyler Durden on 05/11/2011 07:33 -0400

On the one year anniversary of its first bailout, things in Europe's basket case are getting much worse once again. Even as senior EU and IMF inspectors arrived in Athens on Wednesday to press Greece to shore up its finances, workers walked off the job to protest against austerity-induced recession, culminating in a 24 hour strike which sees both airports and journalists taking a break from hard work. Oddly ironic this: the "bankers" arrive to make austerity even more aggressive (so there is more value left over to senior bondholders when the bankruptcy commences), just as the country experiences a deja vu moment of strikers on one side and teargas lobbing policemen on the other. Those who wish to follow the protests live, which so far the mainstream media has refused to show, can do so here. 

 

 

 

 

 

Game Over RAB Capital: London's Once Star Fund Delists Following Terminal Deluge In Redemption Requests 

Submitted by Tyler Durden on 05/11/2011 08:04 -0400

RAB Capital, once the poster child of the London credit bubble, whose assets peaked at $7 billion in 2007, has seen its shares tumble over 30% in afternoon trading, following an announcement that the firm will delist after a terminal surge in redemption requests. From the FT: "RAB, which at the beginning of the year oversaw assets of just over $1bn – a far cry from its peak of $7bn in 2007 – has seen its remaining assets evaporate in recent weeks. Investors pulled $370m from RAB’s flagship $470m Special Situations fund last month when a three-year moratorium on withdrawals finally expired....Since then, clients – fearful of the RAB’s viability – have abandoned the company’s other strategies. The firm’s $120m Cross Europe fund has been swamped by redemption requests, say people familiar with the company. In addition, one of RAB’s remaining star money managers, Gavin Wilson, is to retire from the firm. Mr Wilson’s $250m Energy fund has been one of RAB’s best performing offerings of late." Well, if other, much better managed hedge funds are any indication, Mr. Wilson's Energy Fund likely got annihilated last week, putting the final nail in the 4 year public stint of this vehicle to bring leverage to leverage.

Ron Paul Subcommittee Hearing On The Relationship Between The Federal Reserve And Government Debt 

Submitted by Tyler Durden on 05/11/2011 09:54 -0400

A hearing that is sure to spark a lot of controversy and debate will be held today at 10 am EDT, by the Domestic Monetary Policy Subcommittee, chaired by presidential candidate Ron Paul. As noted, "The hearing will explore the fundamental role that U.S. government debt plays in the monetary system; the use of Treasury debt by the Federal Reserve in conducting monetary policy; and the troubling reliance of Congress on the Fed to print money to facilitate deficit spending." Alas, there will be no Fed members testifying at the hearing, instead we will hear from Dr. Richard Ebeling, Professor of Economics, Northwood University, Bert Ely, Ely & Company, Inc., and Dr. Matthew J. Slaughter, Associate Dean, Tuck School of Business, Dartmouth College.