Central Banks Purchase 127 Tons Of Gold In Q1

"Most have heard by now that Mexico disclosed that back in Q1 it bought 93.1 tonnes of gold, increasing its total gold holdings from 7.1 tons to a whopping 100.2 total tons, a stunning move which was disclosed to have been done "in line with prudent diversification principles of reserves management." However, what is less known is that many other central banks, chief among them Russia and Thailand were also waving the shiny yellow metal in between January and March. And just as importantly, from the World Gold Council, from where this update comes: "The latest statistics show no significant selling by the signatory central banks in Year 2 of the third Central Bank Gold Agreement (CBGA3)." So no central banks sell, yet the daytrading retail public knows better. As for the key question of whether China is adding to its meager holdings of 1,054 tons, which put it behind the GLD, not to mention France and Italy, there is no update. Recall, however, that when China announced an addition of +454 tonnes of gold in April of 2009, this indicated stealthy purchases of the metal in the 2003-2009 period. In other words, China is very likely accumulating gold and the next update will likely come some time in 2015.
From the World Gold Council:

As of the IMF’s May release of its International Financial Statistics, several countries have reported additional purchases of gold. Notably, Mexico reported to the IMF that it acquired 14.8 and 78.5 tonnes of gold in February and March, respectively. This was a significant increase in its gold holdings, raising Mexico’s position in the table to the 34th largest holder of gold with 100.2 tonnes. In its press release, the Banco de Mexico indicated that its acquisition of gold was in line with prudent diversification principles of reserves management. Indeed, Banco de Mexico’s acquisition of gold was likely motivated by a need to diversify its rapidly expanding foreign reserves, which increased from approximately $75 billion to $120 billion between Q1 2007 and Q1 2011.

Additionally, Thailand also reported an increase in its gold reserves of 9.3 tonnes in March, raising its total gold holdings to 108.9 tonnes. This follows an acquisition of 15 tonnes in July of last year. Finally, Russia continues to regularly add gold to its reserves, adding 22.5 tonnes between January and March. Russia is the 8thlargest holder of gold..."

at  http://www.zerohedge.com/article/central-banks-purchase-127-tons-gold-q1?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

30 Year Prices At 4.38% In Very Weak Auction; Indirects Flee

"And so we close this week's bond issuance with a very disappointing 30 Year, which priced $16 billion at 4.38, nearly 4 basis point wide of the When Issued, and at a very weak 2.43 Bid To Cover: the lowest since November's 2.31. And with the high yield closing at the lowest level for primary issuance in 2011, it is not surprising that foreigner expressed very little interest in this auction: only 33% of the auction went to foreign buyers, whose hit rate was a very high 81.2% (total Indirect tender was just $6.5 billion or 41% of the total), indicating that even had the entire Indirect order book been filled, it would not have covered even half of the auction. 8.7% of the bond went to Direct Bidders, leaving Dealers having to bail out the auction once again, with a massive take down of 58.2%. Altogether a very weak auction, and likely the last one for a long time now that the Treasury is in deep debt ceiling trouble..."

at http://www.zerohedge.com/article/30-year-prices-438-very-weak-auction-indirects-flee?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

Housing Prices Will Lead to Double Dip Recession: 3 Short Plays

"Alas, the double dip recession has arrived. It seems that everyone and their mother in financial media predicted this moment. It goes without saying that this was a long time coming. However, I am certain that I will be among the first to give a glimpse to what exactly the bottom may look like (whenever it arrives) and the new reality that maybe the U.S. home market. Economist Robert Shiller thinks home prices will drop between 5- 10% this year alone. Rather than get caught watching here are some short plays that maybe profitable during this decline. The SPDR KBW Bank Index ETF (KBR), Western Alliance Bancorp (WAL) and Cathay General Bancorp (CATY) all have significant downside correlation to the Case Shiller housing prices index:..."

at http://seekingalpha.com/article/269375-housing-prices-will-lead-to-double-dip-recession-3-short-plays?source=feed

Greek Debt Crisis “An Absolute Nightmare,” FT’s Wolf Says

"Days after S&P's downgrade sent yields of Greek debt soaring, European officials are reportedly working on another bailout package for the debt-laden nation.
The latest chapter in Europe's never-ending sovereign debt crisis comes about a year after Greece received a 110 billion euro ($158 billion) bailout package from the EU and IMF. That bailout was supposed to buy time for Greece to adopt austerity measures without having to tap the public debt markets. (See: Greece Is the Word: "I Think They'll Be Able to Control This," Dow Says)

But Greece has consistently fallen short of its budget targets in the past year and austerity measures have resulted in lower tax receipts and ever-higher deficits. As a result, financial markets are pricing in a default or major restructuring of Greek sovereign debt, putting renewed pressure on EU officials to prevent contagion into Europe's other 'PIIGS', most notably Spain.

The situation in Greece is an "absolute nightmare" for European officials, says Martin Wolf, The FT's chief economics correspondent.

Because it's "completely inconceivable" Greece will be able to raise enough money to fund its debts via the private market, Wolf says the country is faced with a stark choice: restructuring its debt now — and force private debt holders to take a haircut -- or become a ward of the EU, which will absorb the debt and then be desperate to avoid haircuts that would hit taxpayers (again)..."

at http://finance.yahoo.com/blogs/daily-ticker/greek-debt-crisis-absolute-nightmare-ft-wolf-says-120246255.html

Gold May Rise to $2,000 as Alternative to Currency, Eric Sprott says

"As investors continue to buy gold preferring it to paper money the price may go as high as $2000 before the end of this year says Eric Sprott Chairman, Chief Executive Officer & Portfolio Manager of Sprott Inc . Gold will rise by at least 17% this year, Sprott said today in an interview during the New York Hard Assets Investment Conference. The metal averaged $1,228.45 an ounce last year on the Comex in New York and ended 2010 at $1421.40. via Bloomberg

“It’s gone up 17% a year for the past 11 years; I’m sure it will do that as a minimum,” Sprott said. “It could easily hit $2,000 this year. That wouldn’t be out of the question.”

at http://goldbasics.blogspot.com/2011/05/gold-may-rise-to-2000-as-alternative-to.html

Spanish Revenues Collapse by 16.8%, GDP Misses Target; Is a Bailout of Spain in the Cards?

"...The big news here today is with government accounts. GDP is lower than expected, and revenue are down way more than expected (down 16.2% compared with a predicted drop of 12.8%).

Therefore, the government is looking at another few billion in borrowing this year and its schedule of deficit targets is thrown out of line.

Spain's budget is already tight after spending cuts and salary reductions, so the article suggests higher taxes might be need to get back on target..."

at http://globaleconomicanalysis.blogspot.com/2011/05/prepare-for-bailout-of-spain-spanish.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Next On The Downgrade Docket: Belgium

"With so much of the attention once again focused on Europe's periphery (which somehow the efficient market could not be bothered with for about 4 months, even though it was all there, staring people in the face all along), it may be time to recall the Europe's core is just as troubled as everything else. Some may recall that back on December 14, S&P came out with a bit of a stunner (which in retrospect looks rather tame following the now forgotten warning on the US Debt): "And so European contagion is back as S&P, now clearly with a mandate to remind that Europe is in a heap of trouble every month or so, puts Belgium on Outlook negative, saying that it is basically just a matter of time before the country loses its AA+ rating. The bogey: 6 months, which likely means that around May of next year, just like a year prior, we will see the same fireworks out of Europe, only this time not from Greece, but from the very heart of what is left of a solvent continent. "If Belgium fails to form a government soon, a downgrade could occur, potentially within six months. Should a government be formed but is, in our opinion, ineffective in its fiscal stance or devolution, we are likely to consider rating action within two years." Well, it is now 6 months later, and Belgium still has no government. Time to pull the switch?
Bloomberg chimes in on the imminent downgrade of the world's longest anarchy:

“There’s a downgrade looming,” said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf. “The market appears to have become really complacent regarding the issue. This may become an issue again if a downgrade is to come.”..."

at  http://www.zerohedge.com/article/next-downgrade-docket-belgium?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29

Are Michigan and Illinois like Greece and Ireland?

"US states are a lot like Eurozone nations.

• Investors are concerned about the possibility of state default, especially for states like California, Michigan, and Illinois, just as they are concerned about possible defaults for European periphery countries like Greece, Ireland, and Portugal.
• The largest states pull roughly the same economic punch as the largest European countries.

California’s economy is larger than Spain and approximately 90% the size of Italy. Michigan, despite its recent industrial decline, still has an economy larger than Greece, Portugal, or Ireland taken separately.

• US states are in a dollar currency union, just like Eurozone members are in a euro one.

In addition, there are many economic, legal, and political linkages between states just as there are similar, but weaker, linkages among European countries.

• Reinhart and Rogoff’s (2008, 2009) comprehensive work gives us timely reminders that Eurozone countries like Greece, Spain, Austria, and Greece have defaulted before in the 1930s and 1940s, just as some US states have.

Eight states went bankrupt in the 1830s and 1840s, ten states went bankrupt in the late 1800s, and the last state default was Arkansas in 1933..."

at http://www.voxeu.org/index.php?q=node/6487

Don’t Buy A House In 2011 Before You Read These 20 Wacky Statistics About The U.S. Real Estate Crisis

"The following are 20 really wacky statistics about the U.S. real estate crisis....

#1 According to Zillow, 28.4 percent of all single-family homes with a mortgage in the United States are now underwater.

#2 Zillow has also announced that the average price of a home in the U.S. is about 8 percent lower than it was a year ago and that it continues to fall about 1 percent a month.

#3 U.S. home prices have now fallen a whopping 33% from where they were at during the peak of the housing bubble.

#4 During the first quarter of 2011, home values declined at the fastest rate since late 2008.

#5 According to Zillow, more than 55 percent of all single-family homes with a mortgage in Atlanta have negative equity and more than 68 percent of all single-family homes with a mortgage in Phoenix have negative equity.

#6 U.S. home values have fallen an astounding 6.3 trillion dollars since the housing crisis first began.

#7 In February, U.S. housing starts experienced their largest decline in 27 years.

#8 New home sales in the United States are now down 80% from the peak in July 2005.

#9 Historically, the percentage of residential mortgages in foreclosure in the United States has tended to hover between 1 and 1.5 percent. Today, it is up around 4.5 percent..."

at http://theeconomiccollapseblog.com/archives/dont-buy-a-house-in-2011-before-you-read-these-20-wacky-statistics-about-the-u-s-real-estate-crisis

Why ECB Political Elites Will Never Permit A Real Solution To The Greek Crisis

"The reason why European leaders will not accept a haircut on Greek debt is because the European Central Bank has exposures worth €100 billion ($144 billion) tot he country, according to Wolfgang Münchau.

Writing in the Financial Times, Münchau explains that beyond killing Greece's banking system, the overall impact on the ECB would be huge. It would also spread to around the European system, causing losses at banks throughout the eurozone
This is not a scenario the ECB is willing to accept, and, in many ways, it is their leadership calling the shots. That's why Greece is likely to just get more cash from the EU and IMF, or sell its debt to them. Soc Gen described this scenario as a postponement of the inevitable. It also relies on politicians being willing to dole out billions more in tax-payer money, something Finnish politicians continue to stand against..."

at http://www.businessinsider.com/why-the-ecb-will-never-accept-a-haircut-on-greek-debt-2011-5?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29#ixzz1LsYmAO4E

Stocks went up because of huge injections of liquidity by all governments around the world

"Marc Faber : We have had a powerful rally since the beginning of the year. Some markets have gone up by 100% or so. A correction right now is a normal part of the cycle. Stocks didn’t necessarily go up because of an improvement in the fundamentals. They went up because of huge injections of liquidity by all governments around the world. In order to continue to grow asset prices higher, fiscal deficits and inflation will continue at a high rate..."

at http://faber-blog.blogspot.com/2011/05/stocks-went-up-because-of-huge.html

Digging Still Deeper In Friday's Jobs Report; What's the Real Unemployment Rate?

"Last month many were surprised to see the jobs report claim 244,000 jobs were added yet the unemployment rate ticked up 2 tenths from 8.8% to 9.0%.

The widely proclaimed reason from mainstream media was that jobs were more plentiful and because more people were looking for jobs.

That explanation makes sense on the surface in light of the official definition of unemployment (you had to have looked for a job in the last 4 weeks to be counted as unemployed). However, the explanation does not stand up to scrutiny.

The fact is, employment fell by 190,000 according to the Household Survey and another 131,000 people dropped out of the labor force last month or the unemployment would have been even higher. Fewer people (131,000 to be precise) wanted a lob and looked for jobs in April than in March.

The Obama administration as well as mainstream media wants to play job numbers both ways, that is to say they want to use the Household Survey when it suits their purpose and the Establishment Survey otherwise.

Regardless, close scrutiny of the details in the report shows the headline numbers were far worse than they looked.

I commented on that in my Friday post BLS Jobs Report: Nonfarm Payroll Headline Number Looks Good, Beneath the Surface, Awful where I said ..."

at http://globaleconomicanalysis.blogspot.com/2011/05/digging-still-deeper-in-fridays-jobs.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

S&P Cuts Greek Debt 2 Notches Deeper in Junk, Cites 50% to 70% Haircuts; CDS at Record High, Probability of Default is 68%

"Last week Trichet reiterated for the nth time "restructuring is not on the agenda". This follows his February pronouncement the "whole world" approves the bailout program.

Today, once again, the market refuses for the nth time to believe Trichet's nonsense, and Credit Default Swaps on Greek debt and Irish debt hit a new record high. Greece is now the lowest rated country in Europe..."

at http://globaleconomicanalysis.blogspot.com/2011/05/s-cuts-greek-debt-2-notches-deeper-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

How long will the bond market trust the United States?

"A remarkable feature of current financial markets is their willingness to lend to the federal government on favorable terms, despite a huge budget deficit, a fiscal trajectory that everyone knows is unsustainable and the failure of our political leaders to reach a consensus on how to change course. This can’t go on forever — that much is clear.

Less obvious, however, is how far we are from the day of reckoning.
Winston Churchill famously remarked that “Americans can always be counted on to do the right thing, after they have exhausted all other possibilities.” That seems to capture the attitude of the bond market today. It trusts our leaders to get the government’s fiscal house in order, eventually, and is waiting patiently while they exhaust the alternatives.

But such confidence in American rectitude will not last forever. The more we delay, the bigger the risk that we follow the path of Greece, Ireland and Portugal. I don’t know how long we have before the bond market turns on the United States, but I would prefer not to run the experiment to find out..."

at http://www.nytimes.com/2011/05/08/business/economy/08view.html?_r=1

Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister says "When it becomes serious, you have to lie"

"Earlier today in EU Seeks Collateral for More Greek Aid; Trichet Reiterates Restructuring "Not on the Agenda", Market Reiterates "Trichet is a Pompous Fool" I Called ECB President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Junker, a pair of arrogant, pompous fools.

I failed to mention that Jean-Claude Junker readily admits something we should all know anyway, that he is a blatant liar.

Please consider Market jitters bring difficult choice between truth and lies for politicians, spokespeople

On March 29, when speculation swirled that Portugal needed a bailout, Prime Minister Jose Socrates denied — again — that that would happen despite clearly unsustainable market pressures.

"I'm sick of saying we won't" be requesting help, he told journalists.

Just eight days later, in a chastened appearance on national television, Socrates did just that.

For Jean-Claude Juncker, the prime minister of Luxembourg, the threat of immediate market turbulence means the usual norms of transparency don't apply.

"When it becomes serious, you have to lie," Juncker, who as the chairman of the regular meetings of eurozone finance ministers is one of the currency union's key spokesmen, said in recent remarks..."

at  http://globaleconomicanalysis.blogspot.com/2011/05/jean-claude-juncker-luxembourg-pm-and.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

David Stockman: "It Will Take A Major Dislocation In The Bond Market" To Wake Up America

"It is no secret that David Stockman, former budget director in the Reagan administration, has long been a vocal opponent of the crash course America has found itself on courtesy of record debt. In this Bloomberg interview, he presents his latest take on U.S. fiscal policy and the outlook for agreement between Congress and the Obama administration on a deficit and spending reduction plan. Suffice to say, he is not a fan of either the republican or democrat plan, and is convinced both sides are playing nothing less than class warfare to promote their flawed programs. "I think the people would respond if they knew the fact, and if they'd been were told the truth, but they haven't been, they've been lied to for the last 10-20 years by both sides saying that we can live beyond our means, new entitlements, new tax cuts constantly, tax stimulus for everything that we could imagine, and as a result of that the country doesn't know that sacrifice is going to be required, and that everyone is going to have to give up something." On the recent "spending cut" much touted by Washington: "even this noisy $39 billion package cutback, that was all flimflam and swindle: there wasn't $39 billion in that, maybe there was $5 billion at best, and had anybody in the business community reported that they had $39 billion in a package that was this fraudulent they would have every prosecutor in the country and the SEC on their tail right now." And on the much endorsed by Zero Hedge Tobin tax: "We out to put a major tax on transactions on Wall Street, because Wall Street is turning into a high speed casino. We need to start thinking about new revenue sources and that is one of them." So what will finally awake America? "I think it's going to take a major dislocation in the bond market, a real conflaguration on the part of the people who have to buy this debt, before the country wakes up." Of course, if the Fed is able to sell virtually unlimited Long-Term Treasury puts, the synthetic push on sellers will never abate and the Fed can manipulate the curve virtually in perpetuity, or until such time as those buying Treasury vol protection, ironically, decide it makes no more sense to hedge against a curve yield surge..."

at http://www.zerohedge.com/article/david-stockman-it-will-take-major-dislocation-bond-market-wake-america?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

The Greek Debt Crisis Escalates: Is Greece Threatening To Leave The Euro?

"Is the Greek debt crisis about to explode out of control? According to Der Spiegel, the government of Greece is considering leaving the Euro and reestablishing its own currency. If that happened, it would throw global financial markets into chaos and it might mean the end of the euro as a pan-European currency. But the Greek government has to do something about all of these debts. At this point Greece is literally drowning in debt. The yield on 10-year Greek bonds has now reached an astounding 15.51%. There is no way that is sustainable even for the short-term. Greece is rapidly going bankrupt. Even with absolutely brutal austerity measures in place, the debt just continues to explode. There are protests against the government almost daily and Greece is in a state of chaos. Unfortunately, because Greece is part of the euro they can't just start printing lots of money as a way to get out of this crisis. Now there are persistent rumors that Greece really is thinking about leaving the euro, and that could potentially mean big trouble for the world financial system.
It was a new article in Der Spiegel that brought these rumors to the forefront again. Der Spiegel says that it possesses secret Greek government documents that discuss plans to leave the euro. Der Spiegel also claims that a secret crisis meeting was held in Luxembourg on Friday night to discuss this crisis.

The following is a brief excerpt from the Der Spiegel article that caused the financial community in Europe to be in such an uproar today....

"The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area's finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night."..."

at  http://theeconomiccollapseblog.com/archives/the-greek-debt-crisis-escalates-is-greece-threatening-to-leave-the-euro

The Beginning of the Eurozone Crackup?

"Maybe this is why the ECB decided to hold off on the interest rate hike:

The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area's finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.

This from Der Spiegel online (HT Ryan Avent). Come next Monday morning will the Eurozone be the same?"

 

at   http://macromarketmusings.blogspot.com/2011/05/beginning-of-eurozone-crackup.html

Euro Whacked by Reports that Greece May Leave the Eurozone?

"The Euro has fallen from roughly 1.49 to the dollar to 1.43 in a mere two days, which is a huge move. Many pundits have argued that the ECB’s newly accommodative stance is the trigger, but there may be additional forces at work. Most experts have deemed the idea that any eurozone member would exit the currency to be simply inconceivable, that it would be too costly and disruptive. But with the hair shirt that Greece is being asked to wear, all bets may be off.

As of this juncture, this reports in Der Spiegel does not appear to have gotten traction among the Usual Suspects in the MSM. Headline: “Greece Considers Exit from Euro Zone” (hat tip readers John M and Illya F)..."

at http://www.nakedcapitalism.com/2011/05/euro-whacked-by-reports-that-greece-will-leave-the-eurozone.html

Does The US Have A Lot Of Government Debt?

"In the nation’s latest fiscal mood swing, the mainstream consensus has swung from “we must extend the Bush tax cuts” (in December 2010) towards “we must immediately cut the budget deficit.” The prevailing assumption, increasingly heard from both left and right, is that we already have far too much government debt – and any further significant increase will likely ruin us all.

This way of framing the debate is misleading – and very much at odds with US fiscal history. It masks the deeper and important issues here, which are much more about distribution, in particular how much are relatively wealthy Americans willing to transfer to relatively poor Americans?..."

at http://baselinescenario.com/2011/05/05/does-the-us-have-a-lot-of-government-debt/