Monday, April 26, 2010

Gold...The Ultimate Triple-A Asset

This is a perfect follow up on Eric Sprott Still Makes A Lot Of Sense...... ( !!! ) and shows that if you would eliminate the "Enron-Esque Accounting" probably 90% percent of all sovereign ratings are more than a little bit inflated...... UPDATE: Timing of the post could have been worse..... See end of the post.....

Die perfekte Ergänzung zu Eric Sprott Still Makes A Lot Of Sense...... ( !!! ) die eindrucksvoll aufzeigt das wenn man die "Enron-Esque Bilanzierung" miteinbeziehen würde wohl knapp 90% aller Staatsratings zum Teil erheblich "inflationiert" sind..... UPDATE: Timing des Postings hätte schlechter sein können... Siehe Ende des Postings....

Eric Sprott: Weakness Begets Weakness: from Banks to Sovereigns to Banks via ZH

The rating agencies’ ranking of the United States is even more disconnected from reality. To believe that the US sets the benchmark for sovereign debt credit ratings is preposterous.

While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 - the largest since 1945 - and stated that without significant policy changes the US government would soon face an "unsustainable growth in debt". This was not news to us.

It goes on to state, however, that using reasonable assumptions, "roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020." This is news!

In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt.

This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

Speaking of Rating Agencies :-)! ....

Da wir gerade bei den Rating Agenturen :-)! sind....
In our view it’s time for investors to acknowledge sovereign risk. The ratings agencies can opine all they want, but it seems clear to us that the only true AAA asset to protect your wealth is gold.

The risk inherent to investors, of course, is what happens when the bond market begins to realize and react to this new level of risk.

Banking To Debt Crisis Roundabout GLG Partners via FT Alphaville

Bond Traders Declare Inflation Dead After Yields Fall

The bond vigilantes who punished governments for profligate spending in past years have gone into hiding.

Sovereign bonds yield an average 2.385 percent, about the same as a year ago and below the average of 3.08 percent in 2008 when the credit market seizure led investors to seek the safety of government debt, according to Bank of America Merrill Lynch index data.

The cost to borrow is steady even though the amount of bonds in the index that includes nations from the U.S. to Germany and Japan has grown to $17.4 trillion from $13.4 trillion two years ago.


Scheint mir ein ausgewogenes Chance/Risikoprofil zu sein..... ;-)

Bob Janjuah: "We Are Trapped In Some Sort Of Horrendous Keynesian/Monetarists' Nightmare...." via ZH

We are trapped in some horrendous Keynesian/monetarist nightmare, where policymakers, aided/abetted/advised by their buddies in the media, in the lobbyist cabal and in financial system, have YET AGAIN decided to go down the route which merely delays the problem/pushes it down the road, but which virtually guarantees that when the NEXT bubble collapses (I assume it will be the Global Government Debt/Bond Bubble and/or the Global Fiat Money/Paper Money/FX Bubble), there is NO pleasant way back.
Bill Gross WaPo
"In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like," Gross said. "It's a game that can never be finished."
Read this twice... Bill "The Bond King" Gross from PIMCO is hinting the obvious.....Glad that i didn´t have to bring PONZI into the mix myself....... All this should make all the "GOLD BUBBLE TALK" even more "credible.... ;-)

Das letzte Zitat von Bill "The Bond King" Gross, der ja mittels PIMCO bekanntlich der weltweit größte Investor in Anleihen ist, sollte zur Sicherheit lieber zweimal gelesen lesen werden........Bin dankbar das ich PONZI nicht selber ins Spiel bringen mußte.....Dieser "grundsoliden" Fundamentaldaten geben speziell all denen die noch immer nicht genug von der "GOLDBLASE" bekommen können sicher noch mehr "Nahrung"... ;-)

"GOLD BUBBLE CHART" ;-) from Todd Harrison / Minyanville via Pragmatic Capitalist

I highly recommend to read the entire links & to subscribe to the free Sprott Asset Management Newsletter.... No wonder the IMF has just Superzised Their "Backup Rescue Facility" By Half A Trillion ( no typo ) for "Contribution To Global Financial Stability"......

In dem Link sind noch etliche andere unangenehme Weisheiten speziell im Hinblick auf Griechenland. Empfehle daher sich die kompletten Links etwas genauer durchzulesen sowie den kostenlosen Sprott Asset Management Newsletter zu abonnieren....Kein Wunder das "vorsorglich" der IMF die Mittel zur "Stabilisierung" der Sorgenkinder mal eben still und heimlich auf 500 Mrd $ verzehnfacht hat ( kein Tipfehler )....


S&P cuts Portugal’s ratings two notches to A- FT Alphaville

S&P cuts Greece ratings to junk status MW

S&P Downgrades Spain To AA On "Risks To Budgetary Position", Outlook Negative ZH

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Blogger jmf said...

In a world of trillions more close to $ 70 billion are another clear indicator of a bubble.... ;-)

World Gold Council Discloses Investors Bought 5.6 Tonnes Of Gold Via ETFs In Q1 ZH

The World Gold Council has released its Q1 2010 update, according to which "Investors bought 5.6 net tonnes of gold via exchange traded funds (ETFs) in Q1 2010." This has brought the total amount of gold in monitored ETFs hit a new record of 1,768 tonnes ($63.4 billion worth of the shiny metal).

10:24 PM  
Blogger jmf said...

'Hi. My Name Is America, and I'm a Deficit Addict.' WSJ

11:25 PM  
Blogger jmf said...

Tsunami of Red Ink - Global Look at National Debt and Who Owns US Debt Mish

5:22 AM  
Blogger jmf said...

Greece Posts Bailout Collateral (reprise) RB ;-)

4:16 AM  
Blogger jmf said...

I think Jesse nails the pyschology of many "wannabe" Gold Bugs perfectly...

Performance of Several Key Currencies Since January 2007 Jesse

Gold did sell off hard in the market plunge in October of 2008 reaching an intraday low of $680, a buying opportunity of the first order. Many who said they were waiting to buy a dip never bought, because like most speculators they keep waiting for 'THE' bottom, and keep lowering their target buy price, and never really take a position. Then watch it run away from them, and wait for a pullback, but again never buy back in.

This is a flip side to those bulls who were long the tech bubble, and kept waiting for a higher price to sell their positions, just a few dollars more, and ended up taking a ride on a death spiral.

10:53 PM  
Blogger jmf said...

Spot on....

Staying the Course in Gold Expected Returns

1:35 PM  
Blogger jmf said...

Nice chart putting the recent rise in paper assets into perspective.....

S&P-To-Gold Ratio: On Verge Of 1.00 Breakdown ZH

5:44 AM  
Blogger jmf said...

Sovereign Default Risk "Leaderboard" Bespoke

8:04 PM  
Blogger jmf said...

Nice chart.....

Who’s most at risk of falling into a European debt trap
FT Alphaville

3:30 AM  
Blogger jmf said...

Excellent graph....

Europe's Web of Debt NYT

4:15 AM  
Blogger jmf said...

Full report to the FT Alphaville link

Morgan Stanley On European Contagion ZH

9:40 PM  
Blogger jmf said...

Jesse is as always spot on....

Bullion Denominated in Euros, Pounds and Swiss Francs At New Record Highs as the IMF Prepares for a Currency Crisis

10:10 AM  
Blogger jmf said...

Safety First FT

The devalued euro, in real terms BI

7:46 PM  
Blogger jmf said...

Interactive graph....

Changes In European Debt 2000-2009 Barry / NYT

7:56 PM  
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8:24 PM  

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