Jim Sinclair’s Commentary
The title should be "Faltering Western World Financial System Fuels Gold Price."
Faltering Europe Fuels Gold Price Fires
By Alix Stee 08/16/11 – 02:57 PM EDT
NEW YORK (TheStreet ) — Gold prices skyrocketed Tuesday to a record close as weak second quarter growth numbers out of Germany and indecisive action from EU leaders spooked investors into the safe haven.
Gold for December delivery soared $27 to close at $1,785 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,789.80 and as low as $1,763.60 while the spot gold price was adding a more modest $14.20, according to Kitco’s gold index.
Silver prices settled up 51 cents at $39.81 an ounce while the U.S. dollar index was adding 0.05% at $73.91.
Gold prices were popping on a slew of disappointing growth numbers out of the Eurozone. The highlight came from the revelation that Germany’s economy grew only 0.1% in the second quarter, 2.8% year-over-year. The first quarter number was also revised down. Germany is the strongest Eurozone economy and its near contraction reading weighed on its neighbors — Eurozone growth slowed to 1.7% from 2.5% in the first quarter.
Gold extended its gains after German Chancellor Merkel and French President Sarkozy failed to deliver the goods at a joint press conference this afternoon. They both rejected a common eurobond and offered limp suggestions for helping the eurozone’s almost two-year old debt crisis.
Both leaders offered up a balanced budget rule that each member’s parliament would have to pass and a financial transaction tax. Neither did anything to help stocks. "They keep going into a room and coming out with another plan to save the euro," says Chuck Butler, president of EverBank World Markets. This "weighs heavily on the euro and gives people the need to buy gold as a protection."
Jim Sinclair’s Commentary
In a relative sense Canada avoided the OTC derivative debacle.
WTF: The federal budget and 50 years of Canadian debt
Mar 21, 2011 – 10:06 PM ET | Last Updated: Aug 5, 2011 12:09 PM ET
In this occasional feature, the National Post tells you everything you need to know about a complicated issue. Today, the federal budget. Finance Minister Jim Flaherty is set to unveil a budget on Tuesday that analysts expect will include a $40-billion deficit, adding to speculation of whether Canada’s debt is under control or spiralling into an abyss depends on whom you ask and what numbers you use. Here, the National Post’s Tamsin MacMahon debunks the federal debt.
How big is Canada’s debt?
The Canadian Taxpayers Federation, which set up its ever-ticking massive debt clock on Parliament Hill last week, declared the country is “broke” and points out that Canada’s debt hit $563-billion, a record and one that wiped out more than a decade of steady reductions with one massive $56-billion federal budget deficit in 2010. However, Canada’s accumulated debt, or the sum of all its budget deficits, translates into about 30% of the total GDP. That makes the country a shining star among struggling G7 economies and represents a drastic decline from the mid-1990s when the federal debt-to-GDP ratio hit nearly 70%. In real dollars Canada’s debt did set a record. But adjusted for inflation, today’s federal debt pales in comparison with the records of the mid-1990s. For instance, the debt in 1996 stood at nearly $769-billion when adjusted for inflation, 25% higher than the present-day debt.
So that’s all there is to it, right?
Not exactly. Other analysts take a different approach to calculating Canada’s debt, putting the debt-to-GDP ratio anywhere from 30% to as high as 80%. For example, by looking at Canada’s gross debt, which includes the debts of provincial governments, but excludes some assets like the Canada/Quebec Pension Plan accounts, Canada’s debt-to-GDP ratio increases to closer to 65%. That increase owes much to Ontario’s skyrocketing debt, projected to be nearly $250-billion by next year (2012), and Quebec’s dismal 50% debt-to-GDP ratio. The International Monetary Fund debt calculations, in contrast, also include unfunded liabilities such as public sector pension funds. Those calculations put Canada’s debt closer to $900-billion and the country’s debt-to-GDP ratio as high as 80%. The Organization for Economic Co-operation and Development excludes employee pension plan future liabilities, but includes current public sector pension plan assets in its calculations, making Canada’s combined federal and provincial debt closer to 30%.
Jim Sinclair’s Commentary
If this is the "New Normal" the USA is headed toward internal political and social strains.
A record 45.8 million American using food stamps
CNNMoney
12:58 p.m. CDT, August 5, 2011
Nearly 15 percent of the U.S. population relied on food stamps in May, according to the United States Department of Agriculture.
The number of Americans using the government’s Supplemental Nutrition Assistance Program (SNAP) — more commonly referred to as food stamps — shot to an all-time high of 45.8 million in May, the USDA reported. That’s up 12% from a year ago, and 34% higher than two years ago.
The program provides monthly benefits to low-income individuals and families, which they can use at stores that accept SNAP benefits.
To qualify for food stamps, an individual’s income can’t exceed $1,174 a month or $14,088 a year — an amount that is 130 percent of the national poverty level.
The average food stamp benefit was $133.80 per person and $283.65 per household in May.
The highest concentration of food stamp users were in California, Florida, New York and Texas — where more than 3 million residents in each state received food stamps in May.
