Is the gold bull over given the past two days of serious price smackdown?
In a word - No. Not even close. The gold bull is still intact and healthy, and going through the same corrective pattern it has seen several times over the past five years.
Additionally, the high risk in the banking sector is driving more people to allocate a portion of their personal wealth into the safety of gold. This buying offtake of supply is likely to strengthen the bull market over time as demand builds.
Given the charts and the action we have seen, we are raising our target for the next leg of the gold bull market to 1250+ in US dollars if we break up and out of this symmetrical consolidation pattern.
Let's see what happens.
Investors buy gold bars in record numbers
By Paul Farrow
2:27pm BST 22/07/2008
UK Telegraph
Volatile stock markets and a lack of confidence in the UK banking system has boosted demand for gold bars and coins from private investors to levels not seen for 25 years.
Tens of thousands of investors have rushed to buy gold from bullion dealers over the past year, during which the gold price has broken through the $1,000 barrier on occasions.
Tony Baird of Baird & Co, one the UK's biggest gold bullion dealers, said business was getting busier and busier – with punters investing £1,500 to £150,000 in gold bars and coins. Baird, who has been in the gold business for 40 years, claimed that demand was on a par with the late 1970s.
He added: "We have had queues in here. People are nervous of the stock markets and they are nervous of the banks. Northern Rock was a trigger and now Fannie Mae and Freddie Mac have stirred things up again this week."
BullionVault.com – the online marketplace for gold bullion bars – said that number of private individuals investing in gold has more than doubled over the past year. It now holds 3.5 tonnes of gold on behalf of UK investors compared to less than 1.5 tonnes a year ago.
BullionVault founder Paul Tustain said: "Gold is always a popular choice of investment when the economy slows."
It is not just physical gold that investors are chasing. People are buying Exchange Traded Funds that track the gold price.
ETF Securities saw record inflows on Tuesday with inflows of $265m. Gold ETCs recorded $225 million of trading on the London Stock Exchange (LSE) on the same day the LSE issued a report showing that gold ETCs took two of the top four spots in terms of trading volumes in June 2008 on the LSE’s ETC/ETF trading platform.
According to db Research, the independent research arm of Deutsche Bank the top three traded ETFs last month were all gold: Lyxor Gold Bullion Securities, ETFS Physical Gold ETF Securities Ltd and ZKB Gold.
Nik Bienkowski, chief operating officer at EFT Securities, said: "We are not surprised that commodities and more specifically gold ETCs continue to shatter records for trading volumes and inflows."
23 July 2008
UK Investors Buy Physical Gold in Record Numbers - Target Price for Next Leg Increases
Bank of America To Buy Back 75 Million Shares
This news was released by Bloomberg simultaneously with an early release of the Fed's Beige Book which spoke about the "morose mood" of the public (morose: showing a brooding, gloomy, or sullen mood).
Doug Kass reports that "bank stocks just moved up on a story on the newswires that Bank of America (BAC) is going to buy back 75 miillion shares. Actually Bank of America is reducing its expiring 200-million-share buyback to 75 million shares (it had remaining authority of 190 million shares)."
Financial sector 'welfare queens' or just a simple case of market manipulation? Probably some of both.
It does not get much more "in-your-face" than this.
Bank of America to buy back up to 75 million shares
By Alistair Barr
1:52 p.m. EDT July 23, 2008
SAN FRANCISCO (MarketWatch) -- Bank of America said on Wednesday that it will buy back up to 75 million shares. The board authorized the giant bank to spend as much as $3.75 billion to repurchase stock during the next 12 to 18 months, it explained. The new program replaces an earlier 200 million-share buy-back plan that is expiring. Bank of America shares climbed 3.3% to $33.42 during afternoon trading on Wednesday.
AP
Bank of America declares dividend of 64 cents
Wednesday July 23, 1:55 pm ET
Bank of America declares dividend of 64 cents to be paid Sept. 26
CHARLOTTE, N.C. (AP) -- Bank of America Corp. on Wednesday declared a regular dividend of 64 cents.
The dividend will be paid Sept. 26 to shareholders of record on Sept. 5.
The board also declared a dividend of $1.75 for its 7 percent cumulative redeemable preferred stock, series B. That dividend will be paid Oct. 24 to shareholders of record on Oct. 8.
22 July 2008
Congress Agrees to Bail out Fannie and Freddie
The dilution of the United States dollar to enable a de facto debt default has begun. The only way this will be feasible is if several of the other major currencies are inflated in sympathy with the dollar.
The dollar 'rally' and coordinated pressure on the metals and oil today that was ignored by the bond market makes a little more sense now with regard to timing.
Vote out all Republicans and the Democratic leadership this fall.
U.S. Lawmakers Reach Deal on Fannie, Freddie Bill
By Brian Faler
July 22 Bloomberg -- U.S. lawmakers reached agreement on a rescue plan for Fannie Mae and Freddie Mac that the House may vote on tomorrow, Representative Barney Frank said.
Under a modified version of proposals made by the Bush administration, the Treasury Department would gain authority to inject capital into the two largest U.S. mortgage finance companies, through loans and equity investments.
The agreement is the clearest indication yet that Congress will approve a backstop for the beleaguered companies, which Treasury Secretary Henry Paulson said today is essential for safeguarding U.S. financial market stability. Lawmakers added the provisions to legislation that would create a stronger regulator for Fannie Mae and Freddie Mac and expand federal efforts to stem mortgage foreclosures. 
``The package we have got is fully acceptable'' to the Treasury and Senate lawmakers, Frank, a Massachusetts Democrat who chairs the House Financial Services Committee, told reporters in Washington today. ``Nobody is for everything that's in it or got everything in it he wanted, but we negotiated a lot.''
Treasury spokeswoman Brookly McLaughlin said in an e-mailed response to a question that the department is reviewing the language of the bill, which is 694 pages.
Crossing White House
Frank said lawmakers, defying a White House veto threat, decided to keep provisions for $3.9 billion to help local communities buy up foreclosed properties. The Bush administration opposed the idea because it said it would aid lenders who now owned the vacated properties, not struggling homeowners.
``It's clear that the Democrats chose to play politics with the legislation,'' White House spokesman Tony Fratto said in an e-mail, without mentioning any veto plans. He echoed McLaughlin that officials are reviewing the bill.
The Treasury would be barred from providing aid that would cause a breach in the federal debt ceiling under the agreement, a constraint aimed at limiting any taxpayer losses. The debt limit would be raised to $10.6 trillion from the current $9.815 trillion.
The plan would give Paulson power to restrict the companies' dividend payments and require regulatory approval of the salaries of top executives. (But we're not nationalizing them right? - Jesse)
Higher Cap
The legislation would also raise the limit on the size of the mortgages the companies may purchase. The new cap would be $625,000, or the median home price plus 15 percent, whichever is lower, Frank said.
Frank's counterpart in the Senate issued a statement indicating he backs the bill now progressing in the House.
``We have been engaged in extensive and largely fruitful discussions with our counterparts in the House'' and with Bush administration officials, Democratic Senator Christopher Dodd said in a joint statement with Republican Senator Richard Shelby distributed by e-mail. ``We remain optimistic about the prospects for this legislation.''
Dodd, of Connecticut, chairs the Senate Banking Committee and Shelby, of Alabama, is the panel's top Republican. (Dodd is the Senator who took the inexpensive mortgage from Countrywide - Jesse)
Paulson, who proposed a rescue program on July 13, reiterated today the plan is aimed at restoring investor confidence in the two companies.
Slide in Stocks
Fannie Mae has dropped about 45 percent in the past month, and Freddie Mac has tumbled about 60 percent, on concern the companies have insufficient capital to cover writedowns and losses amid the mortgage-market collapse.
Lawmakers wrapped the plan into a housing bill that would create a program aimed to help an estimated 400,000 Americans with subprime home loans refinance into 30-year, fixed-rate mortgages backed by the government.
The legislation includes tax breaks to help prop up the housing industry, including what would be the equivalent of an interest-free loan worth as much as $7,500 for first-time homebuyers.
The bill also would allow taxpayers who don't itemize their tax returns to temporarily claim a property-tax deduction, said Representative Richard Neal, a Democrat from Massachusetts and member of the Ways and Means Committee. States could offer an additional $11 billion of mortgage-revenue bonds to refinance subprime loans.
Final Approval
The Senate may vote on the legislation as early as July 24, said Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada. The bill would then go to President George W. Bush for final approval.
A Congressional Budget Office estimate released today put the cost of Paulson's plan at $25 billion, a figure below the total that some lawmakers had expressed concern about. (LOL, like the early estimates on the Iraq war. 25 billion. Is that why they lifted the debt limit by about 800 billion? And that's for openers. - Jesse)
``It's pretty good news -- a lot of people thought it would be much higher,'' Shelby said earlier today. (ROFLMAO - Don't worry it will be - Jesse)
Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac own or guarantee about half of the $12 trillion in outstanding home loans.
The companies, which buy mortgages from banks, face mounting losses stemming from the collapse of the subprime home loan market.
Lawmakers rejected a proposal to bar Fannie Mae and Freddie Mac from paying dividends while they are tapping the expanded line of credit with Treasury, Frank said. They decided instead to give Paulson the power to restrict such payments or to take preferred stock in the companies, he said.
``It's not a mandate,'' Frank said. ``He's got to have some flexibility.'' (And a wide stance - Jesse)
Paulson wanted Congress to grant the Treasury temporary authority to buy stock in the companies and offer an unlimited federal credit line.
