By Trace Mayer, on May 28th, 2010
While gold, silver and platinum are risk-free the precious metals industry contains both sterling actors and unscrupulous shysters. All are trying to make a profit which, if done morally, is commendable. The Glenn Beck and Goldline issue raised by Mr. Weiner is nonsense. But as a purchaser I want to get the best value. Oftentimes an ounce of prevention is worth a pound of cure. 
GLENN BECK AND REPRESENTATIVE WEINER
Representative Anthony Weiner was first elected in 1998 to the New York 9th District and roosts on the Energy and Commerce committee and Judiciary committee. His top campaign contributor is ActBlue at $44,500 and his #2 campaign contributor is M&R Management with $19,200. ActBlue describes themselves as ‘the nation’s largest source of funds for Democrats’.
CBS News recently reported,
Weiner accused Beck and other conservative spokespeople (among them Mark Levin and Fred Thompson) of using “their shows to prey on the public’s fears of inflation and socialist takeovers while actively promoting the purchase of gold coins as insurance against this purported government overreach.” …
Weiner, who is on the House Subcommittee on Commerce, Trade and Consumer Protection, says Beck “should be ashamed of himself.” He has written letters to the SEC and FTC asking them to investigate Goldline and is proposing legislation to force the company to “fully disclose their dishonest business practices” by showing consumers “their astronomical markups, and deceitful promises of profitability.”
Mr. Weiner may want to tame his defamatory tongue where he is asserting that Goldline engages in ‘dishonest business practices’ and ‘deceitful promises’. If these assertions are false and a reasonable investigation would cause the reasonable person to conclude that Goldline were not involved in dishonest business practices or deceitful promises then Goldline should consider suing Mr. Weiner for defamation. Think of all the free publicity!
After a reasonable investigation the facts appear to reveal that Goldline’s customers, unlike those of Monex who has an F with the BBB, are pleased with the company’s business practices and there appears to be no evidence of anyone, besides Mr. Weiner who is probably not a Goldline customer anyway, claiming that Goldline has acted in a dishonest or unscrupulous way.
 But perhaps this is to be expected language from those defaming ilk like Mr. Weiner. Where does ActBlue get their funding? One example is Martin Matthews the Director of Government Affairs for Merck & Co. who gave ActBlue $750. And what does Merck & Co. do for business?
On 6 October 2004 The Wall Street Journal reported,
Merck & Co.’s arthritis drug Vioxx may have led to more than 27,000 heart attacks and sudden cardiac deaths before it was pulled from the market last week … citing a study by the Food and Drug Administration, said that from Vioxx’s approval in 1999 through 2003, an estimated 27,785 heart attacks and sudden cardiac deaths
WebMD Health News citing a recent study published in the Archives Of Internal Medicine asserts ‘Merck should have known Vioxx was deadly years before they pulled the drug from the market, a study of Merck’s own data suggests.” And where did those profits from Merck’s sale of Vioxx go? Into Mr. Weiner’s campaign pocketbook. And how does he use them? As a bully pulpit against profitable companies with a sterling BBB reputation.
GOLD AND SILVER DEALER REVIEW
best value being (1) credible and reputable and (2) having the best prices.
While I consider RunToGold a fun hobby I also require it to be self-sufficient since that is the only way to ensure it will be sustainable. While it is fun I will not allow it to be black hole on my balance sheet. Fortunately, sales of The Great Credit Contraction and donations from readers like you have been sufficient to provide for the thousands of dollars of cash costs associated with its operation. Free speech can be quite expensive!
Over the years with RunToGold I have been approached by many gold and silver dealers, including Goldline, about advertising but I never found the right fit. While I had my own sources for purchasing bullion, not numismatic coins, and I recommended those companies when asked; for the most part I have shied away from publicly endorsing any particular company besides GoldMoney because to do so requires me to stake some creditability and why should I?
But I am finding that many readers are reporting back to me with both good and bad accounts of interactions with gold and silver dealers. Consistent with the ounce of prevention rule I have undertaken to pool the collective experiences of my readers along with my own so that I can direct new readers who decide on buying gold, silver and platinum towards a provider that offers the best value being (1) credible and reputable and (2) having the best prices. This is an example of what I found:
GAINESVILLE COINS
mention RunToGold and you may get a shipping discount
So who is Gainesville Coins? I had never heard of them before a few months ago when one of my readers, V.B., strongly suggested I investigate them. She had earlier asked me for advice on who to buy about $50,000 of bullion from and I had suggested A****. She did further research and bought from Gainesville Coins because she could drive down and pick up the order.
I likewise made an order, drove down to pick it up and found it a tremendous value, especially on lower dollar amount purchases. Additionally, I talked with the owners and if you call and mention RunToGold then you may get a shipping discount or use the discount code ‘RunToGold‘ on the website and, if they have any left, a postcard of the Liquidity Pyramid.
CONCLUSION
Owning gold, silver and platinum is something every responsible person should do. When deciding who to buy bullion from I can now confidently recommend Gainesville Coins if you want possession or GoldMoney if you want a third-party storage service. I think both forms are wise.
Additionally, I would shy away from taking any advise from Mr. Weiner. So long as the transaction is voluntary, unlike those Mr. Weiner engages in like voting YES on the Health Care Bill to give Merck more money from involuntary premiums, I am more concerned with the number of ounces the buyer gets. With Gainesville Coins I am confident you will, in the vast majority of transactions, get more ounces than when buying from any competitors. Of course, do your own due diligence.
DISCLOSURE: Long physical gold, silver and platinum with no interest the murderous Merck (MRK), problematic SLV or GLD ETFs or the platinum ETFs.
By B.P.T., on May 28th, 2010
At 8:30 AM EDT, the monthly Personal Income and Outlays report for April will be released. The consensus for Personal Income is an increase of 0.5% over the previous month, which would be the third month of gains in a row. The consensus for Consumer Spending is an increase of 0.2% after a strong March, and the consensus Core PCE price index change is an increase of 0.1%.
At 9:45 AM EDT, the Chicago PMI Index for May will be announced. The consensus index value is 62.0, which would be a decrease from April, but is still well above the break-even level at 50.
At 9:55 AM EDT, Consumer Sentiment for the second half of May will be announced. The consensus is that the index will be at 73.3, which is the same level reported in the first half of the month.
At 3:00 PM EDT, the Farm Prices report for April will be released, giving investors and economists an indication of the direction of food prices in the coming months.
By Winton Bates, on May 27th, 2010
I get the impression from the methodology chapter of their recent book, ‘Identity Economics’, that George Akerlof and Rachel Kranton are not particularly interested in econometric tests of the predictive power of their theory. They suggest that it is difficult to falsify any theory because ‘even the most straight forward test has literally millions of possible specifications’ (p. 115). I think they are exaggerating, but even accepting their point it seems to me that useful knowledge may be gained by considering what predictions might follow from a new theory and how well those predictions describe aspects of the real world.
The key idea of identity economics is that people gain utility when their actions conform to the norms and ideals of their identity (or social category e.g. gender, race, social class, age group) and lose utility when they do not. We should expect this to be so if we accept that individual behaviour is strongly influenced by socialization and that norms of behaviour can differ between people in different social categories.
The key idea of identity economics suggests that, other things being equal, people are likely to be happier when they live in societies where there are few economic or social pressures for them to act in ways that are contrary to the norms and ideals of their identity. It is important to define what we mean by happiness in this context. I think the appropriate concept in this instance is emotional well-being, as measured in happiness surveys, rather than an all-inclusive concept of well-being explicitly incorporating such factors as wealth, health and education. It seems reasonable to expect that, other things equal, people with high levels of identity utility would be more likely to say that they are happy or satisfied with life than would people with low levels of identity utility.
It seems to me that one prediction we could make on the basis of identity theory is that people in homogeneous societies are likely to be happier than those in societies in which individuals have to interact with people who have different cultural backgrounds. We might expect that this effect would depend on the strength of ties to particular groups in multi-cultural societies, but we would expect homogeneity to be a plus for average happiness.
Is the evidence from happiness research consistent with this prediction? When I did a Google search using the words ‘happiness’ and ‘homogeneity’ the first results I saw seemed consistent with the prediction – people in countries that homogeneous (as well as affluent) tend to be the happiest. However, delving deeper, I found a more careful study for 65 countries, using multiple regression to control for other variables, which suggests that ethnic homogeneity may actually have a negative effect on average life satisfaction (Douglas Barrett, Kristen Van Rensselaer and Bruce Gordon, ‘Possible effects of national population homogeneity on happiness’, Journal of International Business Research, 6 (1), 2007).
The authors comment as follows:
‘The results suggest that life satisfaction is significantly negatively related to ethnic homogeneity in the presence of our control variables. This is consistent with the “melting pot” concept, as multiple cultural influences create a richer living environment’ (p. 55).
I’m not sure what a richer living environment actually means. Perhaps one way of thinking about it is that a richer living environment enables us to get some of the benefits of foreign travel (e.g. sampling foreign food) without leaving the country. I think the result may also be consistent with identity economics if we view successful multicultural societies as providing a learning experiences in which a substantial proportion of the population from all major ethnic groups have come to view themselves as tolerant of diversity. We should expect tolerant people to gain utility from acting in accordance with their ideals.
By B.P.T., on May 27th, 2010
At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report. The consensus is that there were 450,000 new jobless claims last week, which would be slightly less than the higher than expected number that was reported last week.
Also at 8:30 AM EDT, the preliminary GDP report for the first quarter of 2010 will be announced. The consensus is an increase of 3.5% in real GDP and an increase of 0.9% in the GDP price index. These estimates are slightly higher than the advance estimates for this quarter, and indicate moderate growth.
Also at 8:30 AM EDT, the Corporate Profits report from the Bureau of Economic Analysis will be released.
At 10:00 AM EDT, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.
At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.
Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.
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By Russ Nelson, on May 26th, 2010
A bunch of people are tweeting and retweeting the question “I didn’t look today, did the free market clean up the oil yet?”
I have a couple of responses to that. First that there is no such thing as a free market. You’re not free to sell something unless someone else is willing to buy it. That points to the conclusion that there are only customer-regulated markets and government-regulated markets. And that poses the question: who’s the customer here, and if they’re not regulating
why not?
If customers can’t regulate the behavior of sellers, then it’s not even close to being that-thing-which-is-called-a-free-market. So that points to this: when governments regulate, they don’t regulate in a vacuum. Their regulation displaces customer regulation. If you look at the oil industry, you’ll find that it’s regulated up the wazoo and back down again.
Customers can’t regulate because they’re being prevented from doing so by government regulation.
Thus, to my friends who are asking this question, I suggest that since a free market isn’t present in the oil industry, it’s silly to expect that something which doesn’t exist is capable of taking action.
And my second response is to ask what would have hap;pened had this oil spill happened on private property. It’s certainly the case that the property owner would have a contract with BP, and the contract would specify remedies. One way or the other, the property owner is going to be compensated for the risk of oil risks.
Who is the property owner here? Why, it’s the federal government, which claims to own the seas off our coast. What does their contract with BP say? If it doesn’t hold BP’s feet to the fire for enough money to clean up the
oil, then why did the government allow the drilling?
So the question is not why the free market hasn’t cleaned it up yet, but instead why the government screwed up. Private companies fire incompetent executives, and if they don’t do that, they go out of business. Who’s going to lose their job over the irresponsible handling of the BP drilling? And if they don’t, will the government go out of business?
The answer is obviously “no” to the second, and probably “nobody” to the first. And that, my friends, is exactly why you want to limit the things you let your government do.
By Eldon Mast, on May 26th, 2010
Existing home sales soared in April as existing home buyers rushed to take advantage of the tax credit that expired at the end of the month.
On Monday, the National Association of Realtors reported that existing home sales jumped 7.6% last month to a seasonally adjusted annual rate of 5.77 million units, up from a rate of 5.36 million in March. Sales year-over-year were up 22.8%.
Even though the jump was widely anticipated, it still beat forecasts. The consensus among economists was that resales in April would only rise at an annual rate of 5.65 million units.
The median price of all existing homes also rose in April. Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month.
Details of the report show comparable gains for both single-family homes, up 7.4%, and condos, up 9.1%. The Northeast led the regional breakdown of gains.
By B.P.T., on May 26th, 2010
The Mortgage Bankers’ purchase index was released at 7:00 AM EDT, and there was a week to week decrease of 3.3% last week, showing continuing weakness in the housing market since the second financial stimulus program for home sales came to a close at the end of April.
At 8:30 AM EDT, the Durable Goods Orders report for April will be released. The consensus is that there was a gain of 1.5% from March, which would continue the positive trend in this metric.
At 10:00 AM EDT, the New Home Sales report for April will be released. The consensus is that 425,000 new homes were sold last month, which would be an increase over March, but was expected as the housing tax credit expired at the end of April.
At 10:30 AM EDT, the weekly Energy Information Administration Petroleum Status Report will be released, giving investors an update after a negative week for oil prices.
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By Claus Vistesen, on May 25th, 2010
Nothing is so bad, that it isn’t good for something
So goes an old adage in my home country (and I would imagine elsewhere too) and perhaps if hard burdened Eurozone policy makers and investors are finding it hard to find any kind of (positive) silver lining in the current debacle, they may just want to remember that old of oldest saying. I am of course talking about the Euro here and while its recent fall from grace has been linked to all kinds of nastiness in the form of a Eurozone break-up/collapse as well as the final nail in the coffin of those who once argued that the Euro would surpass the USD as the global reserve currency [1], it is also going to act as a much needed leg of support to those economies most in need of export performance in the absense of domestic demand. As the tally of the financial crisis increases and as the demographic transition soldiers on this is fast becoming all the Eurozone economies combined [2] (click for better viewing).
Since the beginning of 2010 the Euro has depreciated 14% and 16.5% agains the USD and JPY respectively and this is remarkable in an environment where risk aversion has unwound. In short; when it comes to the game of cards in terms of global liquidity/capital flows where holding old maid means that you buy bear the brunt of intra-G3 appreciation. This is what I wrote in my sneek-peek into 2010 G3 FX markets;
In an G3 context, 2010 clearly holds the potential for Dollar strength, but timing and intensity is going to differ. Most major research houses see the USD/JPY as a strong candidate for a correction that could move the pair back in the 100s. I concur. Whatever speed the US economy will have in 2010, Japan will be the laggard and the BOJ will be dragged kicking and screaming into a full out battery of QE measures.
Buy the Old Maid. If the rally in risky assets continue into 2010 and beyond, the Euro will be holding the Old Maid amongst the G3. If the recovery is stopped in its tracks it is very likely that it will be from an event conjured in Europe making the USD holder of Old Maid. The former looks the most plausible scenario at this point in time with the notable qualifier that the USD should strenghten against the JPY. In this way, the Old Maid will shift hands from the JPY to the Euro and potentially the USD with the outlook for the EUR/USD not easy to call.
In my book the EUR/USD looks way too high even in the 1.40s. However, we have seen before that this pair may continue to rally so it is worth treating this one with care. Societe Générale sees dollar weakness sustained (except versus the JPY) well into 2010 and thus the EUR/USD continuing to drift upwards. I only conditionally agree. Especially I would emphasize the fact that the risks to the Euro, by far, out match those to the USD at the current juncture. In this way, I am less sanguine when it comes to the continuation of the ”recovery” and thus the rally in risky assets.
I will let my readers judge the accuracy of my argument but I don’t think it is too far off the mark. Consequently, I was not particularly suprised by this piece today running across the Bloomberg wire that FX punters and other of their ilk are beginning to look to the Euro as a source of global liquidity to play the carry wheel in high yield economies.
(quote Bloomberg)
The fastest convergence in short-term interest rates in almost a year is making the euro a surprise addition to currencies used to finance investments in higher- yielding assets. “The hot guys are moving into using the euro as a funding currency,” said John Taylor, who helps oversee $7.5 billion as chairman of New York-based FX Concepts LLC, manager of the world’s largest foreign-exchange hedge fund. “It’s not quite as cheap as the yen but it’s a lot safer in a crisis, because the worse the world looks the worse the euro looks.”
Borrowing in euros to finance an investment in the Australian dollar, New Zealand dollar, Brazilian real and Norwegian krone returned 10 percent in the past 6 months, according to data compiled by Bloomberg. The same trade using the dollar instead of the 16-nation currency resulted in a 7.5 percent loss, and a 7.4 percent decline with the yen. Deteriorating economic prospects in the euro area have helped push down the cost of short-term borrowing in Europe relative to the U.S. The London interbank offered rate, or Libor, for three-month loans in euros fell to within about 14 basis points, or 0.14 percentage point, of the dollar rate on May 21, from 26 basis points at the end of April and 40 on Dec. 31, according to data from the British Bankers’ Association.
Libor for loans in dollars for three months was 0.497 percent at the end of last week, compared with 0.636 percent for euros, the BBA said. The European Central Bank’s main refinancing rate is 1 percent, while the Federal Reserve’s target rate for overnight loans is as low as zero.
Now, I am sure that the Eurocrats would rather have the Euro gunning for reserve status and certainly this goes for the ECB hawks who have so far, and decisively in the context of the initiation of QE, been drowned in a sea of dove feathers. However, being a carry trade funder has its advantages too; just ask Japan who has benefitted from this role a long time up until of course the Fed rushed into QE on the back of the financial crisis as well as it appears that Japan’s own horrible growth and debt outlook has taken the, temporary, backseat to the crisis in Europe. As Andreas Hahner, a money manager at Allianz Global Investors, is quoted by Bloomberg; you need three things to be a carry trade funder. Low interest rates(check!), depreciation/relative weakness (check) and low volatility (well, check for now). However, Mr. Hahner is right to point to the fact that the bounce back in the Euro could flush out many a European version of Ms Watanabe.
But then again, which boounce back would he be talking about here?
Certainly, in relation to the G3 the big problem is that the long term growth prospect for the US looks decidedly brighter than for Europe and Japan (demographics remember) and this is a “problem” since we were also supposed to correct those blasted imbalances. In fact, one cannot help but feel that if Germany really wants wealth preservation and vigilance against inflation, let them have it, but they need to know what it means. I would consequently submit that in terms of keeping the Eurozone in one piece and in its current form will require a sea-change at the ECB. We have seen the first steps to this with the intiation of QE, but what markets have not faced up to yet is the duration of this policy measure. It won’t just go away folks; it is here to say. Whether it also means that the Euro is now to become a carry trade funder of choice is a significant question since if this is the case, it means that it will also begin to trade like one. I for one would not be surprised to see this and investors should take note of the change in discourse on the Euro here [3].
—
[1] – About time too; some of us has argued this for the better part of the last 3 years!
[2] – In this sense, there IS convergence which is actually an interesting point to ponder in terms of general reflection.
[3] – Well, of course, you should not take note of me not being surprised 
By Eldon Mast, on May 25th, 2010
Jobless rates fell in Washington D.C., Maryland and Virginia last month, according to government data released Friday. It was the marking first regionwide decline in unemployment rates since the recession of 2009.
According to the April data from the federal Bureau of Labor Statistics, Washington D.C., experienced the most dramatic drop in April’s measure, falling to 11% from 11.5% in March. Maryland’s unemployment rate fell to 7.5% from 7.7% and Virginia’s fell to 7.2% from 7.3%.
Many economists over the weekend agreed that the data reflected a real drop in joblessness and that it underscores ongoing evidence of a sustained recovery cycle.
“This is the first time all three [unemployment rates] declined in tandem,” said Sara Kline, an economist at Moody’s Analytics. “The labor force has been growing for the last couple of months and there’s been a downtick in unemployment.”
According to the Washington Post, a survey conducted in April among recruiters in the District, Maryland and Virginia, showed a dramatic increase in hiring in the first quarter. “To see four straight months of unemployment going down and over-the-year job growth — these trends are going in the right direction,” said Joseph P. Walsh Jr., director of an employment services agency in the region.
“Things certainly are headed in the right direction,” said Eric M. Seleznow, executive director of the Maryland Governor’s Workforce Investment Board.
In Virginia, more than 28,000 jobs were added, 14,100 of them in Northern Virginia. “It was an encouraging month,” said Ann D. Lang, senior economist at the Virginia Employment Commission.
The growing strength of the job market continues the positive trend nationally that we’ve been tracking here for over a year now — a trend that now appears quite likely to be only a few months away from netting the U.S. economy 500,000 new jobs per month.
By B.P.T., on May 25th, 2010
At 7:45 AM EDT, the weekly ICSC-Goldman Store Sales report will be released, giving an update on the health of the consumer through this analysis of retail sales.
At 8:55 AM EDT, the weekly Redbook report will be released, giving us more information about consumer spending.
At 9:00 AM EDT, the monthly S&P/Case-Shiller home price index report will be released. Given that most economists don’t expect the overall U.S. economy to improve until housing prices end their decline, the market will be watching this number closely.
At 10:00 AM EDT, the monthly report on Consumer Confidence for May will be released. The consensus index level is 59.0, which would be a 1.1 point increase over April, following a large gain last month.
Also at 10:00 AM EDT, the FHFA House Price Index for March will be released, providing more information about the direction of the housing market.
Also at 10:00 AM EDT, the State Street Investor Confidence Index will be released, which looks at changes in the amount of equities held in the portfolios of institutional investors.
At 8:30 PM EDT, Ben Bernanke will speak at the 2010 Institute for Monetary and Economic Studies Conference International Conference.
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