2010 July 28 | timiacono.com

Gold, Bears, and Peanut Butter

After today’s exodus of another 18 tonnes of gold bars from the SPDR Gold Shares ETF (NYSE:GLD), another graphic showing the latest damage to the “tonnes in the trust” might have seemed like the right thing to hoist up late in the afternoon, but there’s a much more important threat deserving of attention – BEARS!

In addition to the above story from Colorado, not far from here the other day in Glacier Park, Jack Hannah fought off a grizzly bear as detailed in this ABC News report, all of which might have us visiting the local sporting goods store to buy some bear spray before our next hike.

Full Disclosure: Long GLD, no position in bears or peanut butter.

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Goldman Says Oil is Too Cheap

Everybody’s favorite investment bank, Goldman Sachs, just doesn’t seem to be dispensing the same kind of sure-fire, money-making advice that they used to. After urging bets on a resurgent euro as it continued to plumb new lows in the spring (did they stick with that one long enough to be benefit from the June turnaround?), they’ve consistently called for higher oil prices, the latest recommendation coming yesterday in this story at Bloomberg.

Oil Near 11-Week High; Goldman Says Crude Too Cheap

Oil traded near an 11-week high in New York as equities rallied around the world and Goldman Sachs Group Inc. said crude prices are too cheap.

Oil was at about $79 a barrel before a government report due tomorrow that may show U.S. fuel supplies increased last week. Goldman Sachs said futures prices are “significantly” below the level warranted by “fundamentals,” offering buying opportunities for this year and next.

Goldman Sachs said in a report yesterday that the balance between supply and demand will continue to tighten in the second half of this year as global economic growth boosts demand, returning inventories to “more normal” levels.

Crude oil looks to be a one-way bet this week – down – and it’s not clear how that’s going to change in the near-term given all the economic data now piling up that all points to a dramatic slowdown in U.S. growth if not a double-dip recession. Of course, anything could happen in China (and probably will), but, it’s hard to imagine how we’ll see substantively higher oil prices without some signs that growth is increasing, not decreasing.

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Here’s a pretty good summary of the Glenn Beck/Goldline controversy in flowchart form by Jess Bachman over at Barry’s Big Picture blog. Apparently, it’s the ‘ol “bait-and-switch” routine that has would be buyers of gold bullion coins switched over to numismatics when just a little fear of 1933-style FDR confiscation is injected into the process.

Click on the image above for the whole ginormous chart.

Remember, if you’re going to buy gold coins, buy bullion, not numismatics, unless you really know what you’re doing (which, like me, you probably don’t).

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HAMP Redefault Reporting to be Revised

In this story at the Huffington Post, Shahien Nasiripour provides the latest on the suspect reporting of HAMP redefaults (i.e., where virtually all of those with permanent loan mods from the government and the attendant 64 percent total debt-to-income ratio somehow continue to service all that debt), a topic that was discussed in this item here yesterday.

The Obama administration has revised its latest monthly report on its signature foreclosure-prevention plan, deleting a heavily-criticized performance metric used to measure whether assisted homeowners are re-defaulting on their taxpayer-financed mortgages.

The Treasury Department claims that Fannie Mae, which administers its Home Affordable Modification Program, screwed up.

In place of the now-deleted table, in a revised report posted Monday to their FinancialStability.gov Web site, Treasury said:

“Since the Making Home Affordable report was posted on July 20th, Fannie Mae, which administers the program, has reported to Treasury an issue in its implementation of the delinquency statistic methodology used to report performance of permanent modifications. Fannie Mae is now revising the data, and Treasury has retained a third-party consultant to provide additional review and validation. Upon completion of that independent review, a revised table will be provided.”

Meanwhile, last month analysts at Fitch Ratings projected that as many as 75 percent of HAMP modifications will ultimately result in re-default — despite the lower monthly payments. In their note last week, the Barclays analysts said they’re sticking to their original re-default projection of about 60 percent.

Just a few percent versus 60 or 75 percent – that’s quite a difference…

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May Case-Shiller: Being Paid to Buy Homes

After watching some of the evening news commentary last night on the latest Case-Shiller home price data, it became quite clear that the mainstream media did the nation a big disservice by fawning over the price increases in May, juiced as they were by the expiring homebuyer tax credit. Economist (surprise!) Casey Mulligan writing at a NY Times blog was similarly clueless. Here’s a pretty good take on the data from the Wall Street Journal:

The WSJ story referenced in the interview above – Supply of Homes Set to Grow – details the supply problem that looms and the math is pretty simple. In addition to some homebuilders ramping up production you have more than a year’s supply of foreclosed homes that have yet to hit the market, all of which makes any talk of a lasting rebound premature.

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