Were the banks really profitable in January and February? Also, proof of silver manipulation by JP Morgan and HSBC Confirmed

http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

More proof of silver manipulation as per Ted Butler's newest article:
http://www.investmentrarities.com/03-30-09.html

New Home Sales DECREASED 41% in February

New-Home Sales Rise 4.7%
New Home Sales Fell 41% in February 2009

The most violent rallies happen in bear markets

The most violent rallies happen in bear markets. From the close on 3/9/09 of 6547.05 to the close on 3/26/09 of 7924.56 the DJIA has advanced 1,377.51 points, or 21.04%.

Do NOT get suckered into this rally, despite what everyone tells you that our economy is improving, durable goods improved, etc. The worst has yet to hit the fan.

Treasuries Fall on Supply Concern as Seven-Year Sale Looms

Treasuries Fall on Supply Concern as Seven-Year Sale Looms

By Dakin Campbell and Susanne Walker

March 25 (Bloomberg) -- Treasury 10-year note yields rose the most in more than two weeks after an auction of $34 billion in five-year notes drew a higher-than-forecast yield, spurring concern record sales of U.S. debt are overwhelming demand.

U.S. securities dropped even after the Federal Reserve today bought $7.5 billion of Treasury notes, its first targeted purchases of U.S. securities since the early 1960s. The five- year auction drew a yield of 1.849 percent, higher than the 1.801 percent forecast in a Bloomberg News survey of eight trading firms. The Treasury will sell $24 billion of seven-year notes tomorrow.

“In light of all the supply that’s in the market it’s not a surprise that yields have moved back up,” said Jeffrey Caughron, an associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “You don’t want to fight the Fed in this market environment. Even though there is enormous supply, the Fed will do what it can to keep a cap on yields.”

The 10-year note yield rose eight basis points, or 0.08 percentage point, to 2.78 percent at 4:40 p.m. in New York, according to BGCantor Market Data. The price of the 2.75 percent security due in February 2019 fell 21/32, or $6.56 per $1,000 face amount, to 99 23/32.

Yields have now gained 24 basis points in the five days since the Fed’s March 18 announcement it would buy Treasuries sent yields down 47 basis points, the most since 1962.

Five-Year Auction

The 30-year bond yield gained 10 basis points today to 3.73 percent, while the current five-year note yield appreciated eight basis points to 1.81 percent.

The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, fell to 2.02 from an average 2.18 at the previous 10 sales.

The Treasury Department is selling a record $98 billion in notes this week, eclipsing the record $94 billion auctioned the week ended Feb. 27. The U.K. failed to attract enough bidders today at an auction of 1.75 billion pounds ($2.55 billion) of gilts for the first time in almost seven years.

President Barack Obama’s government is selling record amounts of debt to revive economic growth, service deficits, and cushion the failures in the financial system. Debt sales will almost triple this year to a record $2.5 trillion, according to estimates from Goldman Sachs Group Inc.

Orders for U.S. durable goods unexpectedly rose by 3.4 percent in February, the Commerce Department said today in Washington. Purchases of new homes in the U.S. unexpectedly jumped in February, increasing 4.7 percent to an annual pace of 337,000 after a 322,000 rate in January, Commerce said.

Fed Purchases

“Better than expected economic data, failure of the long- end auction in the U.K. and low demand at the five-year Treasury auction; all these factors combined are leading to higher yields,” said Anshul Pradhan, an interest-rate strategist in New York at Barclays Capital Inc., another primary dealer.

The Fed said it purchased $7.5 billion of U.S. debt spread among 13 of the possible 19 securities eligible for purchase. The notes mature from February 2016 to February 2019, the Federal Reserve Bank of New York said in a statement today. Nearly $22 billion was submitted to the central bank in the first day of buying, the New York Fed said.

“We are really not seeing any kind of meaningful support for the Treasury market,” said Kevin Flanagan, a Purchase, New York-based fixed-income strategist for Morgan Stanley’s individual investor clients. “Conventional wisdom in the market is that the Fed will concentrate on the five- to 10-year or the seven- to 10-year sector.”

‘Poor Communication’

The Fed joins central banks in the U.K. and Japan in extraordinary purchases of government debt. U.S. policy makers announced the decision last week to buy $300 billion of government debt in the next six months along with a plan to more than double purchases of housing debt to $1.45 trillion, hoping to reduce rates on home loans.

The dollar fell the most in almost a week against the euro on concern Treasury Secretary Timothy Geithner supported a Chinese plan to blunt demand among global central banks for the U.S. currency. The dollar weakened as much as 1.2 percent to $1.3651 per euro, the biggest intraday decline since March 19, before trading at $1.3601 at 4:20 p.m. in New York.

Geithner later affirmed the dollar’s role as the world’s reserve currency.

“The poor communication from the Treasury department has complicated the market for Treasuries,” said Baker Group’s Caughron.

Failed Auction

The U.K.’s effort to buy government debt wasn’t enough to prevent today’s failed auction of 40-year gilts, the first time that the government failed to attract enough bids at a sale of debt since 2002. Investors bid for 1.63 billion pounds ($2.4 billion) of 4.25 percent notes, less than the 1.75 billion pounds offered.

“The failed gilt auction doesn’t bode well for Treasuries,” said Michael Franzese, head of government bond trading for Standard Chartered in New York.

Average 30-year fixed mortgage rates were about 2.29 percentage points more than 10-year Treasury yields, versus 1.57 percentage points five years ago. Mortgage rates declined to 4.98 percent in the week ended March 19, according to Freddie Mac, the mortgage-finance company under U.S. government control.

TED Spread

Treasuries lost 1.68 percent this year, according to Merrill Lynch & Co.’s Treasury Master Index. U.S. debt was down 3.4 percent before the Fed announced its purchase program last week.

The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, widened to 1.04 percentage point from 91 basis points on Feb. 10. It reached a two-month high of 1.13 percentage point on March 13. The spread averaged 36 basis points in 2006 before credit markets began to decline the next year.

To contact the reporters on this story: Dakin Campbell in New York at dcampbell27@bloomberg.net; Susanne Walker in New York at swalker33@bloomberg.net

Citigroup receiving bonuses as well; Bill Murphy on Gold Manipulation

AIG isn't the only bailed-out financial firm paying big bucks to managers who helped steer their company to near collapse. Citigroup has pledged millions of dollars in bonuses to senior executives for the next few years, despite lawmakers efforts to eliminate such payments.

Citigroup Plans Big Bonuses Despite Rules Against Them

SVM: Silvercorp Metals Inc.

I just bought stock in this company today.

I highly recommend taking a look at it. It has ZERO debt, and one of the lowest cost silver miners in the world. They have a plentiful cash position and pay a dividend of $.02 per share. They are headquartered in Vancouver but do business in the People's Republic of China. According to their website, China is the third largest silver producing nation with room to grow. It is a high growth play and I advise you to take a look at their website.

Silvercorp Metals Inc.

Hedging against inflation by investing in gold and silver

If you are interested in buying mining stocks, you should seriously look at the companies that make up the XAU index. The link to the XAU index with all the symbols is below. I've also linked to a Wikipedia page listing the percentage allocation of each company that the XAU follows.

XAU Index presented by Kitco
XAU presented by Wikipedia

There is also an ETF with the symbol "GDX" that is traded on the stock exchange. The name of the fund is called the Market Vectors Gold Miners ETF. I've listed the link to their website as well. However, by being an ETF it incurs certain costs and is subject to expense fees. However, these fees are very low at .55% per year. They are also subject to counterparty risk as well.

Van Eck's GDX page

The "GDX" fund is probably the easiest way to diversify with gold stocks as it includes a balance of small, mid and large cap mining companies. If you don't want small caps in your portfolio, then I highly recommend investing in all ten companies that make up the XAU index. However, I do not recommend "GDX" as there is too much risk involved. It is much better to invest in the miners directly without any counterparty risk.

There are also two other funds. Their holdings primarily consist of physical gold and/or silver bullion and are audited frequently. Again, being ETFs there are expense fees but they are relatively low.

CEF: Central Fund Of Canada - Mandated that at least 90% of its holdings must be in gold or silver bullion. Currently it is allocated at 57.7% gold and 39.6% silver with 2.7% being cash and other net assets.
http://www.centralfund.com/

GTU: Central GoldTrust - Holds 95% of its assets in gold bullion.
http://www.gold-trust.com/

Other than CEF and GTU, I would not invest my money in any other ETF that claims to hold or track silver or gold bullion. Many of them don't own the silver or gold bullion in the fund and hold paper certificates instead.

The best way to own gold and silver is to own the physical metal outright. Nothing beats having it right in front of you! You can do this many ways and they include Ebay, APMEX, BullionDirect, and your local coin shops.

Sometimes you need to relax...

Presenting Joe Satriani's "If I Could Fly"

george4title: Californians Scrapping, Squating and Stores Closing Down

VisionVictory: All Roads Lead to Hyper-inflation and a severe Depression

Here is the Gold for Bread Video:



According to http://www.goldgrambars.com/, The value of .1 grams of pure gold is $3.08 on March 19, 2009 (based on $958.50/ounce price).