BP Spill May Exceed Estimates, U.S. Congressman Says (Update1)

The truth will come out way later, but the public is beginning realize the scope of this environmental and economic disaster.

U.S. Representative Edward Markey said he is concerned BP Plc’s well in the Gulf of Mexico may be leaking as much as 70,000 barrels of oil a day, compared with previous estimates of 5,000 barrels.

Source: bloomberg.com

The Road to Default

Follow the capital flows, people. As money flees from the European bond market, it runs to the safety of US debt, stocks, and gold. The race to the fiat bottom, however, ensures that it’s only a matter of time before the US devalues again and capital begins to flee the safe haven illusion of the US bond market.

Greece needs to borrow from everyone else to cover it budget deficit. Excuse me, but are we not doing the same thing when we go hat in hand and sell our debt to China and Japan? What is happening is that capital is starting to notice we are in the final stages ready for major default.

Source: martinarmstrong.org

Gold A-Wave

Here comes the bears (and bears dressed as bulls) trying to call a top in a secular bull market that has years to run.

"Gold: Too Late for Easy Money" kitco.com

Trading Block (Around 2:05 Mark):


The A-wave (up) continues to push higher into the backdrop of disbelief. Of course, gold will "correct" into the small, B-wave decline around the short-term cycle dates. This is inevitable. The real question is from what price zone will the correction start?

Remember, the B-wave declines always setup the powerful C-wave advances.

The A-wave (up) continues to push higher into the backdrop of disbelief. Of course, gold will "correct" into the small, B-wave decline around the short-term cycle dates. This is inevitable. The real question is from what price zone will the correction start?

Source: cnbc.com

Mailbox

Highlighted read text speaks volumes. Parabolic move in gold in US dollar terms would be the result.

Thoughts:

Gold traders today asked if the price should follow the general commodities lower or perform as the only vehicle in a major currency crisis that offers true safety moving higher. Gold will opt on this question to perform as a currency as that is what gold is inherently

With the euro now below $1.26, $1.2150 to $1.2250 is now in the cross hairs of the shorts.

How deep do you think the entire Western World problems are when a trillion dollars of shock and awe publicly falls flat on its ass? The answer is incalculable and beyond reprieve.

Some commentators are talking a euro at par to the dollar. I assure you that would be the end of the union and the beginning of the attack of the dollar that is certain you is to come.

If you have the emergence of national European currencies, as a result of the failure of the union, the mirror image strength of the dollar would instantaneously disappear. The Credit Default Swaps would turn the vengeance on the dollar. The Drachma would be incinerated. The Swiss and DM would be the stronger units.

If the EU fails so does the USDX. With no mirror image to hold up the dollar artificially the USD will fall faster than Greece’s credit.

Financially TV had an interesting interview that rated the chance of so many investment bankers having a perfect quarter with no loss day as one in a few billion. This proves that the audacity of these people is beyond the beyond. That type of trading record is simply impossible unless you are cheating. When it speaks of 100 million dollar profit days you have to be stealing big time.

Jim

30-Year Bond Auction Results

Again, the significance of these auction results is not so much bid to cover ratio but rather who's dominating the buying in the auction. Like the 10-year, the 30-year results show increasing auction sizes and direct bidder participation rates. For now, these troublesome trends remain contained within the white noise of larger headline stories.

30-Year Bond Auction Results:


The 30-year Treasury bond leveraged ETF illustrates the continued unwinding of the short-term safe haven trade that started in April. Mid action illustrates a pick up in volume as the gap is tested. A test of the gap on light and heavy volume would create a bullish and bearish setup, respectively. Be certain that above auction trends are beginning to shape future buy and sell decisions.

30-Year Treasury Bond Leveraged ETF (TMF):


Source: treasurydirect.gov

U.S. Posts 19th Straight Monthly Budget Deficit

When the shocking is repeated, it becomes routine. This is the danger of complacency. While the public tries to get a feel of the new and hopefully not to painful normal, they have missed the shocking reentry of the US federal deficit into what only can be classified as the unsustainable zone. Yet, despite this troubling development, a large chunk of the public remains unaware, essentially oblivious to SOS signal contained within the gold trend.

The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.

US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:


Source: abcnews.go.com

Stat of the Day: California now in top ten for highest government default probabilities in the world

No one fails, but this policy carries a price of deteriorating confidence in management of the currency.

The usual suspects are on the list including Dubai, Ukraine and Latvia. The one thing to notice is that California has now cracked the top ten with a 20% default probability. For California muni bond holders, this number bears watching.

Source: creditwritedowns.com