By Bob Chapman,, GoldSeek

The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.

And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.

The changes were designed to make it more difficult for people to shed their debt, particularly in a Chapter 7 filling. A “means” test, for example, was introduced to separate those who could afford to repay their debt from those who couldn’t. A Chapter 7 filing is off the table if the means test determines a person is able to pay back at least a portion of the debt after it is restructured.

The worst U.S. recession in a generation is testing the effectiveness of these laws. The economic downturn also has prompted more middle-class Americans to file for bankruptcy protection.

Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data. It is the highest level of consumer-bankruptcy fillings since 2005. Consumers rushed to file in 2005 before the new bankruptcy laws took effect in October of that year.

Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier, according to the research center. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November.

“That suggests it was largely ineffective,” Ronald Mann, a law professor at Columbia University, said of the 2005 overhaul. “I don’t think anybody who’s knowledgeable about the bankruptcy system thought the statute was well crafted.”

During this recession, the housing crisis and high unemployment rate have prompted more people to file for bankruptcy who may never have considered the option before, experts said. Filings from 2008 showed more people with high income and high education levels resorting to bankruptcy petitions, according to an annual survey of consumer-bankruptcy filers’ demographics by the Institute for Financial Literacy, a nonprofit that provides bankruptcy-related counseling and education services. Those demographic trends appeared to continue last year.

Mr. Mann said he believes bankruptcies reached their peak sometime last year, but bankruptcy attorneys from across the country said there was no sign that business was slowing. The 113,274 filings in December alone were a third higher than the same month a year earlier.

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By Rick Ackerman, GoldSeek

With the help of a credulous news media, Obama, Bernanke, Geithner et al. have continued to sledgehammer the “green shoots” story.  Actually, it is no longer timid green shoots that supposedly are sprouting up, but a recovery so strongly rooted and powerful that it has sent stocks soaring since March and, more recently, goosed T-bond yields skyward.  Have mere words caused this, jolting the economy from its worst slump since the Great Depression? We very strongly doubt it, much as we doubt that a rising stock market has anything whatsoever to do with the nation’s economic health. If you doubt this, take a good look at the chart below and consider the ebullient mood of America in August 1929.

Still, we don’t fault the spinmeisters for trying so desperately to tell it like it isn’t. As Joseph Goebbels famously said, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” The rest of this quote is less often repeated, but it holds dire implications for the economy and perhaps even for the political system if and when Americans realize that it is lies alone that have kept us from crashing. Here’s how the Nazi propagandist finished the thought: “The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie.”  Indeed, how much longer can taxpayers be shielded from the consequences of a federal deficit on its way to $14 trillion or more? And how many believe the whopper that spending yet more trillions in Keynesian fashion – which is to say, flushing it down the toilet – will enable us to grow the economy out of indebtedness?

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Gold and other precious metals spiked Thursday, as did crude oil and US stocks following a report by the Commerce Department saying the economy expanded at a 3.5 percent annualized pace in the third quarter. Gold’s rise broke a losing streak that had extended to five days. The Dow and S&P enjoyed their best one-day jumps in three months.

New York bullion figures follow:

• Silver for December delivery jumped 41.5 cents, or 2.6 percent, to $16.655 an ounce. It ranged from $16.12 to $16.71.

• Gold for December delivery advanced $16.60, or 1.6 percent, to $1,047.10 an ounce. The yellow metal ranged from $1,048.40 to $1,026.90.

• January platinum surged $31.30, or 2.4 percent, to $1,338.20 an ounce.

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Read the rest of Gold, Silver and US Stocks Rally (2,395 words)

Clive Corcoran submits:

The following are some musings on the U.K. economy, prompted by an adage that seems quite appropriate for our times of thinking the unthinkable.

1. The U.K. public finances are in dire straits with a likely deficit this year well in excess of £200 billion and with red ink as far as the eye can see. It seems highly likely that within the next three or four years outstanding public debt will exceed 100% of GDP.
2. The U.K. is still in recession with a -0.4% GDP reading for Q3, 2009
3. The fact that the U.K. faces a national election within the next nine months means that there is no immediate political will to address the problem or even to spell it out to the electorate.
4. The markets are expected to fund the deficit through the continued purchase of gilts despite the fact that the Bank of England has indicated that it is winding down its Quantitative Easing program.
5. Sterling recently has exhibited as its default mode a tendency for sudden plunges against other major currencies.
6. A recent posting here reveals that the price of gold as expressed in terms of a variety of currencies showed that holders of the U.K. currency had lost the most purchasing power vis a vis the precious metal over the last five years. The real point of this is to highlight that the U.K. economy has historically been more inflation prone than many others.
7. Could the U.K. government – whatever flavor it takes after June 2010 – be faced with the awkward choice of having to approach the IMF for an emergency loan to bail out the gilts market and prevent a collapse in sterling, or to adopt the euro to seek some safety under the umbrella of a more globally acceptable currency?
8. Will Tony Blair, as the possible new President of the European Union, find that he has been provided with the unique destiny of rescuing the U.K. economy by facilitating the early adoption of the euro in place of sterling?

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Major gold mining projects in Perth will help to boost the city’s fortunes over the next few decades, it has been suggested.
According to the Telegraph, new gold projects – along with the effect of the growing Chinese economy, rising house prices and significant gas contracts – look set to place Perth on the road to recovery from the recession.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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South African Finance Minister Pravin Gordon on Tuesday called on government departments for sectoral and financial coordination, saying that the country had to explore options for promoting the development of the mining industry.

The mining sector displayed the first signs of recovery in the country’s economy, which is its first recession since 1992, with production rising strongly in the six months to end August, benefitting from a recovery in commodity prices and rising iron-ore exports to China.

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Przemyslaw Radomski submits:

This essay is based on the Premium Update posted October 23rd, 2009

The crude oil market has lost most of its popularity since it is no longer near $150 per barrel (no longer do oil-related topics dominate the main financial websites), but nonetheless I’m sure that nobody can deny crude oil’s importance in today’s globalized economy. It is vital for both businesses and individual consumers, as fuels are derived from it. Most of us need to drive and purchase goods that also need to be transported to us directly or indirectly.

Read more »

The Daily Reckoning

If you’ve invested in gold, you’re about to gain a powerful ally: pension funds.

“I think the largest institutions like our own are realizing that we barely own any [gold]” Shayne McGuire, head of the Teacher Retirement System of Texas said in an interview in Hong Kong very early this morning. “The same thing applies to most of the pension funds which manage trillions of dollars in world wealth.”

McGuire, who oversees $95 billion, just opened an internally managed gold fund for his 1.3 million public education employees, and suggests other pension funds follow suit. Owning gold is “financial insurance,” he said, sounding a lot like David Einhorn at the Value Investing Congress earlier this week. “Consider the tremendous fiscal excess that major governments have made to prevent the world economy from collapsing… I don’t think the question really is what is gold worth but what are currencies not worth.”

According to the FT, there are 2,600 public pension plans in the U.S., worth over $2 trillion.

“If we believe we’re in a secular bear market or entering a world of hyper-inflation and debased fiat currencies,” Eric Sprott, fund chief at Sprott Hedge Fund LP, added. “There’s no better place to be than gold and precious metals. I find it quite instructive that the price of gold has gone up every year for the past nine years, since the bear market started. That’s not a coincidence, and we think the full cycle could easily reach 15-20 years.

“There is a survivalist aspect to having such a big stake in tangible assets. As long as governments show such low regard for policies that support the real value of paper financial assets, investing in precious metals is about the only way to guarantee the preservation of your wealth.”

“Sprott is our kind of guy,” notes Addison Wiggin, fresh back from the Congress himself. “His $4.2 billion hedge fund is long 30% in silver bullion, 15% in gold bullion, 30% in gold stocks, 10% in energy, 5% in miscellaneous stocks and 10% in cash. Suspicious of equities going back to the tech bust, Sprott played what we had termed ‘The Trade of the Decade’ like an impresario…”

Now, after nearly 10 years, “bargains are harder to find today,” Sprott continued, “but we’re still finding small gold miners that appear to have slipped through the market’s cracks and trade — based on what we believe are reasonable production estimates and no increase in the price of gold — at only around five times estimated 2011 earnings. When we find those, we’ll buy them all day long.”

Gold’s New Ally originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets.

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Spot Silver prices opened this week at $17.48. Silver reached a high of $17.97 on Friday, October 23rd. The low for silver occurred on Thursday, October 22nd at $17.38. Silver ended the week up $0.23 at $17.71. This week, investors concentrated on 2009 1 oz. Silver American Eagles, 2010 1 oz. Canadian Silver Maple Leafs and 1 oz. Sunshine Minting Silver Rounds.

Platinum:

Spot Palladium prices opened this week at $331.00, and ended the week up $7.00 at $338.00. 2009 1 oz. Palladium Maple Leafs, 1 oz. Pamp Suisse Palladium Bars and 10 oz. Pamp Suisse Palladium Bars are consistently popular palladium items.

The Daily Reckoning

The central banks of the world are changing tune. Since 1989, the banks have been net sellers of gold reserves, meaning that as a group they have sold more than they have taken in. This is an important point because the large gold sales of central banks tend toward lowering the spot price of gold. The news emerging from a September 2009 GMFS report is that central banks as a whole are once again becoming net buyers, and their purchases have the potential to put upward pressure on the price of gold in the public markets.

According to GFMS, “this represents a remarkable change of direction for a market that has been used to absorbing substantial volumes of gold sold by central banks over the last decade.”

Central bank gold sales may have been initially enlisted in an effort to support the dollar as the world’s reserve currency, especially since 1971 when the US de-linked the dollar from gold. The changing trend may be related to recent renewed interest in the SDR, which has been getting a lot of attention in media as a potential replacement reserve currency. Or, it could reflect an anticipation of a continued increase in the value of gold over time.

Either way, this is an important trend to watch. Central banks are significant players in the gold market and can affect the value of your personal gold holdings.

The full story is available from Jesse’s Cafe Americain which has more details on the official central bank purchases and several insightful charts.

Gold May Have More Price Support now Than at any Time Since 1989 originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets.

More articles from The Daily Reckoning….