Gold and silver metals led the plunge in commodities yesterday.

Gold and silver metals led the plunge in commodities yesterday. As we said a month or more ago, when it falls it will plunge fast and cascade into margin calls and huge losses for speculators. In addition people who have bought the metal itself will discover the fraud in that non-existing sellers market, the one-way buyers market. The metal’s marked sells gold and silver you have to go to pawn shops and loan sharks to sell your gold and silver with 30% to 50% commissions when you get out. As we said over a month ago the people buying gold listening to the right-wing radio show gold advertisements could end up losing 70% to 90% buying at the recent highs and then selling to the pawn shops.

Within a few month commodities will be rising again but do not expect gold and silver to rise very much.

The airline industry was able to pass along a 10% cost increase this year. Higher food and fuel costs are spurring restaurant menu changes, which are reflected in the food-services category of the personal- consumption-expenditures price index. Purchased meals and beverages, which make up about 6 percent of core PCE rose nearly 2 percent in March. “Inflation hawks see restaurants and airlines passing through higher prices and say the FED’s behind the curve,” Nsouli said. “The FED’s not paying enough attention to such trends when it comes to its continued accommodative monetary policy.” But the collapse of speculation in gold and silver will burn so many people that inflation will have to be out of control (perhaps in 5 years) before the recent highs are reached again.

World Markets:
Oil plunged a record more than 8 percent on Thursday, the third record daily drop in a row in dollar terms, as concerns about economic growth and monetary tightening spurred a sell-off in commodities, gold and silver.
U.S. crude tumbled below $100 a barrel in heavy trading volume after weak economic data from Europe and the United States fed concerns that have battered commodities all week.

German industrial orders fell unexpectedly in March.

European Parliament members including Marta Andreasen, Roger Helmer and Michael Cashman want to freeze some of the funds the European Union gives socialist Spain until it resolves legal shortcomings that have stripped once-legal buyers of property rights. A non-binding 2009 report by the parliament’s petitions committee criticized the socialists for applying restrictions on coastal property retroactively and showing “judicial laxity” toward corruption and speculation as owners are stripped of their property rights. “It’s inconceivable that anyone would want to invest in property in a country that has shown itself to be lawless when it comes to property rights,” Andreasen said in an interview.

Greek Prime Minister George Papandreou says Greece doesn’t need to restructure its debt as long as Germany does not require they ever pay back their loans. But if Germany wants interest payments on the loans then Germany must provide more loans to pay the interest. It sounds like the Greek unions suckered in Germany pretty well. Who says the Germans know how to handle their money? Portugal is about to get their German handout this week.
K1 Group founder Helmut Kiener, accused of defrauding investors of 345 million Euros ($513 million), told a court his funds weren’t intentionally set up as a Ponzi scheme. He claimed that his personal homes and personal aircraft were acquired with investor money to improve his productivity and they would have eventually have been corporate profit centers.

Fraud in the EU CO2 Market is rampant. The whole concept of “human caused global warming” is a scam that takes advantage of European administrator conceit and inbreeding that leaves them too stupid and naïve to realizes they are managing the biggest scam of this decade. The European Union will take testimony this week on a regulatory “gap” exposed earlier this year, when criminals stole carbon permits and forced the closure of spot trading for 15 days. The European Commission’s moron overseer of the world’s largest emissions-trading system, is due to meet today in Brussels with emitters, traders, researchers and climate groups to discuss protection for contracts for immediate delivery. Spot volume, historically accounting for 15 percent of the EU carbon market, has yet to bounce back from this year’s thefts by online hackers and value-added tax fraud in 2010. Helmut Kiener offered to run the agency if acquitted of his fraud charges.

US Economic Highlights
GM reported a record profit but that does not fool anyone who knows they just came out of bankruptcy. It doesn’t take much profit to raise profit 1000% percentage points when you are climbing out of the red. But GM’s profit couldn’t even make 35% this time… that is how bad they are and the stock still did not break even two years after the GM union thugs were bailed out by American taxpayers thanks to Obama. Of course American taxpayers that owned GM lost everything but Obama paid the union off so they will vote for him. That is why unions should not be allowed to get paid anything from the government because only corrupt government officials benefit from union contributions. Government unions should be illegal as they were in the past. The more corrupt they are they more they get from unions especially unionized government employees and the more the corrupt government gives the unions. Obama is the most corrupt president ever in this regard. He even wants to allow unions to end the secret ballot so they can see how union members vote they was the International Socialists, the Communists hold their votes.

Construction Spending in Mar improved 1.4% after declining -2.4% last month. Without Obama socialist manipulation the improvement was 0.4% this month (still good).
AM ISM Index Apr declined to 60.4 from 61.2 last month indicating the economic showdown is worsening. The Obama misery index is the sum of the inflation rate and the unemployment rate. It is about 13% now. Under Jimmy Carter the misery index was over 16% because they used real inflation not the phony FED core rate to compute American misery.
Factory Orders Mar up 3.0%, very good compared to 0.7% last month!

May 2 3:00 PM Auto Sales May Once again the auto and truck sales news is delayed since it is so bad.
May 2 3:00 PM Truck Sales May

MBA Mortgage Index 04/29 definitely improved +4% compared to last month’s -5.6%
Challenger Job Cuts Apr still bad at -5.0% vs. -38.6% last time
ADP Employment Change Apr a dismal 179K after a dismal 201K in Feb
ISM Services Apr dropped to 52.8 from 57.3
Crude Inventories 04/30 dropped to 3.421M from 6.156M

Today
All bad news
Initial Claims 04/30 474K up sharply from 429K last week even after 2K manipulation
Continuing Claims 04/23 3733K up sharply from 3641K even after 18K manipulation
Productivity-Prel Q1 down to 1.6% from 2.6%
Unit Labor Costs Q1 up sharply 1.0% after being stable or a non inflationary -0.6%

This week
May 6 8:30 AM Nonfarm Payrolls Apr
May 6 8:30 AM Nonfarm Private Payrolls Apr
May 6 8:30 AM Unemployment Rate Apr
May 6 8:30 AM Hourly Earnings Apr
May 6 8:30 AM Average Workweek Apr
May 6 3:00 PM Consumer Credit Mar


Market Outlook May 6, 2011
Investors in hard gold and hard silver lose 50% of the value when they try to cash it in. That is because those markets sell and do not buy any significant amount of precious metals. There is so much fraud that expensive testing of gold and silver must be done by the buyers. Many sellers are watering down the metals with copper and just 1% copper reduces the value 30% because it is so expensive to remove the last 1%. Buying hard gold and silver is the worst thing a person can do even buying from the US Mint. And Gold and silver will decline 75% on their own over the next 15 years anyway because the world is still facing a worldwide depression not hyperinflation. Only developing countries and bankrupt socialist governments like those in South America and Africa and the Mediterranean resort to hyperinflation.

The American economy is still stagnant because Obama refuses to cut welfare that is an enormous economic inefficiency. Toothless immigrant welfare recipients are seen regularly at gambling casinos cashing welfare checks and illegally exchanging food stamps for cash. American welfare corruption has more than doubled under Obama. Obama gave over $30Billion to black constituents who fraudulently claimed they were owed reparations because their ancestors did not get all the corrupt handouts they were “entitled” to under previous administrations. This Obama corruption of the farm bureau alone is justification for firing that entire government office.

World Markets
International trade shows that the world economy has only revived about 25% not the 70% shown by the stock and commodities markets. QE2 is created the current stock market and commodity bubble. That means more than half of the stock market rise from the 2009 lows is unsupportable and could evaporate quickly. See:

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
Click on the 3yr chart.

Asian markets were down again last night. China down -0.3%, Hong Kong down –0.4%, India down closed, Japan down –1.5% and Seoul down -1.5%.

European markets are spread this morning in a range of about –0.5% to +0.6% half way through their day.

US pre-market futures are up today in a range of about 0.2% to 0.4 % at 7:00 AM EST.