A combination of several factors, including a declining dollar and the Federal Reserve’s announcement that it would keep interest rates at virtually zero until late 2014, helped to send gold and silver prices soaring to multi-week highs. Analysts expect the upward trend to continue as paper currencies founder and gloomy news continues to dominate the economic headlines.

The spot price for gold was around $1,725 by 2 p.m. Eastern time after jumping more than $60 since the day before, up almost 30 percent from a year ago and more than 7.5 percent over the last 30 days. It smashed through $1,700 on Wednesday for the first in six weeks.

“At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar,” Commerzbank analyst Daniel Briesemann told Reuters.

Analysts said the single most important factor behind gold’s strong rally was the Federal Reserve. On Wednesday, the privately owned central bank promised to keep short-term interest rates at rock bottom until late 2014, extending the date from its previous pledge to keep rates down until mid-2013.

Also bullish for gold — and bearish for the U.S. dollar, of course — was Fed boss Ben “helicopter” Bernanke’s veiled threat to unleash more so-called “Quantitative Easing,” known in simpler terms as creating new “money” out of thin air and pumping it into the economy by purchasing bonds. The dollar immediately took a hit against other major currencies.

“The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don’t get improvement in the pace of recovery and a normalization of inflation,” Bernanke said during a quarterly news conference after the Fed’s report was released. Analysts and central bank critics, already concerned about massive monetary “easing” in recent years, lambasted the idea that more money would solve the economic problems plaguing America.

“If the Federal Reserve thought the economy was improving, it wouldn’t need this artificial prop to keep sustaining it,” said Euro Pacific Capital head Peter Schiff, noting that wild money printing was helping to drive the nation and its economy off a cliff. “The President and the Federal Reserve are now conspiring to create a much bigger crisis.”

The Fed claimed it would be targeting a 2-percent rate of annual inflation for 2012. However, few analysts take the government’s “Consumer Price Index” (CPI) measure of inflation seriously — especially as Core CPI, one of the most frequently cited figures, omits price increases in key sectors like food and energy.

According to Schiff, the government’s claim based on CPI that inflation for 2011 was 3 percent is completely bogus. It was actually much higher, he said, noting that officials were using phony measures like the CPI to mask the true rate of inflation. And it is likely to be even higher in 2012 before eventually morphing into a full-blown currency and debt crisis in the coming years.

“The reason they have to keep [interest rates] so low is to artificially support a phony economy,” Schiff explained. “This economy is a disaster waiting to happen — the only thing standing between us and economic Armageddon is zero-percent interest rates.”

But it can’t go on forever, and the longer rates are kept so low, the worse the looming crisis will be. For now, Schiff, whose business trades gold and silver, said investors should protect their assets by purchasing precious metals “before the price goes any higher.”

An analysis by Bloomberg published on Wednesday showed that gold — which has increased every year for more than a decade — provided the best return on investment over the last five years when adjusted for volatility. And heavy-hitting financial firms cited in the report including Goldman Sachs and Morgan Stanley are forecasting that gold prices will keep rising to around $2,000 in 2012 or 2013.

“People are still very under-invested in gold, and so there is a huge scope of that increasing,” explained UniCredit analyst Jochen Hitzfeld, the most accurate precious-metals forecaster tracked by Bloomberg over the past two years. Other experts noted that gold is widely and accurately perceived as a safe-haven in times of economic turmoil.

While gold prices have been extraordinarily volatile — spot prices hit $1,923 in September before crashing to $1,523 by the end of 2011 — the longer-term rally has so far been relatively consistent over the past decade. Just 10 years ago, gold was worth less than $300 per ounce.

Silver, which has also seen drastic price fluctuations, was less than $5 per ounce 10 years ago. In 2011, it surged to an all-time high of around $50 before dropping back down to about $33.35 today. The U.S. dollar, meanwhile, has not been doing so well — even when measured against other depreciating paper currencies.

Even billionaire investor George Soros, whose well-publicized sale of some 99 percent of his gold holdings during the first quarter of 2011 spooked precious-metals investors, has jumped back into the market. According to Securities and Exchange Commission (SEC) filings cited by Bloomberg, the hedge-fund manager had increased his stake in SPDR Gold Trust, an exchange-traded fund tracking gold prices, to almost 50,000 shares as of September 30.

Central banks around the world were also buying up multi-ton quantities of gold bullion, according to data cited in news reports. And the trend shows no signs of slowing down.

In other bullish news for the precious metal, unconfirmed reports indicate India has started purchasing oil from Iran using gold rather than U.S. dollars. China could follow, too, according to news reports.

“It shows the exodus from the dollar is gaining speed,” noted precious-metals and currency trader Simit Patel on the investment analysis site Seeking Alpha. “With the major economies of the world facing $7.6 trillion in bond payments due this year, I think the tipping point for a shift out of dollars and into a new monetary system backed by gold is not as far off as it may seem.”

With the steep drop in prices during the last few months of 2011, some analysts and traders were reluctant to get back in the precious-metals market before the appearance of a solid bottom had solidified. But the big banks and respected analysts are forecasting that as long as the fundamentals — out-of-control money printing, sovereign-debt crises, wild government spending, and more — remain the same, gold and silver prices could see massive gains in 2012.

Source: New American.

The Federal Reserve on Wednesday said it will likely not raise interest rates until at least late 2014, much later than it had said previously, as it nurses a still-sluggish economic recovery.

The Fed, after a two-day policy meeting, repeated its view that the economy faces “significant downside risks” but it offered little to suggest it was close to launching another round of bond-buying to prop up growth.

It did say, however, that it would maintain a “highly accommodative” monetary policy stance. Economic conditions “are likely to warrant exceptionally low levels for the federal funds rateat least through late 2014,” the central bank said in a statement.

Many investors had expected the Fed to push its expectations for the first rate hike into 2014, but few had thought it would be late in the year. After every previous policy meeting dating back to August, the Fed had said rates were not likely to rise until mid-2013.

The central bank also appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers’ goals. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations.

U.S. government debt prices rose sharply after the announcement, pushing long-term interest rates lower, while the dollar fell against the euro. Stocks prices moved into positive territory.

Aside from the 2014 rate pledge, the Fed’s statement hewed closely to its last policy pronouncement in mid-December.

It described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices. In a slight shift, it acknowledged signs that business investment has slowed.

“I think what they are seeing is that the rate of growth is not sufficient to bring down the unemployment rate,” said Brian Dolan, chief strategist at FOREX.com in Bedminster, New Jersey.

Richmond Federal Reserve Bank President Jeffrey Lacker, an inflation hawk who rotated into a voting seat this year, dissented against the decision. He preferred to omit the description of the time period for ultra-low rates.

NEW TRANSPARENCY STEPS

As part of an effort to provide more insight on its thinking to financial markets and the public, the Fed later on Wednesday will begin publishing individual policymakers’ projections for the appropriate path of the benchmark federal funds rate. That release is scheduled for 2 p.m. (1900 GMT)

In response to the deepest recession in generations, the Fed slashed the overnight federal funds rate to near zero in December 2008. It has also more than tripled the size of its balance sheet to around $2.9 trillion through two separate bond purchase programs.

The policy is credited with having prevented an even more devastating downturn, but it has been insufficient to bring unemployment down to levels considered normal during good economic times.

In December, the U.S. jobless rate stood at 8.5 percent, and some 13 million Americans were still actively looking for work but could not find it.

While forecasters expect the U.S. economy grew at a 3 percent annual rate in the last three months of 2011, they look for growth of just around 2 percent this year.

Fed officials appear likely to bide their time in determining whether more monetary stimulus is needed. Many economists expect they will eventually decide on another spurt of Fed bond buying – probably one focused on mortgage debt.

There is a possibility officials will announce an explicit inflation target later on Wednesday, perhaps a hard marker of 2 percent or a range of 2 percent or a bit below. The Fed has been debating a statement on its long-run goals, but whether one will be released is unclear.

Analysts said the Fed’s shift in communications will put an even greater emphasis on a post-meeting news conference by Fed Chairman Ben Bernanke set for 2:15 p.m. (1915 GMT).

“The chairman is likely to remain non-committal to any additional policy easing, but he is likely to reinforce the Fed’s commitment to ‘review the size and composition of its securities holdings’ and be ‘prepared to adjust those holdings as appropriate,’” said Millan Mulraine, senior macro strategist at TD Securities.

Source: Yahoo News.

*Taken from the Daily Mail. Lots of pics at link.

Hundreds of Brazilian soldiers and police officers have swooped on a crime-ridden slum this morning as part of an operation to rid Rio De Janeiro of gangs ahead of the 2014 World Cup.

A group of marines, backed by helicopters and armoured vehicles, were joined by around 800 armed police and other officers during the raid in the Mangueria neighbourhood, one of Rio de Janeiro’s most populous neighborhoods.

The shantytown is a key part of the city as the Maracana stadium located nearby will host both the 2014 World Cup final and the opening and closing ceremonies of the 2016 Olympic Games.

The operation is an attempt to drive from the area the drug traffickers that have held sway there for decades, Brazilian officials said.

CONTINUED..

*Taken from Roll Call. Written by Stuart Rothenberg.

Just over four years ago I wrote in this space that Democrats not only didn’t have to worry about losing their Senate majority in ’08, they needed to set their sights on 60 seats in 2010 because a “filibuster-proof majority would change the rules of the game on Capitol Hill.”

Well, Democrats did get to 60 seats, but they did it well before I thought that was likely. Pennsylvania Sen. Arlen Specter’s party switch in April 2009 and Sen. Al Franken’s (D-Minn.) seating in July of that year ensured Democrats would hit the magic 60 mark, giving the party six months of a supermajority that Congressional leaders and the White House used to pass health care reform.

Now, the tables have turned.

Republican won 24 of the 37 Senate contests last year, giving them a head start not only on winning a Senate majority in 2012 but possibly winning a 60-seat supermajority two years later.

They will need to net 26 or 27 of the remaining 67 contests over the next two cycles to win a majority in 2014, or 36 of the next 67 to get to 60 seats during the next midterm elections.

The Senate is always a different kind of numbers game than the House. With unbalanced classes, Senate control — to say nothing about a filibuster-proof majority — hinges on which party has more seats up for election in a particular election cycle.

When one of the political parties has a huge election night, as Republicans did last year, it automatically gives that party an opportunity to take over the Senate, whether two years later or four.

The 2012 Senate class includes 23 Democrats and only 10 Republicans, and the stunning imbalance means that Democrats will be on the defensive throughout the cycle unless the political environment shifts dramatically to their party.

That’s possible, of course, especially if the proposed budget offered by House Budget ChairmanPaul Ryan (Wis.) alienates swing voters and seniors, putting GOP House and Senate candidates on the defensive for the rest of the cycle. But, at least early in this election cycle, the raw numbers look very challenging for Democratic Senate strategists.

At this point, at least five Democratic Senate seats are at great risk. Retiring Sen. Kent Conrad’s North Dakota seat is as good as gone. Ben Nelson’s Nebraska seat is more competitive, of course, but Democratic chances of retaining it in 2012 may depend on a nasty GOP primary producing a weak Republican nominee.

The Montana race, pitting incumbent Democrat Jon Tester against Republican Rep. Denny Rehberg, looks no better than even money for Tester, who won narrowly because of the huge Democratic wave in 2006.

Rising Obama popularity would help Tester’s chances, but Democrats probably need to be successful in their effort to paint Rehberg as an ethics basket case if they are to retain the seat next year.

The Missouri Senate race has changed significantly in the past few weeks. Sen. Claire McCaskillonce appeared to be a savvy, well-positioned Democrat who was likely to have a competitive race simply because of the competitiveness of her state.

But recent revelations about a possible conflict of interest and unpaid taxes — issues that she used to attack a former primary opponent and that undermine her message of transparency and integrity — increase her vulnerability greatly.

Democrats note that one of McCaskill’s possible general election opponents, former state Treasurer Sarah Steelman (R), has her own problems, but the possible candidacy of Rep. Todd Akin (R) adds another dose of uncertainty to McCaskill’s prospects.

Virginia surely is a tossup, featuring two middleweight candidates — former Gov. Tim Kaine (D) and former Sen. George Allen (R) — who a few years ago would have been classified as political heavyweights.

Other than Massachusetts, where special election winner Sen. Scott Brown (R) will face a test because of his party, the Democrats’ best chance for a Senate takeover is Nevada, an open seat that looked more vulnerable when incumbent John Ensign (R) was still in the contest.

Even now, a GOP gain of 2 to 4 seats looks likely, with larger gains possible if Florida, New Mexico, Michigan, Ohio or others come into play.

Like this cycle’s Senate class, the 2014 class is also seriously unbalanced, with 20 Democratic seats and only 13 Republicans slated to be up that year.

Even worse for Democrats, the geography of that class is a particular problem, with Democratic Senators from South Dakota (Tim Johnson), Montana (Max Baucus), Louisiana (Mary Landrieu), Alaska (Mark Begich), New Hampshire (Jeanne Shaheen) and North Carolina (Kay Hagan) scheduled to face voters then.

For those Democrats, the re-election of President Barack Obama in 2012 would be a mixed blessing. It would keep a Democrat, with a veto pen, in the White House for four more years, but it would also create a so-called Six-Year Itch election in 2014, increasing the risk for Democratic Senators up for re-election then.

Second midterm elections are not always a disaster for a sitting president’s party — the Senate was a draw in 1998 and Democrats gained a handful of House seats in Bill Clinton’s second midterm — but they more often than not result in considerable gains for the party not holding the White House.

Recent Six-Year Itch losses include six Senate seats and 30 House seats by Republicans in 2006 (George W. Bush), eight Senate seats but only five House seats in 1986 (Ronald Reagan) and thirteen Senate seats and 47 House seats in 1958 (Dwight Eisenhower).

All of this means both short-term and longer-term concern for Senate Democrats, who will need a mood change in the electorate to feel more secure in 2012 and even 2014.