A Melman Minute By: Leonard Melman   NOTE: In order to complete Mr. Melman's forthcoming book on the essential fundamentals of the developing international financial crisis and its relationship to gold and silver, new "Melman Minutes" will be posted only three times per week, each Monday, Wednesday and Friday. Since the work has been expanded to include potential solutions to the growing list of seemingly insoluble dilemmas, the working title of the book has been revised to 'REVERSING THE WAY IN!"   March 29, 2010 PERSONAL NOTE:  Regrettably, this morning's "Melman Minute" will have to be somewhat abbreviated, but for the best of reasons.  Our forthcoming book, "Reversing the Way In", is now virtually complete and we have promised our technical team that the final script will be forwarded to their attention this afternoon.  Following their editorial review, the text will be prepared for publishing and ordering details will be announced on this site as soon as possible.  That limits our time this morning, but we hope you would agree it is for the best of reasons. - - - - - On the international scene, terrorism - national or by groups - has suddenly become an important subject. First, as we reported this past Friday, a South Korean vessel was sunk in North Korean coastal waters in somewhat suspicious circumstances.  It has now been reported that 46 sailors perished and, as a result, border tensions between the North and South have risen sharply and South Korea's defense ministry has put their armed forces on alert.  North Korea has added to the state of uncertainty by accusing South Korea of provocative actions within the Demilitarized Zone and stated that such actions could no longer be tolerated. Then, just as we were waking up, we were hit by the news that suicidal terrorists had launched attacks against two Moscow subway stations, killing at least 35 people and injuring dozens more.  According to a Wall Street Journal report this morning, "...Russia's Federal Security Service said the preliminary investigation indicated the attacks were carried out by rebels from the North Caucasus Region where Islamic militancy has spread in recent years..." Terrorism simply will not go away.  It has become a fact of life which is adding an increasing level of risk in many directions. Speaking of risks, we ask that you note the appearance of the long term chart of the "TYX Index" which denotes interest rates on 30-year government bonds issued in America.  As can be clearly noted, those rates began a gradual decline from the eight percent area reached in late 1994, a movement which culminated in a panic drop to 2.5% at year-end 2008.  However, since that time, rates rallied sharply, consolidated in the 3.9 - 4.8% area and now appear poised to break upward from their long-descending pattern. The risks to the American and world economies, should long term interest rates begin to rise powerfully, can hardly be over-stated.  Mortgage rates are dependent upon the direction of these rates and, should they break out sharply to the upside, there would likely be a profoundly negative impact on real estate markets.  Even more threatening, if the entire interest rate structure begins to rise sharply, government financing of enormous debt would become ever-more expensive, driving deficits and debt levels ever-higher, thereby likely compounding the underlying problems. As we see things, the important chart resistance levels for the TYX Index are 4.8%, 5.0%, 5.5% and 6.0%.  Should rates exceed these levels, it is our opinion that all manner of "red warning flags" will be flying high. Markets this morning show gold and silver moving strongly higher, with gold having recaptured virtually all of last week's losses.  The yellow metal now once again stands above $1,110 while silver has regained the $17.35 per ounce mark.  Base metals are showing particularly strong gains with copper leading the way, now quoted above $3.50 per pound for the first time since 2008.  Mining share indexes are ahead by an average of 1.5%, crude oil is once again above $82 per barrel and both the Dow Industrials and Canada's TSX Index are each up about 50 points as of 9:40 AM PDT.  The U.S. Dollar is slightly lower in currency trading. - - - - - All quotes U.S. Dollars unless otherwise noted. Next "Melman Minute" scheduled for Wednesday, March 31 when we plan to take a delayed look at the growing anger regarding civil service salaries and benefits as well as the implications of a sharply rising copper price.        ◄  Previous Minute                                                                                                        Next Minute  ►
		DISCLAIMER The information presented above is based on data which we believe to be from reliable sources, but the accuracy of which cannot be guaranteed.  Any opinions or predictions contained herein are those of the editor and are likewise offered also for information purposes only. Any investment decisions should be made only following consultation with registered investment professionals.