Investors Flee to Gold For Safety as Economy is in Shambles

Very few people seem willing to admit the U.S. and global economy is under extreme pressure. Investors know it though, and fled to gold as a safe haven today, pushing gold futures up to their highest level in eight weeks.

The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.

Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.

Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.

This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.

Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.

The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.

Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.

What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?

Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.

Treasury Stake in Citigroup (NYSE:C) Being Sold by Morgan Stanley

Morgan Stanley Chosen to Sell Shares of Citigroup Held by Treasury Department

Yesterday the Treasury Department announced they will be selling their stake in Citigroup (NYSE:C) with the help of Morgan Stanley, rejecting an offer from Goldman Sachs (NYSE:GS) which offered to take care of the details for almost nothing.

In what I consider an odd concern from government officials, it was implied they didn't want to use Goldman Sachs in the deal because of the negative publicity surrounding them during the financial crisis.

My problem with that is the government should be doing things the right way (I know, I know), and to think in terms of public relations rather than efficiency and low expense is idiotic and irresponsible, but then we're talking about the government.

A spokeswoman for the Treasury said terms of the deal with Morgan Stanley will be released some time in the next two days.

The government plans to sell the common shares they hold in Citigroup at intervals rather than all at once.

Shareholders Sticking with Citigroup (NYSE:C)?

Citigroup and Treasury Selling Shares

We have the usual contradictions in a hyped stock in Citigroup (NYSE:C) as those like Dick Bove say it's time to buy and others are questioning whether shareholders should run from the stock now that the Treasury Department has said it's going to divest of their stake in common shares in the company in 2010.

The question is whether the sale of shares in the company will result in the price being knocked down for some time, or if the anticipated sales has already been priced into the stock.

The other concern is about the assets held in its specially-created Citi Holdings unit which exists to sell off the non-core or poorly performing assets. There's over $500 million held in that unit of the company, and until they're sold off, it lingers over the head of Citigroup.

Bove has stated he believe once the assets are divested and the company restructured, Citigroup should generate 70 cents a share in earnings.

As far as the government goes, it's an odd situation in that people consider the government holding onto the shares is a negative, the government selling them could dilute them, the government can sell them so they're considered strong, and the shares of Citigroup will be strong because the government says it is able to sell them.

Citigroup will remain a contradiction and anomaly for some time, and no matter what the many people say, it's very uncertain in the short- to mid-term where the company will head in share price, in my opinion.

Time to Buy Citigroup (NYSE:C) Says Dick Bove

Buy Citigroup now says Dick Bove

With the renewed commitment by the Treasury Department to divest of its stake in Citigroup (NYSE:C), and that action already being priced into the shares, Dick Bove says now is the time to buy Citigroup.

Bove has also raised his continually increasing target in the company from $7 to $8.50, and has upgraded the stock to a buy.

He doesn't think there will be a major upheaval from the sale of the shares by the Treasury because of the huge number of shares being sold on a daily basis, which should keep it from being overly diluted.

As far as the fundamentals go, Bove believes Citigroup can generate 70 cents a share in profits once the restructuring period is over.

Treasury Department Selling Citigroup (NYSE:C) Shares

Treasury Free to Sell Citigroup Shares

The Treasury Department can now freely sell the 7.7 billion shares it owns in Citigroup (NYSE:C) after the "lockup" expired on Wednesday.

Now that the shares in Citigroup has skyrocketed over the last several weeks, holding at over $4 a share for now, it would be a good time for the Treasury to sell and realize gains of up to $6.2 billion, depending on how and when they are unloaded.

This would be good for Citigroup as well, as it would probably get another good increase in its share price when the government is no longer a major owner in the business. Shareholders and investors have been waiting for that to happen in order to have a better idea on where the company will go without government interference.

The original investment in city by the government was $25 billion, and today it would be worth over $31 billion if it was sold.

Even with this scenario, it is expected the selling of shares in Citigroup will be in chunks over the next year or so, which as far as return on investment goes, could be good or bad.

Dow Jones in Largest Point Gain in History

The Dow Jones Industrial Average surged up by 936 points Monday, the largest gain in the history of the index. As far as percentage goes, the 11 percent upward move was the second-largest in the history of the Dow, and the largest since March, 1933.

Much of the positive move is credited to the Treasury Department giving out some details on the proposed "rescue plan." Of course the horrible performance of the Dow last week guaranteed there would be a significant rebound soon. Still, it was an impressive move by any standard of measure.

Another significant factor in the record-breaking upswing was early announcements that banks in Europe would start investing in troubled banks as well. The groundswell spread from there.

The Dow closed the session at 9387.61. Also enjoying he up day was the S&P500 Index, which swelled by 11.6 percent, ending the day up by 104 points.

The Nasdaq also moved up at similar levels, finishing the day up 195 point, or 11.8 percent.

While everyone was exuberant over the news, we do have to realize that the market is going to go up and down in large swings over the near term, and will have to get used to that as a temporary way of economic life.