The U.S. government’s interest expense fell to the lowest in seven years as yields on Treasury debt dropped to records even as debt soared beyond $16 trillion for the first time, aided by a one-time accounting change.

The U.S. paid $359.8 billion in interest on $16.1 trillion of debt in the 12 months ended Sept. 30, according to the Treasury Department’s TreasuryDirect website. That’s down from $454.4 billion for the 2011 fiscal year and the least since $352.4 billion in fiscal 2005.

Borrowing costs for the U.S. declined as investors sought the safety and liquidity of U.S. government securities as the European sovereign-debt crisis worsened, employment growth stalled and Federal Reserve policy makers sought to bolster the economy by extending the average maturity of the central bank’s Treasury holdings. The lower borrowing costs have helped the administration of President Barack Obama as the U.S. has run the only four budget deficits exceeding $1 trillion in the country’s history as it has struggled to recover from the worst financial crisis since the Great Depression.

This Bloomberg story showed up on their website early in the afternoon Eastern time yesterday...and I thank West Virginia reader Elliot Simon for bringing us our first story of the day. The link is here.

Erroneous trades that sent Kraft Foods Group Inc. up as much as 29 percent in the first minute of trading were canceled by exchanges, the latest incident to fuel scrutiny of the electronic infrastructure of U.S. markets.

The Nasdaq Stock Market and NYSE Arca broke trades in Kraft Foods Group Inc. at or above $47.82 executed in the first 60 seconds, the exchanges said in e-mailed statements. Kraft rose as much as 29 percent to $58.54 by 9:31 a.m. New York time, according to data compiled by Bloomberg. The stock ended the session down 1.2 percent at $44.87 as of 4 p.m.

“While it is difficult to say with any degree of certainty, it seems that this might be the case of mishandling a buy order through a ‘fat finger’ incorrect limit or using a far too aggressive order type or algo,” Mark Turner, head of U.S. sales trading at New York-based Instinet Inc., which accounts for almost 4 percent of daily U.S. equities volume, said in an e-mail. “In either case, the exchanges handled the error in accordance with their error guidelines.”

This is another Bloomberg story...this one from Wednesday...and I borrowed it from yesterday's edition of the King Report. The link is here.

Portugal will raise taxes across the board to ensure the country collects enough revenues to meet tough budget goals under its 78-billion-euro bailout, Finance Minister Vitor Gaspar said on Wednesday.

The country will raise income taxes to an average rate of 11.8 percent from 9.8 percent currently and slap a 4 percent income tax surcharge in 2013. It will also launch new taxes on capital and luxury property already this year, Gaspar told journalists.

He said the government will also propose a tax on financial transactions and continue to cut spending, adding that in 2013 all additional austerity measures will amount to 3 percent of gross domestic product.

The above three paragraphs are all there is to this Reuters story that was posted on their website on Wednesday...and it's another article I borrowed from yesterday's King Report. The link to the hard copy is here.

Fear of escalating demands by Germany, Finland and Holland is a key reason why Spanish premier Mariano Rajoy continues to drag his feet on a full sovereign bail-out.

Spain's refusal to act has frozen the eurozone rescue machinery and begun to rattle markets. The European Central Bank will not buy Spanish bonds until the country requests aid from the European Stability Mechanism (ESM) and signs a "Memorandum" giving up fiscal sovereignty.

Finance minister Luis de Guindos told Spain's parliament Wednesday that there will be no bail-out until the terms are clear. "The government will take the best decision for Spain and its European allies when it knows all the details," he said.

Finland has become the greatest worry. "Rajoy is terrified that the Finns will say `No' after he has requested a rescue," said a Spanish economist with close ties to the Rajoy team.

This Ambrose Evans-Pritchard offering was posted on The Telegraph's website on Wednesday evening...and I thank Roy Stephens for sharing it with us. The link is here.

The International Monetary Fund's chief economist has warned that the global economy will take a decade to recover from the financial crisis as the latest snapshot of the UK economy suggested that growth in the third quarter will be at best anemic.

Olivier Blanchard said he feared the eurozone crisis, debt problems in Japan and the US, and a slowdown in China meant that the world economy would not be in good shape until at least 2018. "It's not yet a lost decade," he said. "But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.

Blanchard made his comments on a Hungarian website Portfolio.hu ahead of the IMF meeting next week in Tokyo. Germany is expected to defend its handling of Europe's debt problems at the meeting, but Blanchard said there was more that Europe's largest economy could do to support Spain and other struggling eurozone nations. In particular, he urged Berlin to accept a rise in inflation and wages that would make it less competitive with its trading partners.

What is this guy smoking? This story showed up the guardian.co.uk Internet site on Wednesday...and I thank reader David Ball for sending it. The link is here.

Food prices around the world jumped by 1.4pc in September to a six-month high, the United Nations said, as the severe US drought cut grain harvests.

The UN’s index tracking a basket of food commodities rose 3 points last month to a level of 216 points, after staying steady for two months.

The move in the index, produced by the UN’s Food and Agriculture Organisation (FAO), leaves it 22 points below its all-time peak of 238 in February 2011, and 9 points off its recent high in September last year.

Further increases in food prices are expected as the impact of the US drought, the worst the country has seen in half a century, continues to be felt through the supply chain.

This article appeared on the telegraph.co.uk Internet site yesterday afternoon BST...and is another Roy Stephens offering. The link is here.

As we have been actively warning for a few days now (Iran's Misery Index and here) - and has now become mainstream media-critical - Iran is accelerating toward significant regime volatility... it seems our note on hyperinflationary case studies and the 'blame' and 'denial' extension is particularly timely...

Submitted by Steve H. Hanke via Cato-at-Liberty,

Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people. When a currency collapses, you can be certain that other economic metrics are moving in a negative direction, too. Indeed, using new data from Iran’s foreign-exchange black market, I estimate that Iran’s monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation.

This short story, with an excellent chart embedded in it, was posted over at the Zero Hedge Internet site late on Wednesday afternoon...and I thank Casey Research's Bud Conrad for finding it for us. It's worth the read...and the link is here.

In a sign of new Iranian flexibility over on-going nuclear negotiations, a top Iranian official has revealed that Tehran is willing to consider a cap on 5% uranium enrichment and adopt the intrusive Additional Protocol of the nuclear Non-Proliferation Treaty provided that sanctions on Iran are dropped.

An Iranian official who told this author on the condition of anonymity also indicated that Iran has received and is seriously considering an official US request for a telephone hotline in respect to potential accidents in Persian Gulf, and may consent to an "incident at sea agreement" to demonstrate Iran's intention to de-escalate regional tensions.

Representatives of the "5 +1" nations (ie, UN Security Council's permanent members plus Germany) met on the sideline of the General Assembly summit last week and agreed to hold another round of multilateral talks with Iran. This comes at a time of increased Israeli pressure to force the issue into a military scenario, in light of Prime Minister Benjamin Netanyahu's UN speech, where he used a cartoon image of a ticking bomb to draw a "red line" on 90% Iranian enrichment - much to the surprise of many pundits in Iran and abroad who have interpreted this as a "green light" for Iranian enrichment below that line.

This is worth reading as well, even if you're not a "New Great Game" enthusiast. The story was posted on the Asia Times Internet site in Hong Kong early on their Friday morning...and I thank Roy Stephens for sharing it with us. The link is here.

"It's our currency and your problem," U.S. Treasury Secretary John Connally famously said of the dollar in 1971.

More than 40 years later, China is doing something about it.

Fed up with what it sees as Washington's malign neglect of the dollar, China is busily promoting the cross-border use of its own currency, the yuan, also known as the renminbi, in trade and investment.

The aim is both narrowly commercial - to reduce transaction costs for Chinese exporters and importers - and sweepingly strategic.

Displacing the dollar, Beijing says, will reduce volatility in oil and commodity prices and belatedly erode the ‘exorbitant privilege' the United States enjoys as the issuer of the reserve currency at the heart of a post-war international financial architecture it now sees as hopelessly outmoded.

This Reuters piece was filed from Bahrian mid-morning New York time...and is a must read in my opinion. I thank Richard Craggs for bringing it to our attention...and the link is here.

First up is Rick Santelli. His blog is titled "Gold Headed Higher as it's the Anti-Printing Trade". Now here's Citi analyst Tom Fitzpatrick...and it's headlined "What to Expect With Gold Assaulting $1,800 & Silver at $35". Lastly is Agnico-Eagle CEO Sean Boyd. His blog is headlined "A Game-Changer That Will Send Gold to $3,000".

The South African mine strikes, and associated intimidation of any who wish to return to work, appear to be continuing to spread - from platinum, to gold and now to other mining sectors as well.

Add Julius Malema, the firebrand populist former ANC youth wing leader to the fray with his anti-mining message calling for the mines to be made unmanageable, and his personal antagonism towards President Zuma and the strikes have indeed spread to the gold mining sector, and beyond. The industry leader, AngloGold Ashanti has had to cease work for the past two weeks at all its South African operations, while Gold Fields, the No.2 gold miner has had to shut down half of its flagship KDC mining complex. The latest gold miners to suffer are Gold One at its Ezulwini mine and Harmony at the Kusasalethu operation with the prospect of strikes spreading to the rest of the gold mines - and there are now reports of interruptions at Petra's Kimberley diamond mining operations, at Coal of Africa's Mooiplats coal mine and at Kumba's big Sishen iron ore mine (the latter said that initially production had not been affected, but has since shut the mine down as the strikers blockaded access to the pit). Altogether some 22 mines have shut down because of the wave of strikes.

This rather longish piece by Mineweb's General Manager and Editorial Director, Lawrence [Lawrie] Williams is a must read for sure...and this item is the first of four in a row from Manitoba reader Ulrike Marx. The link is here.

* Toyota's Durban plant hit by four-day walkout

* Three more Amplats mines closed; police fire teargas

* Kumba Iron Ore stops output at giant Sishen pit

* Talks to end truck drivers' strike collapse

CAPE TOWN, Oct 4 (Reuters) - Toyota Motor Corp said it had been forced to shut its South African car factory for four days because of an illegal pay strike, the first sign of wildcat mine stoppages spreading into other parts of Africa's biggest economy.

Trade union leaders at the Japanese car giant's Durban plant said workers would return on Friday after winning a 5.4 percent pay rise inspired in part by a hefty increase won last month by strikers at Lonmin's Marikana platinum mine.

This Reuters story was filed from Cape Town at 7:55 p.m. GMT on Thursday evening in London...and another tip of the hat goes to Ulrike for this item as well. The link is here.

"We want to tell everybody out there we respect our agreements... and we have not brought our negotiations forward," chamber senior executive Elize Strydom said on local radio station, SAFM on Thursday.

She said a task team had been created to look at matters such as rock drillers' salaries and basic wages. Its work was expected to be completed at the end of October.

Asked whether negotiations set for next year were being brought forward she replied: "Absolutely not".

This story was filed from Johannesburg yesterday...and is posted on the mineweb.com Internet site. It's the third offering in a row from Ulrike Marx...and the link is here.

The Chamber of Mines has issued a one page framework document setting out an agreement between itself, Cosatu, NUM and Gold companies wherein all parties have committed to review the appropriate entry level wages and job categories potential.

"Essentially this means a job re-grading exercise" reads the amended document.

The compromise meets the demands by mining company bosses that the existing wage agreements are kept intact as they were only due to expire next year June whilst also allowing the unions leeway to argue for wage increases or the upgrading of the lowest level workers.

It's obvious that the situation is very fluid in S.A. at the moment...and you just about need a program to keep up with the changes. This mineweb.com story was filed from Johannesburg late on Thursday evening local time...and I thank Ulrike Marx for her fourth story in a row. The link is here.

Gold could hit an all-time high of $2,400 by next summer, driven up by a third round of quantitative easing in the US. The first round of QE in February 2009 caused the gold price to increase rapidly from a base of $900/oz – from which it has never looked back.

BlackRock fund manager Evy Hambro who invests in the precious metal and gold equities, predicted that QE3 could result in the gold price hitting US$2,400/oz by the middle of next summer.

In his gold report this week he said: "The gold chart has turned decidedly bullish with the 50-day moving average rising above the 200-day moving average. The last time this happened was in February 2009, which interestingly was shortly after the implementation of QE1. Then, gold was $900/oz and never looked back. Should we witness a similar rally, prices would be taken to $2,400/oz by midsummer next year – and $1,760/oz would be the new floor."

The International Monetary Fund released data this week which revealed central banks continue to buy gold with both South Korea and Paraguay recently adding to their reserves.

This story showed up on the telegraph.co.uk website mid-afternoon BST..and I thank Roy Stephens for digging it up on our behalf. I consider it a must read...and the link is here.

Gold traders are the most bullish in three weeks as investors’ bullion holdings expanded to a record after central banks pledged to do more to spur economic growth.

Twenty of 32 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral. Investors are holding the most metal ever through gold-backed exchange-traded products after buying 85.4 metric tons last month, the most since July 2011. Hedge funds’ bets on a rally are the biggest in seven months, U.S. Commodity Futures Trading Commission data show.

“More and more people are going to anticipate inflation in the future because of quantitative easing and the amount of debt we’ve got in the system,” said Frederique Dubrion, the Geneva- based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “We can print whatever amount of money we need, but you can’t print gold. It’s nobody’s liability, it’s a hard currency.”

Another very positive gold story from the main stream press...this one from Bloomberg late yesterday afternoon...and I thank Elliot Simon for his second and final offering in today's column. The link is here.

This very short 1:15 minute video clip was posted on the Bloomberg website yesterday...and gives you a quick look at the world's five largest gold mines by output. I thank Washington state reader S.A. for bringing this item to my attention...and now to yours. The link is here.

Capping the loan-to-value ratio for gold loan NBFCs amounts to overkill by the Reserve Bank of India.

Back in March this year, when the Reserve Bank of India (RBI) stepped in with a cap of 60 per cent on the loan-to-value (LTV) ratio for gold loan non-banking financial companies (NBFCs), it said it was acting to pre-empt systemic risks and to safeguard public funds. The verdict was that the gold loan companies depended too much on public funds and their focus on a single product made them vulnerable to concentration risks. Moreover, there was unease about the big players in the business growing too fast, and fears of a bubble building up in the sector.

As with all major policy changes, a final judgment is best reserved until the consequences, intended and unintended, have played out fully. However, six months down the line, the initial assessment is not promising, pointing as it does to an element of overkill.

As widely noted in the media response, the cap on LTV reduces the usefulness of gold as a financial asset that can be used in times of need. In fact, it hurts the poor who are now forced to borrow from the unorganised sector on more adverse terms. The irony that RBI, of all institutions, should work to give a new lease of life to India’s old-school pawnbrokers and moneylenders did not go unnoticed. Indeed, something similar is already playing out in Andhra Pradesh where media reports speak of usurious moneylenders back in business with a bang now that microfinance players have been silenced.

This is obviously the Reserve Bank of India's attempt to kill gold as a financial asset. But in light of what's currently going on in the gold world at the moment, it's my opinion that this will not end in the RBI's favour. We'll see.

This story was posted on the business-standard.com website just after midnight on Thursday...India Standard Time. I thank Ulrike Marx for her final offering in today's column...and the link is here.

GoldSilverWorlds had the honour to discuss some important topics related to precious metals with Nick Barisheff, CEO of Bullion Management Group Inc. and author of the book “$10,000 Gold: Why Gold’s Inevitable Rise is the Investor’s Safe Haven” which will be released later this year...and is available now for pre-order on Amazon.com. This article is the first one in a five part series. The topics that we covered: the current transfer of wealth from paper to hard assets (primarily gold & silver), ongoing currency destruction, tips for low risk-high reward investing, and the ignorance of mainstream media towards gold’s huge advance.

Today’s discussion is based on the primary trend that started at the beginning of this millennium. The fundamental shift that has been taking place since then was the creation of value through paper assets shifting in a gradual way to hard assets, primarily (but not only) gold and silver. Part of the current ongoing dollar devaluation is caused by this disparity between financial assets and gold. Nick Barisheff gave with these rounded numbers to create a high level picture of the scale of the paper asset market versus gold. The market for financial assets should be worth approximately $250 trillion. It includes mortgage bonds, equities, treasury bills and related financial instruments. It contains pure paper assets and does not include real estate or derivatives. Against that $250 trillion stands a nominal value of the gold market of around $4 trillion.

Half of the gold market is owned by Central Banks and half is privately owned. Central Banks account for approximately 500 tonnes gold purchases per year (figures are based on the past couple of years). The gold owned by private hands, is held by a relatively small number of very wealthy families (who mostly hold it for generations). The effect of the above situation on the gold market is that both Central Banks (who became net buyers in 2008 and who are not selling their gold) and the vast majority of privately held bullion is not for sale at any price. So all you’ve got is new mine supply to meet the upcoming [investment] demand. Imagine what happens if you get only a few percentage points move out of the $250 trillion paper market in an attempt to buy gold. Indeed, the only adjustable number in such a situation is the price of gold.

This essay was posted over at the goldsilverworlds.com Internet site on Thursday...and is a must read for sure. The link is here.