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My Dear Extended Family,
Please make an effort to stay balanced. Greed is a condition of lack of balance similar to fear. Fear is being fanned from within the gold community as much or more than from outside. When people who know gold is seriously under priced talk temporary bear, they kick good people when they are down. When I last discussed this with Dean Harry Schultz he made a great comment about the leading gold reviewers. Harry said "You cannot herd cats."
We can never make good discussions when we are out of balance. If I can be of any assistance it is to bring you back to balance as you review your situation. The market manipulators depend on being able to unbalance you and the greatest tool they have is to supply credit to the margin junkies who live on the edge of greed. This helps them flash to fear faster than the weather changes on Mt. Washington.
The continued strokes in the fiat money markets, regardless of where, is bullish for gold. The problems of OTC derivative just brought into the headlines by Morgan is alive and well, guaranteeing QE to infinity. It is possible that due to the genus quant’s, many of these weapons of mass financial destruction have taken on lives out of the control of their manufacturers. How long the Fed wants to stare down the markets is limited in time in a election year. QE is non-economic buying of US treasuries. They are bought to create a rate by government.
Austerity has exploded in the face of politics in the EU. That always results in changing politicians such as in France and Greece. The recovery in US economic statistics is running thin. That will cause more demand for liquidity especially in this election year as it is liquidity that floats all boats, especially the wishes of the want-to-again-be president.
The Fed has never failed a sitting administration in its history. The Fed is not going to fail the sitting administration in this election year. The assumed strength in the US dollar is a product only of the mirror image of weaker euro. The US dollar is not going to purchase more of anything US when currency induced cost push inflation is alive and well. The USDX is an antiquated index in its weights and measures.
You must make your decision in present time, neither fearful or greed-ful of the future. Look at every factor of gold and list them as bullish or bearish.
My decision is to forge ahead.
Sales of gold or gold shares should only occur when there is a clear and present need to pay bills with no other alternative. Your sales should not be made in the unbalanced fear of the bear raids fundamentally certain to fail in both gold shares as well as gold itself.
Respectfully,
Jim
 Dear CIGAs,
I will be speaking at the following event tomorrow in New York City.
Gathering and registration begins at 3:00 in Lincoln Room
Annual CMRE Spring Dinner – May 17, 2012 The Union League Club, 38 East 37th Street
New York City, NY
3:45 Bob Hoye, Financial Historian
A Preface -Political and Financial Reform
Challenges to America and Europe
Financial markets and political institutions have been corrupted to serve another experiment in authoritarian government. There is an old saying in physics that "If you keep your data base short enough it will fit your theory". This allows an impaired intellectualism that loves and promotes central planning, no matter how shoddy the record. At one time the thinking classes admired Socrates point that
"The unexamined life is not worth living".
Ambitious intellectuals from Keynes to Marx have corrupted this to
"The un-coerced life is not worth living."
Session I: 4:00 – 5:45
Money* and the Corporate State
Walker Todd – Session Chairman
Theme of the session as viewed by Walker F. Todd relates to Aaron Task’s article quoting Robert Schiller’s new book Finance and the Good Society…”This time in history will be remembered as a time financial capitalism took over the world…A time when emerging countries became developed.” Task quotes Shiller as calling for robust regulatory regime, “ultimately you have to have morals and principles…Regulation is part of the picture.
Shiller: “our jobs situation is changing so fast because of IT but that doesn’t mean it’s finance that’s doing it…Today, most people see IT as improving their lives….Meanwhile, many see finance precisely as the ‘great vampire squid wrapped around the face of humanity’, as Matt Taibbi famously described Goldman Sachs.”
Walker Todd asks, can a society exist if the property rights of the great majority constantly are put at risk by the unnecessary gaming activities of the few? Does the majority have a moral duty or legal obligation to pay off the losing bets of the few? Can property rights be built on a purely transactional basis governed by mathematical modeling instead of a relationship basis with enforceable contracts lasting longer than a single day (or a single moment)? At least we now know the direction in which Wall Street would like to take us. Will we let it do so?
Speakers
Frederick Sheehan, author Panderer to Power: How did we get here?
Discussant: William J. Bergman, Money & Power: The Chicken or the Egg?” Francine McKenna: The MF Global story
Discussant: Bill Rochelle, Bankruptcy Law In Crisis
*Recalling Justice McReynolds: ”Loss of reputation for honorable dealing will bring us unending humiliation. The impending legal and moral chaos is appalling.”
5:45 – 6:00 Recess 6:00 – Dinner is Served
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Session II: 7:00 – 8:00
Chairman Daniel Oliver Jr. founder Myrmikan Capital, LLC Introduction of Honored Guests
HSH Prince Michael of Liechtenstein and HSH Princess Hildegard of Liechtenstein
The Hon. J. William Middendorf II and Prof. Edwin Vieira Presentation of the CMRE Award in recognition of Prince Michael’s Achievements in Economic Education
Address by Prince Michael Session III: 8:00 – 8:45
The Wisdom of Jim Sinclair:
A Session of Questions and Answers
Chris Powell, CMRE Member, Secretary, GATA, Chairman
“Locked and loaded, QE to infinity, which is debt monetization on steroids
because you have no clue how terrible the wrath of the collapsed 2008-2009 OTC WMD derivatives still are. The collapse of 2013 – 2015 will be a horror to behold.” — Jim Sinclair’s Mineset, April 21, 2012
Session IV 8:45 – 9:45 PM
What is to be Done?
Chairman Howard Segermark
Paul Brodsky, QB Asset Management – (QBAMCO): Money and Society
Thomas Selgas, Advisor to States for constitutional legal money
The States and their Power to restore sound money.
Edwin Vieira, Jr. Lawyer, Author of major books on money and the law
The American System or the Corporative State?
“The founders, after all, were eminently practical men interested in results not simply rhetoric. They knew that the economic categories, “wealth,” “capital,” “income,” and “property” in general consist of money, are valued in money, or are transferred by individuals by the use of money. Therefore, they made free market money—silver and gold—the only official money of the United States. Today, we know that “political money” in the hands of a central power is the precursor of and support for fascism in all things. If that does not tell us what needs to be done, nothing will.” – Edwin Vieira
The PowerPoint program by Tom Selgas will be shown in the library during gathering and after the program closes.
Program will close at 10:00. However, the Club will allow our informal use until 11:00 PM
Questions will follow each session Committee for Monetary Research & Education
10004 Greenwood Court, Charlotte, NC 28215 704/598-3717
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Goldman Sachs e-mails show illegal naked short selling was bank’s policy
Submitted by cpowell on 05:58AM ET Wednesday, May 16, 2012. Section: Daily Dispatches
Accidentally Released — and Incredibly Embarrassing — Documents Show How Goldman et al. Engaged in ‘Naked Short Selling’
By Matt Taibbi
Rolling Stone, New York
Tuesday, May 15, 2012
http://www.rollingstone.com/politics/blogs/taibblog/accidentally-release…
It doesn’t happen often, but sometimes God smiles on us. Last week he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.
The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time — primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.
Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.
More…
Jim Sinclair’s Commentary
There are problems growing. Members of the USD Union are not too different from those of the members of the European Union.
Needy States Use Housing Aid Cash to Plug Budgets
By SHAILA DEWAN
Published: May 15, 2012
Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.
In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.
The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.
The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.
More…
Priceless: How The Federal Reserve Bought The Economics Profession
The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed’s thrall, the economists missed it, too.
"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."
One critical way the Fed exerts control on academic economists is through its relationships with the field’s gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll — and the rest have been in the past.
The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."
More…
By Greg Hunter’s USAWatchdog.com
Dear CIGAs,
The $2 billion loss of JP Morgan in derivatives trading is signaling, once again, the enormous risks big banks take with taxpayer backing. All U.S. banks are covered by the FDIC, and if a loss is big enough, it could threaten the financial system just as it did in 2008. JP Morgan has $70 trillion in total derivative exposure. The entire world has a little more than $700 trillion in derivative exposure, and one bank has 10% of all the derivative exposure on the planet! If JP Morgan gets into trouble, it alone could cause systemic failure. Today, the FBI announced an investigation into the surprise $2 billion (or more) trading loss that happened last week at the bank. Reuters reported, “The probe was seen in some quarters as necessary, given the ongoing debate in Washington about bank regulation and reform, and one expert said it raised the level of concern around what happened. ‘The FBI looks for evidence of crimes and goes after people who it alleges are criminals. They want to send people to jail. The SEC pursues all sorts of wrongdoing, imposes fines and is half as scary as the FBI,’ said Erik Gordon, a professor in the law and business schools at the University of Michigan.” (Click here for the complete Reuters story.)
The Obama Administration has to be very worried about JP Morgan which has the biggest derivative exposure ($70.1 trillion) of American banks. The next 4 big U.S. banks after JP Morgan, also, have huge derivative exposure. Citibank has $52.1 trillion in total derivatives, Bank of America has $50.1 trillion, Goldman Sachs has 44.2 trillion and HSBC USA has $4.3 trillion in total derivatives. Combined, the five biggest commercial banks have $220.9 trillion in total derivative contracts. Weigh that against the combined assets of those same top five banks of just $4.8 trillion, and you get an eye popping 46 to 1 leverage! What could go wrong? (Click here for the OCC 4th quarter report.) Please remember, in 2009, the Financial Accounting Standards Board (FASB) changed how banks value assets such as real estate and mortgage-backed securities to whatever the institution thinks they’ll fetch in the future. These “assets” are not valued at what they would sell for today. I call this “government sanctioned accounting fraud.”
The other big banks are probably making some of the same bets in risky derivative as JP Morgan. The FBI opening up an investigation now is like closing the barn doors after all the livestock has run off. There have been zero criminal prosecutions of financial elites in the wake of the 2008 meltdown. (1,000 were successfully prosecuted after the S&L crisis in the 1990’s.) That is no accident. I think it’s because of Wall Street’s political connections, but also because the government has been worried about pushing too far for fear of crashing an already fragile financial system. Now, the FBI is going to start prosecuting Wall Street. Really? Why doesn’t the FBI investigate the Halloween bankruptcy of MF Global and the $1.6 billion in missing segregated client funds?
More…
Jim,
Regarding "Remember to Stay Balanced" today:
There’s an old gambling saying I heard from a guy from Brooklyn years ago.
"Scared money never wins."
I think that’s what you’re saying.
Regards,
CIGA Pete
Dear LT,
Your formula has been deadly accurate. Here is a growth area in the USA. We have money for wars but none for jobs or education to retrain the jobless!
Best,
CIGA BT
"Growing up here, things were good," says Blanco. "Now, you talk to people at the PTA, in the school cafeteria, and people are struggling. At the grocery store, people are going in only for what they need and not for what they want. You see people driving Lexuses and BMWs, and now they are in line at the food bank. Everyone is hurting. Everyone is looking for a job. We’re middle class in the suburbs, and now we’re hurting.”
More…
Japanese pension fund switches to gold
CIGA Eric
One of many that will switch into gold as a means of reducing its sovereign risk. Even a small global reallocation into gold will pressure already an already tight physical market. Thank god for those "bullion backed" paper ETFs. Without them, where would the new supply come from? Pension fund reallocation into gold are most likely replacing one risk (sovereign) with another (paper claims to gold).
Headline: Japanese pension fund switches to gold
Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies. Initially, the fund aims to keep about 1.5 per cent of its total assets of Y40bn ($500m) in bullion-backed exchange traded funds, according to chief investment officer Yoshisuke Kiguchi, who said he was diversifying into gold to “escape sovereign risk”.
The move into a non-yielding asset comes as funds in the world’s second-biggest pension market are under increasing pressure to meet promised payments, as domestic interest rates remain rooted near zero. This year, the first of Japan’s baby boomers turn 65, becoming eligible for payouts. Mr Kiguchi said the lack of yield was a concern for the fund’s investment committee, but he persuaded them that “from a very long-term point of view, gold may be one of the safe currencies”. He added that he had sold Australian dollars this month to meet his initial target allocation for gold for the fund, which has 20,000 members.
Source: ft.com
More…
Jim Sinclair’s Commentary
Courtesy of CIGA Stefan
Soros Talks Everyone Go Fetal, He Acts And No One Notices
CIGA Eric
Two things happen when Soros says anything remotely negative about gold. First, the headline and laptop experts organize to parse every word in order to support the "gold top" thesis. Second, the gold community immediately assumes the fetal position. Now, when Soros acts bullishly towards gold, a key distinction from talks, it’s generally the silent treatment from all.
This is how I like it. Seismic activity in gold and silver and a general loathing from all tend to coincide with excellent long-term entry points.
Headline: Paulson Holds to Gold ETFs in First Quarter, Profits as Prices Rise
Prominent hedge fund manager John Paulson held on to his ETF bullion holdings in the first quarter of this year, profiting from an early surge in gold prices before the market tanked, a regulatory filing by his company showed on Tuesday. It was the first time Paulson had retained his position in the SPDR Gold Trust [GLD 150.52 0.78 (+0.52%) ] since the second quarter of 2011. He slashed his holdings in the world’s largest gold ETF in two earlier quarters due to what analysts suspected were client redemptions. Other major fund managers with positions in SPDR Gold, including billionaire financier George Soros, also turned positive on the ETF during the first quarter, some raising their holdings sharply.
Source: cnbc.com
More…
Greeks Withdraw Nearly $1 Billion From Local Banks
CIGA Eric
The market is demanding liquidity while policies and politician counter with austerity. The mismatch in expectations is eroding confidence both on a domestic and international scale. Headline: Greeks Withdraw Nearly $1 Billion From Local Banks
Greek depositors withdrew 700 million euros ($900 million) from the nation’s local banks recently, said President Karolos Papoulias, though the exact timing of the transfer was unclear. Citing a conversation he had with Greek Central Bank Governor George Provopoulos, Papoulias said "that the strength of banks is very weak right now." Stocks declined following the report after being up earlier in the day. Attempts to form a government in Greece collapsed on Tuesday, jolting financial markets at the prospect that leftists opposed to the terms of an EU bailout could sweep to victory in a June election and nudge the euro zone crisis into a dangerous new phase The tremors from Greece, compounding worries about Spain’s debt-laden banking system, ended any honeymoon for new French President Francois Hollande, thrusting the growing risks to the euro zone to the top of the agenda for his first meeting with German Chancellor Angela Merkel hours after he took office.
Source: cnbc.com
More…
Jim,
Add this to the recent post about Soros, Pimco, Paulson, and Texas Teacher Retirement Fund buying gold. More than anything, these events are a harbinger of things to come. It’s bright as daylight. Gimme my sunglasses!
CIGA Wolfgang Rech
Japanese pension fund switches to gold
By Ben McLannahan in Tokyo
May 16, 2012 3:17 pm
Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies.
Initially, the fund aims to keep about 1.5 per cent of its total assets of Y40bn ($500m) in bullion-backed exchange traded funds, according to chief investment officer Yoshisuke Kiguchi, who said he was diversifying into gold to “escape sovereign risk”.
The move into a non-yielding asset comes as funds in the world’s second-biggest pension market are under increasing pressure to meet promised payments, as domestic interest rates remain rooted near zero. This year, the first of Japan’s baby boomers turn 65, becoming eligible for payouts.
Mr Kiguchi said the lack of yield was a concern for the fund’s investment committee, but he persuaded them that “from a very long-term point of view, gold may be one of the safe currencies”. He added that he had sold Australian dollars this month to meet his initial target allocation for gold for the fund, which has 20,000 members.
More…
Jim,
Here is the link. 4 years of 30% inflation destroys your purchasing power! I think that means $100 today at 30% for 4 years will be worth only $26 in today’s dollars. Ouch! Imagine a gallon of call costing $15!
Click here to watch the video…
CIGA Phil
Jim Sinclair’s Commentary
As if I do not have enough gold bears on my back as it is. Look at what came to visit my back door – a modest sized black bear.
Jim Sinclair’s Commentary
Here is the latest from John Williams’ ShadowStats.com.
- Core‰ CPI-U Inflation Hits Cycle High –
Continue reading In The News Today
Hi Jim,
This is a very interesting and ominous scientific observation regarding derivatives and the inability of their creators to control them.
As the article states, the banksters have “created a monster they cannot control—a monetary system that operates at a level beyond human comprehension.”
It doesn’t get much scarier than that, does it?
Continue reading Jim’s Mailbox
Dear CIGAs,
John Embry has paid me a great compliment. Please check out the article below.
Jim
Click here to read the full article on KingWorldNews.com
Embry – This is One of the Greatest Statements of All-Time
With global stock markets tumbling, along with gold and silver, today King World News interviewed John
Continue reading Embry – This is One of the Greatest Statements of All-Time
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