Dear CIGAs,

Our Comrade in Golden Arms, Pedro, called this AM to report an event affecting the natural gas supply via Scandinavia that has the capacity to cut off supply to the UK for a considerable period of time.

Monty, our "gas man" is checking his sources for confirmation. Natural gas is shown to be plumbing seasonal lows. It has broken out of its French curve and arithmetic power downtrend lines. Now check it in today’s IBD. Do not trade future as that is not why I am telling you.

• It is another nail holding the foundation of price inflation in a firm setting.
• There are things called natural gas public companies.
• This is quite gold positive.
• This is decidedly Gartman negative.

Regards,
Jim

 

 

Jim Sinclair’s Commentary

Come on, this has to be a Jim Cramer look and sound alike. JB you are putting us on!

From CIGA JB Slear

Our governing bodies have done a liaise fare overview of our financial system. It will soon be said that No One in their right minds will play the stock market again. The markets/governance have lost all credibility. Now let’s look at GOLD and commodities… people have to eat

Click here to view video…

CIGA JB Slear
Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104
 

 

Jim Sinclair’s Commentary

Pakistan is the real problem that has the capacity to do more damage than the OTC derivative traders did.

Bush buried Musharraf's al-Qaeda links
By Gareth Porter

WASHINGTON - Pervez Musharraf's resignation as Pakistan's president on Monday brings to an end an extraordinarily close relationship between Musharraf and the George W Bush administration, in which Musharraf was lavished with political and economic benefits from the United States despite policies that were in sharp conflict with US security interests.

It is well known that Bush repeatedly praised Musharraf as the most loyal ally of the United States against terrorism, even though the Pakistani military was deeply compromised by its relationship with the Taliban and Pakistani Islamic militants.

What has not been reported is that the Bush administration covered up the Musharraf regime's involvement in the activities of the Abdul Qadeer Khan nuclear technology export program and its deals with al-Qaeda's Pakistani tribal allies.

The problem faced by the Bush administration when it came into office was that the Pakistani military, over which Musharraf presided, was the real terrorist nexus with the Taliban and al-Qaeda.

More…

 

 

Jim Sinclair’s Commentary

A message from Mr. Williams to all CIGAs reading the total BS that the fed is tightening.

johnwilliams@shadowstats.com wrote:

• July M3 Expanded Month-to-Month, Year-to-Year
• Inflationary Recession Continues to Intensify
• Broad Outlook Unchanged

 

 

Jim Sinclair’s Commentary

We have not seen anything yet where price volatility in gold is concerned. Do not abandon or margin your gold insurance please.

Fear of new Mid East 'Cold War' as Syria strengthens military alliance with Russia
Kevin O’Flynn in Moscow and James Hider, Middle East Correspondent
 
Syria raised the prospect yesterday of having Russian missiles on its soil, sparking fears of a new Cold War in the Middle East. President Assad said as he arrived in Moscow to clinch a series of military agreements: “We are ready to co-operate with Russia in any project that can strengthen its security.”
 
The Syrian leader told Russian newspapers: “I think Russia really has to think of the response it will make when it finds itself closed in a circle.”
 
Mr Assad said that he would be discussing the deployment of Russian missiles on his territory. The Syrians are also interested in buying Russian weapons.
 
In return Moscow is expected to propose a revival of its Cold War era naval base at the Syrian port of Tartus, which would give the Russian Navy its first foothold in the Mediterranean for two decades. Damascus and Moscow were close allies during the Cold War but the Kremlin’s influence in the region waned after the collapse of the Soviet Union. Yesterday’s rapprochement raised the possibility that Moscow intends to re-create a global anti-Western alliance with former Soviet bloc allies.

More…

 

 

Jim Sinclair’s Commentary

When this situation becomes broadly understood and fully in motion crude will rise $100 from wherever it is trading. Gold will probably move higher than I anticipate. Your only insurance is gold anything.

Pakistan party threatens to quit, coalition wavers
By MUNIR AHMAD – 4 hours ago

ISLAMABAD, Pakistan (AP) — One of the Pakistani government's main coalition partners threatened Thursday to quit unless judges fired by former President Pervez Musharraf are quickly reinstated — dashing hopes that Musharraf's departure would end the nation's turmoil.
 
The two main parties — traditional rivals united primarily in their hatred of Pervez Musharraf — also diverge on who should succeed him as president and whether the former strongman should face trial.
 
The coalition's biggest bloc, the Pakistan People's Party, already appears to be lining up smaller parties in parliament to keep control of the government if the party led by former Prime Minister Nawaz Sharif pulls out of the coalition.
 
"The future of this coalition is linked to the restoration of judges," Sharif's spokesman Sadiqul Farooq told The Associated Press. "If the judges are not restored, we will prefer to sit on opposition benches."
 
More…

 

 

Jim Sinclair’s Commentary

Yesterday all the bears on crude were out, yet crude would not crack on inventories. The loudest crude bear proved he is cracked.

British Petroleum declares force majeure on Georgian pipelines
BP says Georgian-Russian conflict forced oil pipeline shutdown.
By Maria Varmazis -- Purchasing, 8/14/2008 11:11:00 AM
 
British Petroleum said late yesterday that it has delcared force majeure on oil shipments out of Georgia after the military conflict between Russia and Georgia forced them to shut down their Baku-Supsa Western Route Export Pipeline (WREP), which runs between 45,000 and 90,000 barrels of oil a day through Georgia.
 
The Georgian government alleges that Russia has been specifically targeting this pipeline near Tblisi, but Russian officials say that the pipelines have never been a target. BP emphasizes that their pipeline is undamaged.
 
The Associated Press reports that BP spokeswoman Sheila Williams said BP began pumping gas into the Baku-Tbilisi-Erzurum pipeline again which runs from the Caspian Sea through Georgia into Turkey earlier today after it was closed on Tuesday for security concerns.

More…

 

 

Jim Sinclair’s Commentary

Just to keep you up on the terror of the fight against terrorism.

New Guidelines Would Give F.B.I. Broader Powers
By ERIC LICHTBLAU
August 21, 2008

WASHINGTON — A Justice Department plan would loosen restrictions on the Federal Bureau of Investigation to allow agents to open a national security or criminal investigation against someone without any clear basis for suspicion, Democratic lawmakers briefed on the details said Wednesday.
 
The plan, which could be made public next month, has already generated intense interest and speculation. Little is known about its precise language, but civil liberties advocates say they fear it could give the government even broader license to open terrorism investigations.
 
Congressional staff members got a glimpse of some of the details in closed briefings this month, and four Democratic senators told Attorney General Michael B. Mukasey in a letter on Wednesday that they were troubled by what they heard.
 
The senators said the new guidelines would allow the F.B.I. to open an investigation of an American, conduct surveillance, pry into private records and take other investigative steps “without any basis for suspicion.” The plan “might permit an innocent American to be subjected to such intrusive surveillance based in part on race, ethnicity, national origin, religion, or on protected First Amendment activities,” the letter said. It was signed by Russ Feingold of Wisconsin, Richard J. Durbin of Illinois, Edward M. Kennedy of Massachusetts and Sheldon Whitehouse of Rhode Island.
 
More…

 

 

Jim Sinclair's Commentary

How many of you are looking at the IBD Price Momentum Line? It requires taking a point of view. If you are bullish you would assume it to give correct indications.

Click chart to enlarge in PDF format

 

Jim Sinclair's Commentary

Here is another paid source of critical information.

From http://www.institutionalriskanalytics.com:

As we prepare to get the Q2 data from FDIC next week, below we reveal the Q1 Economic Capital numbers for the top-10 US bank holding companies based upon bank assets.

Click here to see the margin of safety for the ten largest banks vs. their OTC derivatives exposure in this table from The IRA Bank Monitor, including Bank of America (NYSE:BAC), Citicorp (NYSE:C), and JPMorgan Chase (NYSE:JPM).

The spread vs. Risk Based Capital in the far right column is the amount of change in valuation in the bank's OBS derivatives book to wipe out the Tier One Risk Based Capital for the subsidiary banks.

Questions? Comments? info@institutionalriskanalytics.com

 

 

Click chart to enlarge today’s 12 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.

Jim,

This chart has been unaltered other than some new notes since I sent it to you a year ago.

With all that has gone on in the last year is this chart still in the ball park?? (My opinion is YES).

Respectfully Yours
CIGA Alex

Click chart to enlarge in PDF format

Dear Alex,

It would have been better if I had foreseen the depth of the reaction from $1033. I have no excuse. It might be better if we used more discipline in the use of the phone as 75% of the people calling in a panic violated the cardinal rule and were margined to the max and meeting margin calls. 15% call me many times a week and 10% are seeking pressing fundamental information and reassurance.

I kid you when I say you are throwing scraps to the dogs with these charts. I do not want any reader going wild and betting the farm. The answer to your question is YES.

All the best,
Jim

 

Dear Jim,

I wasn’t trying to nail every short term swing. I am dollar cost averaging because I am not a professional trader.

I was going to lengthen my time for purchases if you thought there was a delay. (I am very happy with 1,650 gold at any time 2011, I don’t care how we get there).

Regards
CIGA Alex

Dear Alex,

Excellent discipline. You will do great with a few scares. Stay the course.

Jim

 

 

Dear Jim,

When tempers are high and nations stand at the ready, the worst thing that can happen is a failure to communicate.

Best,
CIGA Big Tatanka

Norway: Russia to cut all military ties with NATO

OSLO, Norway (AP) — Norway's Defense Ministry says Russia has informed it that it plans to cut all military ties with NATO.

Ministry spokeswoman Heidi Langvik-Hansen says the country's embassy received a telephone call from Russia's Defense Ministry on Wednesday, saying Moscow plans "to freeze all military cooperation with NATO and allied countries."

Norway was told in the telephone call a written note about this would be sent out shortly.

Russian officials were not immediately available to confirm the information and officials at NATO headquarters said they have not been informed of any such moves.

More…

 

Russia warns NATO against re-equipping Georgia's military

BRUSSELS, Aug. 20 (Xinhua) -- Russia's ambassador to NATO Dmitry Rogozin warned Wednesday NATO against filling the gap of losses of the Georgian military incurred in its conflict with Russia.

"Any attempt of NATO to fill the gap of losses of the Georgian army contradicts the conventions of the OSCE (Organization of Security and Cooperation in Europe)," Rogozin told reporters.

All NATO countries, Russia and Georgia are members of the OSCE.

He said the provision of strategic armament to Georgia and the flight of NATO reconnaissance planes along Russia's borders as requested by Georgia are regarded as hostile actions to Russia.

More…

 

British Petroleum declares force majeure on Georgian pipelines
BP says Georgian-Russian conflict forced oil pipeline shutdown.
By Maria Varmazis -- Purchasing, 8/14/2008 11:11:00 AM
 
British Petroleum said late yesterday that it has delcared force majeure on oil shipments out of Georgia after the military conflict between Russia and Georgia forced them to shut down their Baku-Supsa Western Route Export Pipeline (WREP), which runs between 45,000 and 90,000 barrels of oil a day through Georgia.
 
The Georgian government alleges that Russia has been specifically targeting this pipeline near Tblisi, but Russian officials say that the pipelines have never been a target. BP emphasizes that their pipeline is undamaged.
 
The Associated Press reports that BP spokeswoman Sheila Williams said BP began pumping gas into the Baku-Tbilisi-Erzurum pipeline again which runs from the Caspian Sea through Georgia into Turkey earlier today after it was closed on Tuesday for security concerns.
 
The West is accusing Russia of being slow in troops withdrawal which is provided for in a peace agreement. Russia has said the pullout is to be completed by Friday

More… 

 

Georgia has lost S.Ossetia peacekeeping rights - Russian military

MOSCOW, August 21 (RIA Novosti) - Georgia has lost the right to conduct peacekeeping operations in its breakaway republic of South Ossetia, a senior Russian military official said on Thursday.
 
"Only Russian Armed Forces have the right to perform a peacekeeping mission in this area of responsibility," said Col. Gen. Anatoly Nogovitsyn, deputy chief of the Russian military's general staff.
 
He said the Russian peacekeeping contingent was also continuing to function in its responsibility zone in another Georgian separatist republic, Abkhazia, and said additional peacekeeping observer posts would be set up there in the near future.
 
"In order to ensure security for civilians, additional peacekeeping observer posts are to be set up in the near future," the official said.

More…

 

 

Dear CIGAs,

Did you listen closely today?

Goldman chimed in on Crude oil today with a forecast for it to return and better its high price in 2008. That must have taken the shine off Bloomberg's agenda of panning energy today.

A Reuters article today predicts food prices to rise 5% or more over the next year. How does that fit in with all the experts hogging the airwaves declaring gold, crude oil and food are going lower?

CIGA Pedro, who has my respect for his analysis, suggested we pay close attention to the siege of Kabul now being carried out by the Taliban. The city, he says, is practically surrounded with a seven mile perimeter closing in on a daily basis. Fighting in Afghanistan is another historical mud hole that once you enter your major struggle is to get out. History, modern and ancient, gives testimony to this. The same people now surrounding Kabul are the same people that threw the Russians out by attrition.

Attacks on French signal Taliban strength: analysts
Rebels gaining on Kabul, some say
Bronwen Roberts ,  AFP
Published: Tuesday, August 19, 2008

KABUL - A Taliban ambush that killed 10 French soldiers just outside of Kabul was the latest in a series of deadly attacks near the capital that analysts said Tuesday showed the rebels were gaining on the city.

About 100 militants on Monday ambushed a patrol of French and Afghan troops in normally calm Sarobi, 50 kilometres east of Kabul, sparking fighting that lasted into Tuesday.

It was the deadliest ground battle involving international troops in Afghanistan to defeat an Al-Qaeda-linked insurgency led by the extremist Taliban militia, who were removed from government in late 2001.

More…

 

 

Click here for today's action in Gold, the US Dollar Index, the XAU, Royal Gold, Barrick Gold and GoldCorp with commentary from Trader Dan Norcini

 

 

Dear CIGAs,

I completely and without a single ounce of reservation agree and support the conclusion contained in the commentary below from Monty Guild and Tony Danaher.

Sincerely,
Jim

 

“FORTUNE FAVORS THE BRAVE”

FERTILIZERS, GRAINS AND PRECIOUS METALS

As you know, we are fundamental analysts, not technicians.  We take an investment view on stocks and commodities, not a trading view.  That being said, we believe that much of the panic and the savage price decline in food related investments and in precious metals is behind us.  We are adding to our positions in these two areas.

We do not know if the correction caused by technical momentum traders is over. What we do know is that the emerging world is very strong economically, and these countries are large and growing consumers of high protein foods.  Thus, a recession in Europe, Japan and the U.S. will not deter them from upgrading their diets.  This will require the production of more grains and an increase in demand for fertilizers and other food production inputs.  We own fertilizer stocks and we have recently been adding to our positions.
 
The world banking system is broken and badly needs to be re capitalized.  How will they get new capital from investors?  We doubt that the banks will be able to get many investors to buy into their optimism and buy their stock.  In our opinion, the only long term solution is that governments print more money to re-capitalize and re-liquefy the banking system.  The season for increased gold demand is upon us as India starts to buy more for the wedding season.  Gold coins are in short supply at many coin dealers in the U.S.  Stagflation, inflation, and deflation threaten the world in different parts of the globe.  All of these events are bullish for gold and we are adding to our gold positions.
 
As we said earlier we are not technicians, or momentum players (the two groups that seem to have had control of commodity prices during the last few weeks).  We are fundamentalists, and the fundamentals argue that food and precious metals are getting into attractive buy areas.
 
We do not know if this is the ultimate bottom in precious metals. We do know that we want to own gold during periods when the world banking system is flirting with collapse and the only solution is governmental takeovers and subsequent large money printing exercises, by governments in Europe, Japan and the U.S. 
 
There has been no fundamental decrease in the value of gold as a hedge against both inflation and strong deflation.  Clearly, many commentators believe that one or the other may be the long-term outcome.  We believe it is still too early to call…but that inflation has the upper hand at this time.  Historically, gold has fared well in both inflationary and strong deflationary periods.  We will write more on this later.
 
Thanks for listening.

Click here for disclaimer information and to visit GuildInvestment.com

 

 

Dear CIGAs,

Bloomberg is working overtime today.

You know a great way to spin is to set up a false “dummy” and knock it down. Today that is glaringly present in crude. The experts, who are young ladies from central casting, say crude is up awaiting the inventories report. There is no mention that the Russians have tied up all means of energy supply to Europe while Iran threatens to shut down the Strait of Hormuz when and if anyone attacks them.

Major long term supply is contracting and internal geopolitics in oil supplying areas other than the Middle East are negative to energy.

When inventory reports come in negative, Bloomberg drags out all the energy bears within ten miles of their broadcast center.

The most important piece of news is that it is estimated by foreign central bank sources that the take down of US government agency bonds like Freddie and Fannie will drop by 50%. The ramification of that is so dollar negative but who thinks more than one day ahead in our Hedgie and algorithm heaven world.

This is what appeared to be a major spin on paper gold's open interest. That is Dan's department.

Respectfully yours,
Jim

 

 

Jim Sinclair’s Commentary

Strange! Where else have you heard this?

Don't hold your breath until he speaks on Bloomberg.

“We have a subprime financial system, NOT a subprime mortgage market"

An economic Cassandra whose predictions are coming true
Published: August 16, 2008

NEW YORK: On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.

He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he said, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.

As Roubini stepped down from the lectern after his talk, the moderator of the event said, "I think perhaps we will need a stiff drink after that." People laughed - and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market.

But Roubini was soon vindicated. In the year that followed, subprime lenders began entering bankruptcy, hedge funds began going under and the stock market plunged. There was declining employment, a deteriorating dollar, ever-increasing evidence of a huge housing bust and a growing air of panic in financial markets as the credit crisis deepened. By late summer, the Federal Reserve was rushing to the rescue, making the first of many unorthodox interventions in the economy, including cutting the lending rate by half a percentage point and buying up tens of billions of dollars in mortgage-backed securities.

More…

 

 

Jim Sinclair’s Commentary

When a specific performance contract fails to perform for whatever reason, the OTC derivative's nominal value becomes real value.

This is about more than this writer even knows. If you have the money you will always be welcome in this global market.

Merrill Brokers Press Pimco, BlackRock to Buy Auction-Rate Debt
By Bradley Keoun and Christopher Condon

Aug. 20 (Bloomberg) -- Merrill Lynch & Co. brokers are pressing fund managers Pacific Investment Management Co. and BlackRock Inc. to buy back auction-rate securities, aiming to speed up client bailouts in the frozen market.

More than 300 brokers have e-mailed Pimco saying its executives may ``no longer be welcome in our offices'' unless they redeem the securities, according to Erick Ellsweig, a Merrill financial adviser in North Carolina who spearheaded the e-mail campaign. Will Fuller, head of distribution for Merrill's U.S. brokerage arm, wrote to BlackRock on Aug. 15 saying its failure to offer redemptions in the past two months has created ``dissatisfaction in our financial advisers and clients.''
 
Merrill's brokers, who make up the biggest U.S. financial advisory network, say they're trying to help clients stuck with more than $10 billion of securities in the $200 billion auction- rate market. Pimco, which manages the world's biggest bond fund, and BlackRock, the largest publicly traded U.S. fund manger, used the market to finance their closed-end mutual funds, and Merrill brokers sold the investments to its customers.
 
``The brokers at Merrill are very upset about the lack of access to capital for their clients, and they have been rattling the cage,'' said Geoffrey Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island.
 
The auction-rate market seized up in February with $330 billion in securities when the credit crisis prompted Wall Street firms to stop supporting the periodic auctions in which the securities were bought and sold. New York Attorney General Andrew Cuomo has accused Merrill and other brokers of improperly peddling them as investments that were as liquid as cash. Merrill has said it's cooperating with government probes.

More…

 

 

Jim Sinclair’s Commentary

Plausible denial provided by a pal.

Schroeder blames ‘gambler’ Saakashvili for conflict

The former German Chancellor Gerhard Schroeder has blamed Georgia for starting the conflict in South Ossetia and described its President as a “gambler”. In an interview with the German magazine Der Spiegel, he criticised President Mikhail Saakashvili and warned against speeding up the country's accession to NATO.

"Imagine that we had been forced into military action on the side of Georgia as a NATO member, on the side of an obvious gambler, as one must describe Saakashvili," he said.

"I don't believe Russia is pursuing a policy of annexation and I also don't believe that there will be a return to the previous status quo for South Ossetia and Abkhazia. That is out of the question."

Schroeder told the influential magazine that the events shouldn't undermine Germany's strategic partnership with Russia and claimed Western governments had made “serious errors” in their dealings with Moscow.

"I think little of demonizing Russia, and I believe Moscow will soon see the need for greater integration into the international community," he said.

More…

 

 

Click chart to enlarge today’s 12 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.

Dear Jim,

It seems attacks are intensifying in Afghanistan as Pakistan weakens and NATO loses its stomach for a "limited war on terror." These people are not half hearted militants; they play for keeps and are now attacking bases in a sophisticated fashion.

Best,
CIGA Big Tatanka

Taliban Escalate Fighting With Assault on U.S. Base

BAMIYAN, Afghanistan — Taliban insurgents mounted their most serious attacks in six years of fighting in Afghanistan over the last two days, including a coordinated assault by at least 10 suicide bombers against one of the largest American military bases in the country, and another by about 100 insurgents who killed 10 elite French paratroopers.

The attack on the French, in a district near Kabul, added to the sense of siege around the capital and was the deadliest single loss for foreign troops in a ground battle since the United States-led invasion chased the Taliban from power in 2001.

Taken together, the attacks were part of a sharp escalation in fighting as insurgents have seized a window of opportunity to press their campaign this summer — taking advantage of a wavering NATO commitment, an outgoing American administration, a flailing Afghan government and a Pakistani government in deep disarray that has given the militants freer rein across the border.

More…

Dear Great Tatanka,

Amen to that!

The first rule of combat is to Respect your enemy so that you can truly learn how to think like them. Without that victory is difficult to achieve.

All the best,
Jim

 

 

Hi Mr. Sinclair,

Just thought I’d pass a very interesting commentary along to you from another Mr. X.

Mr. X is a very bright Swiss economist who is worth reading even if you disagree. He has a very interesting chart regarding global liquidity.

Regards,
CIGA Mike

Dear CIGA Mike,

I read no other commentator therefore my mistakes are my own. My good deeds are my own.

If he says there is a contraction in world liquidity then he is mad as a hatter, as the only contraction is in the credit markets. That credit market contraction feeds into M3 figures and therefore in no way suggests the Fed is contracting liquidity.

Please go to www.shadowstats.com, comment, pay the man his modest fee and see what is real. I do not read any commentary there, only the statistics using valid historical parameters.

The slight downturn in M3 is meaningless. You have to see it clearly with your own eyes. $75 billion a week has already added up to an amount larger than the Helicopter Drop.

Anyone who thinks those begging bowl loans are repaid in 28 simply has no accounting background. They are perma-rollover gifts of public funds. The faithful believers in the statistic of the Fed deduct the $75 billion. This is the same on all other bailouts when the Fed gets worthless OTC derivatives in return. That is one of the today's most popular and risky mistakes.

The incorrect M3 gurus defend their position when they declare that Government statics and the Fed NEVER have or will fabricate. To have a chart using today’s skewed statistics does not make today's USA CPI accurate in terms of true conditions, in any way.

Ever heard of creative accounting, which today is extolled as no fabrication even though it fabricates, as in makes, a skewed result in favor of the agenda at hand?

All the best,
Jim

 

 

Dear Mr. Sinclair,

Wonder if other CIGA's have encountered delays in delivery of their gold bullion orders? The dealer I use has posted a message on their website and when called, affirmed that various products are unavailable for delivery for an undetermined length of time. They hope to resume deliveries "within a few weeks".

Though I am delighted to hear folks are putting money in hard assets and are taking advantage of the current sale, I am wondering what is going on and whether this is something to worry about.

Puzzled in New Jersey,
CIGA Annette

Dear Annette,

I would have simply shrugged this off based on the fact that most local coin dealers as well as majors are in the business to make money without taking risk. As markets fall they do not buy in any significant way. Therefore as gold settles out they have little or no inventory.

They are merchants only at times when it pleases them, yet so many people all over the world are telling me the same story. The only answer is the reaction we just witnessed in paper, not real gold. That would suggest but not prove the bullion market is tight.

Regards,
Jim

 

 

Dear Jim,

It seems Russia is seizing the opportunity of this Balkan incident to change the mix worldwide! Russian ships in Venezuelan ports are a change in the hemisphere balance.

Those ships could have nuclear missiles onboard. It looks like Hugo has also been rearming with Russian help. The mutual defense pact signed between Iran and Venezuela has also not been talked about much. Is this a sign that Russia will support both its allies?

Best,
CIGA Big Tatanka

Russia wants to send naval fleet to Venezuela: Chavez
18 Aug, 2008, 0148 hrs IST, AGENCIES

CARACAS: President Hugo Chavez said on Sunday that Russian President Dimitri Medvedev wants to send a Russian naval fleet to visit Venezuela.

"Russia has informed us they intend to visit Venezuela, that is, the intention that a Russian fleet should come to the Caribbean," Chavez said on his weekly radio program.

"I told the president (Medvedev), 'If you're coming to the Caribbean, we'll welcome you,'" Chavez said, adding that the Russian naval fleet would pay "a friendly and working" visit to Venezuela.

Under leftist President Chavez, Venezuela has been seeking closer relations with Moscow, in part to buy military hardware, including 24 Russian Sukhoi fighter jets recently delivered, after Washington refused to supply spare parts for the F-16 jets it sold Venezuela in the 1980s.

More…

 

 

Jim Sinclair’s Commentary

And it will trade at $1650 on or before January 14th, 2011.

Star fund manager sticks to $1600 gold troy ounce prediction despite slump
By Philip Haddon | 06:13:00 | 19 August 2008

Despite gold falling to below $800 for the first time in nine months on Friday and hitting his fund's performance, AAA-rated star US equity manager François Mouté is standing by his prediction of the gold price reaching $1600 per troy ounce in the next year.

Mouté (pictured below) has a number of gold mining companies in the top ten holdings of his $1 billion ABN AMRO US Opportunities fund. As the gold price has fallen in recent weeks, reaching $787 per troy ounce on Friday last week, so have the values of some of his top holdings. This has resulted in Mouté suffering a rare period of underperformance; his fund has lost 11.4% in the last four weeks while the S&P 500 index has risen 4.5%.

'I am disappointed to see gold below $800, and I am even more disappointed to see the exaggerated decline in the price of gold mines,' AAA-rated Mouté told Citywire. 'Mines are selling at 1.1 times NAV, when they normally trade at anywhere between one and three times NAV.'

'The falling oil price was one of the factors that precipitated the weakness in gold,' he says. 'But I am still using as a basic yardstick the fact that an ounce of gold should be 16 times the price of a barrel of oil. So a falling oil price is not that worrisome, as even if oil goes to $100 a barrel, that still does not change my 12 month view of gold reaching $1600 a troy ounce.'

More…

 

 

Jim Sinclair’s Commentary

With significant litigation brewing in multiple countries, it might be timely to make what is already a crime in all instances, illegal in all instances.

SEC May Propose New Short-Sale Rules Within `Weeks,' Cox Says
By Jesse Westbrook

Aug. 19 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox said his agency will propose new rules aimed at curtailing manipulative short sales of stocks in the ``next few weeks.''

``Our proposals will be designed to ensure the smooth functioning of markets and to support equally the important role of bets on the upside and the downside,'' Cox told reporters in Washington today.

The SEC imposed a temporary measure last month that made it harder for traders to bet on declines in shares of Freddie Mac,Fannie Mae and 17 brokerages. The agency said the order was meant to prevent traders from driving down stocks considered at risk of manipulation after Bear Stearns Cos. and IndyMac Bancorp Inc. collapsed amid speculation they were faltering.

The measure, which expired Aug. 12, targeted so-called naked-short selling by requiring traders to actually arrange to borrow stock before executing a short sale. Prior to the SEC's order, investors were only required to locate shares in advance.

``We are looking to see what were the consequences of doing that,'' Cox said in a Bloomberg Television interview. The agency is also considering rules that would curtail short selling in all companies, not just a select few, he said.

More…

 

 

Jim Sinclair’s Commentary

1. Did you hear this from Euroland?
2. Euroland will have a hard time getting as dangerous as US financial entities.
3. The assumption that gave you the dollar short covering rally is total bull.
4. "Rogoff is correct when he says U.S. banks are at risk, as he did in a recent talk in Singapore."

Have you protected yourself? Have you distanced yourself as much as is practical from your financial agents? If you haven’t, why not?

Rogoff's warning part of the problem
Commentary: Former IMF economist raises concerns
By MarketWatch
Last update: 12:22 p.m. EDT Aug. 19, 2008

NEW YORK (MarketWatch) -- Ken Rogoff, the former International Monetary Fund economist who has predicted a major U.S. bank failure in the coming months, isn't talking about what specifically could cause such a failure. Maybe that's because his panic attack is a big part of it.

Rogoff is correct when he says U.S. banks are at risk, as he did in a recent talk in Singapore.

Many U.S. banks are at risk. Market strategist Barry Ritholtz pointed out Monday that Washington Mutual Inc. (WM) HSBC Holdings PLC's (HBC) U.S. holdings, National City Corp. (NCC), Sovereign Bancorp (SOV), and Huntington Bancorp (HBAN) are considered among the weakest banks, with more than $25 billion in assets, according to a report from Weiss Research Inc.

On the brokerage side, Weiss noted that the brokerage arms of Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), and Citigroup have the lower capital multiples, making then less capable of withstanding losses.

The truth is, the collapse of Bear Stearns Cos. wasn't about capital, it was about liquidity and, more importantly, confidence.

When Rogoff claims that the banking system is "not just going to see midsized banks go under in the next few months; we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," how much confidence has he pumped into the market?

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Jim Sinclair’s Commentary

The fuse has been ignited.

When Pakistan goes off soon the boom will be equal to the "Big Bang," repercussions will roll forward causing incalculable geopolitical dislocations right into 2011.

Musharraf Ouster Fails to End Deadlock, Distraction Over Judges
By Khalid Qayum and Robin Stringer

Aug. 20 (Bloomberg) -- Pakistan's ruling coalition, fresh from ending a six-month standoff by forcing President Pervez Musharraf to resign, failed to resolve a festering dispute over reinstating judges he fired.

The government's inability to reach a compromise will continue to distract the four-party alliance as Pakistan suffers from faster inflation, a slowing economy and rising Islamic militancy on its border with Afghanistan. That may cause problems for U.S. President George W. Bush, who considered Musharraf an ally in fighting al-Qaeda and the Taliban and is pressing the new government to step up its efforts.

``If I were the Bush administration, I'd kiss goodbye the chance of having a workable Pakistani government'' this year, said Daniel Markey, a senior fellow at the Council on Foreign Relations in Washington. ``For the next weeks and probably months, the focus will remain on the rules of the game, and who holds power.''

After two days of meetings on what to do about the judges, the coalition said yesterday it hoped to find a solution in the next 72 hours, according to Fazl-ur-Rahman, chief of the Jamiat- e-Ulema Islam, a coalition partner. Asif Ali Zardari's Pakistan Peoples Party, and former Prime Minister Nawaz Sharif's Pakistan Muslim League faction are the biggest parties in the alliance.

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Jim Sinclair’s Commentary

On and on it goes and where it ends nobody knows. How it ends is not dollar positive.

Lehman May Report $4 Billion Writedown, JPMorgan Says
By Alexis Xydias and Joyce Moullakis

Aug. 19 (Bloomberg) -- Lehman Brothers Holdings Inc. may write down about $4 billion in credit-related investments and other assets when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said.

``The credit environment continues to be difficult,'' New York-based analysts led by Kenneth Worthington wrote in a report yesterday. ``It will be another difficult quarter for Lehman.''

Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, the analysts wrote. The company may have already been selling some commercial mortgage assets, they added.

Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, has slumped 77 percent in New York trading as it struggles to pare its debt holdings. The bank has reported writedowns and credit losses of $8.2 billion in the past 12 months, according to data compiled by Bloomberg.

The analysts cut their per-share estimate for the third quarter to a loss of $3.30 from a 35-cent profit. They expect Lehman to report a loss of $6.77 a share for the full year, compared with their earlier forecast of a $2.35 loss. They maintained a ``neutral'' recommendation on the stock.

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Jim Sinclair’s Commentary

Right now I would say the geopolitical risk premium in crude is minus zero dollars. Such mass abandon usually occurs just at the WRONG time.

Iran Threatens to Close Strait of Hormuz If Attacked

Following recent threats by Iranian government elites, [1] in the past several days senior Iranian officials have emphasized that if it is attacked, Iran intends to close the Strait of Hormuz, thereby impeding the export of oil from the Gulf to the rest of the world.

The following are statements on this matter by several senior Islamic Revolutionary Guards Corps (IRGC) officials:

IRGC Political Bureau ChiefJavani: Closing the Strait of Hormuz is Part of Iran's Defense Policy

In an editorial titled "When Will the Hormuz Strait Be Closed?" in the Iranian weekly Sobh-e Sadeq, which is the mouthpiece of Iranian Supreme Leader 'Ali Khamenei circulated among the IRGC, IRGC political bureau chief Yadollah Javani wrote:

"The Strait of Hormuz is one of 14 locations in the world with unique strategic importance. Over 60 percent of the world's energy reserves are located in the Persian Gulf, and 17 million barrels of oil are transported daily from the strait by oil tankers. In today's global economy, oil plays the same role as blood in the human body, and under present circumstances, it is impossible to conceive of an active and dynamic economy without oil. Industry is completely dependent on [Persian] Gulf oil for survival.

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