Dear CIGAs,

FASB 157: Be careful what you wish for.

Removing the mark to market rules may give a short term rally to bank stocks, but it could easily turn out to be a disaster for banking, for the US taxpayer and the US economy.

For those who remember the Japanese banking crisis and ensuing malaise, Japan is moving toward 2 decades of deflation and low or no economic growth.

In Japan, failure to fairly value bank assets kept banks from writing off bad assets and thus kept them from performing their first function, to make loans and act as a clearing agent for economic activity. Watch out and be very careful what you wish for… the same thing could and possibly will happen in any country that removes mark to market requirements.

This is a key issue and one which Jim Sinclair knows a great deal. Listen carefully to his wise advice on this subject.

In other news, Competitive Devaluations of currencies are underway.

Time line… Britain(a few weeks ago) introduces Quantitative Easing. Result: the Pound falls decisively.

Then we saw Swiss intervention to lower the Swiss Franc… then US Quantitative Easing (QE) today.

This means although major nations such as these talk free trade and no tariffs or only limited tariffs they are actually fighting a trade war with competitive devaluations of their currencies.

The US is the latest to announce the obvious. They are using QE to devalue the dollar and to serve other purposes as well. This can only be very positive for gold and negative for the US dollar long term.

Jim Sinclair has called for this repeatedly and he is once again correct.

Some of you did not listen to him and bought gold or gold shares on margin. Some people further aggravated the problem by buying the rallies and selling the declines. You were in effect doing the opposite of what Jim instructed you to do.

In my opinion, the first characteristic of successful investors and traders is that they take responsibility for their own actions.

Respectfully yours,

Monty Guild
www.GuildInvestment.com