Dear CIGAs,
A major criteria for the most significant move in gold, called a Golden Pillar, is the demise of the long bond. This is why you must understand that hyperinflation is a product of a currency event that occurs in the midst of the worst of business conditions. The event is locked in and loaded by quantitative easing.
The first window in time for this event is the early 4th quarter of 2009. When it starts it runs quite quickly. Within 12 to 18 month from the initial rumblings hyperinflation consumes the currency.
The first rumblings are here and now below .8200 on the USDX. Below .7200 and you will be looking back at $1224 as gold runs towards $1650.
This is definitely on its way.
The commercial interests are still not ready for this. For the commercial interest to either miss this move or be buried by it is a reach. It could happen, but is unlikely to happen without a fight. We will be watching closely to call it for you.
In truth the best possible action would be for gold to decline from some level into the third week of this month and then launch forward. However, to those utilizing gold to insure their standard of living and life it makes no difference at all. The reason for that is gold is going to $1650 and then on to Alf’s numbers.
The goons are now making fools out of themselves in gold equities. The gold share hit yesterday was GRANDSTANDING in an attempt to shake out stock for a cover.It is apparent to me that the shorts are getting very itchy to cover. That is what dirty tricks are all and only about.
I really can’t understand why anyone wants to trade here or try to market time here. It is so obvious to the trained eye that the train is pulling out of the station for biggest move so far in gold. Stop trying to time everything to the minute. You want a full position – do it and do it now.
U.S. mortgage rates surge to highest level since December
Thu Jun 4, 2009 4:04pm EDT
By Julie Haviv
NEW YORK (Reuters) – U.S. mortgage rates surged to their highest in almost six months in the latest week, despite government efforts to keep rates at low levels that will help the hard-hit housing market begin to recover.
Interest rates on U.S. 30-year fixed-rate mortgages soared to 5.29 percent for the week ending June 4, up from 4.91 percent in the previous week, according to a survey released on Thursday by home funding company Freddie Mac.
The higher rates reflected an increase in yields on U.S. government bonds, which act as a benchmark for the mortgage market.
"Any additional rate increases will significantly hurt the home purchase and refinance markets, which will really hurt the economic recovery," said Alan Rosenbaum, president of Guardhill Financial, a New York City-based mortgage banker and brokerage company.
The last time rates exceeded current levels was the week ended December 11, 2008, when the 30-year rate was at 5.47 percent. The latest week marked the biggest jump since a 0.42 percentage point rise in the week ended October 30, 2008, when rates hit 6.46 percent.
Jim Sinclair’s Commentary
Another bank headed for trouble?
Jim Sinclair’s Commentary
Green shoot or only fertilizer?
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Jim Sinclair’s Commentary
In the 4th quarter of this year China will in be competition with the entire world to consume all the production for the next few years and more.
The Chinese are smart – they will not be waiting for the 4th quarter.
By the 4th quarter of 2009 the full sized lady will have sung. You can count on that.
China to consume 40% of global gold production
2009-06-04 16:00:00
By Karim Rahemtulla
The economic fundamentals for gold are favorable. Production of gold from South Africa, United States, Australia and Canada, has dwindled every year over this past decade.
These countries, which combined to produce two thirds of the global gold through the 1980’s, now produce less than half of the gold mined today. In 2006, South Africa, the world’s largest producer of gold, hit its lowest production level of gold in 84 years.
Meanwhile, physical demand for gold has been going through the roof. Much of the recent explosion in demand can be attributed to retail investors in India, China and other parts of Asia where the appetite for gold as investments is soaring.
India, for example, is experiencing an 80% growth in gold investment following a loosening of trade and market restrictions.
And let’s not forget China.
China, which has the fastest-growing economy in modern history, is undergoing major changes in the way they handle gold.
China, home to 1.3 billion people, private gold ownership has been outlawed for generations. But in 2002, the Shanghai Gold Exchange opened and started free trade in gold for the first time in the nation’s history.
Jim Sinclair’s Commentary
A strange thing happened on the way to the State of the Union. Expenses went sky high and revenues dropped into a black hole.
It looks like the Formula was all people had to know in 2006, but then who wants the truth when there is such large rewards for liars, goons and all around SOBs.
Benefit spending soars to new high
By Dennis Cauchon, USA TODAY
The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans’ income is now coming in the form of a federal or state check or voucher.
Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That’s the highest percentage since the government began compiling records in 1929.
In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.
The recession caused about half of the increase, according to the report. Unemployment insurance nearly tripled in the past year. The other half is the result of policies enacted during President George W. Bush’s first term.
Following the 2001 recession — when costs normally decline — social spending soared to pay for the Medicare drug benefit, expanded health care for children and greater use of food stamps.
The safety net is working, advocates say.
Jim Sinclair’s Commentary
It is time for the kids to stand aside. They need beer money while the older applicants need to put food on the family table. Yes, it is that bad.
This is what the OTC derivative manufacturers and distributors have contributed to society.
Older workers muscling out teens for summer jobs
By Tony Pugh | McClatchy Newspapers
WASHINGTON — After three years of braving Alaska’s minus 50-degree winter temperatures and round-the-clock summer sunshine, architect Victoria Schmitz is taking a break. She’s going to summer camp for two months outside Boulder, Colo.
Schmitz, 34, won’t spend her time horseback riding, hiking or canoeing in the scenic foothills of the Rocky Mountains, however. She’ll be working from 6 a.m. to 7:30 p.m. serving meals to adolescent boys as an assistant cook in the camp kitchen.
Her summer foray into food service isn’t by choice. It was the only job she could find, as so many companies have halted or postponed construction projects because of the recession.
"I’m the lunch lady. Hoagies and grinders and navy beans," Schmitz said, in a sly reference to the old Adam Sandler-Chris Farley skit from "Saturday Night Live."
Across the country, the job shortage has created a buyers’ market for traditional summer employers who can now pick from an abundance of laid-off and older workers, such as Schmitz, whose experience, reliability and hunger make them more attractive as short-term seasonal hires.
Jim Sinclair’s Commentary
Regardless of the chatter of the talking heads, this overvalued dollar is going to seek .72, .62 and .52. This winter is going to be extremely difficult for the US dollar. I am sure that before December the dollar will be pummelled
U.S. dollar ‘seriously overvalued’: study
Wed Jun 3, 2009 8:07pm EDT
WASHINGTON (Reuters) – The U.S. dollar is "seriously overvalued," mostly against the Chinese renminbi and some other Asian currencies, according to a new study published on Wednesday.
The Peterson Institute for International Economics, a Washington-based think tank, said the majority of the 29 currencies it studied need to appreciate against the dollar, with a large rise especially needed by the Chinese currency.
"The principal counterpart to the overvalued dollar is the undervaluation of the Chinese renminbi, which would have needed to appreciate about 21 percent on a weighted average basis and about 40 percent against the dollar to achieve equilibrium," said the study by economists William Cline and John Williamson.
Investor flight to the dollar safe haven since last year has pushed the U.S. currency up by about 10 percent, which on top of an estimated overvaluation of about 7 percent a year ago made for an overvaluation of about 17 percent by March this year, the study said.
But the dollar slid to its low in 2009 on June 1 against the euro and a basket of currencies amid optimism the prospect of a global economic recovery boosted riskier assets.
Jim Sinclair’s Commentary
The biggest gamble Washington has taken is the fast (maybe) GM and Chrysler bankruptcy. The auto downsized giants are counting on car sales at a no less than 9-10 million units rate after bankruptcy.
A failure for these sales to occur will be so public that no matter of SPIN will cancel the disappointment. You can count on the government buying of vehicles to be jammed into the first 6 to 8 weeks, but that will be it. All of the indices that have given the largest support to the green shoot BS are those whose foundations are subjective and interview based.
The USA will be right behind GB as per the following article;
The Bank of England’s medicine is not working
Posted By: Edmund Conway at Jun 2, 2009 at 16:33:57
Anyone who really believes the credit crisis is over; that the bull market is back and that we are effectively back to the races may be in for a shock. Yes, an unprecedented amount of monetary and fiscal medicine has been thrown at the economy. Yes, economic growth may have passed its nadir. But real signs of recovery? No, the medicine is not working yet. Starting with quantitative easing.
QE – the process in which the Bank of England effectively prints money and pumps it directly into the economy – was always going to be a tough one to pull off. The Japanese tried it in the 1990s and any evidence of success is hardly conclusive. And the earliest signs from the UK’s own experience are hardly any more encouraging.
Today the Bank of England released its mammoth monthly monetary and financial stats book and a dig beneath the numbers uncovers some rather alarming facts about the QE programme and its efficacy. The first is that the so-called leakage of the cash overseas (we first reported on this last month) is gathering pace.
Simply put, the way the Bank had intended to get the money into the economy is as follows: it would like to buy as many gilts (government bonds) as possible off UK pension funds and non-bank investors. With this cash then burning a hole in their pockets, not to mention bumping up banks’ deposit accounts, the investors should go out and spend it on equities and corporate debt. The credit crunch should then abate and, voila, you’ve got your economic recovery.
Bernanke Speaks:
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Bernanke said in testimony to lawmakers today. "Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance."
So I guess he means we will have neither
The Chairman took my breath away when he said that the unemployed could use the time to bone up on their skills so that they would be able to take new jobs when they are offered. Mr. Chairman, please descend from your rarefied strata. Statements like that might make the unemployed go wild.
Following this an African American congress women asked the Chairman how he thought consumers would increase buying when they were unemployed. Instantly she was flushed as the financial TV station went to a commercial.
The Colbert Show should replace financial TV
Jim Sinclair’s Commentary
We are awaiting Pakistan’s announcement that the Surge has defeated the Taliban and that displacing more than 2,500,000 refuges was a successful operation.
U.S. experts: Pakistan on course to become Islamist state
Tuesday, Jun. 02, 2009
Jonathan S. Landay – McClatchy Newspapers
"It’s a disaster in the making on the scale of the Iranian revolution," said a U.S. intelligence official with long experience in Pakistan who requested anonymity because he wasn’t authorized to speak publicly.
WASHINGTON — A growing number of U.S. intelligence, defense and diplomatic officials have concluded that there’s little hope of preventing nuclear-armed Pakistan from disintegrating into fiefdoms controlled by Islamist warlords and terrorists, posing a greater threat to the U.S. than Afghanistan’s terrorist haven did before 9/11.
"It’s a disaster in the making on the scale of the Iranian revolution," said a U.S. intelligence official with long experience in Pakistan who requested anonymity because he wasn’t authorized to speak publicly.
Pakistan’s fragmentation into warlord-run fiefdoms that host al Qaida and other terrorist groups would have grave implications for the security of its nuclear arsenal; for the U.S.-led effort to pacify Afghanistan; and for the security of India, the nearby oil-rich Persian Gulf and Central Asia, the U.S. and its allies.
"Pakistan has 173 million people and 100 nuclear weapons, an army which is bigger than the American army, and the headquarters of al Qaida sitting in two-thirds of the country which the government does not control," said David Kilcullen, a retired Australian army officer, a former State Department adviser and a counterinsurgency consultant to the Obama administration.
"Pakistan isn’t Afghanistan, a backward, isolated, landlocked place that outsiders get interested in about once a century," agreed the U.S. intelligence official. "It’s a developed state . . . (with) a major Indian Ocean port and ties to the outside world, especially the (Persian) Gulf, that Afghanistan and the Taliban never had."
Jim Sinclair’s Commentary
The rally in the US dollar yesterday is comical. The only real demand out there is in defense of the Brazilian currency wherein the Brazil Real is being bought because of Brazil / China ousting the dollar in trade in that pivotal place.
Gold would be perfect if it did not break out to above $1000 for a short few weeks. Then Alf, here we come.
Gross Says Diversify From Dollar as Deficits Surge (Update4)
By Dakin Campbell
June 3 (Bloomberg) — Bill Gross, founder of Pacific Investment Management Co., advised holders of U.S. dollars to diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits.
Treasury Secretary Timothy Geithner’s plan to bring the budget back into balance won’t be successful as consumers shrink spending and the U.S. growth rate slows, Gross said in a Bloomberg Radio interview today. The budget deficit will be narrowed to “roughly” 3 percent of GDP from a projected 12.9 percent this year, Geithner said June 1.
“I think he’ll fail at pulling a balanced rabbit out of a hat,” Gross said from Pimco’s headquarters in Newport Beach, California. “They are talking about — once the economy in the U.S. renormalizes — the move back toward balance or much less of a deficit. I suspect that will be hard to do.”
Higher savings rates and an increase in the cost to service the national debt will drag on the U.S. economy, likely meaning “trillion-dollar deficits are here to stay,” Gross wrote in his June investment outlook posted today on the firm’s Web site.
Gross, manager of the world’s biggest bond fund, said on May 21 the U.S. will “eventually” lose its AAA credit rating after Standard & Poor’s lowered its outlook on the U.K.’s AAA to “negative” from “stable” amid an escalating ratio of debt- to-gross domestic product. While U.S. marketable debt is at about 45 percent of GDP, annual deficits of 10 percent will push the amount to 100 percent within five years, a level that rating companies and markets view as a “point of no return,” he wrote.
