Dear CIGAs,
Just as in the 70s, central banks are human too. They will be buyers on balance prior to 2011.
"It goes without saying that the time to buy gold and silver is now, while 99% of the world remains oblivious to the inevitable collapse of the current monetary system. Buying a “store of value” with a 5,000 year track-record behind it, using soon-to-be-worthless paper is a bargain at any price."
New Central Bank Sales Agreement Is Very Bullish for Gold
August 07, 2009
Europe’s central banks jointly announced a new sales agreement to govern the gold they annually dump onto the market. They announced a 20% lower quota – down to 400 tons per year – despite the price of gold sitting only a couple of rallies away from a new, nominal record.
The fact that these central banks are significantly reducing their gold sales despite the high price of gold can only be interpreted two ways. First, it could simply signify that these central banks have much less gold to sell, and thus will be steadily reducing their sales no matter how high the price of gold goes.
The alternative interpretation would be that despite the near-record price, Europe’s central banks expect the price of gold to go much higher – and thus don’t want to give away their gold (as was done by U.K. Prime Minister Gordon Brown).
In fact, both interpretations are correct. Even if we take the reported gold reserves of these central banks seriously (despite very good reasons to doubt those claims) Europe’s central banks hold little more than 10,000 tons of gold, with about 40% of that amount held by Germany, alone. At the previous ceiling of 500 tons per year (or 5% of Europe’s total gold holdings) Europe’s central banks would have squandered all their gold reserves in 20 years.
However, with Germany adamant that it won’t sell any of its gold, in reality the previous agreement would have exhausted all of Europe’s available gold – forever – in only about ten years. Even reducing this quota to 400 tons per year only extends the ‘life’ of this game for a couple more years.
Jim Sinclair’s Commentary
From every viewpoint the reason for celebration on Friday was pure SPIN as a function of MOPE. The scary thing is this Administration is the truest believers in MOPE as the real thing.
Non-Farm Payrolls and Its ‘Statistical Qurks’
Friday, August 7, 2009
When deciding how credible this mornings jobs reports is, you only have to look at one number. According to the Bureau of Labor Statistics, employment in the auto industry went UP by 28,000 last month. Nobody believes this, and I mean nobody, not even the biggest government boot looking financial reporters. Even the mainstream media cautioned that this could be a ‘statistical quirk’, the polite term in the numbers industry for lying. You should assume that finding one ‘statistical quirk’ in a report is similar to finding one roach in your apartment. In both cases, there’s a lot more that you’re not seeing.
The headline number for the report was a loss of 247,000 jobs, which is bad enough as is. July was the 19th consecutive month for job losses. Since the recession has began in December 2007, the government admits that 6.7 million jobs have been lost. Goods-producing industries shed 128,000 jobs, and service-producing industries cut 119,000 jobs, including 44,000 in retail and 38,000 in professional and business services. Unemployment in retail (the largest individual private sector employer) seems to be accelerating. After the ‘robust’ auto industry gains, health care was the biggest job gainer. Government also added about 7 thousand jobs, but this information was left out of the BLS press release even though it is always reported (when information that has always been available suddenly disappears watch out).
According to the government, the unemployment rate declined to 9.4% (actually 16.3% if you include discouraged workers and involuntary temp workers). You may ask how is it possible for there to be a significant job loss and for unemployment to improve at the same time (could it be another ‘statistical quirk’)? It’s simple – 422,000 people ‘conveniently’ left the labor force. Even though the O’bama, Bernanke, and Geithner and the BLS in its press release tell us that the economy is improving, large numbers of people are giving up looking for jobs because they think there is no chance of finding one. Somehow, I don’t think both of these contradictory views are possible. One of them seems to be a lie – pardon me, I meant ‘statistical quirk’.
If you listen carefully to what Obama and Bernanke have been saying for the last several months, you will notice that ‘things are getting less worse’ is the gist of their statements. The Obama litany is: the financial meltdown has ended (which happened during the Bush administration, but he still takes credit for it), the rate of job loss is slowing, and the stock market is doing better. Bernanke also concentrates on the stock market is getting better theme (and I am sure this is not taking place without some government assistance). The recession is indeed getting ‘less worse’, although not as much as the government claims. There is also a huge gaping chasm between getting less worse and getting better. However, the government may be able to solve this problem in the future with bigger ‘statistical quirks’.
Jim Sinclair’s Commentary
Now that Friday is bank closing day it is expected and ignored by the sheeple.
Regulators close 3 banks in Fla., Ore.; total 72
NEW YORK — Regulators on Friday shut down two banks in Florida and one in Oregon, bringing to 72 the number of federally insured banks to fail this year under the weight of the weak economy and rising loan losses.
The Federal Deposit Insurance Corp. was appointed receiver of the banks: First State Bank, of Sarasota, Fla.; Venice, Fla.-based Community National Bank of Sarasota County, and Community First Bank, of Prineville, Ore.
First State Bank had total assets of $463 million and deposits totaling $387 million. Community National Bank had $97 million in assets and $93 million in deposits. Community First Bank had $209 million in assets and $182 million in deposits.
The FDIC said Stearns Bank, of St. Cloud, Minn., agreed to assume all the deposits of both Florida banks. Stearns Bank also agreed to buy $451 million of First State Bank assets and $94 million of Community National Bank assets.
The nine branches of First State Bank will reopen Monday as Stearns Bank branches, while Community National Bank’s four branches will reopen Saturday.
Jim Sinclair’s Commentary
Check out this video of Gerald Celente discussing how the bailout bubble is the mother of all bubbles.
Jim Sinclair’s Commentary
Suffering from insomnia? Read the health bill
Click here to read the actual text of the Health Care Reform Act of 2009
Jim Sinclair’s Commentary
China’s next major coup is excellent technology at lower than competitive prices.
China Continues Its Long, Slow Climb to the Skies
August 07, 2009
Brian Schwarz
China has taken another step forward in its mission to build its own commercial airplanes, but industry experts remain skeptical of Beijing’s long-term objective of becoming less dependent on Boeing (BA) and Airbus (EADSY.PK) – made machines.
China’s first domestically-developed regional ARJ21-700 jet successfully made a trial flight of 1,300 kilometers in July. It took the jet about two hours to fly from Shanghai to Xi’an, the capital of northwestern China’s Shaanxi Province, according to the China Economic Review.
The ARJ-21 is short for "Advanced Regional Jet for the 21st Century". The plane is also the first regional jet that China has fully developed on its own. The first ARJ-21 jets are expected to be delivered to Chinese clients late next year. The ARJ21 regional jet is able to carry 70 to 110 passengers andshaping up as China’s equivalent of the A300 from Airbus.
In the 1980s, McDonnell Douglas, which is part of Boeing, made about 30 MD-82 and a couple of MD-90 in China. Some critics claim the ARJ21 is a copy of similar models from Bombardier and Embraer built at the old MD plant in China.
The ARJ21 program is important to Beijing because helps China learn to develop a commercial aircraft to Western standards, to coordinate with many subcontractors, to establish an international marketing operation, and—crucially—to prove that it can support aircraft in service. Parts for the plane are made by 19 foreign manufacturers, including General Electric (GE), Honeywell (HON) and Parker Hannifin (PH).
Jim Sinclair’s Commentary
Certainly. Isn’t that why you say everything the US wants you to say?
Isn’t that what is happening in Pakistan and is traditional there?
What is leadership for anyway?
Karzai Inc: Has Afghanistan’s leader turned the country into a family business?
With less than two weeks to go until the national elections, the questions hanging over the Afghan president and his family are refusing to go away.
By Alex Spillius in Washington and Ben Farmer in Kabul
Published: 7:00PM BST 07 Aug 2009
Cabinet ministers in Afghanistan were recently asked to make an "asset declaration". The president, Hamid Karzai, said that he possessed only $10,000 in cash and some jewellery. His claim prompted loud laughter among Westerners in Kabul. But the diplomatic humour masked deep concerns that Afghanistan’s leader is turning the country into a family enterprise – with a favoured few being allowed to enrich themselves to the extent that it is alienating the public and helping Taliban insurgents to garner sympathy.
As the country prepares to stage the first Afghan-led presidential election on August 20, the questions hanging over the president and his family have taken on an extra significance.
The combined wealth of the Karzais runs into many millions of dollars, and it has been built mostly since Hamid Karzai took over as president in 2001 after the Taliban’s overthrow. That was when his brothers returned from the United States, the country to which his mother and five of his siblings had fled after the Soviet Invasion in 1979.
Now, Mahmoud Karzai, 54, the second oldest of the president’s six brothers, is one of the country’s richest men, thanks to newly acquired interests in mines, a cement factory, property development, and an "exclusive sales agreement" with Toyota. Until 2001 he was a partner in a string of modest, family-owned restaurants in Baltimore, San Francisco and Boston.
The president’s younger brother, Ahmed Wali Karzai, 48, has faced accusations by Western diplomats – which he firmly denies – of being a major force in the heroin trade valued at $3.4 billion by the United Nations last year. He has also built up substantial land holdings, transportation and private security business interests in Kandahar, the country’s second city.
Jim Sinclair’s Commentary
Come on silly, what do you think Federal Funds are for anyway?
Federal funds enriching middlemen, not homeowners
By Daniel Wagner
Associated Press
WASHINGTON – Billions of dollars the federal government is spending to help financially pressed homeowners avert foreclosure are passing through – and enriching – companies accused of preying on the people they’re supposed to help, an Associated Press investigation found
The companies, known as mortgage servicers, are middlemen who collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans. As the only link between borrowers and lenders, they’re in the best position to rework the terms of loans under the government’s $50 billion mortgage-modification program.
But the AP found that at least 30 servicers had been accused in lawsuits in recent years of harassing borrowers, imposing illegal fees, and charging for unnecessary insurance policies.
Most recently, the companies also have been criticized for not helping homeowners quickly enough, delays that lead to more fees for homeowners and profits for servicers.
The government says it has no choice but to work with the servicers because they are the only link between borrowers and the investors who indirectly own their mortgages through securities.
Jim Sinclair’s Commentary
Friday’s market was so rigged.
Over 30,000 firms in danger of failing by end of 2010
Analysts predict that over 30,000 companies could go into liquidation before the end of next year, after official figures showed that company failures have reached their highest ever level.
By Jonathan Liew
Published: 5:57PM BST 07 Aug 2009
There were 5,055 company failures in England and Wales in the second quarter of 2009 on a seasonally-adjusted basis, the Insolvency Service said, which equates to an increase of 2.9pc compared with the previous quarter, and a 39.1pc year-on-year rise.
An additional 1,027 companies went into administration in the period, a rise of 9.5pc year-on-year, and the number of companies going into receivership almost doubled from 177 to 345.
In all, around one in 120 active companies went into liquidation in the twelve months to June.
The consensus amongst analysts was that the outlook was likely to worsen in the short-term, even if the economy recovers.
Andrew MacCallum, managing director of Alvarez & Marsal, said: "More than 5,000 companies may have gone into liquidation in the last quarter, but we can expect to see that figure exceeded in every quarter until at least the end of 2010.
"Credit is still tight and many businesses are loaded with debt that they cannot service.
Liz Bingham of Ernst & Young said: "In the last recession the insolvency peak lagged the economic trough by over a year.
Jim Sinclair’s Commentary
CIGA Green Hornet says:
"Here is the ultimate solution to the pension problem. Benefits to start of 112 year old, applied retroactively. No benefits assignable. We can put that as a rider on the US Health bill guaranteed to cull the gene pool."
U.K. State-Pension Retirement Age May Exceed 68, BBC Reports
By Simon Thiel
Aug. 8 (Bloomberg) — The U.K. state-pension retirement age may rise beyond a planned increase to 68 as Britons live longer and save less than in the past, the British Broadcasting Corporation reported.
David Norgrove, chairman of the Pensions Regulator, said recent government legislation will raise the state retirement age progressively to 68, the BBC said. “I think it will end up higher than that,” he told the BBC.
Millions of people will “undoubtedly” have to wait longer in the future to draw a state pension, the BBC reported, citing Norgrove.
To contact the reporter on this story: Simon Thiel in London atsthiel1@bloomberg.net.
Jim Sinclair’s Commentary
FASB’s gift to the criminal world .
Looking behind Freddie’s numbers
August 8th, 2009
Late yesterday Freddie Mac surprised markets by reporting a profit and by not requesting additional bailout money from Treasury. Before we celebrate, however, let’s consider a few revealing footnotes from the company’s quarterly filing. But first, some key financial ratios.
As you can see, non-performing assets are still rising quickly. (Click table to enlarge in new window)
As for the filing footnotes, we see that Freddie’s profit line got a big assist from FASB’s new fair value accounting rules. This shifted a large chunk of the company’s losses from the net profit line to the “accumulated other comprehensive income” line, artificially inflating shareholder equity. So-called “non-credit related” impairments were recognized in earnings during Q1, but not in Q2:
Jim Sinclair’s Commentary
These guys think bling is all gold is about. This nullifies the gold bear’s gold price hope that the IMF would injure the gold price.
World Gold Council welcomes renewal of the Central Bank Gold Agreement, reaffirming the importance of gold as a key element of global monetary reserves
Posted on August 8th, 2009
Aram Shishmanian, Chief Executive of WGC said on Friday: “The announcement is a clear endorsement of gold’s role in today’s global economic and financial architecture and a reflection of the success of the previous Central Bank Gold Agreements. The agreement to limit the sale of gold over the five year period to 2,000 t demonstrates that, at a time of continued market volatility and inflationary fears, gold’s unique investment qualities provide the necessary hedge and protection that central banks are seeking. The reduction in the annual ceiling on sales from 500 t in the current agreement to 400 t/y starting on September 27, 2009, reflects an acknowledgment of the fact that the central banks’ appetite for sales is diminishing. This is evident in the way that total sales under CBGA2 look set to fall well short of the ceiling the signatories set for themselves in 2004.”
The decision to allow room under the agreed ceiling to incorporate the IMF’s proposed sale of 403 t demonstrates a willingness to help the IMF comply with the recommendations of the Crockett Report that IMF sales should represent no net addition to the quantity of gold the market is expecting from the official sector.
Jim Sinclair’s Commentary
Click here to see Jon Stewart from The Daily Show taking on Goldman Sachs…
Jim Sinclair’s Commentary
Friday’s dollar party is nonsense.
Meltdown 101: Unemployment by the Numbers
By CHRISTOPHER S. RUGABER (AP)
WASHINGTON — Employers are laying off fewer workers, the government reported Friday, but widespread cuts are still happening — only about 30 percent of industries are adding jobs or holding steady.
That’s up from 20 percent in March, at the depth of the recession, but it still means that 70 percent of the 271 industries tracked by the Labor Department are cutting jobs, according to the department’s July employment report.
"We’re still a long way from where we would be in an expansion," said Mark Vitner, senior economist at Wells Fargo Securities. "Job losses continue to be extremely broad-based."
For example, in July 2007, five months before the recession began, 50.7 percent of industries were hiring, or at least not laying people off, the department said.
Still, most of the news in the monthly report showed improvement: The unemployment rate dropped slightly to 9.4 percent, from 9.5 percent in June. And companies cut 247,000 jobs, a large number but fewer than the average of 645,000 a month from November to April.
Jim Sinclair’s Commentary
The airwaves are still pumping out the hogwash skewed federal numbers.
Guess What? Unemployment’s Really at 16.3 Percent
John Lott
August 07, 2009
How is it possible for the unemployment rate to essentially remain unchanged when 247,000 jobs have been lost? Because the number of people who gave up and stopped looking for work rose dramatically.
The announcement today that the unemployment rate declined slightly to 9.4 percent in July while only 247,000 additional jobs were lost has been greeted as good news. The change in the unemployment rate puts the rate at what it was in May. Yet, even a rough look at the numbers indicates that the true unemployment rate has been getting significantly worse over the last few months.
How is it possible for the unemployment rate to essentially remain unchanged when 247,000 jobs have been lost? The reason is simple — the number of people who stopped looking for work rose dramatically. Six hundred thirty-seven thousand additional people no longer consider themselves looking for work. This is by far the largest drop in the number of people who consider themselves in the labor force during the last year. — It is almost twice the 358,000 increase in the people who left the labor force during June and almost four times the average monthly increase of 167,333 over the last year. Jobs are sufficiently scarce and the prospects of people finding them at wages that they are willing to work for so low that many individuals don’t think that it is worth their time to even look for a job.
Part of the drop in unemployment is also due to the fact that some people are running out of unemployment benefits and taking part-time jobs. There is usually a big increase in the rate that people find jobs during the last few weeks that they have unemployment benefits. In July 102,670 people saw their unemployment benefits run out. That number rose to 141,538 in August and is expected to soar to 486,049 in September. It will keep on rising each month hitting 1.5 million in just December alone. This past Sunday on ABC’s "This Week" Treasury Secretary Tim Geithner only promised "to look very carefully at [these lost benefits] as we get closer to the end of this year." Larry Summers, President Obama’s chief economic advisor, was similarly noncommittal when he was interviewed that same day on CBS’s "Face the Nation."
Jim Sinclair’s Commentary
91 days to go for the doomed dollar
‘Lost Couple of Decades’ Looming for U.S. Economy:
By David Wilson
Aug. 7 (Bloomberg) — The U.S. economy may be just as sluggish during the next 20 years as Japan’s economy was in the last 20, according to Comstock Partners, a money manager founded and run by Charles Minter.
Stimulus programs and a surging money supply aren’t likely to “solve a problem of excess debt generation that resulted from greed and living way beyond our means,” the firm wrote yesterday in an unsigned report on its Web site. “We could wind up with a lost couple of decades.”
The CHART OF THE DAY shows U.S. total debt and gross domestic product since 1952, along with the ratio between them, based on data compiled by Bloomberg. The ratio rose in the first quarter to 372 percent even as household borrowing dropped for a second straight quarter, an unprecedented streak.
The U.S. is headed for “a deleveraging period” in which the amount of so-called private debt, including consumer borrowing, collapses as government borrowing explodes, Comstock wrote.
Assuming that private borrowers pay down debt at the same pace as they did in Japan after its 1980s economic bubble burst, the savings rate will climb to about 10 percent in 2018, the report said. The estimate was made in a study by the Federal Reserve Bank of San Francisco that Comstock cited. It’s more than double the 4.6 percent rate for June.
Jim Sinclair’s Commentary
Go China!
Iron ore price breaks US$100/t to hit new high
By Commodities Now, August 8th, 2009 at 12:28 pm
The Steel Index daily iron ore price reference price reached US$104.1 per dry metric tonne today. The price, published daily for 62% Fe content fines delivered China, and has today surged upward, increasing by 5.0% on yesterday and 9.2% over the week.
Jim Sinclair’s Commentary
The headline should say "This Should Keep You Up At Night."
Warning: AIG collapse could trigger new crisis!!
BY DANIEL AT 7 AUGUST, 2009, 10:21 PM
AIG, once world largest insurance firm whose derivatives unit still has more than $1 trillion of exposures that need to be unwound while keeping losses under control.
Saying “derivatives are dangerous,” Warren Buffett
“Derivatives at the heart of the crisis, catastrophic losses are inevitable, financial system headed for oblivion, the new world disorder, EU doomed, Credit Default Swaps at the heart of the problem, Plunge Protection Team history, coverups for globalization failures, Bloodbath for the Yen…
The heart of the current crisis is the quadrillion plus derivative market. Roughly half of these derivatives are listed on exchanges, but the other half are on the totally unregulated, totally opaque, poorly documented and mostly naked (no reserves or collateral given to secure performance) OTC derivatives market.
….
It is only fitting that the credit-default swaps lie at the heart of the problem, which the fraudster banks now face. When you look at what has been done by these reprobates in the past, this is a most fitting fate for them. First, they had President Reagan pass an Executive Order in 1988 forming the President’s Working Group on Financial Markets so they could manipulate markets 24/7 with the PPT. That was forced by the 1987 Stock Market Crash, an event orchestrated by the Illuminati to convince everyone that we had to have an interventional team to stop such extreme market gyrations.”
