Dear CIGAs,
In reference to John Williams, who is a respected economist, his inflation adjusted gold prices are a tad heftier than most.
John Williams, of Shadow Statistics weighed in with his inflation adjusted price. $7150.00 is not too far from Alf’s max price objective of $10,000.00.
"John Williams, an economist and the editor of Berkeley, California- based shadowstats.com said "If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,""
Jim Sinclair’s Commentary
For your information.
Bailouts, Bonuses, And The Return Of Unjust Gains
By Tracy A. Thomas
October 19, 2009
(Excerpted From Article)
CONCLUSION
Restitution was created to provide legal means of redressing injustices that otherwise would go unanswered. As Dan Dobbs, the author of the classic Remedies treatise, Law of Remedies, explained, “[u]njust enrichment cannot be precisely defined, and for that very reason has potential for resolving new problems in striking ways.”[55] The restitution remedy continues to be an important part of the common law available to provide justice for new and evolving injustices like those presented by AIG.
Jim SInclair’ Commentary
I would like to send a special congratulations to CIGA Marc on the birth of his first born child, a beautiful baby boy. Congratulations Marc!
Jim Sinclair’s Commentary
Here and there to be sure.
BOE King: Delusion To Think Regulation Can Stop Bank Failure
By Natasha Brereton
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- Bank of England Governor Mervyn King said Tuesday that heightened regulation can’t prevent the financial speculation that results in bank failures, and called for a serious review of the structure of the banking sector whose goal would be to eliminate institutions that are too important to fail.
In a speech to business people in Scotland, King championed the idea of separating banks’ utility functions as a means of minimizing the government’s effective subsidy of risky activities and reducing the U.K.’s reliance on a small number of very big banks.
Turning briefly to the economy, he noted that there was likely to be "significant" fiscal tightening in the years ahead, and stressed the need to boost broad money growth, but gave no clear indication on whether he would favor extending the bank’s bond buying policy.
"The sheer creative imagination of the financial sector to think up new ways of taking risk will in the end, I believe, force us to confront the ‘too important to fail’ question," King said. "The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion."
King said it was hard to see how the existence of banks that are too important to fail was consistent with them being private entities.
One way to address the problem would be to reduce the likelihood of such institutions failing as much as possible, but the capital requirements that regulators can impose to achieve such an aim will always be arbitrary, he said.
Jim Sinclair’s Commentary
Today’s major story of our interest is "ORAL CURRENCY INTERVENTION."
European leaders screamed about dollar weakness which caused some dollar short covering.
The dollar has no meaningful upside so therefore gold has no meaningful downside.
Jim Sinclair’s Commentary
The Humpty Dumpty Recovery Economy.
The inviting conclusion is that QE cannot end, because its end will simply recall into present time the reason why it started in the first place. QE is all that is holding the MOPE recovery together.
Whenever you hear the words "End to QE," think "CIT" and "Middle America." You might call this the Humpty Dumpty Recovery Economy.
Hedge manager Sprott sees trouble when easing ends
US government is new "dead man walking", investor says
By Alistair Barr, MarketWatch
Oct. 20, 2009, 12:25 p.m. EDT
NEW YORK (MarketWatch) – When so-called quantitative easing by central banks ends, the world economy may slip back into trouble, Canadian hedge fund manager Eric Sprott warned on Tuesday.
Toronto-based Sprott called Citigroup, Fannie Mae, Freddie Mac, and General Motors "dead men walking" in late 2007. On Tuesday, he said the U.S. government is the new dead man walking, partly because it may struggle to keep borrowing enough money if the Federal Reserve stops buying Treasury bonds.
Sprott’s Canadian hedge fund, Sprott Hedge Fund LP, is up more than 400% since inception in 2000 as it rode a surge in gold prices and shares of gold miners and other raw materials companies.
Bank bailouts and other dramatic efforts by central banks have stopped the world "going into the abyss," Sprott said during a presentation at the Value Investing Congress in New York.
The "granddaddy" of all those bailout efforts is quantitative easing, in which central banks in the U.S. and the U.K. especially buy government bonds to keep interest rates low, Sprott said.
Jim Sinclair’s Commentary
As long as those that claim to be hedgers have no regulations, no regulations will be effective.
All of this applies to OTC derivatives going forward as the old have in the main no standard and less financing. As such the old OTC derivatives cannot be clearinghouse guaranteed and therefore cannot trade on any exchange.
City’s market in derivatives faces control from Europe
Paris-based ‘super regulator’ will have final say under draft directive
By Ambrose Evans-Pritchard
Published: 9:20PM BST 20 Oct 2009
A European super-regulator will have the final say over London’s vast derivatives market and will acquire powers to limit the positions taken by banks and hedge funds, according to draft plans released by the European Commission.
The proposals will also see traders facing capital charges if they choose to settle contracts outside the main exchanges. Over-the-counter trades will have to be cleared though a "central counterparty" so that regulators can keep tabs on overall risk.
"A paradigm shift must take place away from the traditional view that derivatives are financial instruments for professional use, for which light-handed regulation was thought sufficient," said the draft. "Derivatives should be appropriately priced in relation to the systemic risk they entail, in order to avoid these risks being passed on to the taxpayers."
It added: "Derivatives play a useful role in the economy. However, they also contributed to the financial turmoil by allowing leverage to increase and by interconnecting market participants, a fact which went unnoticed because of lack of market transparency."
Insiders say European authorities were stunned to discover that French and German banks were massively exposed to US insurer AIG, creating the danger of an EU-wide crisis if AIG had been allowed to fail.
Jim Sinclair’s Commentary
This is not only gas cards, it is all card companies when you consider new credit limits and credit restrictions.
Consider what this means to the US consumer.
Citi starts closing Mastercards without warning
People across country reporting their cards linked to gas companies denied
updated 8:39 a.m. MT, Tues., Oct . 20, 2009
NEW YORK – Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.
Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was "closed at credit grantor’s request" on the Shell MasterCard account.
"They said there was a routine review," said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.
Burdette isn’t alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.
Citi confirmed the basics. The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.
