Hello Jim,

I first learned of Martin Armstrong via your site and have read what I could find regarding his work. One of his charts caught my eye months ago in a piece titled: ‘Understanding the Real Economy’ ^[1]. On the front of that piece, Armstrong had a chart with the date April 16th, 2010 listed as a possible key date.

I kept that in mind and as the date grew closer I watched to see if anything would happen. As we all know, that’s the day the news of Goldman Sachs was all over the headlines. I’m amazed, not only of the date predicted by Armstrong, but it seems to be the date a part of your Formula was activated. "What OTC derivatives do not do to the International Investment Banks, litigation will."

Your Formula and Armstrong’s predictions simply amaze me. My hat is off to both of you.

Wishing you the best,
CIGA Dan

Dear Dan,

Yes, Armstrong is very good to say the least.

Jim

 

Dear Jim,

After taking a break over the Easter holidays, the FDIC got busy again, closing nine banks between 4/9/10 and 4/16/10. Eight of the nine were closed this week.

Collectively, these nine banks had reported assets of about $6.84 billion and deposits of about $5.7 billion. The FDIC estimates the cost of the closings will be about $1.12 billion, about 19% of deposits. Based on that estimate, the bank’s assets are really only worth about $4.59 billion and had been over-stated by 49%.

The FDIC also had to enter into loss-share agreements with respect to $4.06 billion of assets taken over by the acquiring banks. That indicates its eventual losses could greatly exceed present estimates. Since the beginning of this crisis, the FDIC has entered into loss share agreements with respect to about $141.3 billion in assets.

As has often been the case in recent closings, the larger banks were the worst offenders in terms of over-valuation. City Bank of Lynnwood, Washington, had reported assets of $1.13 billion that, based on the FDIC’s loss estimate, are really only worth about $697 million. Bank management had over-valued them by about 62%.

Tamalpais Bank of San Rafael, California, had reported assets of $628.9 million that, by the FDIC’s loss estimate, are really only worth about $406.5 million. They had been over-valued by about 55%.

The largest of the banks closed, Riverside Bank of Florida, Fort Pierce, Florida, had reported assets of $3.42 billion. Based on the FDIC’s loss estimate, they are really only worth about $2.27 billion and had been over-valued by about 51%.

In each of these cases, a look at the bank’s balance sheet would have suggested it was very well capitalized. In reality, each was insolvent and had to be closed at a great cost to the FDIC.

Respectfully yours,
CIGA Richard B.

 

Goldman Sachs: At war with Washington
CIGA Eric

We will see.

I am hard pressed to believe that, all of a sudden, Wall Street no longer Owns Washington because it sure has.
Delay will be the best tactic that Goldman can use.
It will take a considerable time to adjudicate this civil suit.

Jim,

Agreed. More political PR passing as headline news. Financial reform, or the appearance of it, needs fodder for the kangaroo court. The limiting factor, however, is that the liquidity driven recovery is not only fragile but also requires cooperation. They cannot push this illusion too far without creating both economic and political consequences. Depiste the headlines, capital markets discount long-term reality.

Eric

One tweet yesterday said it all: "How can the [US] government sue Goldman Sachs? I thought Goldman Sachs ran the government." That charge is just a tad harder to make today, now that the biggest investment bank on Wall Street is fighting a civil suit for fraud filed by a government watchdog. For anyone who wants a reckoning for the economy-devastating episode that is the banking crisis, this bears the promising indications of war between Wall Street and Washington.

More… ^[2]

Stand Strong with Gold – Transition from D-wave to A-wave
CIGA Eric

In my Consolidation breakout study of gold ^[3] on 12/19, I illustrated the potential of the 2009 breakout. I published this study, because the D-wave decline, characterized by orchestrated headline-induced fear, was coming.

This commentary was followed by Stand Strong with Gold ^[4] on 1/06/10. This commentary discussed the long-term potential for gold and was intended to bolster resolve and discipline during the D-wave (Down).

As of April 2010, money flow and time analysis ^[5], point to a transition from D-wave (Down) to A-wave (Up). Remember that transitions are processes rather than static points. If investment success depends on a static entry point – single purchase point, the transition process will test patience. Gold is all about control, and control is defined by time (delay of the inevitable).

Within the context of the transition from down to up, please review and updated Consolidation Breakout Study Chart with the following comments:

Force of the breakout is a function of time and range (or volatility) within the consolidation. The force of the breakout (percentage gain from the breakout point), increases as the time and volatility of the consolidation increases.

The 2008-2009 consolidation was nearly the longest and most volatile. This should give it great force to the upside. To suggest that it has topped out after 7-months and 8.5% rally from the breakout ignores the massive energy stored within the previous consolidation.

Gold Consolidation Breakout Study Chart:
^[6]

Notice how REV(E), yellow indicator, made a new high in 2009. The energy of the tape is increasing.

More… ^[7]

Dear Jim,

Have you seen this?

CIGA HK Mac.

Clinton: I Was Wrong to Listen to Wrong Advice Against Regulating Derivatives*

In my EXCLUSIVE “This Week” interview, I asked former President Bill Clinton if he thought he got bad advice on regulating complex financial instruments known as derivatives from his former Treasury Secretaries, Robert Rubin and Larry Summers.  He acknowledged that he was wrong to take the advice of those advising him against regulating derivatives.   

(Note: please see update at the bottom of this post.)

“On derivatives, yeah I think they were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency,” Clinton told me.

“And the flaw in that argument,” Clinton added, “was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.”

More… ^[8]

 

Dear Jim,

Is it not time to get " Wag the Dog" off the shelf again and laugh our way through it?

The on again off again Greece bailout and the continuing excuses for inaction shows the real concern for the future (but don’t tell anybody).

The Goldman case has been blown out of all proportion (intentionally?) and is a flimsy action at best.

Yes Wall Street still controls K Street(but let’s kid it does not).

CIGA Peter

Dear CIGA Peter,

Right on. Anyone that has not seen "Wag the Dog" and "Bulworth" has missed a great movie night at home. They are political and economic lessons of great value as a side benefit.

Regards,
Jim in Qatar

 

Dear Jim,

Just in case you weren’t aware, I thought you should know that "The Current Price of Gold is unsustainable"… according to the bold typeset front page of the Financial Times on Tuesday. Are these not the people who called the "End of Gold" in 1999?

It’s good to have such reliable indicators in the Gold market.

Long and strong, I remain, your servant,
CIGA Pedro

Dear CIGA Pedro,

The Financial Times is the greatest of all gold contra indicators and has always been.

Watch out when the Financial Times publishes the 2nd bull article.

Your pal still in Qatar,
Jim

 

Dear Jim,

"Stay the course. We are a few days from a stratospheric takeoff in the price of gold."

Is it just because of the natural accelerated trend-line or is it because of yours, Martin’s and Alf’s work?

CIGA Paul

Dear Paul,

The answer is both. I feel certain we are a short breath away from the major assault on $1650.

Look at it this way – April Gold showers lead to May golden flowers.

June will be a startling time.

Regards,
Jim

 

Jim Sinclair’s Commentary

Jeff has an interesting observation.

It looks like the big action on airline puts the trading day before 9/11 that no one has any interest in following up even though the doer of that deed lies in the paper trail.

The buyer of the Goldman puts also lies in the paper trail.

Jim,

What’s really interesting, as always, is the story that no one is telling. The SEC is either stupid or corrupt for announcing their suit on options expiration Friday, the most volatile day of the month.

April 170 Goldman Sachs puts, which would have expired worthless had the SEC waited until today, rose 140,000% on Friday.

Anyone with an extra thousand bucks and some insider info on Friday morning could have made just shy of a million and a half by Friday afternoon.

There was surprisingly large volume in these “out of the money” puts the days before. Who in their right mind would bet on such a large fall for such a typically stable company? Someone who knew what was coming.

CIGA Jeff

 

Dear Jim,

As you forecasted, OTC derivatives are exploding all around the West. Budgets in European cities, like Saint-Etienne, are bombed away.

The following story says it all.

I believe you when you say gold price will go stratospheric. Gold will explode like the Pinatubo.

Greetings from Europe,
CIGA Jeroen

Saint-Etienne Swaps Explode as Financial Weapons Ambush Europe
April 14, 2010, 6:04 PM EDT
By Alan Katz

April 15 (Bloomberg) — The worst global financial crisis in 70 years arrived in Saint-Etienne this month, as embedded financial obligations began to blow up.

A bill came due for 1.18 million euros ($1.61 million) owed to Deutsche Bank AG under a contract that initially saved the French city money. The 800-year-old town refused to pay, dodging for now one of 10 derivatives bombs on contracts so speculative no bank will buy them back, said Cedric Grail, the municipal finance director. They would cost about 100 million euros to cancel today, he said.

“It’s a joke that we’re in markets like this,” said Grail, 38, from the 19th-century city hall fronted by an arched facade and the words Liberte, Egalite, Fraternite. “We’re playing the dollar against the Swiss franc until 2042.”

More… ^[9]

 

Stocks, Interest Rates, and Gold can rise together

This is exactly what we are seeing (up stocks, up gold, and rising interest rates – the last piece) as the 17.2 year cycle of 2016 approaches.

"Welcome to the Decline and Fall of America where stocks, interest rates, and gold can rise together."

Source: martinarmstrong.org ^[10]

More… ^[11]