Hi Jim,

I just read your reply to Bill’s question/statement regarding deflation vs. Inflation.

Good answer. People just don’t get the currency event. It is because:

1. They are too young.
2. They have not studied history.
3. They are overwhelmed with propaganda.
4. They observe M3 contracting and finally.
5. They just don’t get the currency event.

I think Harry Schultz put it best when he said some things will skyrocket (like oil) and other things will deflate (like real estate). Sometimes people see things in one dimension and can’t see past their noses.

Big love,
CIGA Selim

 

Hi Jim,

The current monetary system looks like it will fail. There is way too much debt across the board across all levels. Add to that $1,300T in derivatives and $150T in US government unfunded liabilities. That’s $500k in US government unfunded liabilities per US person.

When people realize that they must purchase gold to retain what purchasing power they have left, they will form a herd like mentality and the gold stocks will explode upward in price. It is only a matter of time.

Gold is the ultimate fiat currency lie detector. Wall Street now owns Washington and Main Street is left to fend for themselves and piss in the wind.

This is an American tragedy. Our County’s founding fathers surely are quite disappointed.

I believe that Main Street with eventually rebel and the 2nd American revolution will take hold.

All the best,
CIGA Ray

 

Dear Fred,

There are tons of conflicting opinions concerning negative lease rates recorded on the internet. I assume the confusion has lead to your question.

The answer is simple. Central Banks are paid lease rates for lending gold yet assume the full risk of non-return of the asset which is not an attractive proposition when sovereign credit is sundering.

To be paid nothing for taking the risk of non-return of the asset is not attractive to any sane person.

The gold price is moving up. It simply says no interest on the part of central banks in lending gold to questionable credit, and even other central banks as questionable credits.

The desire to short gold is dropping daily. The bearish opinion that it indicates central bank’s over-much selling pressure is denied by the appreciation of the price of gold.

It is fact that central banks have been buyers and even on balance buyers It is that simple.

The confusion is that the bears are giving academic answers to a practical situation.

Respectfully,
Jim

 

Eric,

You will recall my observation that the top nuclear scientist in America had been sent by the Administration to the BP war room as advisors.

Don’t rule out anything as the greatest ecological disaster in the history of man continues.

Regards,
Jim

Nuclear Option on Gulf Oil Spill? No Way, US Says
CIGA Eric

I do not advocate any particular "solution" but rather point out how quickly consensus opinion can go from "No Way" to "Let’s Think about it". A week ago, consensus opinion feared lower stock and gold prices, but that will change with every up tick. There are reports that suggest that the infrastructure of the well has been damaged. If this is correct, plugging the well through traditional measures could prove very difficult. Watch consensus opinion evolve as the size of the spill continues to increase.

“Probably the only thing we can do is create a weapon system and send it down 18,000 feet and detonate it, hopefully encasing the oil,” Matt Simmons, a Houston energy expert and investment banker, told Bloomberg News on Friday, attributing the nuclear idea to “all the best scientists.”

Source: www.cnbc.com ^[1]

More… ^[2]

Hi Jim,

You predict hyperinflation. I can only see that happening if people have the money to spend. If their IRA is toast because the stock market has melted down, they will have no cash to spend. They have already lost the equity in their homes and most are under water. Jobs are in jeopardy, everyone is cutting back, no one is going on a spending spree. If the Administration was to eliminate the income tax and sent $10,000 checks to everyone, then prices will rise like you predict… but they won’t give up taxes that easily. Ben will have to use a B-52 money drop.

Deflation can occur if no one has any extra money to spend. Most businesses finance their inventory and pay interest on their loans. If their products are not moving, they will not raise prices, hell, they may take a loss so they can clean out the back room and make this months payment.

Sooner or later the Government will default on its promises, it is just a matter of time. Then, interest rates will skyrocket. I just can’t see how prices can rise when everyone is out of work or broke. I think they are deliberately trying to destroy America so they can give us a solution to the problem: the new world order – a one world government with the bankers in charge and our Constitution, will be history.

All the new money that has to be created out of thin air has gone to the bankers, not the people. How can prices rise if the common man is destitute?

CIGA Bill

Dear Bill

Hyperinflation is a currency, not an economic, event. That is not factored into your set of parameters leading to your conclusion.

Governments do not default, they reschedule and print more money. QE can provide pieces of paper, but not buying power.

All your points below that you offer to sustain deflation is the meat from which hyperinflation occurs. Governments of the Western world will provide all the fiat money to bail out everything but Main Street, but there will be no increase in buying power.

I have written on this subject at least 200 times, and seem not yet been able to communicate what is an economic/political axiom. This currency event, not an economic event, has happened before and will again.

Did the same conditions and formulas you put forward to sustain deflation not exist in Weimar, Zimbabwe and 34 other examples? Is not what the Western world is doing now EXACTLY what was done in Weimar, Zimbabwe and 34 other examples?

Respectfully yours,
Jim

 

Jim Sinclair’s Commentary

And so it will be provided. Another event answer to Bill’s question.

EU chief says eurozone bailout could be increased

BRUSSELS – The European Union president says EU governments will increase a massive euro750 billion ($1 trillion) bailout package if it isn’t enough.

EU President Herman Van Rompuy told Belgian magazine Trends Tendances on Thursday that "if the plan isn’t enough, my answer is simple: in this case, we will do more."

He says he doesn’t think that’s likely because the size of the financial rescue on offer for eurozone countries who can’t repay their debts already "stunned the world."

Germany is providing the largest chunk of the debt guarantees that back the fund.

More… ^[3]