Dear CIGAs,

My advice to gold and gold share holders is, in the vernacular of the times, to "CHILL."

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Jim Sinclair’s Commentary

The G20 script caste against present circumstances.

1. EC members terrified by the power of OTC derivatives to destroy national bond markets are running scared. The strategy is twofold. Intervention at $1.19 to $1.20 in the euro and massive PR concerning strong currency initiatives weakened the dollar from its highs and took the euro so far into its $1.24-$1.25 key resistance.

2. Bernanke as a student of the Great Depression organizes a strong argument for continued coordinated monetary expansion with the US Treasury.

3. Monetarism fails miserably when applied in an open system. That is its major weakness. Bernanke’s thesis demands the entire Western World be on the same page of Monetarism for without it new lows in the history of this period will be established. A return to locked credit markets is a reasonable assumption

4. Media seems to have slowed down on its revelations of EU weak states.

5. There seems to be a slight pickup in media discussion of the dire condition of US states heading towards bankruptcy.

Keep in mind that in this new global economy a problem anywhere is a problem everywhere. As any currency in the Western World comes under attack, Gold has become the asset of choice.

Be ready for more violence in the USD/EU equation. Violence regardless of direction will be gold positive. This move is to $1650 and beyond.

 

Jim Sinclair’s Commentary

An event to keep in mind: More than a million people are expected to run out of benefits this month, according to the National Employment Law Project.

 

Jim Sinclair’s Commentary

The is a clear and present danger when a competitor holds your future in their hands.

The story that China would suffer as much is total crap when you see them cultivating Asian trading partners, internal consumptive power and cornering world hard assets.

China’s holding of US Treasuries is a strategic move and a weapon of mass financial destruction if it should be used in a manner other than as an investment.

U.S. intelligence community debates China’s bond holdings
Wed Jun 23, 2010 3:19pm EDT
By Emily Flitter

NEW YORK, June 23 (Reuters) – U.S. intelligence officials and top academics last week debated the risk China could wield its massive U.S. debt holdings as a weapon aimed at influencing U.S. foreign policy, according to a person who attended the meeting.

At a National Intelligence Council meeting last week, held at a Washington, D.C. hotel, members of U.S. intelligence agencies and China watchers discussed potential outcomes if China chose to sell its $900 billion of U.S. Treasury bond holdings, pushing up interest rates and making life much tougher for U.S. businesses and consumers.

While considered a remote possibility, China’s tremendous economic stranglehold over the United States remains much-debated as the world’s third largest economy grows in leaps and bounds and the number one economy struggles to break free from a deep recession.

The meeting took place as the United States prepares to issue a report that could label China a currency manipulator. U.S. lawmakers are also arguing over a bill that would penalize China for any protectionist policies.

"The best offense is often a good defense and you must be prepared. This is something that allows the U.S. to consider what policy alternatives they might have when facing threats from the outside," said Paul Markowski, president of the Global Strategies-Analysis Group in New York.

More… ^[2]

Jim Sinclair’s Commentary

Back towards crisis levels.

How about to worse than recent crisis levels in this Ski Jump Virtual Recovery.

Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels
Vincent Fernando, CFA | Jun. 24, 2010, 5:36 AM

Deutsche Bank has a new and improved index of U.S. financial conditions, and this index just slumped back towards the lows of our recent crisis.

Deutsche Bank’s Peter Hooper:

Financial conditions appear to have worsened substantially in recent quarters based on our update of the broad index of US financial variables presented earlier this year at the US Monetary Policy Forum. In the wake of recent developments in Europe, increased stress in financial markets has pushed that index halfway back to its immediate post- Lehman crisis lows.

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The index is built from an array of financial indicators such as U.S. treasury yields, the volatility index (VIX), the stock market, Broker-Dealer leverage, among others. It’s a bit of a black box, but it’s calculation is giving a similar reading to what we saw during the worst of the financial crisis.

More… ^[4]

Jim Sinclair’s Commentary

In Africa’s Riff Valley this happened to a large lake, and as the level rose the methane bubble popped the top, flowed with the wind and killed an entire town.

Methane in Gulf "astonishingly high": U.S. scientist

(Reuters) – As much as 1 million times the normal level of methane gas has been found in some regions near the Gulf of Mexico oil spill, enough to potentially deplete oxygen and create a dead zone, U.S. scientists said on Tuesday.

Texas A&M University oceanography professor John Kessler, just back from a 10-day research expedition near the BP Plc oil spill in the gulf, says methane gas levels in some areas are "astonishingly high."

Kessler’s crew took measurements of both surface and deep water within a 5-mile (8 kilometer) radius of BP’s broken wellhead.

"There is an incredible amount of methane in there," Kessler told reporters in a telephone briefing.

In some areas, the crew of 12 scientists found concentrations that were 100,000 times higher than normal.

"We saw them approach a million times above background concentrations" in some areas, Kessler said.

More… ^[5]

Jim Sinclair’s Commentary

CIGA Will asks if this is a plus for employment, and therefore will be heralded as a sign of an improved economy.

Bank of America Boosts Staff Handling Troubled Loans
By David Mildenberg – Jun 23, 2010

Bank of America Corp., the second- largest U.S. home lender, added 2,000 employees since April to work with borrowers having trouble paying their mortgages, a senior executive said.

The lender now has more than 18,000 workers in “default management,” a 60 percent increase since January 2009, Barbara Desoer, president of Bank of America’s home-loan and insurance unit, said in testimony prepared for a congressional hearing on U.S. housing policy tomorrow. Those workers handle 100,000 calls a day, she said. Wells Fargo & Co., the largest U.S. home lender, Bank of America and other companies have hired thousands of employees or shifted staff from other departments to work with borrowers who have lost jobs or experienced declining incomes. Banks repossessed a record 257,944 homes in the first quarter, 35 percent more than a year earlier, according to Irvine, California-based RealtyTrac Inc. More than a fifth of U.S. mortgage holders owed more than their homes were worth, Seattle- based real estate data provider Zillow.com reported last month.

“Given the depth of the nation’s recessionary impacts on homeowners, a considerable number of customers will transition from homeownership over the next two years,” Desoer said in the testimony. “We must compassionately and responsibly help those customers who have exhausted all their options and can no longer afford to stay in their homes.”

Handling More Calls

Bank of America, based in Charlotte, North Carolina, handles almost 14 million home loans, or about one of every five U.S. mortgages, more than any other U.S. servicer, Desoer said. Payments on 1.4 million loans are more than 60 days late, she said. Investors or government-sponsored entities such as Freddie Mac and Fannie Mae own most of those loans and pay servicers fees to handle billing and collection.

More… ^[6]