In The News Today

Posted at 1:16 PM (CST) by & filed under In The News.


Dear CIGAs,

Today a report showed a May drop in a regional index of manufacturing activity.



Jim Sinclair’s Commentary

The Administration in Ireland


Jim Sinclair’s Commentary

Yra tells it exactly as it is.

My former floor trading partner and dear friend lays out the lay of the dollar.

Notes From Underground: The only TRU-MAN about the DOLLAR is ex-CEA head Christina Romer
By Yra

In an effort to stay abreast of news and markets while in Boston, the two most interesting items on the global financial stage are causing a push/pull in the market. The Spanish elections certainly impacted the markets. Weakness in the EURO began on Friday as Bloomberg ran a story about the sad state of municipal finances in Spain that would be revealed after the Socialists lost most previously held local governments. It seems that the Spanish authorities have been fudging their local municipal finances and this will put more pressure on Spain to enact austerity budgets even with an unemployment rate above 21%.

The problem with Europe is the same as the problem the FED is facing: LACK OF CREDIBILITY. As the Socialists in Spain suffered a route at the ballot box, there may be more pressure on PM Zapatero to get the economy moving. Yet with the Germans and other creditor states pushing for greater austerity measures for the PIIGS, we are left to wonder what tools will be available to the individual nation-states to provide the needed stimulus. There was also a Der Spiegel piece that appeared online today in which it interviewed Jean-Claude Juncker and took him to task for being an ARROGANT, LYING EUROCRAT, thus undermining the little credibility that the political elite in Europe possess.

The Spanish election, S&P’s revision of Italy’s outlook to negative, and more Greek problems sent the EURO reeling against the DOLLAR and most other currencies. The market also sold off the COMMODITY CURRENCIES as the idea of EUROPE and the U.S. both suffering economic decline is forcing a selloff of risk as the Aussie and Canada seem in lockstep with the global equity markets. GOLD was the best performer as investors are leery of any FIAT CURRENCY.



Jim Sinclair’s Commentary

From CIGA Las:

"The smart money in Asia continues to accumulate." CIGA Las

CHART: China Passes India As World’s Biggest Gold Buyer

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world’s biggest purchasers of the metal.



Jim Sinclair’s Commentary

It should really read "What Happens When (not if) New York, Illinois, California and 46 other States of the USA default."

What happens when Greece defaults
By Andrew Lilico Last updated: May 20th, 2011

It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time (it won’t be longer than that). Given that the ECB has played the “final card” it employed to force a bailout upon the Irish – threatening to bankrupt the country’s banking sector – presumably we will now see either another Greek bailout or default within days.

What happens when Greece defaults. Here are a few things:

– Every bank in Greece will instantly go insolvent.

– The Greek government will nationalise every bank in Greece.

– The Greek government will forbid withdrawals from Greek banks.

– To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.

– Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)



Jim Sinclair’s Commentary

I personally know without any doubt what $1500 means to a company involved in the gold business.

He is so right. The barrel always rolls

Digging Deep for Value

David L. Steinberg, the founder of DLS Capital Management, considers himself a contrarian investor. Last summer, for example, he scooped up shares of BP (ticker: BP), which had gotten pummeled in the wake of the Gulf of Mexico oil spill. His reasoning: The stock was trading at a big discount to the worth of the company’s reserves.

Steinberg, 53, also favors gold-mining stocks, owing to his view that the greenback’s value will continue to decline as the federal deficit bulges.

Hewing to a deep-value portfolio-management style, DLS sometimes has bumpy returns, as in 2008, when its composite—which tracks how the bulk of the firm’s assets have performed—was down 51%, trailing the Standard & Poor’s 500’s 37% fall.

But Steinberg argues that patience is crucial for buying beaten-down securities—and his strategy has outperformed the market over the longer term. The firm’s global-equity composite has an annual net total return since its March 2003 inception through April 30 of 18.1%, versus 8.4% for the S&P.


Jim Sinclair’s Commentary

Let’s hope this publication is more correct at this time than they were in their hammer article of RGLD at $11 per share.

For Gold Miners, Big Nuggets of Hope
SATURDAY, MAY 21, 2011

A disappointing multiyear period for the major gold-mining stocks— Newmont Mining, Barrick Gold and Goldcorp—could be ending, thanks to rising profits, higher dividends and strong gold production.

Gold’s price has stalled recently. But since mid-2008, it has jumped about 50%, to $1,500 an ounce, while the shares of the three miners haven’t budged. Newmont (ticker: NEM) has been the worst long-term performer, with its stock about where it stood in late 2003, even though gold has more than tripled from the $400 an ounce it fetched back then.

BULLS ARGUE THE STOCKS COULD rise sharply in coming years, particularly if gold resumes its ascent. "There’s great value in the gold stocks," says Fred Hickey, a Barron’s Roundtable member who edits the High-Tech Strategist newsletter in Nashua, N.H. "They’ve underperformed the metal by 50% in the past few years. The cash flows are strong, and the price/earnings ratios have shrunk. If you believe gold prices are going higher, you will get earnings leverage, and the profits could be explosive."

Industry leader Barrick (ABX) at 45, is down 14% this year and trades at 10 times estimated 2011 profit of $4.31 a share. Goldcorp (GG), at 48, is up 6% this year and fetches 21 times projected 2011 earnings of $2.28 a share, while Newmont, at 54, trades for 13 times estimated 2011 net of $4.23 a share.


Jim Sinclair’s Commentary

With Banksters running the show, who needs the Old Mob Guys?

Banks Push Consumer Bureau to Keep U.S. Complaint Line Private
By Carter Dougherty – May 13, 2011 4:00 AM MT

The new U.S. consumer agency, which has yet to begin formal operations or write a rule, is already being squeezed between banks and advocacy groups over how to set up a complaint hotline.

Under the Dodd-Frank regulatory overhaul, the Consumer Financial Protection Bureau must establish a way for banking customers to submit reports about their problems with products and services. At issue is what happens after they’re filed.

Nonprofit groups such as Consumers Union and the Sunlight Foundation are pushing for an open system that would allow anyone to scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints to damage reputable brands.

“The point of banking supervision is to get the system working properly, not to air dirty laundry and scare capital away from banks,” Richard Riese, senior vice president at the bankers association’s Center for Regulatory Compliance, said in an interview.

The hotline has become a focal point of a philosophical debate about the bureau’s role — whether it should aim to improve consumer financial products primarily by working directly with companies or by bringing public attention to unfair practices.



Jim Sinclair’s Commentary

He has subjective motivation but that does not dilute the fact he is totally correct. Almost every State of the USA is insolvent and facing a degree of default.

If QE3 or the same paper printing by another name does not occur, the sound of the States of the USA exploding will be deafening.

US Worse Off Financially Than Euro Nations: Walker
Published: Monday, 23 May 2011 | 9:25 AM ET
By: Jeff Cox

The US is spending $4 billion a day more than it is taking in, putting the country on an unsustainable fiscal path perpetuated by both Democrats and Republicans, according to David Walker, head of the Comeback America Initiative.

Solving America’s problems will require a combination weighted toward spending reductions but one that also will require spreading the taxation burden around more evenly, said Walker, the former US comptroller general.

"We’re not growing enough and we’re not going to grow our way out of this problem," he said in a CNBC interview. "We would have to have double-digit real GDP growth for decades to grow our way out of this hole."

Walker’s organization promotes fiscal stability and is warning that the US is trailing many other developed nations in terms of getting its fiscal policies in order. Comeback America is a conservative think tank funded mostly through a grant from the Peter G. Peterson Foundation, named for the founder the Blackstone Group private equity firm.

In fact, according to an index that Comeback America developed, the US is in worse shape from a fiscal standpoint than debt-plagued nations such as Italy or Spain, he said.