Dear Friend of GATA and Gold (and Silver):

The New York Sun tonight takes Federal Reserve Chairman Ben Bernanke apart for his doddering performance before the House Financial Services Committee and his dissembling response to U.S. Ron Paul’s question as to whether gold is money. The Sun’s editorial is headlined "Bernanke: Gold Isn’t Money" and you can find it here:

http://www.nysun.com/editorials/when-gold-isnt-money/87421/ ^[1]

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

Jim Sinclair’s Commentary

Here is Grain Father Jim, and the flock on the day gold makes a new surge.

 

Jim Sinclair’s Commentary

JB Slear, our gold and silver delivery man, makes the following keen observation.

China uses pictures to help explain the last media induced hype we’re forced to observe… geee I wonder who that big bear is?? Looks like he’s gonna eat them both, unless that’s a Mother Bear of debt. Hmm, I wonder who that could be representing…

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Jim Sinclair’s Commentary

Moody’s is playing with dynamite.

Moody’s Places U.S. on Review for Downgrade As Debt Talks Stall
By John Detrixhe – Jul 13, 2011 3:01 PM MT

Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.

The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”

More… ^[3]

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James Turk: just “several more days of silver in the 30s”
Posted by Dominique de Kevelioc de Bailleul on Jul 13, 2011

With silver and gold rallying strongly against the tide of the risk-off trade, bullion expert James Turk forecasts that silver is about to launch into the 40s, as more nervous investors come to terms with the inevitability of further devaluations and/or sovereign defaults, forced upon the world’s central banks by investors and weak politicians.

“One never knows exactly how the markets will unfold, but my sense is that we only have several more days of silver in the 30s,” Turk told King World News. “Once silver clears $38 on a closing basis, you are going to get back into the mid 40s in a heartbeat.”

Turk, the founder and president of overseas precious metals storage firm Goldmoney.com has warned long ago of the events playing out in Europe today, so his words carry significant weight among the bullion community.  The timing of his call back in January for silver to reach $50 by June 30 was considered reckless and daring at the time.  But history has proved him correct.  Silver reached an intraday high of $49.70 on May 2, just pennies shy of $50 and a month sooner than he expected.

Recently, Turk (along with another PM giant, Jim Sinclair) has differed with another hard-money advocate, Marc Faber, on the direction of precious metals prices during the months of July and August.  Faber expects the precious metals to meander in the hot summer months, which is a bet that the long-standing historical record of weakness during that time is most likely.  On the other hand, Turk anticipates a repeat of 1982, the year of the Mexican peso devaluations.

“The action in gold and silver so far this summer indicates to me that this is in fact poised to be explosive on the upside,” Turk explaind.  “Nobody is talking about this, but it could be a reality in short order.  Here it is nearly 30 years after the breathtaking summer of 1982, and history is about to repeat all over again.”

More… ^[5]

Jim Sinclair’s Commentary

Just in case you had any question about liquidity’s direction.

Bernanke lays out easing options
July 13, 2011, 10:00 a.m. EDT

By Greg Robb

WASHINGTON (MarketWatch) – While the Federal Reserve believes that the temporary shocks holding down economic activity will pass, the central bank is examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Bernanke discussed three approaches to further easing in his prepared remarks. One option, Bernanke said, would be for the Fed to provide more "explicit guidance" to the pledge that rates will stay low for "an extended period." Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to "increase the average maturity of our holdings." Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves, "thereby putting downward pressure on short-term rates more generally." Bernanke was clear to stress that easing was not the only option under consideration and that the next Fed move could well be to tighten. At the moment, Fed officials see a recovery that "will likely remain moderate," Bernanke said, with the unemployment rate falling "only gradually." Inflation is expected to subside in coming months, he said.

More… ^[6]

Jim Sinclair’s Commentary

Ron Paul and Ben Bernanke are at it again.

 

Embry – Mining Shares Will Be Like Internet Stocks in the ’90’s
KingWorldNews.com

With gold hitting new all-time highs and silver up over $2 at one point and mining shares taking off to the upside, today King World News interviewed John Embry, Chief Investment Strategist at $9 billion strong Sprott Asset Management.  When asked where he sees things right now Embry stated, “What’s been fascinating, and what was unappreciated by me in the early stages, was the enormous number of derivatives that have been created in the financial system.  Because of the derivatives they’ve been able to keep this thing going for infinitely longer than any rational mind would have thought possible.”

Embry continues:

“You’ve been able to create leverage to the extent that you’ve never seen before and this is why I think the bubbles were able to get stretched out and last as long as they did.  Because the balloon was blown up so much, I just think the aftermath in its finale is going to be extraordinarily unpleasant.”

When asked about the action in gold Embry responded, “I have been waiting for this move and it was interesting that it (gold) broke out a couple of days ago with real vengeance in the Euro.  I suspected that the next shoe to drop with be in North America and now we’ve got new highs today in US dollars, which should get even bigger headlines.  Gold is starting to make new highs against all currencies, and this is what we envisioned in an environment in which the fiat currency system is breaking down.”

When asked if London Whistleblower Maguire’s interview was contributing to this rally Embry said, “I believe it is.  He made very strong points.  One of his key points was regarding the whole pricing mechanism in the gold market, and that is when the physical market takes over from the paper market in establishing the price, it will represent the end of paper manipulation….

Click here to read the full interview on KingWorldNews.com… ^[7]

Jim Sinclair’s Commentary

Our whole financial system is an illusion

‘The Matterhorn Interview’ – July 2011
By Lars Schall

The book author, financial commentator and entrepreneur Mike Maloney talks in this exclusive interview with Lars Schall for Matterhorn Asset Management in Zurich, Switzerland about: inflation/deflation, the flaws of the current monetary system, the upcoming rollercoaster ride in crude oil, and the biggest bull market in gold and silver ever.

Mr. Maloney, is a massive financial/economic storm ahead for us that will express itself basically through these four phases: a short-term deflation – inflation – a huge deflation – a hyperinflation?

Mike Maloney: Yes, I absolutely believe so. I think related to the recovery of the stock markets, we got something going on in the United States that I refer to as a “Dead Cat Bounce“ – this is an old stock market term that goes back to the crash of 1987, where a stock market trader, when he was asked about the crash, answered: “Even a dead cat would bounce if you drop it from a high enough point.“ This means if a stock is so ridiculously overvalued, then when its bubble pops and it crashes, it goes down a certain amount and then investors come in to start buying what they think are good deals, because it’s now at half of what the stock was previously selling for, but they aren’t measuring the fundamentals: is this stock really a value measured in things like of P/E ratio (price-to-earnings ratio) and dividend yields?- the fundamental measurements of whether the stock is a bargain or whether it is overvalued. They aren’t looking at that. They just look at the price and they come in thinking they are scooping up deals only to find out later that the stock still needs to fall to go back to fair value. So those people that buy cause the stock to rise, then the stock runs out of steam or energy and it starts to roll over and decline again.Well, entire economies are doing the same thing. We were in a bubble that was a worldwide bubble. It’s a credit bubble that has caused all these other bubbles in other asset classes like stocks and real estate. Those bubbles have begun to pop, but by any measure of reasonable value the stock markets and the real estate are not done of falling yet. We’re still in a bubble. The crash of 2008 was just a speed bump on the way to a major accident. In the United States and many, many other countries around the world we are now in this “Dead Cat Bounce.“ The Federal Reserve for example created a whole bunch of currency. For the bailouts they’ve created more than a trillion of dollars of base money – base money is the currency in circulation, the paper dollars and the deposits that the banks have at the Federal Reserve, which are redeemable in paper dollars. These are not the dollars that the banks create with fractional reserve lending, which magnifies the money supply, but the Fed more than doubled the amount of base money, it went from 825 billion to 2.2 trillion paper dollars.

More… ^[8]

Jim Sinclair’s Commentary

Perseverance is an issue of faith based on fact.

Stay the course in your gold and silver share positions.

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