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Jim Sinclair’s Commentary

The risk of conflict with Iran lies here.

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Jim Sinclair’s Commentary

At first it was a trickle. You read it here, but really did not make that much of it. Then it became a quiet unnoticed stream.

Get ready to the torrent in the second half of 2012. The real range of gold this year will be $1700 to $2100

The demise of the dollar
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
By Robert Fisk
Tuesday 06 October 2009

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region’s conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

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Jim Sinclair’s Commentary

"Selective default" sounds to me as a credit event that will be deemed not a full default. Because it is not a full default, default credit swaps will not need to function.

If default credit swaps ever have to perform, they cannot, and will not, without a massive rescue of the five major US banks.

What a hell of a mess.

S&P says likely to declare Greece in default
Posted 2012/01/24 at 8:59 am EST

NEW YORK, Jan. 24, 2012 (Reuters) — Standard & Poor’s will likely downgrade Greece’s ratings to "selective default" when the country concludes its debt restructuring, but that will not necessarily destroy the credibility of the European Union, an official with the ratings agency said on Tuesday.

"It’s not a given that Greece’s default would have a domino effect in the euro zone," John Chambers, the chairman of S&P’s sovereign rating committee, said in an event organized by Blooomberg Link.

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Jim Sinclair’s Commentary

A war risk more likely to be started by election polls rather than an international incident.

Bomb-Bomb-Bomb, Bomb-Bomb-Iran?
By BILL KELLER
Published: January 22, 2012

O.K., Mr. President, here’s the plan. Sometime in the next few months you order the Department of Defense to destroy Iran’s nuclear capacity. Yes, I know it’s an election year, and some people will say this is a cynical rally-round-the-flag move on your part, but a nuclear Iran is a problem that just won’t wait.

Our pre-emptive strike, designated Operation Yes We Can, will entail bombing the yellowcake-conversion plant at Isfahan, the uranium enrichment facilities at Natanz and Fordo, the heavy-water reactor at Arak, and various centrifuge-manufacturing sites near Natanz and Tehran. True, the Natanz facility is buried under 30 feet of reinforced concrete and surrounded by air defenses, but our new bunker-buster, the 30,000-pound Massive Ordnance Penetrator, will turn the place into bouncing rubble. Fordo is more problematic, built into the side of a mountain, but with enough sorties we can rattle those centrifuges. Excuse me? Does that take care of everything? Um, that we know of.

Civilian casualties? Not a big deal, sir, given the uncanny accuracy of our precision-guided missiles. Iran will probably try to score sympathy points by trotting out dead bodies and wailing widows, but the majority of the victims will be the military personnel, engineers, scientists and technicians working at the facilities. Fair game, in other words.

Critics will say that these surgical strikes could easily spark a full-blown regional war. They will tell you that the Revolutionary Guard — not the most predictable bunch — will lash out against U.S. and allied targets, either directly or through terrorist proxies. And the regime might actually close off the vital oil route through the Strait of Hormuz. Not to worry, Mr. President. We can do much to mitigate these threats. For one thing, we can reassure the Iranian regime that we just want to eliminate their nukes, not overthrow the government — and of course they will take our word for it, if we can figure out how to convey the message to a country with which we have no formal contacts. Maybe post it on Facebook?

To be sure, we could just let the Israelis do the bombing. Their trigger fingers are getting itchier by the day. But they probably can’t do the job thoroughly without us, and we’d get sucked into the aftermath anyway. We might as well do it right and get the credit. Really, sir, what could possibly go wrong?

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Jim Sinclair’s Commentary

The epic debt problem of Great Britain is rarely mentioned in MSM. Financial practices in Great Britain make the euro look as conservative as the myths of Honest Abe.

2012 is the year that the euro takes back page to the currency problems of other countries.

UK debt passes £1 trillion for the first time
The UK Treasury has blamed "unsustainable" levels of spending by the last Labour government for public debt rising above £1 trillion for the first time.
By Szu Ping Chan
3:20PM GMT 24 Jan 2012

Public sector net debt excluding financial interventions, such as bank bail-outs, rose to £1.004 trillion in December, as the Government borrowed nearly £14bn last month despite its continued austerity drive.

The £1 trillion figure was the highest since records began in 1993, and represents 64pc of GDP. The Treasury has not recorded an annual surplus since 2001/02, when it repaid £243m into the nation’s coffers.

The Government has forecast that servicing Britain’s debt will cost £47.6bn in the current financial year, rising to £65.5bn in 2016/17.

A Treasury spokesman said: "That our national debt has reached more than £1 trillion simply shows the unsustainable level of spending this country built up over the past few years, and shows why it is critical for our nation’s future that we deal decisively with the deficit."

The Office for National Statistics (ONS) said it expected the figure to ease back in January due to tax inflows, but to rise again in February.

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