In The News Today

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Jim Sinclair’s Commentary

Rush hour in downtown Arusha, Tanzania.

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Jim Sinclair’s Commentary

Is an auction really an auction if it is kept secret from other potential buyers?

Fed’s Secret Sale Of AIG Assets To Goldman Criticized As ‘Un-American’
Bonnie Kavoussi

The Federal Reserve gave just five banks the chance to bid on $6.2 billion in taxpayer-owned AIG assets before selling them to Goldman Sachs on Wednesday.

The Fed allowed Goldman Sachs, Barclays, Credit Suisse, the Royal Bank of Scotland, and Morgan Stanley to participate in the auction, according to a New York Fed statement. Reports of the auction leaked just days before the Federal Reserve announced the sale.

Some investors told Bloomberg News that the Fed’s decision to keep the auction secret was unfair to both investors and taxpayers. They said that if the bank had allowed the free market to set the price for the assets, the sale would have earned taxpayers more money.

"The exclusivity by which the process has shut out smaller dealers is a little un-American…. It seems odd that if you want to get the best possible price that it wouldn’t be open to anyone who wants to put in the most competitive bid," David Castillo, head of sales and trading at Further Lane Securities, told Bloomberg News.

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Jim Sinclair’s Commentary

In buying power it is going to be much deeper.

The Federal Reserve’s Explicit Goal: Devalue The Dollar 33%
2/06/2012 @ 3:36PM

The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable.  Under a gold standard, such an increase was uncommon, but not unknown.  The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged.  A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level.  It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today.  What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.

The Fed’s zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar’s buying power by imposing a negative return on short-term bonds and bank deposits.  In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of American’s hard earned savings over the next 4 years.

Why target an annual 2 percent decline in the dollar’s value instead of price stability?  Here is the Fed’s answer:

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Jim Sinclair’s Commentary

Slowly, but surely good money forces out bad.

Panel endorses gold, silver commerce
The Salt Lake Tribune
Updated Feb 13, 2012 11:18PM

A resolution urging the use of gold and silver in commerce won the approval of a House committee Monday, a move the sponsor says would help Utah stave off inflation and weather impending economic crises.

Rep. Brad Galvez, R-West Haven, sponsored legislation last year to recognize gold and silver as legal tender in the state, but doing business with the metals remains impractical.

Galvez’s resolution would encouragee the adoption of a legal and commercial system to make gold and silver more functional as currency.

The resolution, which was approved by an 8-3 vote by the House Public Utilities and Technology Committee, is nonbinding.

But Galvez is also sponsoring HB157, aimed at making it easier for Utahns to pay taxes in gold and silver and stating that Utah laws and rules could not create impediments to using gold and silver in private transactions or favor paper dollars over the metals.

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Jim Sinclair’s Commentary

Remember the super committee and the promises to cut the deficit?

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Jim Sinclair’s Commentary

Money can have other uses than spending, saving and speculating with.

Jim Sinclair’s Commentary

It is not a question of if – there is no other possibility.

The last four special emails I sent you, from the identity and purpose of the ISDA to today’s message of the greatest fear of the gold advocate being without basis, are the most important items I have ever sent to you in the past 9 years.

Fed’s Williams Says U.S. Monetary Policy Throttle Should Be Kept Wide Open
By Aki Ito and Caroline Salas Gage – Feb 14, 2012 1:00 AM MT

Federal Reserve Bank of San Francisco President John Williams said the U.S. central bank should keep trying to boost growth because it’s missing its goals for employment and price stability, while stopping short of calling for more asset purchases for now.

“I’m sticking with my story that economic growth won’t be that strong,” Williams told reporters yesterday after delivering a speech in Claremont, California. “Going forward, it’s about weighing the costs and benefits of doing more,” he said, adding that he’s looking “at the broad picture for what the outlook on the economy is” instead of a specific threshold that would signal that more easing was unnecessary.

Williams, a voting member on the policy-setting Federal Open Market Committee this year, said that inflation is likely to be about 1.5 percent this year and next, below the central bank’s goal of 2 percent. He also said the current 8.3 percent unemployment rate is “very far from maximum employment,” and that joblessness “will remain well over 7 percent for several more years.”

The FOMC said last month borrowing costs will remain low at least through late 2014, pushing back an earlier date of mid-2013, to help the two-year recovery gain traction. It also voted to maintain its maturity-extension program, announced in September to replace $400 billion of short-term debt in the Fed’s portfolio with longer-term Treasuries in an effort to further lower borrowing costs.

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Jim Sinclair’s Commentary

More movement towards Russia and China.

India to step up ties with Tehran; unfazed by US sanctions
14 Feb, 2012, 04.31PM IST, IANS

NEW DELHI: Unfazed by US sanctions and Israel linking Tehran to the attack on an Israeli embassy car here, India is set to ramp up its energy and business ties with Iran, with a commerce ministry team heading to Tehran to explore fresh business opportunities.

The team is expected to go to Tehran later this month to discuss steps to expand India’s trade with Iran, part of a larger strategy to pay for Iranian oil, said highly-placed sources.

Despite the US and European Union sanctions on Iran, India recently sealed a payment mechanism under which Indian companies will pay for 45 percent of their crude oil imports from Iran in rupees.

Not just oil, India is also stepping up the refurbishing of the Chabahar Port in Iran and a strategic railway link that will offer it direct access to Afghanistan and the energy-rich Central Asia.

In recent years, India has taken care to insulate its multi-faceted ties with Iran from the West’s collision with Tehran over its nuclear programme. The West accuses Iran of developing nuclear bombs.

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Jim Sinclair’s Commentary

Arab spring welcomed with glee by Financial TV is a disaster for Western interests.

Egypt Cabinet minister says US funded nonprofits to create chaos
Published February 14, 2012

Stoking tensions with Washington, an Egyptian Cabinet minister has accused the United States of directly funding nonprofit groups to create chaos in the country following last year’s ouster of longtime leader and U.S. ally Hosni Mubarak, according to comments published in state-owned newspapers on Tuesday.

International Cooperation Minister Faiza Aboul Naga made the remarks in a testimony she gave in October to judges investigating allegations the groups used foreign funds to foment unrest.

Aboul Naga, a leftover from the Mubarak regime who has served in three interim governments formed since his ouster, has been leading the crackdown on the foreign groups. Authorities last week referred a total of 43 employees of nonprofit groups, including at least 16 Americans, to trial before a criminal court.

The Americans include Sam LaHood, son of U.S. Transportation Secretary ray LaHood. All 43 are banned from travel. No date has been set for their trial.

The crisis has soured relations between Egypt and the United States, which has threatened to cut off aid to Egypt — a total of $1.5 billion a year in military and economic assistance — if the issue was not resolved. The release of Aboul Naga’s testimony four months after she gave it suggests that Egypt may not be willing, at least for now, to ease tensions with the U.S.

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