In The News Today

Posted at 9:08 PM (CST) by & filed under In The News.

My Dear Friends,

It seems almost to have come out of nowhere because gold is defying the interventionists and loud naysayers.

I was asked earlier this week by a dear friend if I thought gold could be at or above $1735 this week. My answer then was that this number was a stretch.

Well it isn’t that much of a stretch today. According to Kenny such an event puts us behind all the effort of the central banks to prevent the next real range of $1700 – $2111 and the new chapter of QE.

Regards,
Jim

 

Jim Sinclair’s Commentary

They should not be but they are.
They should not be but don’t expect any change.
They should not be but how else can you rig the game.

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Banks Shouldn’t Be Both Judge and Jury on Credit Defaults: View
By the Editors Mar 7, 2012 7:25 PM ET

Imagine you bought a house and, to insure it, you had to purchase coverage from the homebuilder.

Then imagine a fire nearly destroyed the house, but your ability to collect the insurance depended on a committee of anonymous homebuilders meeting in secret to vote on whether to write you a check. If denied, the panel wouldn’t have to provide an explanation, you wouldn’t be allowed to review the minutes of closed-door discussions and you’d have no right to appeal.

Not a great system. But not dissimilar to the one that governs the world of credit-default swaps, the contracts that insure sovereign- and corporate-debt investors against default. Panels made up of representatives from large banks, hedge funds, investment firms and other interested parties, formed by the International Swaps and Derivatives Association, decide whether payouts will be made to investors.

With the Greek crisis, the group has been busy. It already ruled March 1 that Greece’s debt restructuring so far wasn’t a “credit event,” meaning it didn’t trigger payments on credit- default swaps. It may have been the correct decision. But no outsiders participated in that meeting. No transcript was made public. And when the determinations committee, as it’s called, issued a decision, a terse 300-word explanation was provided. As for CDS buyers, there was no opportunity for an appeal.

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Jim Sinclair’s Commentary

This trickle will become a torrent. It almost fits in the same psychology that is reducing demand for the dollar for international settlements sure to bring the dollar to .7250 on the out of date, silly, antiquated USDX Index.

German newspaper faults secrecy around Germany’s gold in New York
By Ralf Schuler
Tuesday, March 6, 2012

NEW YORK — It’s the most valuable treasure we Germans have: 3,401 tonnes of pure gold — about 1,800 euros for each of us. Absolutely disaster-proof, divided between high-security vaults in Frankfurt, Paris, London, and New York. And the German Federal Bank (Bundesbank) isn’t looking after it!

The incredible gold scandal! On the 19th of November 2011, BILD magazine reported that the German Federal Bank last looked at our gold reserves in New York in 2007, and has thereby even alarmed the Federal Audit Office. (Inquiries are ongoing.)

A clear breach of the law, leading accountancy lawyer Prof. Jorg Baetge told BILD. "A tally of the ingots has to be made at least every three years." The Federal Bank hasn’t done that.

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Govt. sets record deficit in February
By Stephen Dinan
11:31 a.m., Thursday, March 8, 2012

The federal government recorded its worst monthly deficit in history in February, according to a preliminary report Wednesday from the Congressional Budget Office that said the deficit in fiscal year 2012 is already more than half a trillion dollars.

The CBO’s figures show that despite repeated efforts to trim spending, the government has borrowed 42 cents of every dollar it spent during the first five months of this fiscal year.

The nonpartisan agency projected the government will run a deficit of $229 billion in February, the highest monthly figure ever. The previous high was $223 billion a year ago, in February 2011.

It is the 41st straight month the government has run a deficit — itself a record streak that dates back to the final months of President George W. Bush’s tenure. Before now, the longest streak on record was 11 months.

For all of fiscal year 2012, which began Oct. 1, the budget analysts said the government has raised $869 billion in revenue but spent $1.5 trillion so far.

Congress and President Obama sparred for most of last year on how to cut spending, but the CBO’s figures show that spending has actually remained flat in 2012 once the timing of certain payments has been adjusted.

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Jim Sinclair’s Commentary

The fact is they are already practicing global QE via swaps (with wink-wink permanent rollovers) from the Fed down the chain to cover the losses at ECB banks on sovereign debt.

Maybe the squids can sell the Fed a nice OTC derivative to hide the swaps.

QE is alive, and kicking, hiding in plain global sight. This is reverse MOPE to lay a foundation that the Fed is monetarily benign now. They are absolutely not!

Fed Move Likely by June, Ex-Insider Says
By Randall W. Forysth
Wednesday, March 7, 2012

Morgan Stanley’s Vincent Reinhart says central bank is apt to ease before election season hits high gear.

Odds of more monetary stimulus from the Federal Reserve seem to get longer as the economic data improve. And the Federal Open Market Committee is unlikely to take further action at its one-day meeting next Tuesday.

But a long-time observer of Fed policy—from the inside and the outside—thinks another round of quantitative easing, or other measures, is likely later this year. Vincent Reinhart, Morgan Stanley’s chief U.S. economist, formerly was director of the Fed’s Division of Monetary Affairs and served as the FOMC’s secretary and economist, so he has seen things from both sides.

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Jim Sinclair’s Commentary

Yeah, sure. Tell that to the International Swaps and Derivative Association. I can hear the unanimous laughter already.

Hedge funds find loophole to trigger Greek default
By Sarah White and Tommy Wilkes
LONDON | Thu Mar 8, 2012 5:18pm EST

(Reuters) – Some hedge funds have found a legal loophole they believe will force Greece to repay some of its debt in full, three sources close to the matter said on Thursday, in a move that would intensify the standoff between the country and its debtors.

Greece closed a bond swap offer to private creditors on Thursday after clearing the minimum threshold of acceptance to push the biggest sovereign debt restructuring in history.

Government officials said more than 75 percent of eligible bonds had already been committed resulting in losses of some 74 percent on the value of the debt in a deal that will cut more than 100 billion euros from Greece’s crippling public debt.

But because of a provision written into one particular bond, some hedge funds believe that Athens has already defaulted on that bond by asking bondholders to exchange their debt for new paper with a much lower value, according to the sources.

The funds are now trying to buy up enough of the bond — issued by state-owned Hellenic Railways and guaranteed by the government — to force Greece to repay them in full, to the tune of some 400 million euros.

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