Dear CIGAs,
Patience with gold when you know you are right is an asset.
There is nothing like a good nap after the close.
Jim Sinclair’s Commentary
Many of you are so lost in the Fed soap opera that you have lost your focus entirely. The longer the Fed waits, the greater the amount of QE they will have to do.
As in the Skier illustration, done for you years ago, the second drop in the US economy is going directly through the floor. Markets will push the Fed to act on a random day, not on a predetermined Fed meeting of the FOMC.
Where did you all get the crazy idea that Fed moves come on schedule? That implies preplanning – something that has never occurred.
Fed Offers No New Stimulus; Still Sees ‘Exceptionally Low’ Rates Through Late 2014
Fed Sees Slowing Economy, but Defers New Action
By BINYAMIN APPELBAUM
Published: August 1, 2012
WASHINGTON — The Federal Reserve’s policy-making committee took no new steps to support the economy at a meeting that ended Wednesday, although the committee signaled in a statement that it was ready to take new action if job growth does not improve.
The Fed said that the pace of economic growth had slowed over the summer, and said that it expects the unemployment rate to fall “only slowly.”
Nonetheless, the Fed chose to defer action at least until the committee’s next meeting in September, in hopes that the regular arrival of new data will provide greater clarity about the health of the economy.
“The committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote stronger economic recovery and sustained improvement in labor market conditions,” the committee said, using language that was somewhat stronger than it has used in past statements.
Jim Sinclair’s Commentary
John Williams comments on the dynamics behind the Fed action.
- Fed Action Appears to Be on Hold for Systemic-Solvency Crisis
- Construction Spending Still Bottom-Bouncing
- Disposable Income Flattens Out
Jim Sinclair’s Commentary
Whatever is required will be provided.
Greece agrees new spending cuts to keep bailout
1 August 2012 Last updated at 17:25 ET
Leaders of Greece’s fragile coalition government have agreed 11.5bn euros (£9bn) in new spending cuts needed to keep its EU/IMF bailout.
The cuts were required for Greece to qualify for the next 31.5bn euro instalment of the 130bn euro loan.
Without the funds, Greece would face bankruptcy and probably leave the euro.
The deal came after the two junior coalition parties shelved demands for an immediate renegotiation of the bailout terms to delay the cuts.
Conservative Prime Minister Antonis Samaras has argued that Greece must regain credibility before it can ask its international creditors for an extension to its 2013-4 austerity deadline.
"The prime minister said that it must be accepted – as a necessary condition for our country to remain in the eurozone and to be able to negotiate further – to cut public spending by another 11.5bn [euros]," Finance Minister Yannis Stournaras said after the meeting.
"That position was accepted."
Jim Sinclair’s Commentary
The longer it takes to add stimulus, the larger it must be.
Manufacturing in slump in US, UK, eurozone and China
1 August 2012 Last updated at 12:27 ET
Manufacturing in most of the world is in a slump, a raft of reports for July has suggested.
US manufacturing growth shrank for the second month in a row, said a survey by the Institute for Supply Management.
In the UK, the manufacturing sector shrank at its fastest rate for more than three years, while in the eurozone, factory output contracted at its fastest pace in three years.
And manufacturing activity in China had its slowest increase in eight months.
The ISM, a trade group of US purchasing managers, said on Wednesday that its index of manufacturing activity rose to 49.8, from 49.7 in June.
Jim Sinclair’s Commentary
The longer the Fed Soap Opera goes on the more stimulus that will be required.
As given to you years ago in the Skier illustration, the second downturn of the US economy will take out the lows.
Markets will force QE3 because it is the only tool that will provide unlimited discretionary cash to the Fed and Treasury.
Fed frets but doesn’t offer more help for economy
No action surprises analysts, disappoints Wall Street
By Greg Robb, MarketWatch
Aug. 1, 2012, 2:53 p.m. EDT
WASHINGTON (MarketWatch) — A cautious Federal Reserve on Wednesday said the economy was weaker but took no new action to help stimulate demand.
The lack of any policy action was a surprise. Analysts had expected the Fed to at least push out its pledge to hold its benchmark federal funds rate exceptionally low. Instead the Fed repeated that it would likely hold that rate steady until late-2014.
Many economists had thought that the Fed might announce a major new asset purchase plan.
U.S. stocks SPX -0.21% dropped in the immediate aftermath of the Fed decision.
Joe LaVorgna, chief economist at Deutsche Bank, welcomed the Fed’s inaction.
“The training wheels need to come off the bike and the economy needs to be left alone,” LaVorgna said.
As expected, the Fed left unchanged its benchmark federal funds rate target at zero to 0.25%, the level it has been at since December 2008.
Jim Sinclair’s Commentary
How sure are you that the metal is there?
Esteemed son of the south pleads guilty in $90.1m silver Ponzi scheme
Author: Dorothy Kosich
Posted: Wednesday , 01 Aug 2012
A former Anderson County, South Carolina councilman and past national commander of the Sons of Confederate Veterans entered a guilty plea in U.S. District Court in connection with a Ponzi scheme in which an estimated 945 investors in 16 states were duped into investing a total of $90.1 million in alleged silver contracts.
In a complaint filed in the U.S. District Court in South Carolina, the U.S. Commodity Futures Trading Commission said Ronnie Gene Wilson, 64, of Easley operated a Ponzi scheme through his company Atlantic Bullion & Coin, Inc. since "at least 2001 through February 29, 2012."
"As part of their Ponzi scheme, Wilson and AB&C….fraudulently offered contracts of sale of silver bullion, a commodity in interstate commerce," said the CFTC. "Through their Ponzi scheme, defendants obtained at least $90.1 million, from at least 945 investors, for the purchase of silver."
Despite the offers of sale, defendants failed to purchase any silver at all with the $11.53 million they collected from the AB&C Investors. Instead, defendants misappropriated it," the CFTC asserted. "By late 2011, as their Ponzi scheme began to unravel, defendants attempted to conceal their fraud by issuing false and/or fraudulent financial statements."
Well, dear reader, do you know where your silver is??? If you got taken by this scam, you got precisely what you deserved…and is what Ted Butler and I have been going on about for years. It’s physical metal in hand…or in a fund that you know actually owns the stuff. Even SLV would be better than this…and coming from me, that’s saying a lot. I found this story on the mineweb.co.za Internet site in the wee hours of the morning…and the link is here
Jim Sinclair’s Commentary
I have answered this question too many times. It does not matter a twit. QE is coming. About that there is no doubt.
The reason why is it is the ONLY tool that gives the Fed and treasury discretionary funds without limit.
Gold is going to and through $3500. People are so damn deep in the drama they have forgotten the plot.
Governments to Turn to Inflation as Stocks Fail, Pimco Says
By Chris Fournier and Susanne Walker – Jul 31, 2012 5:47 PM GMT-0300
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said governments may turn to financial repression and various forms of quantitative easing to inflate asset values as equities fail to match historical returns.
The so-called Siegel Constant, which purports to show a long-term history of inflation-adjusted equity real returns of 6.6 percent since 1912, may be a “historical freak” unlikely to be seen again, Gross said in his monthly investment outlook posted on the Newport Beach, California-based company’s website today. Presuming a 2 percent return for bonds and 4 percent nominal returns for stocks, a diversified portfolio produces a nominal return of 3 percent and inflation-adjusted returns near zero, he wrote.
Since private pension funds, government budgets and household savings balances often assume a minimum 7 percent to 8 percent minimum annual appreciation, policy makers emulating historical patterns may be tempted to inflate their way “out of the corner,” even though inflation doesn’t create true wealth and doesn’t fairly distribute pain and benefits across society, Gross wrote.
Equity ’Cult’
“Unfair though it may be, an investor should continue to expect an attempted inflationary solution in all almost all developed economies over the next few years and even decades,” Gross wrote. “The cult of equity may be dying, but the cult of inflation may have only just begun.”
Gross in June kept the proportion of U.S. government and Treasury debt in his $263.4 billion Total Return Fund unchanged at 35 percent of assets, according to a report July 11 on the company’s website. Mortgages were at 52 percent for a second consecutive month. Pimco doesn’t comment directly on monthly changes in its portfolio holdings.