In The News Today

Posted at 6:28 PM (CST) by & filed under In The News.

Dear CIGAs,

In case you wondered if a person can live well in another place than where you are now, here is a listing for a house in one of my favorite areas of Tanzania. The residence is located on the Usa River and is offered at less than 1/4 of the value of Sunnyfields Farms in Sharon, Connecticut.


Jim Sinclair’s Commentary

Does he protest too much? We will see.

Bernanke raps BIS call for global cooperation by central banks
By Alister Bull
JACKSON HOLE, Wyo. | Sat Sep 1, 2012 4:01am IST

Aug 31 (Reuters) – The world’s big central banks ought to cooperate more by taking into account the global impact of their individual policy decisions, a top policymaker said on Friday, but he was immediately challenged by Federal Reserve Chairman Ben Bernanke.

Jaime Caruana, general manager of the Bank for International Settlements, a global forum for central banks, told some of the world’s most powerful policymakers that they must recapture the common sense of purpose they showed when fighting the global financial crisis of 2007-09.

"Central banks need to take a more international perspective, recognize their collective influence and take into account monetary policy spillovers," he told policymakers at the annual retreat here, hosted by the Kansas City Fed.

U.S. and European central bankers are working to restore growth on both sides of the Atlantic, while weighing up the costs and benefits of further action that critics say could contribute to an even more serious financial crisis in the future.

Bernanke, in the audience at the luncheon address, did not flatly reject the suggestion, but he noted that a discussion about international monetary policy cooperation also implied cooperation on foreign exchange rates.


Jim Sinclair’s Commentary

True or not, this is an example why really qualified people do not run for President anywhere.

Schneiderman Investigating Bain Capital, Amid No News of Any Investigation on Mortgage Fraud Task Force
By: David Dayen Sunday September 2, 2012 3:33 pm

As you may know, back in late January New York Attorney General Eric Schneiderman agreed to a relatively toothless settlement over mortgage servicing and foreclosure issues in exchange for becoming a co-chair of a task force designed to investigate and prosecute fraud in the securitization market. According to Schneiderman, this would focus resources on “the bubble and the crash,” the events that truly wrecked the economy, and both hold those who committed wrongdoing accountable and provide ongoing consumer relief to those who through no fault of their own found themselves suffering in the aftermath of the financial crisis.

Those were the key selling points of the task force, more formally known as the Residential Mortgage Backed Securities (RMBS) working group. In reality, the task force ended the split within the Democratic Attorney General ranks over the settlement, and created the conditions to finalize it. The goal was more political, to show that the Administration had an interest in accountability for the foreclosure crisis, and in ensuing months, to put on the board a big number of consumer relief that Your Government provided to homeowners. Never mind that the bulk of that relief, over 80%, has thus far consisted of short sales, which banks were already doing for a year prior to the settlement, and which results in the individual losing their home anyway. But that headline number sure looks good in the papers.

Meanwhile we’ve heard almost nothing about this RMBS working group. It took the group four months to hire a coordinator. And there’s ample evidence that the group merely takes credit for ongoing investigations that would have proceeded at their own pace. Nothing new has been generated so far. And what has Eric Schneiderman, a co-chair of this working group, been up to? Well, he’s issued subpoenas to banks over the unrelated Libor scandal. And he’s been very firm with the energy drink industry. But this latest foray is really unseemly, turning an apolitical law enforcement role into really just a political actor.


Why Billionaire Frank Giustra Is Making A Massive Bet On Inflation
Tommy Humphreys


Jim Sinclair’s Commentary

Joe’s work has been good. My job is to find solid resources for you. Gold is going to and through $3500. The number that must be figured out is what full valuation will be.


The long-term chart of Gold shows the current period on the right to compare with the late 70’s on the left. We can see the log channel for Gold in the late 70’s in light blue on the left where Gold soared into the first circle to double the log channel. On the right side of the chart we see the current log channel for Gold in light blue with a parallel line above the channel to represent a doubling of the channel, today. The light blue circle, above, would be the equivalent move today to the sharp move that doubled the channel in the late 70’s. The current 3 fan-line formation is “in the red square.” We see fractal pure parabolic 5th wave moves in the late 70’s and today, currently Gold is now ready to go parabolic on the log chart.


The current fundamentals for Gold appear warrant such a move since Gold is driven by the devaluation of the US Dollar; or in Jim Sinclair’s words, Gold is the inverse of Dollar Value (not the Dollar Index.) The Fed has already printed over $1.3 Trillion Dollars since December, but the markets have not devalued the Dollar, yet, since the Fed said “no more QE.” The Fed owns the psychology of the markets since the markets pay attention to what the Fed says, not what it does. Additionally, there are huge needs for QE Dollar printing going forward because the Federal Government needs all of its unfunded liabilities on its balance sheet before Gold goes into free-rise. These unfunded items include Social Security, Federal Pensions, Unemployment, failed loans of Fannie and Freddie, and more. QE Dollar printing does little for the economy so the Federal Government’s cash flow continues to shrink increasing the need for more QE Dollar printing. The bottom line is that there is no way to deal with the huge debt except to devalue the debt by devaluing the US Dollar. Let’s step back a bit to take a look at how Gold got to where it is.


I started doing “price pattern analysis” on the Gold chart back in 2001, which suggested the current Gold Bull would be a pure 5th wave parabolic move like the one into 1980 because:

1) The Dollar printing necessary to overcome the massive deflationary backdrop of K-Winter would need to constantly accelerate to stave off a deflation. Thus, a parabolic Dollar inflation/ Devaluation would create parabolic Gold.

2) The correction in Gold from 1975 into late 1976 was a “declining wedge”- most likely a 4th wave correction much like 1980 to 2000, also a modified wedge- a 3 fan-line formation. This increased the probability that the 1975 correction correlated to the 1980 to 2000 correction. Thus, a current Gold pure parabolic 5th wave of a higher Elliott Wave Degree- created by a pure parabolic rise in Dollar Inflation/ Devaluation seemed logical.

3) Price advances and corrections in the current Gold Bull at that time aligned nicely with 1976, forward, relative to the resistance areas on the chart off of the 1975 decline.

4) Thus, I produced charts like the two, below, tracking Gold today versus the 70’s. The following two charts were created in 2007 comparing current Gold to the late 70’s and noting “the coming Deflation Scare” waterfall decline into the 4th quarter of 2008. This was all based on the late 70’s side of the chart including the expected 2008 Gold re-test down to the $680 to “old top support.” On other charts from that 2007 period, we coined the term “Deflation Scare” that is so often used, today.



The relevance of these two charts is:

The price advances in the early Gold Bull could be “projected” using regular technical analysis and chart support/resistance through “pattern analysis.”

Once Gold reached new historical highs, there was no more chart support and resistance reference points to track or to project price moves.

This necessitated other TA tools to project future price. “Price pattern analysis” then became “fractal analysis”, based on a study of “time and price relationships.”

In late 2010/ early 2011, fractal analysis off the late 70’s projected Gold to $1860 in the middle third of 2011- adjusted to $1920 via normal TA in April, the target hit in early Sept.

The late 70’s fractal model next projected Gold to $3500/ $3600 into the middle third of 2012. The fundamentals and Gold’s rise into March looked good with the Fed printing more Dollars in swaps to Europe. The Dollar Supply came in on time, but the markets “chose what the Fed said- not what it did” as it printed double the Dollars that drove Gold from $1300 to $1900 in 2011. The markets failed to devalue the USD so Gold moved down to continue a lateral correction. This leaves a huge Dollar Devaluation to come that will drive Gold up and out of the log channel so value investors and Central Banks accumulated Gold at the channel bottom.

As Gold’s rise failed in March, we turned to a Model of a 3 fan-line formation as an alternative corrective formation. The model played out almost perfectly. The cycle time delay fits Elliott Wave Theory since corrections can extend based on current psychology. Nothing has changed except Gold’s potential has increased with the rising channel. Currently, a Dollar Devaluation is starting to be factored in – one that could drive Gold up to Alf Fields price projections if the channel doubles.


Gold’s rise up into late February, anticipating more Dollar Printing QE by the Fed, was nicely aligned to the 70’s cycle until the Fed confused the market by saying “No more QE.” The markets listened to the Fed’s words, ignoring its actions. Instead of the markets devaluing the Dollar per the huge Dollar Supply and running Gold sharply higher, Gold sold off sharply. The Gold chart started to lag the 70’s fractal in time while price diverged lower. For subscribers, we turned to a 3 fan-line Model to compare to Gold. Gold’s price and technical indicators played out much like the Model so we tracked their progress and time projections for a break-out. The Model projected a late August break-out for Gold. Gold’s 3 fan-line formation was stronger than the Model since Gold’s price was supported by the bottom of the upward angled log channel where value investors and Central Banks bought heavily. The Gold 3 fan-line chart is posted next, with a redacted Model 3 fan-line formation following it.



The above shows that at times markets can be pretty inefficient, especially as the Fed heavily manages market psychology. Market price is developed, not by the fundamentals, but by the market’s perception of the fundamentals. This recent perception failure of the markets, now creates a huge positive opportunity for investors in Gold, Silver, and the PM Stocks.


As shown in the first overview chart of the late 70’s, Gold made a huge move to double the log channel around this point in the cycle. Such a move into 2013 might look huge on the chart, but it played out in the late 70’s and seems to fit current fundamentals. The blue lines above the log channel chart, below, show what a doubling of Gold’s log channel into 2013 would look like. That range appears to fit Alf Field’s EW projection, should Gold rise out of the log channel.


Goldrunner maintains a subscription website at GOLDRUNNERFRACTALANALYSIS.COM. Goldrunner is also starting a new and free public Fractal Letter via e-mail. If interested in “The Fractal Letter”, you can send an e-mail to GOLDRUNNERBLOG44@AOL.COM. The Fractal Letter will discuss various aspects of the Fractal Markets, but will at times be targeted to newer investors to Gold, Silver, and the Precious Metals Stocks.