Jim’s Mailbox

Posted at 10:50 AM (CST) by & filed under Jim's Mailbox.

Jim,

Looks like a coordinated effort by the BRIC nations to hammer the US Dollar is in the offing! They want to hurry and speed up their safety net.

News from GEAB.

CIGA Wolfgang Rech

Fed’s QE3 decision causes stir
Updated: 2013-06-26 02:17
By Zhang Yuwei in New York (China Daily)

Signal sends shockwaves through markets across Asia and Europe

The Federal Reserve’s recent signal that it would withdraw stimulus efforts — otherwise known as quantitative easing round 3 — has rattled markets in Asia and Europe, and has drawn attention from leaders in emerging economies to forge a possible "safety net" to weather the uncertainty in global financial markets.

Spokesman for the Brazilian government Thomas Traumann said on Monday that the BRICS — Brazil, Russia, India, China and South Africa — will decide on coordinated action related to the global appreciation of the US dollar at a July meeting in Russia.

In a phone conversation with his Brazilian counterpart Dilma Rousseff on Monday, President Xi Jinping noted that some new and complex elements have occurred in international financial markets that deserved the BRICS nations’ close attention.

Xi said the BRICS nations should boost communication and cooperation in financial sector and speed up the formation of a financial safety net.

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Mr. Sinclair,

I have enjoyed your guidance on jsmineset.com for a couple years now. In my local news it looks like these depositors had their bacon saved this time. Will they be lucky the next round? Thank you for everything!

Sincerely,
CIGA Matthew

Federal agency declares Ochsner credit union insolvent, shuts it down, transfers its members

 

Jim,

As much as I believe you on what is happening, they certainly have our number on this AU and AG manipulation.

Under 1200? Who would have thought after a near rise to 1900, which is well over a 30% retracement with no end in sight, no matter how many in your camp say otherwise. We are battling an army with pea shooters and we are running out of peas.

I have nothing on margin with my gold share holdings, but this is very undefendable as many in our camp come up with reasons to keep holding.

The latest I found interesting was that since the price is going below cost of production for many that some well known majors will go belly up and cease production, thus creating more shortages.

Don’t you think we are running out peas for our arsenal of pea shooters?

Respectfully,
CIGA Angelo

Hi Angelo,

Jim’s advice is to stand firm with your non margined gold positions as this reaction in the price is not based on any change in the underlying fundamentals for the gold market.

It is challenging to see your positions losing value but at times like this it is worthwhile to remember why you took your position in gold in the first place.

The fundamentals have not changed. In fact the economic conditions worldwide have worsened. The only course of action open to the CBs of the West is to print more money. It is a race to the bottom between all of the fiat currencies and the ultimate winner as a result of that race is going to be gold.

Regards,

Peter Mickelberg
Communications Consultant
www.jsmineset.com

 

HI Jim,

The city of Calgary Alberta and surrounding area, including the town of High River (just south of Calgary), had a major flood last Thursday. I have family in Calgary that were affected. In Calgary, the city police allowed residents access as soon as the water started to recede, and the clean-up began last Sunday (June 22).

In High River, the RCMP (Canada’s National police) have not allowed any residents back yet.  What is shocking is that the RCMP have entered evacuated citizen’s homes and confiscated firearms.  There was no crime committed by the individuals – they were evacuated due to the flood.

Maybe we are in a police state, and this is in Canada. The link below is from the National Post newspaper.

CIGA Claudia

High River residents furious after RCMP seize ‘substantial’ number of firearms from evacuated homes
Postmedia News | 13/06/28 8:53 AM ET

HIGH RIVER, Alta. — The RCMP revealed Thursday that officers had seized a “substantial” number of firearms from homes in the evacuated town of High River, about 37 kilometres south Calgary.

“We just want to make sure that all of those things are in a spot that we control, simply because of what they are,” said Sgt. Brian Topham. “People have a significant amount of money invested in firearms … so we put them in a place that we control and that they’re safe.”

That news didn’t sit well with a frustrated crowd who had planned to breach a police checkpoint as the evacuation order from the town of about 13,000, residents stretched into its eighth day.

“I find that absolutely incredible” that they have the right to go into a person’s home and take their “belongings,” said resident Brenda Lackey, after learning Mounties have been securing residents’ guns. “When people find out about this there’s going to be untold hell to pay.”

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Hi Peter,

Thank you again for all your efforts at JSMineset.  In the recently posted article China’s Commodities Output More Potent, Standard Chartered Says http://www.bloomberg.com/news/2013-06-25/china-s-commodities-output-more-potent-standard-chartered-says.html that it is quite possible that in about 2.5 years, China could be importing 80 percent of the annual World Gold mine production, assuming mine supply stays at least constant. Currently they are projected to be importing 17.6%.  Their 6-21-2013 report cites among other things that Gold and copper are among the raw materials that are least vulnerable to China’s growing capacity.  Assuming that Standard Chartered has nailed this one, that is going to leave a lot less for Indian women, Asian women other than the Chinese lady’s, Central Banks and of course Jim Rodgers! Again, assuming SC’s report is accurate, what does Jim believe will happen to share price of Gold mining equities that declare Gold Dividends for their shareholders?

Thank you,
CIGA Bernie

Hi Bernie,

Jim’s view is that if history is any gauge, the future of any gold stock that decides to pay a dividend in gold is bright to say the least.

In the 1930s Homestake Mining rose from the ashes of the 1929 crash. It rallied from $80 in late 1929 to $495 per share in late 1935. A gain of 519%. During that period Homestake paid out $128 in cash dividends. In 1935 the dividend was $56 which was a 70% dividend for anyone who bought the stock at $80. Homestake outshone its competitors because of its strategy to dividend out a huge majority of its net profits to their shareholders.

In the 1960s it was the turn of Durban Deep to do the same and the share price went from $0.36 to $36.00.

Now imagine if an innovative gold producer decides to offer a dividend payment in kind. Offering their shareholders the option of receiving their dividend in physical gold. The premium that would then be attached to that company’s share price can only be imagined as it would distinguish that company from all others in the sector. We could easily see a repeat of the Homestake or Durban Deep performance or even greater.

Regards,

Peter Mickelberg
Communications Consultant
www.jsmineset.com

 

Jim,

So, the economy is getting better huh?

CIGA JB Slear

With changes to its unemployment law, NC becomes 1st state to drop federal jobless funds
Article by: EMERY P. DALESIO
June 28, 2013 – 5:30 AM

RALEIGH, N.C. — With changes to its unemployment law taking effect this weekend, North Carolina not only is cutting benefits for those who file new claims, it will become the first state disqualified from a federal compensation program for the long-term jobless.

State officials adopted the package of benefit cuts and increased taxes for businesses in February, a plan designed to accelerate repayment of a $2.5 billion federal debt. Like many states, North Carolina had racked up the debt by borrowing from Washington after its unemployment fund was drained by jobless benefits during the Great Recession.

The changes go into effect Sunday for North Carolina, which has the country’s fifth-worst jobless rate. The cuts on those who make unemployment claims on or after that day will disqualify the state from receiving federally funded Emergency Unemployment Compensation. That money kicks in after the state’s period of unemployment compensation — now shortened from up to six months to no more than five — runs out. The EUC program is available to long-term jobless in all states. But keeping the money flowing includes a requirement that states can’t cut average weekly benefits.

Because North Carolina leaders cut average weekly benefits for new claims, about 170,000 workers whose state benefits expire this year will lose more than $700 million in EUC payments, the U.S. Labor Department said.

Lee Creighton, 45, of Cary, said he’s been unemployed since October, and this is the last week for which he’ll get nearly $500 in unemployment aid. He said he was laid off from a position managing statisticians and writers amid the recession’s worst days in 2009 and has landed and lost a series of government and teaching jobs since then — work that paid less half as much. His parents help him buy groceries to get by.

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Hi Jim,

There is something bothering me about the movement of gold globally.

A recurring question for me is this: Who has the gold? I understand that there are very powerful people pulling the strings globally, so how do they safeguard their own interests when the gold is moving?

1. The USA is a source of a lot of the gold moving East. The PTB in the West are probably not satisfied with paper in return apart from a transient position. Are they taking paper and if so what are they buying with it?

2. The UK seems to be a handmaiden in waiting – trying to chase partner relationships with the BRICS obviously, but this feels very much like second prize in the beauty contest and scrabbling for the crumbs.

3. China is the ostensible buyer via Hong Kong, but China offers no official data to confirm or deny.

So the question that is bugging me is this: What is to stop the US/European PTB from smashing the gold price in the West and then shipping gold to themselves via HK? Anything at all?

China isn’t telling. China also has sufficient gold production and purchasing to be able to release a fraction into their own retail market to produce a "fever" of buying for the cameras.

I would really appreciate your thoughts.

CIGA Janice

Hi Janice,

What we know for sure is that there is a concerted buying campaign by the BRICS nations when it comes to gold. They are buying as much as they can because they know what is coming. China, in particular is a major buyer as it understands the economic reality that is seemingly not understood in the West.

China and others in the East and the BRICS understand the basic principle, ‘He who has the gold makes the rules’. That is something we should all bear in mind during this reaction in gold.

Jim has said many times that a great levelling is occurring and will continue to occur to play out over the next few years. That is why he is pleading with his readers and those who attend his Q&A sessions to exit the system. His call to GOTS is not made lightly as he knows it is a difficult concept for many to grasp and then take the required action.

Regards,

Peter Mickelberg
Communications Consultant
www.jsmineset.com

 

Dear Jim,

Precious metals investors got some good news Thursday after New York Federal Reserve Bank President, William Dudley confirmed that the central bank may prolong its asset-purchase program if the economy fails to meet the Fed’s lofty forecasts. He is only confirming what Bernanke already said in his testimony last week. With the huge downward revision in GDP numbers, followed by these dovish statements, US equities are in a frenzy, rising higher on endless stimulus dreams.

Dudley, an outspoken dovish policy supporter, commented that, “If labor market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook — and this is what has happened in recent years — I would expect that the asset purchases would continue at a higher pace for longer.”

This is obviously good news for precious metal investors and those betting on inflation as it suggests the money supply will continue to expand rapidly, should the economy not bounce back.

The Dow soared 130 points after consumer ‘comfort’ climbed to the highest in 5 years. Jobless claims decreased while consumer spending increased. The US markets as we noted yesterday are back dancing to their own beat. US equities rose yesterday after a major downward revision in GDP numbers, on renewed hopes stimulus would be continued. Dudley came in today and confirmed what some of us knew, but what many had hoped for.

Dudley also noted that, an increase in the Fed’s benchmark interest rate is “very likely to be a long way off.”

Weaning the American investor and more importantly, the US economy off stimulus and cheap money is proving to be a more difficult task than Bernanke had imagined.

Gold hardly reacted to the news, rising $5 bucks an ounce to $1,230 at 10:38 AM EST. Gold has lost more than $300 in the past 3 months and is about to end one of its worst quarters in its history. Gold is in a negative downward spiral at the moment as the vast majority have turned bearish and the physical buying has faded. Gold will need a catalyst to spur a rise in its price. The most logical and obvious catalyst is likely to be the raising of the US debt ceiling expected later this summer.

Respectfully,
CIGA David

 

Jim,

The corner the Fed has painted itself into has now come home to roost.

-Stop the bond buying and rates go higher, killing the fragile economy, killing the bond market, and killing the stock market.

-Continue buying, (and you must print more money to do so), and you weaken the dollar and cause foreigners to sell their bonds… and rates go higher (simple supply and demand issue). The fragile economy remains on life support, stocks go higher, and bonds go higher (on the buyer of last resort – the Fed). Oh, and yes… Gold soars!

Just no way out!
CIGA Wolfgang Rech

Fed Officials Intensify Effort to Curb Surge in Interest Rates
By Joshua Zumbrun, Jeff Kearns & Steve Matthews – Jun 28, 2013 12:00 AM ET

Federal Reserve officials intensified efforts to curb a growth-threatening rise in long-term interest rates, seeking to clarify comments by Chairman Ben S. Bernanke that triggered turmoil in global financial markets.

William C. Dudley, president of the Federal Reserve Bank of New York, said yesterday any decision to reduce the pace of asset purchases wouldn’t represent a withdrawal of stimulus, and that an increase in the Fed’s benchmark interest rate is “very likely to be a long way off.” He said bond purchases could be prolonged if economic performance fails to meet the Fed’s forecasts.

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