Posted at 8:00 AM (CST) by & filed under Guild Investment.


Last week, the U.S. bond market fell substantially and yields rose as investors finally began to see the obvious: Quantitative Easing (the purchase of U.S. Treasury bonds by the Federal Reserve) and its potential inflationary pressures are weakening the U.S. dollar.

As most economists will tell you, the U.S. economy is in a depression.  Statistically speaking, most depressions are deflationary and therefore accompanied by a fall in interest rates.  However, the bond market’s recent behavior provides evidence that the current depression is not deflationary.  On the contrary, inflationary pressures are building and interest rates are rising.  Bond investors, looking ahead and seeing a light, are realizing that it is the headlight of an oncoming train…and this oncoming train is the trillions of dollars of U.S. bonds which must be floated by the Federal Reserve in the next few years.  The consequences of this flotation will include a weakening of the dollar and an increase in interest rates.  Investors are finally awakening to this trend which we believe will continue for some time.

Certainly, the last two weeks have rewarded our long held global investment strategies.  In our view, this is not the end, but rather the beginning of the decline in the U.S. dollar…and the rise in many other investment areas.  Accordingly, we continue to believe that the wise investor will not hold U.S. dollars, but rather invest their portfolio in oil shares, gold shares, better-managed non U.S. currencies, and stocks in countries where corporate profits will grow rapidly, such as China, India, and Brazil and selected other countries.

For several years, our commentary has brought attention to the looming deficits and the questionable methods of financing them that have become so prevalent.  The current situation of the U.S. economy thus comes as no surprise to our readers. [Please see our archived commentaries at  for more details].  What may be a surprise to our readers is how long the U.S. dollar will decline, and how high many alternative areas of investment, including the areas mentioned above, will rise.

We do not mean to imply that there will be no price corrections.  In fact, investors should be aware that a correction in one or more of the areas we mentioned could take place at any time.  However, they must remember that these are just corrections in a long term uptrend.

We strongly recommend that you use these corrections as buying opportunities.  Do not let go of your strong positions just because profit takers or market manipulators temporarily slow down or reverse the trend.


Use declines to add to your foreign currency and strong stock positions.  We expect something close to what was seen in the late 1970’s, when investors globally tried to diversify out of a depreciating U.S. dollar.  At that time, the U.S. dollar fell, while the prices of gold, commodities, and many stocks in growing companies rose.  Today, China, India, Japan, and other buyers of U.S. treasury bonds reiterated that they would continue to buy U.S. treasuries.  Those are kind words, but looking at the available cash of some of these countries, we see that they do have much cash to use on U.S. bonds.  So their words just may be meant to keep their existing positions from falling to rapidly.


As we have expected, global markets are rising even though global economic growth continues to shrink.  Markets always look forward; the only question is how far forward do they look?

For example, every professional money manager knows that you buy cyclical stocks, like steel, oil, coal, and heavy manufacturing shares when earnings are low or nonexistent, and when orders and backlogs are collapsing.  They also know you must sell the same industries when business is booming, when profits are high and everyone thinks they will go on rising because “this time it’s different”.

Gold (COMEX)-One Year Chart


Crude Oil (NYMEX)-One Year Chart


As we pointed out several weeks ago, the North American, Chinese, and European stock markets are currently selling for about the same P/E ratio versus last 12 months earnings.  The difference is the forward earnings of the four regions.  We expect China’s corporate profits to grow at a rate in excess of 17% per annum for the next five years, and Indian corporate profits to grow at a rate in excess of 13% per annum.  We expect Brazil to grow corporate profits at about 10% per annum, while in Europe, Japan and the U.S. corporate profits may grow at a rate of about 5% per annum for the same time period.

Since stock market valuations are highly correlated with corporate profit growth, we expect Chinese, Indian, and Brazilian stock markets to greatly outperform the North American, European and Japanese stock markets over the next five years…especially when measuring the returns in U.S. dollars.


The U.S. national debt is currently about $11 trillion, which is about $100,000 for every household and about $36,000 for every American resident.  We are paying about 4% interest on this debt, but rates will be rising and we will be paying much more as Quantitative Easing and an ugly U.S. balance sheet cause our creditors to demand much more interest on the money that they lend to us.  When interest rates get to 8%, as they soon will, the cost of servicing this debt will escalate even more rapidly.  Disconcertingly, none of this realism is found in the Congressional Budget Office’s estimates, where they expect the U.S. to enjoy continued low interest rates.

The Congressional Budget Office, which always estimates much too low (we assume due to political pressure), states that the budget deficit for this fiscal year is $1.8 trillion.  Looking ahead they estimate next year’s deficit to be about $1 trillion, and state that it will stay in the high ranges (above $0.5 trillion) for at least the next few years.  In our view, these numbers underestimate the severe deficits we will be facing.


China is positioning itself using a panoply of agreements that include allowing Chinese Yuan bond financing by Hong Kong banks, arranging trade related currency swap agreements with Brazil and six other countries, and working with countries and companies all over to world to lock up assets that it will need to run its production machine.  China’s purchases include oil, coal, iron ore, nickel, and zinc to name a few.  In short, China is buying assets worldwide –including an ever increasing share of the world’s gold supply — to stoke its economic machine in coming years.

China’s lust for gold is significant and deserves note.  The fact is that China has been buying much more gold than it is producing.  China is buying gold in the open market, willing to take gold off of the hands of the poorly managed IMF and central banks like Britain, who sold most of their gold at about $250 per ounce.  Britain, the IMF, and others who have been, or will be, gold sellers appear to us to be operating with an excess of pompous verbiage and a shortage of common sense.

Gold will be an instrumental part of any new monetary system that is created in the world to succeed the current Breton Woods system.  When the U.S. turns over power as the world’s reserve currency to China, it will be China’s large holdings of gold and large cash hoard which will make them a new monetary superpower.  When that transition takes place, the old cliché about the golden rule, “Whoever holds the gold makes the rules” will be remembered for its wisdom.


It has been some time since we discussed Hugo Chavez and the devastation his economic policies would cause.  President Chavez has not been satisfied with badly damaging the Venezuelan economy and causing Venezuela’s oil production to decline.  His latest activity is arresting top Venezuelan military officials as he seeks a tighter grip on the military.  As we have stated, he plans to become president for life, and his continued economic mismanagement and politics of class hatred will end up costing Venezuelans dearly for decades to come.

Next week we will discuss the U.S. financing of General Motors and the probability that the outcome will be much like the previous adventures in Britain, France and Italy when those governments attempted to take over and manage failed automobile manufacturers.

Thanks for listening.

Monty Guild and Tony Danaher

Posted at 3:10 AM (CST) by & filed under Uncategorized.


National debt is at $545,668 per household and growing!

National debt at $545,668 per household
Published: May 30, 2009 at 2:51 PM

WASHINGTON, May 30 (UPI) — Federal debt last year amounted to a record $545,668 per U.S. household — a 12-percent spike in just one year, government sources said.

The increase burdens each household with an additional $55,000 in national debt for just 2008, USA Today reported Saturday.

The increase can be pinned on the explosion of federal borrowing during the recession and an aging population that is driving up the costs of Medicare and Social Security.


No government can live with that burden without taking unprecedented action at one point.

CIGA Christopher

Posted at 3:14 PM (CST) by & filed under General Editorial.

Dear CIGAs,

It has to be a plot to drive me insane.

I get questions every day from gold guys asking what happens if deflation rules the day. It reminds me of the attack of the Prechterites that comes every time gold reacts 2%.

How many times do I have to repeat myself? Hyperinflation is a currency event brought about by a collapse in business activity, offset by QE in any of its many forms, throughout all of history without exception.

We are already in "deflation ruling the day" because deflation is debt failure. Are you blind? Did you not see GM debt fail totally yesterday?

Chrysler is gone. Don’t think for a moment that Ford is not having potentially terminal problems from their credit division and sales as well.

Deflation is today. Debt implosion also includes OTC derivative failure. Once again, are you blind?

97% of you do absolutely nothing in return for the mind blowing amount of work I do for you. I wonder if you read this even though we are a top rated site in a number of Google categories. 98% of you have nothing whatsoever to do with anything else I do. 95% of you drop in occasionally and are too lazy to read so you just write in asking questions that have been covered literally one hundred times. DO YOUR RESEARCH! USE THE SEARCH ENGINE! WE WILL TEACH YOU HOW TO FISH, BUT YOU NEED TO DO THE WORK!

I have shared my wisdom with you. I have given you a search on the website but you ask the same basic questions day after day after day. I have offered you a Compendium of everything you ask but the amount of people who have purchased it is a major disappointment to me. If you value this site then you need to purchase a Compendium. This is what keeps us up and running and we cannot continue to do it without these sales. We are not for profit, we simply use the money to cover our costs. The amount of information included in any of the Compendium packages is unmatchable for the price, and allows to continue into the future. Think how much you are getting by supporting us and Click here to go to the Compendium Order page…

I will no longer answer the same questions continually. Readers have the obligation to do some research as I have given you all the tools to answer every question that is put to me in the God awful amount of emails and faxes I get every day.

My registered stockholders have an absolute right to my time without exception to inquire with me on any subject and to receive my answer. From this moment forward only REGISTERED TRE stockholders have absolute right to my time on whatever subject they require help on. There has to be a triage, or no one can maintain this degree of workload.

Today’s Total Posting:

For today, keep in mind that COT is not yet prepared for a break above $1000 in the gold price. They will do anything and everything to prevent that at this time. For this reason it will take work to accomplish this, but be assured it will occur. Gold is going to $1224 via the point already given to you here and now.

A modest reaction going in to the middle third week of this month would be extremely good for gold.

Posted at 9:00 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

This article speaks for itself.

The Big Collapse Could Be Very Near
SUNDAY, MAY 31, 2009

The Federal Reserve appears to be increasingly nervous about the long term bond market. This is serious. How panicked are they? After leaking a story on Friday, they are back at it on Sunday.

The Federal Reserve leaked to CNBC’s Steve Liesman on Friday that they weren’t targeting long rates. Why such a leak? Probably because the Fed did not want to appear impotent in controlling the long rate. So they put out the word through Liesman that they weren’t targetting the long rate. Can you imagine what would happen to the markets if it sensed long rates were beyond the control of the Fed?

The Fed can of course print money to buy up every Treasury bond in existence, but the inflationary ramifications would be Zimbabwe like, and crush the dollar on international currency markets. Are we near the phase where all hell breaks loose? I have never even answered,maybe, to this question before. It’s always been, "no." Now it’s maybe.

What really has me spooked is another article out this afternoon (on a Sunday) that Drudge has even picked up. It’s a Reuters story by Alister Bull. The headline: Federal Reserve puzzled by yield curve steepening.

Translation, the Fed doesn’t know what is going on, but they are really scared.


Jim Sinclair’s Commentary

There is no stopping the runaway locomotive heading directly at the US dollar.

Now starts the parting of the ways between regions over who or why the disaster is upon us.

Germany Blasts ‘Powers of the Fed’
JUNE 3, 2009

German Chancellor Angela Merkel, in a rare public rebuke of central banks, suggested the European Central Bank and its counterparts in the U.S. and Britain have gone too far in fighting the financial crisis and may be laying the groundwork for another financial blowup.

"I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line," Ms. Merkel said in a speech in Berlin. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time."

Ms. Merkel also said the ECB "bowed somewhat to international pressure" when it said last month it plans to buy €60 billion ($85 billion) in corporate bonds — a move that is modest in comparison to asset-buying by its counterparts, the U.S. Federal Reserve and Bank of England. Details are to be unveiled by the ECB’s president, Jean-Claude Trichet, Thursday.

The public criticism is unusual — and not only because German politicians rarely talk harshly about central banks in public. When politicians around the world do criticize their central banks, they almost always gripe that they are too tightfisted.

The conservative German leader’s comments came as Europe’s statistical agency reported that unemployment in the 16 countries that share the euro rose to 9.2% in April — the highest level since September 1999 and still below the 11.5% that the European Commission forecasts for 2010.


Jim Sinclair’s Commentary

Of course it will. There is oil there.

Opinion: Global Warming Could Pose A Threat to NATO
Published yesterday by Christopher Szabo

According to news reports, those most affected by global warming live in the 50 least developed countries, but this could change. Recent moves by Russia could call into question the NATO alliance’s naval defenses in the Arctic Circle region.

A new Russian military force, especially developed for arctic conditions, is past the planning stages, according to Jane’s Defence. The force, once deployed, would be equipped with: “Special ammunition, ammunition and transport” for the freezing Arctic conditions.

In the wake of the first ice-free month of the Northwest Passage in September, 2007, and Russian claims to most of the High North region, based on it’s claim to the Lomonosov Shelf, which Russia regards as being part of its own exclusive economic zone of 200 nautical miles, the creation of the new military force seems somewhat sinister.

Unlike the Antarctic, the Arctic has no treaty banning commercial exploitation of its resources and not only Russia, but also the U.S., Canada, Denmark, Norway, Sweden, Iceland and Finland have laid claims to the region.

While NATO officials and analysts have stressed the peaceful nature of Russia’s new force, comparing it with Russian cooperation with the West in the Mediterranean and fighting pirates off Somalia, Russian behaviour has not always been that of a good neighbour, especially in areas it considers to be part of its exclusive sphere of influence, such as the former Soviet Union republics. Russia has brutally crushed a Chechen separatist movement as well as fighting a brief war against the former Soviet Republic of Georgia last November.


Posted at 9:33 PM (CST) by & filed under Jim's Mailbox.


This is thought out well and in line with what you have posted most recently…

"The American people will never knowingly adopt socialism. But under the name of ‘liberalism’ they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened… I no longer need to run as a Presidential candidate for the Socialist Party. The Democrat Party has adopted our platform.
– Norman Thomas, six-time U.S. presidential candidate for the Socialist Party, 1944.

On that chart I shipped you, historically the fall of Napoleon in the early 1800s opened the door for Anglo-American dominance of the world. With the fall of the pound, and now the dollar, that era will end soon by your reckoning and many others. I find it quite interesting that Greenspan has publicly said the Euro will become the new world currency, and he had urged the gulf states to break their dollar peg about a year ago. In reality, the euro is just another piece of garbage, but perception sometimes trumps reality for a time as we all know. It could easily be that the euro is just further advanced in terms of currency than what Asia offers at this time, so it will precede it by some years. This fits prophetically, so I sit by and watch. The "one is" refers to the emerging power in Europe, first by the Kaiser and then Hitler/Mussolini, that twice went to war against the Anglo-Saxon hegemony and lost. The one "yet to come" will emerge from its cocoon when the dollar goes down and needs to be replaced on the world’s stage. Perhaps the repatriation of US/Britain gold to both Germany and the emirates is in anticipation of this. It’s always follow the money as you well know. Fascinating times to be sure. Prophetically, China/Russia will emerge to challenge the Euro state. When the baton of power is passed back across the Atlantic, we will know we are getting down to the short strokes.


Dear Jim,

Since the paper certificates are no longer available, do you have any guidance/suggestions on the best way to purchase gold stocks at this time?

CIGA Beth B.

Dear Beth,

That is not entirely correct that paper certificates are not available.

When you make you purchases instruct your broker that you wish "Direct Registration" at the transfer agent, the 2nd best method of holding your assets.

Thereafter and when confirmed that you are in "Direct Registration" system, contact the transfer agent and request paper certificates.

In many cases it will work. This is certainly true for AMEX:TRE/TSX:TNX.


Posted at 6:13 PM (CST) by & filed under In The News.

Dear Friends,

Here is an interesting question for us to ponder.

It does not take a brain surgeon to figure out that there has been the largest theft in human history in the past two years.

What is it that makes the perps firmly believe that they can do this in blatantly obvious ways and totally get away with it? I do not accept political contacts as the legislative is a loose cannon in such a case.

What is it that gives them such comfort?

Why was it so important to do in their minds that doing it almost publicly gives them no concern?

This tells me to be prepared for a substantive world changing occurrence within the time frame we have been discussing as positive for gold on the maximum momentum basis. That time is between now and 2012.

Are you prepared?



Jim Sinclair’s Commentary

Don’t let the numbing spin and off the scale development with equities put you in an exposed mode. The dollar is dead – that is becoming quite clear.

The ramification of the demise of the dollar this year are severe. The sheeple are sleeping, dope smoking, snorting or doing something else to disengaged their brains.

Gold is going to $1650 then on to Alf’s numbers. The dollar is going to .52 and maybe lower on the USDX. The long bonds are going to Hades. The IMF is going to be the world Federal Reserve.

There will be a SDR tied to gold as I have suggested, in the form of a basket of mainly non-dollar currencies that will be the one world currency.

The agenda of those that seek the above is unfolding. Democracy will become an underground movement. About all this there is no question.

Are you prepared?

Dollar Declines as Nations Mull Reserve Currency Alternatives
By Oliver Biggadike and Chris Fournier

June 2 (Bloomberg) — The dollar weakened beyond $1.43 against the euro for the first time in 2009 on bets record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency.

The euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound rose to the highest level since October and the Canadian dollar traded near an eight-month high on speculation signs of a recovery in U.S. and U.K. housing will spur higher-yield demand.

“There’s been a lot of talk out of Russia about a new global currency, and that’s contributing toward this latest bout of dollar weakness,” said Henrik Gullberg, a currency strategist in London at Deutsche Bank AG, the world’s largest currency trader. “These latest comments are just adding to the general dollar weakness we’ve seen recently.”

The dollar slid 1.1 percent to $1.4317 per euro at 4:21 p.m. in New York, from $1.4159 yesterday. It touched $1.4331, the weakest level since Dec. 29. The dollar depreciated 1.1 percent to 95.54 yen, from 96.59. The euro traded at 136.77 yen, compared with 136.78.

Sterling rose as much as 0.9 percent to $1.6596, the highest level since Oct. 30, while the Canadian dollar advanced 1.2 percent to C$1.0806, near the strongest level since Oct. 3.


Jim Sinclair’s Commentary

Didn’t the media inform us yesterday that China was CONFIDENT concerning US debt? This does not read like a confident bull on either the US dollar or US debt.

China’s Yu Tells U.S. Not to Be Complacent About Debt (Update1)

June 2 (Bloomberg) — China’s former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn’t be complacent about China continuing to buy Treasuries.

“I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’,” Yu said in an interview yesterday. “The euro is an alternative. And there are lots of raw materials we can still buy.”

Yu said he is scheduled to meet Geithner today at the Grand Hyatt Hotel in Beijing.

China is the biggest foreign holder of U.S. Treasuries with $768 billion at the end of the first quarter. Premier Wen Jiabao in March called for the U.S. “to guarantee the safety of China’s assets” and central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.

“China will be shooting themselves in the foot if they push this issue too hard,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “If they are too alarmist and contribute substantially to a dollar and Treasuries sell off, they are going to feel more pain than just about anybody in the world.”


Jim Sinclair’s Commentary

Let’s have a round of applause for those OTC derivative dealers that are giving many a vacation experience called "Hutment at the Horwith Station."

Be assured it will be an experience that millions of US citizens will never forget.

Are you prepared?
Uncle Dave Macon explains the origin of our financial plight:

Jim Sinclair’s Commentary

It always starts on the West Coast, but certainly moves into all states in one degree or the other.

Schwarzenegger says day of reckoning is here
Sacramento Business Journal – by Kathy Robertson Staff writer

The state wallet is empty. The bank closed. Credit has dried up, Gov. Arnold Schwarzenegger told lawmakers in a special Tuesday morning address at the Capitol.

“California’s day of reckoning is here,” he said. With no action, the state will run out of cash in 14 days. Three months after the state budget was approved, California faces a $24 billion deficit.

Schwarzenegger has already proposed massive cuts to education, health care and prisons. Now he’s looking for structural reform to make government more efficient and stretch taxpayer dollars.

He’s asked the State Board of Education, for example, to make textbooks available in digital formats — a move that could save millions.

In 2004, the governor talked about blowing up boxes and consolidating agencies, but the initiatives never gained traction.


Jim Sinclair’s Commentary

I would suggest the key comment in the Dow Jones story below is the lack of new reserves which inherently says how important the juniors are.

"We are simply not finding any new reserves anywhere in the world," Jacobsz said at a New York Society of Security Analysts metals and mining conference. Further, deposits where gold can be relatively easily extracted are being tapped out, he said.

DJ Inflation, Economy, Waning Supply To Support Gold – Producers

NEW YORK (Dow Jones)–Declining supply and investor demand driven by economic uncertainty and future inflation are likely to keep gold prices high, mining company officials said Tuesday. "Our view is that the gold market is in probably one of its most promising phases," said Willie Jacobsz, head of investor relations with Gold Fields Ltd. (GFI).

He cited economic uncertainty around the world, future inflation and "a very real decline in global mine supply" as cause for his company’s optimism on the gold price.

"We are simply not finding any new reserves anywhere in the world," Jacobsz said at a New York Society of Security Analysts metals and mining conference. Further, deposits where gold can be relatively easily extracted are being tapped out, he said.

Meanwhile, investors have been snapping up the metal as a currency, uncertainty and inflation hedge.

"The current rally in the gold price is driven by investment demand," Jacobsz said. "We don’t see sentiment changing very soon."

Gold prices will remain strong as long as investors keep flocking to the metal, said Victor Flores, senior mining analyst with HSBC.

"There has been a great deal of interest in gold from investors," Flores said. "As long as gold ETF [exchange-traded fund] demand remains robust, you will see gold [prices] hold up." Although deflationary pressures are strong at the moment, higher inflation and weaker currencies will probably assert themselves down the road as results of government stimulus efforts to fight the economic downturn, Flores said.

"At the moment we are fighting deflation," Flores said. "What’s really lurking around the corner is inflation."

Investors historically have bought gold as a hedge against inflation because they see it holding its value more strongly than other assets amid rising prices. It is also bought as a safe-haven in times of political and economic uncertainty.

"Gold is the only asset class that withstood the current economic downturn," said William Biggar, president and chief executive of North American Palladium Ltd. (PAL), which last month completed the acquisition of Cadiscor Resources Inc. and its gold mine in Quebec.

"Our growth strategy is focused on precious metals and acquiring quality gold assets," Biggar said.

-By Matt Whittaker, Dow Jones Newswires; 201-938-5959;
[email protected]

Jim Sinclair’s Commentary

As a multi-rated pilot I can assure you that none of us wish to speak with the FAA, declare an emergency, or worst of all, tell them about anything flying near us that is not another aircraft with a clearly visible tail number.

The hassle is beyond your wildest imagination, yet this commercial pilot opted to file a report knowing what it means.

He must firmly believe that the aircraft was shot at with the intention of taking him down.

What would the police find if a hand held surface to air was used by a trained person?

Liberty Co., FAA to discuss report of object near plane
June 1, 2009, 11:38PM

Liberty County Sheriff’s officials are expected to meet with the FAA on Tuesday to discuss what a Continental Express pilot reported as a “missile or rocket” flying near his airplane.

A pilot reported to the Federal Aviation Administration that at about 8:15 p.m. Friday, an object passed within 150 feet beneath the aircraft, sheriff’s officials said.

The aircraft was near the southern edge of the county, flying at about 13,000 feet, officials said.

“The pilot, from what we understand, was former military. He was able to get the coordinates down real quick,” said Cpl. Hugh Bishop with the Liberty County Sheriff’s Department.

Sheriff’s deputies searched Friday night for signs of evidence where a missile might have been launched or landed.

“We couldn’t find anything,” Bishop said.