Posted at 12:49 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance.

Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.

It is looking more and more like the current Administration has set on a course of deliberate destruction of the US Dollar and with it, the economic might that the US has enjoyed since post World War II. As said many times on the pages of this web site, the profligacy of the US has inescapable consequences and we are now seeing a rapid acceleration of the same. The fall in the Dollar is picking up momentum and that is why we are witnessing gold moving into new highs.

But gold is more than a Dollar phenomenon – Gold priced in terms of British Pounds and in Euros is relentlessly moving higher as both Great Britain and Europe, the fading West, are debasing their currencies as well.

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

Click chart to enlarge this evening’s action in the US Dollar in PDF format with commentary from Trader Dan Norcini

US Dollar october 13 2009

Posted at 6:58 PM (CST) by & filed under JSMineset Editor.

Dear CIGAs,

Everyone who has ordered a Compendium should now have received the mentioned link to Jim’s 3 hour CIGA presentation in Toronto. If you have not yet received the link please email us at [email protected] and I will resend it to you once confirming you have ordered a Compendium.

Regards,

Dan Duval
JSMineset Editor

Posted at 3:31 PM (CST) by & filed under General Editorial.

My Dear Friends,

Everything we have discussed here for many years is NOW taking place.

Everything we have suggested is coming is NOW on your doorstep.

Any ideas of trading have been smashed not only by common sense, but also by the flash systems against which you do not stand a chance.

All precious metals companies with materials in, on top or mining will succeed in market terms.

All shorts in both precious metals shares and gold itself will end up covering in a less than comfortable manner.

Gold will trade at $1250 and $1650 before seeking Alf’s and Armstrong’s prices.

The US dollar is nearing a severe crisis period that will occur this winter.

Middle American business is facing severe difficulty with a collapse of CIT or even a failure to refinance to a comfortable level a potential crisis-producing event. CIT is to Middle America what Lehman was to the financial industry.

There is very little to add today with one exception: Have you protected yourself?

Respectfully yours,
Jim

Posted at 3:13 PM (CST) by & filed under Jim's Mailbox.

Jim,

Watch bonds closely!

CIGA Eric

Click chart to enlarge

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Dear Eric,

When the long bonds break down it will be the result of a currency situation (dollar) more so than a economic activity induced market action.

Regards,
Jim

Jim,

And so it grows, globally…

Dutch Central Bank takes control of DSB Bank after a bank run caused by collapsed talks to sell the Bank to a Dutch Banking Consortium. The Dutch of course being mercantilists, par excellence, know a bad deal when they smell one… and obviously weren’t threatened, a la Paulson. Another day, another Nationalization. (source FT, Page 1, Swiss edition).

The UK is selling its interest in the Channel Tunnel and £16 billion of other State Assets, including £13 billion of government owned property. (For Americans readers use a multiple of 5x (population) plus currency exchange rate (1.58) to get your relative dollar figure.) Why call it privatisation when it’s obvious it is a fire-sale. When all else fails, sell the family silverware. It might get you through the next week before a vote of no confidence in Parliament. (source: DO).

Meanwhile, China buys everything on the cheap because they, unlike the "advanced" economies, are neither stupid nor broke.

Regards,
CIGA Pedro

 

Jim,

Here is an amazing cartoon from the Chicago Tribune in 1934. Look carefully at the plan of action.

Remember the adage, "Those who do not remember the past are doomed to repeat it"

CIGA Dr. Bob

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Posted at 9:33 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

I am sure of $1650 and if I am wrong it will because my estimate was much too low. Maybe the other Jim is too low as well.

Jim Rogers "Quite Sure" Gold Will Hit $2000, Dollar Will Lose Reserve Status
Posted Oct 12, 2009 09:00am EDT

Famed investor Jim Rogers is "quite sure gold will go over $2000 per ounce during this bull market."

Rogers’ confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world’s reserve currency.

"Is it going to happen? Yes," Rogers says. "I don’t like saying it [and] I’m extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was]."

Rogers didn’t offer a timetable, and it’s likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status.

Still, "I wouldn’t buy gold today," Rogers says. "I think I’ll make more money in other commodities, which are cheaper," as discussed in more detail here.

More…

Jim Sinclair’s Commentary

China goes everywhere that the West will not.

We are watching a large majority of the mineral wealth of the world being tied up to meet a century long industrial plan.

While finance in the West is destructive to mineral concerns, China is taking everything is sight.

China tightens grip on Africa with $4.4bn lifeline for Guinea junta
From The Times
October 13, 2009

China is preparing to throw the junta in Guinea a lifeline in the form of a multibillion-pound oil and mineral deal, financed largely by soft loans. Such policies have already served China well with rogue and discredited regimes from Angola to Sudan. The move comes as the European Union, spurred on by France, the former colonial power, and the African Union are considering sanctions against Guinea if its young military leader, Captain Moussa Dadis Camara, continues to renege on a deal to stand down in favour of free elections.

The massacre occurred after 50,000 demonstrators took to the streets when Captain Camara — who seized power in December after the death of the long-time dictator Lansana Conte — announced that he would stand in the poll. Thousands stayed at home yesterday and riot police patrolled empty streets as the opposition called two days of mourning for the dead.

Beijing, meanwhile, was reported to be close to agreeing a deal, financed by its China International Fund, of about £4.4 billion covering a range of projects. Guinea, the world’s largest exporter of bauxite, also has huge deposits of uranium, iron ore, diamonds and a host of other minerals. It is also believed to have significant off-shore oil reserves.

China’s policy of not linking trade, aid and investment to political reform or human rights issues has paid huge dividends so far. In less than a decade it has created a footprint across the entire continent and secured a willing provider of much needed raw materials to power its economic growth.

There is now barely a country on the continent that does not have a sizeable Chinese presence. Copper-rich Zambia and the Congolese province of Katanga now boast the fastest-growing Chinatowns in the world. Sudan, for years out of bounds to Western companies because of its links to terrorism, now pumps 600,000 barrels of oil a day from its Red Sea port into Chinese ships. In return it received weapons that it used against rebellious black Africans in Darfur.

More…

 

Jim Sinclair’s Commentary

Cash for Codgers ($4500 for couples). Soylent Green (55 gallons) is given as a bonus for the really old ones.

Out of work, out of options, into retirement
Social Security filings up 22% as job loss forces some out of work force
By Allison Linn

Richard H. Freund had it all planned out: He’d work until he was 70 and his wife, a psychotherapist, turned 62.

Then, he’d retire and rely on several sources of income to fund a life making artwork and traveling around the country in a trailer.

Those plans were upended last spring, when Freund, then 66, found out that he would be losing his job as a computer programmer in the housing industry, and faced what looked certain to be a difficult job search.

Although the financial tradeoff was wrenching — his annual income is now half what it was when he was working — he felt he had little choice but to retire.

“At my age and in this job market, I didn’t even consider unemployment.  I just went straight to Social Security,” he said.

More…

Jim Sinclair’s Commentary

We live in a financial world where schemes get rewarded, and builders must fight their way through a host of devils.

Regulators Target ‘Naked’ Access
Concerns Over Risk Management of Anonymous, High-Speed Trades
OCTOBER 13, 2009
BY SCOTT PATTERSON

Federal securities regulators are examining whether an arrangement that lets high-speed traders rapidly buy and sell large chunks of stock anonymously could go awry and threaten markets.

Called sponsored or "naked" access, the setup allows high-speed firms and other outfits to trade directly on exchanges using powerful computers without the exchanges or regulators knowing who is making the trades.

"We understand that some firms are offering so-called naked access without effective controls over financial regulatory risk," said David Shillman, associate director of the Securities and Exchange Commission’s division of trading and markets, which is stepping up its scrutiny of the

More…

Jim Sinclair’s Commentary

Madness reigns in Great Britain.

The only way out is an asset based currency. History screams that message, yet the British geniuses sell the balance of their assets therein condemning the pound to paper currency hell.

U.K. Considers Privatizations to Cut Its Debt
By ALISTAIR MACDONALD

The U.K. government, in a bid to reduce its debt, is exploring a novel way to raise funds, people familiar with the matter say: bundling government activities such as human resources and information-technology management into commercial companies and selling or listing them.

Advisers want the government to consider privatizing any government function that is also performed by private industry, these people say. The companies, in theory, would eventually compete for contracts outside government. The government believes that, given their steady cash flows, they could be marketed to investors seeking dependable returns.

The British public sector manages an asset base valued at well over £800 billion ($1.3 trillion), according to the Treasury.

The idea of expanding asset sales to include human resources, IT management and other government services has been pitched to the government by advisers including Gerry Grimstone, the chairman of life insurer Standard Life, and Martin Read, former CEO of Logica, an IT-services company, according to people familiar with the matter. The U.K. Treasury in July 2008 asked Messrs. Grimstone and Read, as well as other business leaders, to examine the privatization process and public-sector efficiency.

More…

Posted at 5:21 PM (CST) by & filed under In The News.

Dear CIGAs,

Now here is an absolute indication that China and Russia will NOT be using dollars in energy settlements between countries.

This is the real beginning of the rumored trend in hard FACT. It will definitely spread now.

“The countries hope to expand the amount of business they do in their own currencies, rather than the US dollar. However, currently only about 1% of their dealings involve roubles or yuan.”

Russia and China eye $5.5bn deals

Russia is hoping to sign deals worth $5.5bn (£3.5bn) with China as Prime Minister Vladimir Putin visits Beijing.

The deals may lead to Russia selling more oil and gas to China – the world’s second-biggest energy user.

About 30 contracts in infrastructure, energy, mining, transportation and telecoms have been lined up.

Russia is keen to bolster its economy, which President Dmitry Medvedev has said will decline by 7.5% in 2009 – far worse than earlier predicted.

Currency ambition

Trade between Russia and China has risen from less than $10bn to more than $50bn annually over the past six years.

The heart of the relationship is Beijing’s thirst for Russian energy – oil and gas make up more than half of Russian exports to China.

More…

 

Jim Sinclair’s Commentary

Unemployment and inflation is a rock and a hard place.

Fed’s Bullard warns on inflation, unemployment
Oct. 11, 2009, 7:20 p.m. EDT

LOS ANGELES (MarketWatch) — Federal Reserve Bank of St. Louis President James Bullard said Sunday that unemployment is headed into double digits, while the medium-term inflation outlook poses more risk than generally believed, according to reported comments.

“Unemployment is leveling off, but we still may be headed toward double digits,” Bullard was quoted as saying in a Bloomberg report.

According to data released earlier this month, the U.S. unemployment rate hit a 26-year high of 9.8% in September.

Bullard also voiced concern that popular perceptions ignore the risk of high inflation.

“I am concerned about a popular narrative in use today … that the output gap must be large since the recession is so severe … [and] any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output-gap story,” he was quoted as saying by Dow Jones Newswires.

Bullard — currently a non-voting member of the Federal Open Market Committee but set to have a vote on the policy committee next year — made the remarks at an annual meeting of the National Association of Business Economics.

More…

 

Jim Sinclair’s Commentary

According to Jim Rogers:

The 21st century belongs to China

According to Rogers, the 19th century was the era of the British Empire and the 20th century was the U.S.’ heyday. But the 21st century is China’s (though the rest of Asia is definitely going to get a boost too).

The reasons for this are many, but some points brought up by Rogers include the following:

The Chinese want to live like we do;

They are more eager to work;

They are better at saving;

There are 1.5 billion Chinese citizens (and 3 billion people in all of Asia), and we owe them money. They are, according to Rogers, “among the best capitalists in the world.”

 

 

Jim Sinclair’s Commentary

The breaking points is .7150 on the USDX. It will happen as the snow flies on the East Coast.

Dollar Reaches Breaking Point as Banks Shift Reserves (Update2)
By Ye Xie and Anchalee Worrachate

Oct. 12 (Bloomberg) — Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

More…

 

Jim Sinclair’s Commentary

Didn’t every talking head on financial TV tell us that this would never happen?

Dollar Reaches Breaking Point as Banks Shift Reserves (Update3)
By Ye Xie and Anchalee Worrachate

Oct. 12 (Bloomberg) — Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

More…

 

Jim Sinclair’s Commentary

Here is the argument between the Fed and the White House that is certain to be lost by the Fed.

St. Louis Fed’s Bullard Urges Rule to Guide Asset Purchases
By Steve Matthews

Oct. 12 (Bloomberg) — Federal Reserve Bank of St. Louis President James Bullard repeated his call for a quantitative rule to adjust the Fed’s program to buy $1.75 trillion in assets to account for changing economic conditions.

“There has been little indication of how or whether these amounts might be adjusted given incoming information on economic performance,” he said in a speech yesterday in St. Louis. “It is unclear whether the policy is ultimately consistent with a steady state with inflation at target and output at potential. Confusion is creating uncertainty in financial markets.”

Policy makers cut the benchmark interest rate almost to zero in December 2008 and turned to purchases of Treasury, housing agency and mortgage-backed securities as their main monetary tool. They are now debating when to begin withdrawing record liquidity from the financial system as the economy emerges from the worst recession since the Great Depression.

They said last month the economy has “picked up,” while maintaining their pledge to keep the benchmark interest rate exceptionally low for an “extended period.”

With the rate likely to stay near zero for “a while,” Bullard said, the “key issue is how to think about the asset- purchase program.”

More…

 

Jim Sinclair’s Commentary

Do you recall when I told you about OTC derivatives? Read the last line.

Citigroup fined by Finra.

Sources say Citigroup (C) will pay $600,000 to settle charges it failed to supervise international customers, thereby allowing them to avoid dividend taxes. Citigroup has already paid the IRS $24M in taxes to settle claims it concocted derivatives to help clients circumvent taxes.

More…

 

Jim Sinclair’s Commentary

Unfortunately, and very sadly, this is true.

Weapons failed US troops during Afghan firefight
Oct 11, 8:28 AM (ET)
By RICHARD LARDNER

WASHINGTON (AP) – In the chaos of an early morning assault on a remote U.S. outpost in eastern Afghanistan, Staff Sgt. Erich Phillips’ M4 carbine quit firing as militant forces surrounded the base. The machine gun he grabbed after tossing the rifle aside didn’t work either.

When the battle in the small village of Wanat ended, nine U.S. soldiers lay dead and 27 more were wounded. A detailed study of the attack by a military historian found that weapons failed repeatedly at a “critical moment” during the firefight on July 13, 2008, putting the outnumbered American troops at risk of being overrun by nearly 200 insurgents.

Which raises the question: Eight years into the war against the Taliban in Afghanistan, do U.S. armed forces have the best guns money can buy?

Despite the military’s insistence that they do, a small but vocal number of troops in Afghanistan and Iraq has complained that the standard-issue M4 rifles need too much maintenance and jam at the worst possible times.

More…

 

Jim Sinclair’s Commentary

This is the natural outcome of the Formula.

What makes you think anyone rich outside of Wall Street is making money?

Atlas Shrugged in action: NY governor says “tax the rich” isn’t working
Monday, October 12, 2009

New York Gov. David Paterson observes that revenue from tax increases is running at least 20 percent below government projections and that the wealthy, as a group, were not paying more taxes there.

Thus far, New York had only collected about half of an expected $1 billion in income tax revenues from the state’s wealthiest residents, reports Investor’s Business Daily.

“You heard the mantra, ‘Tax the rich, tax the rich,’” Paterson opines. “We’ve done that. We’ve probably lost jobs and driven people out of the state.”

Paterson is something of an accidental governor, having replaced Elliott Spitzer after his sex scandal drove him from office. Observers note Paterson quickly got rolled over by the big-spending wing of his own party.

The state legislature passed a budget for this year with $6.1 billion in projected new taxes and fees. The budget deal was sealed with steeper rates for folks earning more than $200,000 a year, but curiously called a “millionaire’s tax.”

More…

 

Jim Sinclair’s Commentary

Confidence is all that values paper currencies.

The winter is going to be BRUTAL on the dollar. Are you prepared?

Central Banks’ Reserve Shift Ignores Dollar Data
By Brendan Moynihan

Oct. 12 (Bloomberg) — Central banks have been shifting their record reserves into the euro at the expense of the U.S. dollar. Investors may not follow, with America’s saving rate and trade balance data back at levels that prevailed when the European currency was unveiled in 1999.

The CHART OF THE DAY shows the percentage of allocated world currency reserves in dollars has fallen as holdings in euros increased in the past decade, according to quarterly data compiled by the International Monetary Fund. Also tracked are the U.S. personal-saving rate and trade balance as a percentage of gross domestic product.

A second chart shows the Intercontinental Exchange Inc.’s Dollar Index setting lows around the times Bear Stearns Cos. collapsed and Lehman Brothers Holdings Inc. went bankrupt. Short-term interest rate differentials favor the euro over the dollar, though only by 0.75 percentage point, the data show.

The dollar’s position as the world reserve currency has been called into question since reaching an almost three-year high in March. The currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totaled $1.4 trillion in fiscal 2009 ended Sept. 30.

More…

 

Jim Sinclair’s Commentary

The key and extremely important part of this article is the revelation of how financial institutions marked up assets including derivatives to produce earnings. Now some are being marked down again. If FASB required mark to true market all the earnings of these financial entities would evaporate immediately. It was this mark up process, especially in OTC derivatives booked as trading profits, that started the present rally, nothing else.

“The four biggest U.S. banks by assets may have to take writedowns on $55 billion of mortgage- collection contracts after marking them up by $11 billion in the second quarter, casting a shadow over earnings.”

Writedowns on Mortgage Servicing Make Even JPMorgan Vulnerable 
By Michael J. Moore

Oct. 12 (Bloomberg) — The four biggest U.S. banks by assets may have to take writedowns on $55 billion of mortgage- collection contracts after marking them up by $11 billion in the second quarter, casting a shadow over earnings.

Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.wrote up the value of the contracts, known as mortgage-servicing rights or MSRs, by 26 percent in the quarter as mortgage ratesclimbed by about 0.35 percentage point. Net gains on the contracts added more than $1 billion to Wells Fargo’s record earnings in the quarter and $1 billion to JPMorgan’s first-quarter profit.

Mortgage rates fell about 0.26 percentage point in the third quarter, according to Freddie Mac, and servicing costs are rising, meaning the four banks, which handle collections on more than $5.9 trillion of U.S. mortgages, may face writedowns.

“We’re very bearish on MSR valuations,” said Paul Miller, a banking analyst at FBR Capital Markets in Arlington, Virginia. “They are overvalued. There are higher costs associated with the servicing, and we’re very concerned about it.”

The four banks control 56 percent of the market for the contracts, according toInside Mortgage Finance, a Bethesda, Maryland-based newsletter that has covered the industry since 1984. Servicers collect payments from borrowers and pass them on to mortgage lenders or investors, less fees. They also keep records, manage escrow accounts and contact delinquent debtors.

More…

Jim Sinclair’s Commentary

Surges can backfire. This is the 2nd major attack in the last few days.

At least 40 dead after Pakistan suicide attack
Atrocity demonstrates growing threat posed by Taliban insurgents
By Omar Waraich in Rawalpindi and Andrew Buncombe
Tuesday, 13 October 2009

Taliban kidnappers who attacked Pakistan army’s headquarters over the weekend were planning to hold senior army officers hostage until more than 100 militants were released from the country’s jails, the military has claimed.

The news came as militants launched yet another attack on a military target in the country’s north-west, killing dozens of people in a crowded market with a suicide bombing that emphasised how Taliban insurgents have strengthened their hand by developing ties with sympathetic militants outside of their traditional strongholds.

The strike on a military convoy near the Swat Valley, a suicide bombing, killed 41 people. The Taliban has already claimed responsibility. Officials said 35 civilians and six soldiers died when the bomber hit one of three military vehicles that were passing through a market in the Shangla district. Scores more were injured. “It appears to be a suicide attack. The bomber hit one of three military vehicles that were passing through the busiest market in the district,” a senior police official, Khan Bahadur Khan, told Reuters.

More…

Posted at 3:28 PM (CST) by & filed under Jim's Mailbox.

Hi Jim,

Here is another sign we are going to get Stimulus Package #2, not named Stimulus Package #2. You have warned us about how serious a failure of CIT would be.

Respectfully,
CIGA BERNIE

CIT debt swap struggles, bankruptcy looms
Mon Oct 12, 2009 7:22pm EDT

NEW YORK (Reuters) – CIT Group Inc is seeing little interest from bondholders in a debt exchange offer aimed at repairing its fragile balance sheet, making bankruptcy increasingly likely, sources familiar with the matter said.

The lender to small and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy.

CIT is now more likely to try a prepackaged bankruptcy, two people familiar with the matter said. They declined to be identified because the exchange offer is ongoing and information about its progress is private.

More…

 

Dear Jim,

Note the suicide bomber was a former army guard. This is really a civil war. Strange we do not see 39 hostages were freed in the Western media!

“The only hostage-taker captured was identified by Abbas as Aqeel, alias “Dr. Usman.” He critically wounded himself by setting off explosives he was carrying. Military sources said Aqeel, a native of village Kahuta in the northwest, once worked as a guard at an army nursing school, where he got his nickname. He later joined the Punjab chapter of Tehrik-e-Taleban Pakistan”

More…

Best,
CIGA BT

 

Hi Jim,

I have $1089 Gold as our next resistance. We are getting close to October 25th.

How do you see Gold playing out at $1089:

1) A back off to $1024 or less?
2) $1089 is obliterated in short order?

I know it all depends on the US Dollar and $0.76 seems to be a line in the sand.

CIGA S

Dear CIGA S.

Alf Field’s has refused to give this interim numbers in the best interest of those that have benefited so much from his wisdom. He is not withholding for a price, but rather because he rightly believes that any trading in this market has the prime probability of taking a member of the public out of position at just the wrong time.

You have read Armstrong who has made it clear that when it all unravels, it will be in but a few days that this occurs with gold promptly trading at $1224, $1650 and possibly into the multi-thousands.

Yes, things are that bad, camouflaged by MOPE to a degree never witnessed in history.

Now to your question.

Yes, so many people believe $1084 is meaningful that it must have some degree of meaning.

In the grand scheme of things, it has no more meaning than 34 similar points on this journey from $248 to above $1050. Why must you trade when you know the gold price is going to a minimum of $1650?

Do not gauge price in light of the timing of 27 days to go. Things can easily happen sooner than later. This countdown of days is for the purpose of keeping all readers focused and committed. It is based on knowledge, but nothing can be set in cement to the second.

You must see that international confidence in the US dollar is waning at an accelerating pace. Statements and interventions by the government only serve to bring more attention to the fundamental weakness of the currency in question, now the US dollar.

Recall the intervention in the Swiss Franc that got all the press’s attention, but only failed?

The carry trade is like a rampaging virulent disease once it attacks a currency. This is an added negative to the US dollar.

It is going to be a very cold winter for the US dollar.

I must assume you are NOT using leverage as it is suicidal in this gold market.

In your question, the last line has already given you the answer.

Your friend,
Jim

Posted at 3:17 PM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

Index fund activity across the commodity spectrum is intensifying with huge sums of money pouring back into the rather small world of commodities. Current fundamentals in many of these markets do not justify moves of the extent that are occurring as this tidal wave of hot money overwhelms commercial hedge selling. Nonetheless, the “reflation trade” with the US Dollar on the short end of the stick as carry traders relentlessly beat it down to exchange these borrowed funds for things tangible is lifting the commodity boat across the board with few exceptions.

This is being reflected in the Continuous Commodity Index which is the one that I track to keep tabs on this sector as a whole.

If you observe the chart (weekly) it has almost recaptured 50% of its losses that began back in July of 2008 when the bubble burst and the Yen carry trade was unwound and the extensive deleveraging trade began with a passion. The level near 470 marks that halfway point. If, and this is what we are watching carefully, the CCI takes out that level for two weeks and sustains it, that which we have long feared in regards to the collapse of the Dollar will be confirmed, namely, that the wave of inflation is underway and entrenching itself.

The monetary authorities cannot support the Dollar without sending interest rates higher and sending the floundering economy into the rocks. They might try talking it up by threatening to withdraw the excess liquidity but just try imagining what would happen to the real estate market if anyone took such talk seriously.

I have long suspected that the US would fully commit itself to the same path as Japan did when its real estate bubble crashed and that was a policy of benign neglect of their currency; only in the case of the Japanese, it was a transparent and deliberate policy of weakening the Yen. The US wants, nay, it needs the Dollar lower to keep its export market alive and more importantly, to reduce its debt payments in real terms.

The truth is that the US monetary authorities will only attempt to PREVENT A COLLAPSE in the Dollar and that is why they will venture out from time to time to remind us how a strong dollar is in the US interest and that they have all the tools are their disposal to withdraw the excess liquidity when they see the economy is on the mend. Both statements are BS.

Gold is on to this game and that is why it is reacting as strongly higher as it has been. There are now two things that I am watching to see when it moves to $1,100 as a minimum – one is a downside breach of 76 on the USDX that cannot climb back above that level and the other is a move above this 470 level on the CCI.

Click chart to enlarge in PDF format

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