Posted at 6:34 PM (CST) by & filed under In The News.

Dear CIGAs,

One of my services to you is to note those who are doing excellent work in the real estate sector for those CIGAs who may have been victimized by the financial scum so prevalent today.

As always, I have no financial relationship with Marie McDonnell directly or indirectly.

Marie McDonnell, CFE

Truth In Lending Audit & Recovery Services, LLC 
Mortgage Fraud and Forensic Analyst
Certified Fraud Examiner
MARIE.MCDONNELL@TRUTHINLENDING.NET

 

Jim Sinclair’s Commentary

When you consider the funds Greece requires compared to what was funnelled into US financial entities, it is a joke.

Greece is a sideshow being treated like a main event in order to keep attention off the problems of the US and GB.

There is a limit in time to which a lie can carry the day.

Greek Budget Deficit Revised to 13.6%, May Top 14% (Update1)
By Andrew Davis

April 22 (Bloomberg) — The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.

The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.

Greece’s benchmark 10-year bond yield rose to 8.49 percent, the highest since 1998 and more than twice the comparable German rate. The cost of insuring government debt against default climbed to a record today.

Greece’s widening deficit and questions about the accuracy of its economic data have undermined the credibility and enforcement of the EU’s budget rules and contributed to the 6.9 percent slide in the euro this year. The EU and the International Monetary Fund offered Greece as much as 45 billion euros ($60 billion) in emergency loans to assure investors the country can make its debt payments and shore up the euro.

Breaking the Rules

“They have played against the rules and now they’re getting the bill,” said Sylvain Broyer, chief European economist at Natixis in Frankfurt. “It’s a very uncomfortable situation for the Greek government. Greece has very much benefited from the currency region, but ignored the rules.”

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Jim Sinclair’s Commentary

Not to be concerned. The government does not consider food as an important item to the Consumer Price Index.

Wholesale prices rise in March as food costs jump
By CHRISTOPHER S. RUGABER, AP Economics Writer – Thu Apr 22, 8:57 am ET

WASHINGTON – Wholesale prices rose more than expected last month as food prices surged by the most in 26 years.

The Labor Department said the Producer Price Index rose by 0.7 percent in March, compared to analysts’ forecasts of a 0.4 percent rise. A rise in gas prices also helped push up the index.

Still, there was little sign of budding inflation in the report, which measures price changes before they reach the consumer. Excluding volatile food and energy costs, wholesale prices rose by 0.1 percent, matching analysts’ expectations.

Food prices jumped by 2.4 percent in March, the most since January 1984. Vegetable prices soared by more than 49 percent, the most in 15 years. A cold snap wiped out much of Florida’s tomato and other vegetable crops at the beginning of this year.

Gasoline prices rose 2.1 percent, the department said, the fifth rise in six months.

In the past year, wholesale prices are up 6 percent, with much of that increase driven by higher oil prices. But excluding food and energy costs, they have risen only 0.9 percent.

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Jim Sinclair’s Commentary

"No bees, no bats. not food."
–Jim Sinclair, 2008.

Peak Phosphorus
CIGA Eric

The dwindling supply of mined phosphorus could affect the quality and price of agriculture goods in the coming century.

Our dwindling supply of phosphorus, a primary component underlying the growth of global agricultural production, threatens to disrupt food security across the planet during the coming century. This is the gravest natural resource shortage you’ve never heard of.

The geographic concentration of phosphate mines also threatens to usher in an era of intense resource competition. Nearly 90 percent of the world’s estimated phosphorus reserves are found in five countries: Morocco, China, South Africa, Jordan, and the United States. In comparison, the 12 countries that make up the OPEC cartel control only 75 percent of the world’s oil reserves.

Source: foreignpolicy.com

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Jim Sinclair’s Commentary

A really bad idea as China cannot be made to act on the yuan this way.

CIGA Eric’s Commentary

Any meaningful follow through on tarriffs, duties, or sanction will have similar consequences to Smoot-Hawley or Tarriff Act of 1930. This rhetoric bears close attention as many remain blind to the lessons of history.

U.S., China take anti-dumping measures.
The U.S. and China have taken new anti-dumping steps against one another, threatening to reignite trade tensions that had recently eased. The U.S. Commerce Department is launching an investigation into whether certain Chinese aluminum products are being sold at unfairly low prices because of government subsidies. China’s Commerce Ministry said this morning that it’s imposing anti-dumping duties of up to 96.5% on imports of polycaprolactam, or nylon 6, from the U.S., Europe, Russia and Taiwan.

 

Jim Sinclair’s Commentary

The financial problems of US states will dwarf Greece and all the weak EU states together.

The media concentration on Greece is a diversion tactic to see the spot light stays off GB and the USA.

State Debt Woes Grow Too Big to Camouflage by Mary Williams Walsh
Tuesday, March 30, 2010

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

New Hampshire was recently ordered by its State Supreme Court to put back $110 million that it took from a medical malpractice insurance pool to balance its budget. Colorado tried, so far unsuccessfully, to grab a $500 million surplus from Pinnacol Assurance, a state workers’ compensation insurer that was privatized in 2002. It wanted the money for its university system and seems likely to get a lesser amount, perhaps $200 million.

Connecticut has tried to issue its own accounting rules. Hawaii has inaugurated a four-day school week. California accelerated its corporate income tax this year, making companies pay 70 percent of their 2010 taxes by June 15. And many states have balanced their budgets with federal health care dollars that Congress has not yet appropriated.

Some economists fear the states have a potentially bigger problem than their recession-induced budget woes. If investors become reluctant to buy the states’ debt, the result could be a credit squeeze, not entirely different from the financial strains in Europe, where markets were reluctant to refinance billions in Greek debt.

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Posted at 12:35 PM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

Further proof that the rising CCI (Continuous Commodity Index) is not without its effect on the pocketbook of the everyday citizen.

You still have to laugh at the writer’s conclusions. If A=B and B=C, then A=macaroni:

"Still, there was little sign of budding inflation… excluding food and energy…”

Yep, that’s the stuff that no one needs or no one buys and therefore has no effect on the real world.

Rising lumber prices at the home improvement stores, rising hardware costs, rising PVC costs, rising sheetrock costs, rising gasoline prices, rising meat prices, rising sugar prices, rising baby food prices, rising fruit prices, rising diaper prices, rising fees on local services,… Nope – this has zero effect on the average consumer.

Are you not relieved after learning that what your eyes tell you when you watch the cash register at the local grocery store and you hands tell you after carrying fewer bags out to the car for a larger amount spent is all just a function of an overactive imagination, a bit of indigestion resulting from the previous evening’s dinner?

Wholesale prices rise in March as food costs jump
Wholesale prices rise in March as food costs jump, but core inflation remains all but flat

Christopher S. Rugaber, AP Economics Writer, On Thursday April 22, 2010, 12:16 pm

WASHINGTON (AP) — Wholesale prices rose more than expected last month as food prices surged by the most in 26 years. But excluding food and energy, prices were nearly flat.

The Labor Department said the Producer Price Index rose by 0.7 percent in March, compared to analysts’ forecasts of a 0.4 percent rise. A rise in gas prices also helped push up the index.

Still, there was little sign of budding inflation in the report. Excluding volatile food and energy costs, wholesale prices rose by 0.1 percent, matching analysts’ expectations.

Food prices jumped by 2.4 percent in March, the most since January 1984. Vegetable prices soared by more than 49 percent, the most in 15 years. A cold snap wiped out much of Florida’s tomato and other vegetable crops at the beginning of this year.

Gasoline prices rose 2.1 percent, the department said, the fifth rise in six months.

In the past year, wholesale prices are up 6 percent, with much of that increase driven by higher oil and other commodity prices. But the core index, which excludes food and energy, rose only 0.9 percent.

More…

Posted at 3:14 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

I highly recommend the following brief article particularly whenever you get another Elliot Waver with their gloom and doom forecast for Gold. Not only is the article a stunning read but it also is a road map to the history of gold over the next few years.

The main point of interest is the conclusion drawn by the author (who by the way is a former Treasury Department official under a Democratic President so his argument cannot be dismissed as merely a partisan rant), is that the US is headed for a debt crisis eerily similar to that which erupted in the last year of the Jimmy Carter Administration back in 1979. You will recall that is the year during which gold went on to hit an all time high near the $850 mark.

Note also that the author comes to the same conclusion that we have been stating for years now, namely, that the fiscal condition of the US makes a Dollar crisis almost inevitable unless draconian measures are enacted, which incidentally I might add, will slam the brakes on any nascent economic recovery.

Considering the fact that gold is trading in nominal terms near the $1145 level, which is almost 40% below the all time high CLOSING monthly price of gold when adjusted for inflation, the stage is clearly set for gold to run to heights that many currently would believe are incredulous. However, one must take into account, as the article correctly and clearly sets forth, that the deteriorating condition of the US fiscal condition has no comparison going as far back as record keeping began in the US in 1792. That alone, especially his notes on the fiscal condition of the US as related to WWII are most enlightening.

Print a copy of this article and post it on the wall referring to it often and then understand why we here at this site are so concerned about our future as a nation and why we keep saying that the price retracements in gold are mere blips on the long term radar screen.

Also rest assured that if we know this, so too do the large Central Banks and monetary authorities of the rising economic powerhouses of the East.

Trader Dan

Click chart to enlarge today’s Inflation Adjusted Gold Price chart in PDF format

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FT: U.S. Debt to Hit $20 Trillion in 10 Years
Wednesday, 21 Apr 2010 08:51 PM

While the global financial system remains transfixed by the problems of Greece and several other European countries risking default over their massive debts, the real threat is whether the credit standing and currency stability of the world’s biggest borrower, the US, will be jeopardized by its disastrous outlook on deficits and debt.

That’s the fear raised in a devastating op-ed on the Financial Times website written by Robert Altman, a former deputy US Treasury secretary under President Clinton who is now chairman of Evercore Partner, a leading global advisory and investment firm.

“America’s fiscal picture is even worse than it looks,” Altman writes. “The non-partisan Congressional Budget Office just projected that over 10 years, cumulative deficits will reach $9.7 trillion and federal debt 90 percent of gross domestic product – nearly equal to Italy’s.

“Global capital markets are unlikely to accept that credit erosion,” Altman says. “If they revolt, as in 1979, ugly changes in fiscal and monetary policy will be imposed on Washington. More than Afghanistan or unemployment, this is President Barack Obama’s greatest vulnerability.”

The financial outlook for the United States is frightening. The size of the federal debt jis projected by the CBO to increase by nearly 250 per cent over 10 years, from $7.5 trillion to a whopping $20 trillion.

The only remote comparison to such a debt load in the World War II, a global conflict that killed 50 million people, Altman and other analysts have written.

But there is no real comparison even in the 1940s and 50s for such a rise in indebtedness – nothing remotely like it has occurred since record keeping began in 1792, Altman writes.

“It is so rapid that, by 2020, the Treasury may borrow about $5 trillion per year to refinance maturing debt and raise new money; annual interest payments on those borrowings will exceed all domestic discretionary spending and rival the defense budget,” Altman writes in the Financial Times.

More…

Posted at 3:22 PM (CST) by & filed under General Editorial.

Dear CIGAs,

It is always nice to come home to a warm welcome!

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The return trip via Qatar was very difficult and long. I am extremely tired and must rest.

It is suffice to say that we are on the threshold of a major upward move in gold and all things gold.

Respectfully,
Jim

Posted at 2:03 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Today was quite remarkable given the weakness in the Euro and the strength in the Dollar. The commodity markets seemingly entered a different realm with buying originating across a good many of the individual commodity futures markets even as the bonds were higher and the equity markets were showing some hesitancy. Dollar strength was a non-factor today. Once again it appears that managed money wants to own this sector irrespective to some extent of what the Dollar is or is not doing. This bodes extremely well for gold as you will recall that one of the 5 pillars for a bull market in gold, which Jim detailed many years ago and is still applicable even now, is rising commodity prices.

The Continuous Commodity Index put in a 3 month high today and is threatening an upside breakout from the 2 month long congestion pattern that has dominated its daily chart since early February. Palladium made a two year high today while platinum pushed further above $1700. Clearly industrial demand for both metals is on the rise as is the investment demand aspect of both. That strength is being reflected in both silver and copper and is one of the myriad reasons that gold is moving higher. Incidentally, speaking of silver, it needs to push past its ten day moving average near today’s session high to set up a challenge of $18.60.

I have been keeping an eye on lumber futures and they are putting in a very strong showing having moved up sharply the last week. I am not sure what to make of this whether it is related to mill closures or anticipation of a rebound in home building, but for whatever reason, lumber is signifying an improvement in that area. Lumber has been one of the few commodity markets, along with natural gas, that has not participated in the surge of buying in that sector. Perhaps it is playing catch up as fund managers look for undervalued markets.

Natural gas might be next if that is the case although it is still being plagued with supply issues. If Nat Gas were to finally get something going to the upside, it would help push the CCI (Continuous Commodity Index) higher with rising energy costs then percolating through the entire economy. Again, that would work to the benefit of gold. Energy intensive industry has been the beneficiary of cheap natural gas prices allowing them to keep some of their input costs contained. Should that change, eventually, they would have to push these costs through to the end product which would impact buyers of their production. The Fed is supposedly going to work to nip the inflation genie in the bud but it is the perception of inflation that is more dangerous as once that sets hold, it is difficult to root out without drastic action, something which this nascent recovery is in no wise able to bear.

Speaking of inflation – the bond market certainly is not the least bit concerned by it judging from the price action on the long end. They broke out to the upside and now have a rather clear path to 118^10 level on the technical price charts. Bond traders are betting that there will be sufficient demand for new issues to absorb the tremendous supply coming. They are also betting that the labor market is still so weak that inflationary pressures from wages will not be an issue for the foreseeable future. For now, that seems to be overriding any concerns from the rise in commodity prices. But that can change, and in a hurry so we will keep an eye on this market for clues.

Copper, another bellwether market, has been able to attract buying on dips down towards $3.45. Only if it can accomplish an upside breakout above $3.65 will it be able to mount a sustained charge higher. That level has thus far stymied its upward progress. If it can push past there, it will signify that this market is anticipating a further improvement in the global economy.

The mining shares, while higher today, do not look quite as healthy as the bullion chart although they are higher even as the broader equity markets are struggling. The HUI looks to be caught up in a bit of a crosswind with pressure from the lower stock market battling against buying coming from the stronger gold and silver markets. It is encouraging to see it attempting to disattach itself somewhat from the action in the S&P. If gold can push past the $1175 level, the HUI will follow it higher regardless of what the general equity markets do. If they go higher, while gold sustains an upside run, the HUI will have an additional tailwind at its back that will make it outperform the market as a whole. We will have to wait and see what transpires.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

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Posted at 12:53 PM (CST) by & filed under Jim's Mailbox.

US Car news
CIGA Eric

Good thing that these two news items are not related and purely coincidental. MOPE at its finest.

As we are relieved of the burden of unnecessary critical thinking, it frees more time for more productive activities such as watching more reality TV.

Gas in the tank: GM repays $8.1B in gov’t loans

The Obama administration crowed about the "turnaround" at GM and fellow bailout recipient Chrysler LLC, saying the government’s unpopular rescue of Detroit’s automakers is paying off.

AP-GfK Poll: Americans shifting to US cars

Toyota’s safety problems and a buffed-up lineup of offerings from Detroit’s Big 3 are rubbing the tarnish off car buyers’ perceptions of U.S. models. An Associated Press-GfK Poll shows that 38 percent favor U.S. vehicles while 33 percent prefer Asian brands, a significant improvement for U.S. automakers compared to four years ago.

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Open your wallets for plastic cash
CIGA Eric

Loonies, dollars, and gold are nothing more than mediums of exchange. It is the productive and intellectual capacity of a nation that is money. This is what people will barter for. Although cheaper and better works, it does little to address the confidence needed to stabilize demand. If confidence in those maintaining the currency declines, the currency will always falter regards of the composition, cost, or security. This is why gold has functioned as a medium exchange, i.e. money, across nations and cultures for so long.

Starting in late 2011, Ottawa will replace Canada’s paper-cotton bank notes – prone to wear and tear – with synthetic ones that last two to three times longer.

Source: theglobeandmail.com

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US Long Bonds – Early trading look
CIGA Eric

While price remains sandwiched between the gaps, it is currently probing the overhead gap. If price is to overcome the gap, it must do so with energy that matches or exceeds its formation. The 3/24 gap was formed on 8 million shares traded, so this will be no easy feat. A bullish outcome will be generated through a jump of the gap on a sign of strength (volume spike) or through attrition.

The REV indicator already shows a build up of tape energy beyond the previous swing high. This previous swing marks the formation of the overhead gap, so this development is bullish. This could very well be a hint of things to come, but I wouldn’t get too excited yet. The overhead gap has yet to be cleared, and leveraged money flows need to confirm.

Bear in mind, this is all short-term noise within a deteriorating fundamental trend.

US Long Bonds ETF (TLT)
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Posted at 3:50 AM (CST) by & filed under General Editorial.

Dear Friends,

It is like you have been right here with me at the airport lounge in Qatar. At long last I will be on the 8:10 AM flight to JFK.

The ash cloud has hit the Middle East in two ways. Many people are flying into the US via Doha and Dubai, so every flight is filled or oversold.

The ash cloud is also near.

From midnight here to what is now 6:20am we have been speaking via JSMineset.

It feels as if we were sitting at the same table swapping views rather than wasting our time sleeping.

Stay firm my friends. We are nearing another major gold price takeoff.

Respectfully,
Jim