Posted at 3:31 PM (CST) by & filed under In The News.

"The limits of tyrants are prescribed by the endurance of those whom they oppress."
–Fredrick Douglass, August 4, 1857

Jim Sinclair’s Commentary

Here is a rock and hard place. The dollar is becoming less acceptable as a reserve currency because of all the QE.

A failure to apply QE at warp speed will result in the 30 year US Treasury breaking its 28 year uptrend line. That will send rates into the stratosphere and then China’s treasury instruments into the trash heap. QE must continue. The uptrend line will break harder on the downside in November of 2009.

China sells US bonds to ‘show concern’
Jun 17 04:20 AM US/Eastern

A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.

The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction.

"China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University, told the Global Times.

According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.

It was the first month since June 2008 that Beijing failed to purchase more US T-bills.

Zhang Bin, a researcher at the Chinese Academy of Social Sciences, said China’s move showed a more cautious attitude.


Jim Sinclair’s Commentary

I could not have said this better. The dollar will not survive this Fall and will fall sharply this winter.

"US officials wanted to attend Yekaterinburg as observers. They were told no. It is a word that Americans will hear much more in the future."

Washington is unable to call all the shots
Financial Times
By Michael Hudson
Published: June 15 2009 03:00 | Last updated: June 15 2009 03:00

Challenging the American empire will be the focus of meetings in Yekaterinburg, Russia, today and tomorrow for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other leaders of the six-nation Shanghai Co-operation Organisation. The alliance comprises Russia, China, Kazakhstan, Tajiki-stan, Kyrgyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.

The attendees (who will be joined on Tuesday by Brazil for trade discussions) have assured American diplomats that dismantling the US financial and military hegemony is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the US or for the dollar as a vehicle for trade among these countries.

The meeting is an opportunity for China, Russia and India to "build an increasingly multipolar world order", as Mr Medvedev put it in a St Petersburg speech this month. What he meant was this: we have reached our limit in subsidising the US military encirclement of Eurasia while also allowing the US to appropriate our exports, companies and real estate in exchange for paper money of questionable worth.

An "artificially maintained unipolar system", Mr Medvedev said, was based on "one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks".

Keen observers of America, if not effective managers of their own economies, these countries argue that the root of the global financial crisis is that the US makes too little and spends too much. Especially upsetting is US military expenditure – such as military aid to Georgia or the presence in the oil-rich Middle East and central Asia – using money that foreign central banks recycle.


Jim Sinclair’s Commentary

You ask what is next from a person screaming for attention, lacking all his paddles in the water and seemingly being ignored by the public? A shot at Hawaii that misses hopefully.

North Korea may fire a missile toward Hawaii
By HYUNG-JIN KIM, Associated Press Writer
Thu Jun 18, 7:48 am ET

SEOUL, South Korea – North Korea may fire a long-range ballistic missile toward Hawaii in early July, a Japanese news report said Thursday, as Russia and China urged the regime to return to international disarmament talks on its rogue nuclear program.

The missile, believed to be a Taepodong-2 with a range of up to 4,000 miles (6,500 kilometers), would be launched from North Korea’s Dongchang-ni site on the northwestern coast, said the Yomiuri daily, Japan’s top-selling newspaper. It cited an analysis by the Japanese Defense Ministry and intelligence gathered by U.S. reconnaissance satellites.

The missile launch could come between July 4 and 8, the paper said.

While the newspaper speculated the Taepodong-2 could fly over Japan and toward Hawaii, it said the missile would not be able to hit Hawaii’s main islands, which are about 4,500 miles (7,200 kilometers) from the Korean peninsula.

A spokesman for the Japanese Defense Ministry declined to comment on the report. South Korea’s Defense Ministry and the National Intelligence Service — the country’s main spy agency — said they could not confirm it.


Jim Sinclair’s Commentary

Now here is an example of World Class closing of the barn door after the horses have left. Who are they kidding?

Standard & Poor’s Cuts Ratings On 22 Banks
6/17/2009 1:36 PM ET

(RTTNews) – Credit ratings agency Standard & Poor’s lowered its ratings and revised its outlooks on 22 U.S. banks on Wednesday, citing concerns that operating conditions will be less favorable than they were in the past due to volatile financial markets during credit cycles and tighter regulatory supervision.

Standard & Poor’s also said the changes reflect its ongoing broad-ranging reassessment of industry risk for U.S. financial institutions. The agency indicated that the banking industry is now in a transition period and will likely undergo material structural changes.

Further, the agency said its overall assessment of the industry includes expectations that loan losses are likely to continue to increase and could rise beyond current expectations.

Standard & Poor’s credit analyst Rodrigo Quintanilla said, "We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions."

"Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace’s new reality," Quintanilla added. "Such a transition period justifies lower ratings as industry players implement changes."


Jim Sinclair’s Commentary

Actually, I am amazed that something as correct and intelligent as this is entertained by the dullest people on the planet.

I smell politics and pressure on the Fed to ramp up QE without waiting for a second crisis.

Ron Paul’s "Fed Transparency" Bill Gets Majority House Support
Posted Jun 12, 2009
From The Business Insider, June 12, 2009:

The US House of Representative has joined the Cult of Paul.

Ron Paul, the famously anti-Federal Reserve Congressman from Texas has got 221 of his colleagues to sign onto a bill (via Zero Hedge) that would require a fresh, outside audit of the Federal Reserve. That’s more than enough to get the bill out of the House, though it now faces the more adult and deliberative House of LordsSenate, who are likely to have less interest in such seditious shenanigans.

The first Senate co-sponsor is rumored to be Jim DeMint of South Carolina, a favorite among the hard right and a possible Presidential candidate.


Posted at 7:27 PM (CST) by & filed under General Editorial.

Dear Friends,

I am working quite hard to prepare for a business trip to China late next week.

Emails today went over the 700 mark which is an indicator in itself. The record stands at 6000 emails in a single day.

I am trying to answer as many calls, emails and faxes as possible, however that number will be nowhere near everyone who has emailed in. The reality is I am only one man and there is not enough time in the day. Trader Dan and Editor Dan are equally buried.

For those of you who follow Alexa Page Ranks, I was informed that JSMineset’s rank yesterday was 36,027, roughly what it has been all week. Not bad for a website run fully by a number of people you could count on a single hand.

Thank you all for the support!

Respectfully yours,
Jim and the JSMineset Team

Posted at 4:57 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Gold insures not only your finances, but potentially you as a person!

17 days in June are behind us. The third week of June is upon us. The downside in gold had $918 and $932 as its most probable lows. $932 was a fulcrum point of the US night sessions around the world.

Monty has always been the balance man in the gang. It seems like he is moving to the right of this mess by today’s report. Review the 2007 Au consolidation before it fired up and out and compare that to the recent gold market action here.

Get done whatever you plan to do now as a bottom here and into next week seals Armstrong’s $5000 and Alf’s potential overrun in this leg of $3500.

Posted at 3:30 PM (CST) by & filed under Guild Investment.

“Why don’t somebody print the truth about our present economic condition? We spent years of wild buying on credit, everything under the sun, whether we needed it or not, and now we are having to pay for it, howling like a pet coon. This would be a great world to dance in if we didn’t have to pay the fiddler.”
- Quote by Will Rogers

The world has accumulated a great deal of debt, and it will take a long time for the savings rate to get to the point where debt can be managed.  Rather than implement rational solutions to the debt bomb, we think politicians will dither and financial manipulators will continue to try to make money in the current crisis, therefore we expect there will be many more asset bubbles in coming years.

A few reasons why we say this:
1.  Money supply growth is out of control, everywhere.  Often this is due to pressure on central banks by politicians.
2.  The velocity of money is starting to increase after a period of decline.  Due to the resurgence of the shadow banking system.
3.  The problems that have caused the present crisis (unregulated derivatives) are still continuing to be manufactured because they are very profitable to the manufacturers.  Derivatives expand the shadow banking system, which further expands the supply of money and credit, thus adding more fuel to the bubble creating machine.

When derivative manufacturers are confronted with the fact that they are sowing the seeds of another bubble…and then another disaster, their refrain is that “it will be different this time.”  Amazingly, people can be made to believe that stuff!

Politicians and central bankers worldwide are expanding the money supply at astounding rates, and the eventual outcome that we can see is inflation.  We recommend that our readers invest accordingly.  We own oil shares, natural gas shares, gold and silver stocks, agriculture related investments, strong non-U.S. currencies and foreign stocks from fast growing countries [China, India, and other emerging markets].  We are currently getting a pullback in these markets, and we want to use these corrections to add to our positions at $60 a barrel for oil we will get particularly bullish.


Last week, the CEO of Bank of America was on television in front of Congressional leaders testifying under oath about conversations he had with the Federal Reserve Chairman and the U.S. Treasury Secretary before Bank of America had completed its purchase of the ailing investment bank, Merrill Lynch.  To put it politely, the reason for airing it publicly was to gather data in order to prosecute someone.  The U.S. Congress is comprised mostly of lawyers.  They may be terrible at financial and economic decision-making, but they know how to prosecute someone.


1. Was it politics, driven by a desire of the U.S. Congress to make the banks look bad?
2. Was it a desire of the Congressional Democrats to attack the Republican holdovers, Dr. Ben Bernanke and the Republican former Secretary of the Treasury Henry Paulson?

Or, more frightening…

3. Was it a shot across the bow of the entire Federal Reserve Board by the current administration?

Or was it all 3?

Number 1 would be typical.  The U.S. Congress who is highly culpable in this crisis wants to shift blame elsewhere.  Number 2 is very probable.  Democrats want to take any opportunity to smack down Republicans and shift blame for the economic meltdown to the Republicans [in our opinion, both parties deserve blame].  Number 3 is the frightening alternative.

Today, the Obama administration is expected to unveil their new plan for financial regulation.  After it is unveiled, we will be able to comment more.

Details Set for Remake of Financial Regulations
Wall Street Journal-June 15, 2009
By: Damian Paletta

WASHINGTON — President Barack Obama is expected Wednesday to propose the most sweeping reorganization of financial-market supervision since the 1930s, a revamp that would touch almost every corner of banking from how mortgages are underwritten to the way exotic financial instruments are traded.

At the center of the plan, which administration officials are referring to as a "white paper," is a move to remake powers of the Federal Reserve to oversee the biggest financial players, give the government the power to unwind and break up systemically important companies — much like the Federal Deposit Insurance Corp. does with failed banks — and create a new regulator for consumer-oriented financial products, according to people involved in the process.

The plan stops short of the complete consolidation of power that some lawmakers have advocated. For example, it will allow several agencies to continue supervising banks. It also won’t place specific limits on the size or scope of financial institutions, but it will make it much harder for large companies to be so overleveraged that they threaten the broader economy.

What if Congress and the Obama administration are looking for more Fed buying of government bonds, known as Quantitative Easing?  Thus far, the U.S. Federal Reserve and its board of Governors have resisted and board members have stated that no more Quantitative Easing is necessary.


Congress and the Obama administration need to sell trillions of dollars of U.S. Government bonds to finance the current and expected deficits.

[a.] They do not want to cut spending.  Too many constituents enjoy the handouts.
[b.] They do not want to raise taxes, as it might cause the economy to collapse even more.  However, they have a multi-trillion dollar problem this year, next year, and in the foreseeable future….Bond sales must be made. China, Brazil, Russia and other potential bond buyers have been saying that they are concerned about U.S. deficits and U.S. anti-business rhetoric.  For many years, the U.S. has sold smaller amounts of bonds to foreign governments.  Currently, foreign governments can be expected to take a much smaller part of the large quantities that need to be sold in the foreseeable future.

The government needs do either a. or b…or more probably will do c.  What is c?

[c.] More Quantitative Easing; a type of printing money where the Treasury sells bonds to the Federal Reserve.  Quantitative Easing is admitting that no one else in the world will buy the bonds needed to finance our spending without a big increase in interest rates.  The U.S. Federal Reserve buying treasury bonds temporarily solves the problem of how to finance the deficit while keeping interest rates low…thus helping the administration with a very big political problem.


Some of the Federal Reserve Governors are Democrats and some are Republicans…BUT ALL ARE ECONOMISTS.

They know well the pitfalls of financing government largesse by the technique of printing money.  They have seen how the same actions that Congress wants to pressure them into have historically destroyed many economies.  We are certain that they do not want to go down in history as the people who sowed the seeds of destruction of the U.S. financial system.

The integrity and independence of the Federal Reserve must be preserved from the politicians’ desire to give too many gifts to potential voters, if the U.S. and world are to grow and prosper in coming decades.  Ben Bernanke is up for re-appointment or replacement in January.  We believe that if he is not re-appointed, the U.S. dollar will fall and interest rates in the U.S. will eventually rise more rapidly, and rise higher than they would otherwise.

In any case, we anticipate that interest rates must rise.

Thank you for listening.

Monty Guild and Tony Danaher

Posted at 3:25 PM (CST) by & filed under In The News.

“In politics, nothing happens by accident. If it happens, you can bet it was planned that way.”
–Franklin Delano Roosevelt

Dear CIGAs,

Let’s talk street smarts. There is nothing mysterious about this. This is not your cookie cutter type of counterfeit operation, if they are, in fact, fakes.

Governments in times of war counterfeit the opponents currency and government bearer bonds to balloon the money supply, inflicting injury by inflation. These instruments, even not in official figures, act the same as a massive increase in the money supply. $134 billion is not massive by today’s standards but how do you know this is the only suitcase? Nobody is that stupid with funds of this size, even if counterfeit. You can be sure there is more where this came from. The probability then is that the $134 billion is not all of it and might just be the tip of the iceberg.

The above is common knowledge amongst intelligence services.

These are bearer bonds so you only need to have a few purchased in the market to successfully kill the serial number by counterfeiting your own serial numbers.

You use these counterfeit instruments to make loans in modest amounts at various less-than-ethical international operations, preferably those that specialize in illicit funds. Lay a hundred million on the banker and get all the loans you want.

If the government bearer bonds are real then some big guy is making a run for it. This is top dog money, and would indicate a serious and well informed reasoning on the part of the entity running for the hills. People with this type of money are not usually stupid. That amount of real bearer bonds is a reach for drug funds. It would be governmental.

Yeah, mysterious, only to the naive world.

The Mysterious Case of the Seized Bearer Bonds, Worth $134 Billion
Sat Jun 13, 2009 at 03:50:09 PM PDT

The US media has been generally silent about $134 billion in bearer bonds seized by Italian police at the Swiss border. On June 8, AsiaNews reported:

Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.

Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.

Karl Denninger has been following the story, and it appears to be true that this vast sum was, in fact, seized.

It is a mystery why the story is receiving coverage in Europe and Asia, but not in the US. Rumors have been swirling about possible involvement of the Japanese, Chinese, and/or Korean governments, with the last being more likely if the bonds are counterfeit. Whether real or fake, the apparent fact of the smuggling raises all kinds of questions, with no easy answers. Mr Denninger applies his considerable intelligence to the matter, in Sherlock Holmes fashion:


Jim Sinclair’s Commentary

-German outlaws getting titanium chains put on their Mercedes Unimogs.
-German readership of JSMineset increases ten-fold.
-Vending machine maximum life expectancy 25 minutes from installation

Gold sold like chocolate from German vending machines
By Murray Wardrop
Published: 7:30AM BST 17 Jun 2009

Shoppers in Germany will soon be able to buy gold as easily as bars of chocolate after a firm announced plans to install vending machines selling the precious metal across the country.

TG-Gold-Super-Markt aims to introduce the machines at 500 locations including train stations and airports in Germany.

The company, based near Stuttgart, hopes to tap into the increasing interest in buying gold following disillusionment in other investments due to the economic downturn.

Gold prices from the machines – about 30 per cent higher than market prices for the cheapest product – will be updated every few minutes.


Jim Sinclair’s Commentary

Hedgies object to using their title in drug related article.

Mexico cocaine ‘hidden in sharks’

The Mexican Navy says it has seized more than a tonne of cocaine hidden inside the carcasses of frozen sharks.

Armed officers found slabs of cocaine inside more than 20 sharks aboard a freight ship in the Gulf coast port of Progreso in Yucatan state.

Correspondents say cartels are coming up with increasingly creative ways of smuggling drugs into the US.

Shipments of cocaine have also been discovered hidden inside sealed beer cans, religious statues and furniture.

"We are talking about more than a tonne of cocaine that was inside the ship," said Mexican Navy Commander Eduardo Villa.


Jim Sinclair’s Commentary

As in all these things where false flags fly, who was, if there is, the doer?

Report: Carter escapes assassination attempt on visit to Gaza
Jun 16, 2009 17:34 | Updated Jun 16, 2009 19:59

Hamas said it foiled an attempt by Palestinian terrorists to assassinate former US president Jimmy Carter during his visit to the Gaza Strip on Tuesday, Palestinian sources told news agencies.

Israeli security sources said that the Shin Bet (Israel Security Agency) had learned of plans to target Carter and had passed on the information to the former president’s security detail in "real time."

According to Palestinian sources, terrorists linked with al Qaida hid a number of improved explosive devices along a road that Carter’s convoy was scheduled to travel on inside Gaza. Hamas forces reportedly uncovered the IEDs and destroyed them.

Ismail Shahwan, spokesman for the Hamas Ministry of the Interior, denied that an Al-Qaeda-linked group had planned to assassinate Carter.

Shawan said no explosives were discovered near the Erez border crossing. He said that the visit went according to the plan.


Jim Sinclair’s Commentary

According to financial TV the president has nothing better to do than simply make noise on this subject. From me please accept the fact that what is said herein is serious.

China President Hu: Should Diversify Intl Monetary System
* JUNE 16, 2009, 8:56 P.M. ET

BEIJING (Dow Jones)–The international monetary system should be further "diversified," China President Hu Jintao said Tuesday at a summit with leaders of four large developing countries, in a likely reference to the dominance of the dollar as a reserve currency.

"The system for regulating the issuance of major reserve currencies should be improved," Hu said at the BRIC summit with the leaders of Brazil, Russia, and India, according to a text of his remarks posted on the Chinese government’s Web site.

Hu didn’t elaborate on desired reforms of the system, only adding that the exchange rates of major reserve currencies should be kept stable.

Russian President Dimitry Medvedev said before the start of the meeting that he would raise the issue of the U.S. dollar as the global reserve currency.

Hu’s comments are in line with previous Chinese government statements on the reserve currency issue.


Jim Sinclair’s Commentary

Today you pay and all is forgiven. What’s ten billion anyway when the funds are merry-go-round money?

Goldman’s Blankfein issues apology as bank prepares to repay $10bn
Goldman Sachs chairman Lloyd Blankfein has publicly apologised for the first time for the investment bank’s participation in the "market euphoria" that spurred the global financial crisis.
By James Quinn Wall Street Correspondent
Published: 6:00AM BST 17 Jun 2009

Ahead of Goldman’s repayment of its $10bn (£6bn) in US taxpayer’s funds later today, Mr Blankfein also admitted that the bank failed to speak out on the problems occurring in the market.

"We know that we have an explicit contract with our shareholders to be responsible stewards of their capital . . . we regret that we participated in the market euphoria and failed to raise a responsible voice."

The stark admissions are contained in letters to four leading US politicians who are the chairmen and ranking members of Capitol Hill’s two leading financial services committees.

It comes as President Barack Obama prepares to unveil sweeping changes to the US financial regulatory framework in an attempt to make sure the crisis never happens again.

In the letters, copies of which have been seen by The Daily Telegraph, Mr Blankfein also warns that stability in the financial markets can only return if the industry accepts that some of its practices are "unhealthy".


Jim Sinclair’s Commentary

Ah yes, government statistics so universally accepted are showing great strains.

Discrepancies in America’s accounts hide a black hole
By Daniel Gros
Published: June 15 2006 03:00 | Last updated: June 15 2006 03:00

The global financial system seems to have a black hole at its centre. Over the last two decades, US residents have sold a total of about $5,500bn worth of IOUs to foreigners, yet the officially recorded net investment position of the US has deteriorated only by a little more than half of this amount ($2,800bn). The US capital market seems to have acted like a black hole for investors from the rest of world in which $2,700bn vanished from sight – or at least from the official statistics.

How can $2,700bn disappear?

It is often argued that the US can simply make large capital gains on its gross positions because its assets are denominated in foreign currency and its liabilities in dollars. However, the available data indicate that over the last two decades this factor has netted the US at most $300bn-$400bn. This still leaves a loss of well over $2,000bn to be explained.

The explanation comes in two tranches of about $1,000bn each.

The first source of accountingrevenues for the US derives from an anomaly in the item "reinvested earnings" on foreign direct investment in the US balance of payments. This item improves the current account by about $100bn a year because foreign companies systematically report abnormally low profits for their US operations to avoid US corporate income taxes. If one assumes that foreign companies earn the same rate of return on their direct investment in the US as on their portfolio investment in equity, the US current account would deteriorate by about $100bn. Properly measured, the country’s current account deficit would thus be about 1 per cent of gross domestic product larger than officially reported.

The underreporting of the current account deficit implies that US indebtedness is also underestimated. Over the past two decades the cumulative correction for the anomaly in "reinvested earnings" would lead to a higher US net debtor position of about $1,000bn.


Jim Sinclair’s Commentary

The line is drawn in the sand across the 28 year uptrend line of the US 30 year long bond.

Every tool to keep that line intact will be used including the Beige Book.

Fed Weighs Using Statement to Damp Rate Speculation (Update1)
By Craig Torres

June 17 (Bloomberg) — Federal Reserve officials are considering whether to use next week’s policy statement to suppress any speculation they’re prepared to raise interest rates as soon as this year.

While policy makers have signaled they accept an increase in longer-term Treasury yields as the economy improves, some are concerned at any premature anticipation of rate rises. Fed staff have examined the Bank of Canada’s public intention of foregoing an increase until 2010, according to a person familiar with the matter, without concluding the statement has proven effective.

One option would be to emphasize in the June 24 statement that increasing slack in the job market and U.S. manufacturing will keep inflation low and a recovery muted, said Michael Feroli, an economist at JPMorgan Chase & Co. in New York and former member of the Fed Board staff. At stake: keeping borrowing costs low enough to foster a sustained recovery, without binding the central bank to a single course of action.

“There are ways of highlighting their low rate expectations without over-committing,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.

Chairman Ben S. Bernanke and his fellow Federal Open Market Committee members gather in Washington June 23-24. Economists forecast they will keep their target for the benchmark federal funds rate at zero to 0.25 percent. Policy makers will also discuss any changes to their commitment to purchase as much as $300 billion of Treasuries and $1.45 trillion of housing debt.


Jim Sinclair’s Commentary

Administration pressure is on the Fed not to do the same, not to do less, but to do more money printing now named QE. That you can take to the bank!

On one hand here is more power. On the other hand, Ben, do you like your job, status and new found wealth? If you do, prime that pump to infinity.

Obama Praises Bernanke, Declines to Comment on Reappointment
By Scott Lanman

June 16 (Bloomberg) — U.S. President Barack Obama praised Federal Reserve Chairman Ben S. Bernanke for doing an “extraordinary job” while declining to comment on whether he plans to nominate the central bank chief for a second term.

Bernanke has “done an extraordinary job under extraordinary circumstances,” Obama said today in an interview with Bloomberg Television at the White House. On a potential reappointment, Obama said, “I’m not making news on that today.”

Bernanke, 55, has been responsible for the Fed’s unprecedented response to the financial crisis and recession, including lowering the main interest rate almost to zero; purchasing as much as $1.75 trillion in Treasuries and housing debt; and starting emergency-loan programs to aid bond dealers, mutual funds and corporations.

A former Princeton University economist, Bernanke was appointed by Obama’s predecessor, George W. Bush, to succeed Alan Greenspanas the U.S. central bank chief in February 2006. Bernanke’s initial four-year term as chairman ends Jan. 31, and his re-nomination or a new candidate would require Senate approval.

Bernanke, a Republican, has a separate 14-year term as a Fed governor that ends in 2020. Bush appointed him to the Fed Board of Governors in 2002 and then as chairman of the White House’s Council of Economic Advisers in 2005.


Jim Sinclair’s Commentary

Thank God, my upcoming trip to China is on China Air. The unpaid flight attendants will be flying the plane. The plane will be fueled with AvGas. The unpaid food will be from Juan’s Greasy Spoon. For your sake don’t drink the water.

The unpaid cleaners will have the lavatories looking like the super discount flights in Indian Air in the 70s.

British Airways asks staff to work unpaid for up to a month

LONDON, England (CNN) — British Airways is asking thousands of its staff to work for free for up to four weeks, spokeswoman Kirsten Millard said Tuesday.

In an e-mail to all its staff, the airline offered workers between one and four weeks of unpaid leave — but with the option to work during this period. British Airways employs just more than 40,000 people in the United Kingdom.

Last month, the company posted a record annual loss of £400 million ($656 million).

Its chief executive declared at the time there were "absolutely no signs of recovery" in the industry.

"In 30 years in this business and I’ve never seen anything like this. This is by far the biggest crisis the industry has ever faced," said Willie Walsh, British Airways’ chief executive.

A spokesman for one of Britain’s biggest unions said its workers could not afford to work for free for a month.


Jim Sinclair’s Commentary

All trends start in California, and then explode in all the states with the exception of Alaska.

Florida unemployment fund running dry

WEST PALM BEACH, FL — The state of Florida is burning through money to pay unemployment claims.

There is $534 million in the Unemployment Compensation Trust Fund but the state is paying out $65 million a week.

The fund could be dry by August and the state will have to borrow money from the federal government to pay claims.

Nearly a million Floridians are out of work these days.

"There will be no lapse in benefits. Everyone will receive their benefits who is entitled to them," says AWI Spokesman Robby Cunningham.

Uncle Sam isn’t the only one coming to the rescue.



Jim Sinclair’s Commentary

You will note this morning that the party line being blasted over the airwaves is that the position of the BRICs concerning divestiture of dollars is nothing but talk. As proof of this position, a measure of the action of the dollar in this bear market rally is being interpolated in dollar treasury instruments. Airwave media is calling US dollar bonds showing a gain of 11% with interest added, utilizing the ten year as a measure. This position has been repeated at least 15 times since the Asian session opened last US evening.

There is no question that the "line drawn in the sand" by the Chairman of the US Federal Reserve has been drawn directly across the long term up trend line of 28 years on the 30 year long US Treasury bond.

Flash Report :

It is my strong opinion that Bernanke is committed to not letting this up trend line break down, using all the power of the Fed in Quantitative Easing. That means the Fed will buy practically unlimited offerings at auction and in the market should it be necessary.

The problem is market, money and speculators can overwhelm all central banks combined should confidence be lost. Confidence has been maintained by an almost unlimited creation of new money.

Be assured consequences cannot be avoided. The long term uptrend line of the 28 year long bond market is the confidence line and therefore becomes the most important line ever drawn in an attempt to determine the future of an empire.

Nobody in their right mind wants what is coming, but airwaves and hot air is no mendicant. Failure to allow economics to take its natural course in bankruptcy of the deficient, central bank support for the OTC derivative vehicle by the previous Chairman and bubble making all brought this plague upon us.

Economic seer, Chris, starts his presentations with the desire to be totally wrong but the conviction he is not.

Master Technician Alf takes no joy in what he sees but he sees it.

Nobody could have a more miserable circumstance than economic historian and master timer, Armstrong, but April 19th was dead on like many of his prediction. If he is wrong he will not remain wrong for more than a few weeks. I see him as calling one more time in the black of the bull eye.

Jim Sinclair’s Commentary

Get the real figures by subscription. It is worth it to know the true story:

- May CPI-U Annual Deflation of 1.3% versus SGS-Alternate 
Estimate of 6.1% Inflation
- Seasonal Adjustments Continue to Skew Inflation Reporting
- May Annual Production Fell at Fastest Pace Since
Post-World War II Production Shutdown
- May Annual Decline in Housing Starts Continued Record Fall-Off,
Monthly Gain Lacked Statistical Significance

Posted at 3:22 PM (CST) by & filed under Jim's Mailbox.


S&P 500 and the VIX Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Interesting COT F&O outflows in the VIX.




Board of Governor Monetary Base, Adjusted for Changes in Reserve Requirement:

Change in the quantity of the Monetary Base is one of many quantitative easing levers used by the Fed. As to the quantity of money out in the system, the Fed has direct control over the “monetary base” through open market operations. The Monetary Base is the sum of Federal Reserve Notes outstanding and reserve balances, that is, member bank reserve-deposits at Fed banks.

The monetary base growth rate has already exceeded 73% year-over-year (YOY) 2009.01 swing high. The monetary base growth rate is 76% YOY as of 2009.05 and suggests that the Fed is continuing to press the quantitative easing accelerator.




Posted at 9:23 PM (CST) by & filed under In The News.

Dear CIGAs,

Note that the talk of regulation on over the counter derivatives now speaks of a clearinghouse for standardized derivatives. Someone just recognized that all the previous derivatives written cannot be cleared because they are almost a transaction without standards. That means all those transactions outstanding are still weapons of mass financial destruction and lack any practical solution.

No break in general confidence can be tolerated therefore QE is moving full speed ahead.

Keep in mind that all actions have consequences – something that the last three generations have no concept of.

The strongest tool for influencing other nations, tax shelter nations and those deemed enemies is to block bank wire transfers in and out of the country digitally. Blocking electronic money transfers in today’s world basically puts the country out of business.

Note where North Korean sanctions are mentioned, money transfers are to be embargoed. Now you know why Switzerland is throwing out its American clients.

This is a reason why Asia’s interest in gold has grown by orders of magnitude. This is another reason why any gold the IMF wishes to sell will disappear instantaneously, never so much as seeing the marketplace.

Jim Sinclair’s Commentary

Yesterday’s dollar strength came from a statement at the end of the G8 meeting concerning Russia’s unending confidence in the US dollar. That triggered the algorithms to ram the US currency up more than 100 points.

There was a day when that would have been considered a currency crisis against upper bands and central bank intervention would be called in. Today 100 points in a currency move is just another day signifying absolutely nothing. Now the algorithms are trading with each other.

The dollar is history as the Universal Reserve Currency. You do not need a Nobel Prize to see that. The long term dollar trend is down, and will NOT be reversed here by spin.

I join trader Dan in cautioning you that you are not financed to play against the hedgies as traders. Invest with the trend and do not use margin.

Gold is getting ready to secure $1224 on its way to $1650 and then on to Alf’s numbers.

BRICs May Buy Each Other’s Bonds in Shift From Dollar
By Lyubov Pronina and Alex Nicholson

June 16 (Bloomberg) — Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.

The leaders of the so-called BRIC countries will discuss measures to promote regional currencies when they meet later today,Arkady Dvorkovich told reporters in the Ural Mountains city of Yekaterinburg before the first BRIC summit.

“There will be talk about increasing the share of mutual trade in national currencies, possibly placing part of reserves in the financial instruments of partner countries,” Dvorkovich said.

Medvedev is hosting back-to-back summits of developing economies in Yekaterinburg as he seeks to lessen the world economy’s dependence on the U.S. dollar. Medvedev will hold talks later today with Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lulada Silva.

Medvedev and Hu earlier today attended a summit of the Shanghai Cooperation Organization, which also includes the four former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

The Russian leader reiterated his intention to push for the creation of a “supranational currency” to challenge the U.S. dollar and encouraged China and the other Shanghai group members to use each other’s currencies for trade.


Jim Sinclair’s Commentary

Turkey is also involved in the journey of world geopolitics going into 2012. Let’s keep a close eye on developments there.

Remember, the key to the success of the surge in Pakistan is SUSTAINABILITY.

Turkey issues warning, cuts rates
JUNE 17, 2009

Turkey’s prime minister defended the country’s military chief and warned against provocation Tuesday, as allegations of a military plot against the pious Muslim ruling party threatened to undermine civilian and military efforts to purge antidemocratic factions inside the state apparatus.

"Efforts to stir up mistrust between institutions will harm…Turkey as a whole," Prime Minister Recep Tayyip Erdogan said, after meeting the country’s top general to discuss the allegations. "The military High Command has shown responsibility and sensitivity from the moment this story broke.


A good exit: Turkey is critical to peace in Iraq
By The Kansas City Star Editorial Board

ISTANBUL — Turkey, in what is being called neo-Ottomanism, is attempting to reconnect with the Muslim world, something Istanbul has largely avoided since the collapse of the Ottoman Empire in the early 20th century.

This is vital to the future of Iraq: Turkey is Iraq’s largest trading partner and probably will expand that role, which means Iraq’s economy is tied to Turkish trade.

Iraq even has oil pipelines running through Turkey. There has been a series of recent visits, back and forth, and Turkey this year agreed to release more reservoir water, essential to replenishing the dwindling Tigris that waters much of Iraq, including Baghdad.

But Turkey can, and probably will, reverse course if it disapproves of the future direction of northern Iraq, or Kurdistan, the region of jagged mountains just across the southern border here. Turkey has an estimated 12 million to 15 million Kurds. That has fed a 25-year-long Kurdistan Workers’ Party (PKK) insurgency, pushing for an independent Kurdish nation, which has left more than 35,000 dead.



Jim Sinclair’s Commentary

One of the major criterion for 2009-2011 is that Israel will make a major miscalculation.

Circumstances have gathered whereby Israel may have to make some hard decisions. Israel will never give up its demand for recognition of the right of Israel to exist in trade for anything.

The "Our Crowd" side tells me that literally.

On this part I am prone to say Israel will go it alone disagreeing, respectfully, with Mr. Friedman.

Video: Iranian Elections, Israel and the United States
June 16, 2009 | 1440 GMT

To view additional videos in the STRATFOR Insights series, click here.
The Iranian Presidential Elections

In the latest installment of the STRATFOR Insights video series, CEO George Friedman discusses the tense future of the Middle East following the recent Iranian elections.

With Israel offering a Palestinian state on terms that are unacceptable to the Palestinians, and freshly re-elected Iranian President Mahmoud Ahmadinejad expected to continue his hard-line policies, how President Barack Obama moves forward merits close observation.


Jim Sinclair’s Commentary

The world is mad. Do you think it might be a good idea if the Russian President and Finance Minister got on the same page?

The dollar will not survive the fall. The winter is going to be mean, cold and terminal to the US dollar.

Gold is going to fire up and out in a short period of time. On this I have total certainly

Medvedev calls for new reserve currencies
Tue Jun 16, 2:23 am ET

YEKATERINBURG, Russia – Russian President Dmitry Medvedev says the world needs new reserve currencies.

Medvedev told a regional summit Tuesday that the creation of new reserve currencies in addition to the dollar is needed to stabilize global finances.

Medvedev has made the proposal before. It reflects both the Kremlin’s push for greater international clout and a concern shared by other countries that soaring U.S. budget deficits could spur inflation and weaken the dollar.

Airing it at a summit meeting underlined the challenge to U.S. clout.

Medvedev spoke at a summit of the Shanghai Cooperation Organization, which includes China and four Central Asian nations.


Jim Sinclair’s Commentary

"A new world economic order" is another way of saying goodbye to the dollar as the linchpin of business settlements.

Brazil’s Lula calls for new world economic order
Mon Jun 15, 2009 9:17am EDT
By Jonathan Lynn

GENEVA (Reuters) – Brazilian President Luiz Inacio Lula da Silva urged unions and workers on Monday to take advantage of the global financial crisis to help forge a new world economic order.

"I address myself now to the labor leaders," Lula told a global jobs summit at the International Labour Organization (ILO), a United Nations agency grouping governments, employers and worker representatives to promote good working conditions.

"This is an exceptional opportunity for all of you to think and develop proposals together with the employers and business leaders so that we can change definitely the relations between state and civil society and so that we can build our countries with much more fairness and much more solidarity," he said.

Lula said destabilizing surges last year in oil and commodity prices had been due to speculation.

"We cannot live with a financial system that speculates paper on top of paper without generating one single job, without manufacturing one screw, one shoe, one shirt, one tie," the former union leader told the conference to frequent applause.


Jim Sinclair’s Commentary

You think that North Korea is screaming for attention and getting a busy answer on the world phone? What does a fellow who may not have all his paddles in the water do next?

DPRK threatens to launch pre-emptive strike against U.S

PYONGYANG, June 15 (Xinhua) — The Democratic People’s Republic of Korea (DPRK) has warned it would launch a pre-emptive attack against the United States.

Pak Jae Gyong, vice-minister of the DPRK People’s Armed Forces, made the remark at a mass rally that attracted some 10,000 people to denounce a newly endorsed U.N. Security Council Resolution, the official KCNA news agency said Monday.

"Under the present situation where the Korean People’s Army (KPA) is technically at war with the U.S. imperialists, and as the Armistice Agreement has lost its legal binding force, the KPA will promptly exercise the right to a pre-emptive strike to beat back the enemies’ slightest provocation," Pak said.

He threatened to deliver blows to the "vital parts of the U.S." and "wipe out all its imperialist aggressor troops no matter where they are in the world."

Meanwhile, Kim Ki Nam, secretary of the Central Committee of the Workers’ Party of Korea, told the rally that the U.N. resolution was "another grave provocation."


Posted at 2:06 PM (CST) by & filed under Jim's Mailbox.

Dear CIGAs,

Please note the open interest in the December $1000 calls.

Click chart to enlarge



Break Down of Total Bank Credit Growth: Year-over-Year Growth for Total Loans, Business Loans, Real Estate Loans, Home Equity Loans, Consumer Loans, and Cash Assets for Commercial Banks in the US:


The crisis intensifies as the Nov 2008 swing high is breached to the upside in May 2009. This flies in the face of the green shoots spin.

Business, consumer, credit card (& revolving) and commercial real estate loan growth rates decelerating rate. Real estate loans, driven by other residential and home equity loans, growth rates continue to expand. Fractional reserve banking is like a shark, credit must continue to expand (swim) or it faces death. As a result, the unprecedented panic, as reflected by the speed and magnitude of the coordinated quantitative easing, to unclog the credit markets and restart lending process.