Posted at 10:29 PM (CST) by & filed under General Editorial.

Dear Friends,

I am sending this to both my newsletter and corporate readers in order to clear up recent errors in the media that reflect on me negatively despite my unblemished fifty year history in the global financial industry.

In the process of addressing a misunderstanding in the media regarding the business plan of my public company, I asked my Special Advisor, David Duval, to utilize his vast experience to discuss in very general terms the old fashioned method of bringing a gold deposit into commercial production, assuming the economic and related considerations were comparable to those in the past

It is my respect for those time-tested ways that has always guided my business judgments. Since 1999, I have taken a very public position that gold companies should not consider themselves banks, OTC derivative issuers or trading companies, all with mines in their backyards. I believe I have been vindicated in that opinion, given the huge losses that many companies have reported and the fact losses are still accruing because my counsel was not always accepted.

Even today, short of gold OTC derivatives are a primary criterion for large development loans of the modern day gold mining finance model. They are no longer on the books of the producer but rather contained in the indenture of the note. It is a misassumption to feel that we all need massive funds to accomplish our goals even if they are sizeable in the end.

If the present gravel testing at my company’s Kigosi/Ushirombo project allows it, we will approach development much the same way Homestake Mining did at the beginning, moving from surface deposit mining to financing part or all of underground exploration and development with cash flow from initial surface production.

In addition, it’s worth noting that 84% of my company’s current property holdings are designated for royalty option arrangements. Sixty percent of these are subject to royalty agreements and the remaining properties are being reviewed under confidentiality agreements that could see them become royalty transactions.

Please review David’s editorial piece so you can be assured that those pundits who mistakenly said we will need vast amounts of money to accomplish our goals have not done their homework or fact checking as thoroughly as they might have.

Respectfully submitted,
Jim

With Commodity Prices Trending Upward, Near-Surface Mine Development and Royalty Model Become Options for Junior Explorers

By David Duval

The contemporary wisdom that “bigger is better” has taken a well-deserved beating since the credit crisis unfolded and destroyed some of the world’s largest financial institutions in its wake.

With large-scale project financing options limited or non-existent because of the credit crisis, many of the smaller players in the global mining industry have been forced to review their growth strategies, a trend that could see historic mine development practices making a comeback and less mainstream business models adopted.

Perhaps not since the turn of the 19th century has the appeal of “small” become so attractive. Indeed, today’s examples encompass a broad range of industries including power generation (wind turbines, small hydro, solar etc.) and small mining operations that provide feedstock to portable or centrally located process plants and refineries, a practice that is relatively common in Asia and Africa.

Not being major enterprises with large industrial footprints, long permitting periods, and high capital costs, these businesses can be developed incrementally from ongoing cash flows, substantially reducing the risk to investors. In the “good old days” this scale of development was the rule rather than the exception and most of the world’s major gold camps were discovered and developed on this basis over a century ago.

In his book titled, "History of Dakota Territory" George W. Kingsbury describes the development of the Homestake Mine in these words:

“When the claim was purchased by the Homestake Mining Company the exploration consisted of small surface pits only and some mining men considered its value as doubtful although there were a number of favorable surface indications. The company immediately began the further exploitation of the property and two shafts equipped with hoisting engines were sunk and various drifts were soon under way.

By July, 1878, or the year after the purchase of the claim, the first mill of eighty stamps was constructed and in commission. With the first dropping of stamps it was proved that the mine was a producer and from that small beginning the mine has steadily expanded, breaking all records and setting a new pace in the world of gold mining. Although it is a very low ore, illimitable tonnage is at the disposal of the company and large mills, the most improved mining machinery and great mechanical power enable the mine to pay large dividends.”

It’s worth noting that Homestake was listed on the New York Stock Exchange in 1876 and its now dormant South Dakota mine produced approximately 40 million ounces of gold over a 120 year period before the mine’s economic reserves were exhausted in late 2001.

Mimicking the discovery of other major gold finds at the time, Homestake began as a surface showing with gold values occurring in vein material that was easily distinguishable from adjoining wall rock. Pick and shovel mining provided a bulk sample for metallurgical test work and grade estimation.

First off, however, the miners recovered gold from alluvial gravels that were eroded from the hard rock vein material. Exploration shafts were then sunk to evaluate the vein material at depth, producing gold in the process to offset exploration costs.

In many parts of the world (including Africa and Latin America) artisanal miners have already gained access to sub-surface vein material by hand sinking small shafts and mining along the vein structures. In fact, you would be hard pressed to find a major mine in Africa that didn’t have such workings within its property boundaries. These old workings facilitate target selection and the development of a resource base for production purposes.

Because of its high specific gravity (gold’s relative weight to that of water) gold concentrates in stream beds within alluvial gravels and it can be extracted by mechanical methods that take advantage of the fact it is 19.3 times as heavy as water.

Gold occurs in many different geologic settings but two basic types of occurrences or deposits are recognized: primary and secondary. Both rely on similar chemical and physical processes to produce economic concentrations of gold ore.

The Homestake discovery didn’t have the advantage of present day drilling technology to confirm the existence of an orebody whose life would extend for more than 100 years. Instead, the economic viability of the mine was established by mining and processing the easily extractable surface material with equipment that used gold’s specific gravity to produce a saleable concentrate. In the late 1890s, cyanide was employed to recover fine gold from rocks and is still used under carefully controlled conditions.

Even today, gravity separation is the best proven and accepted technique of concentrating minerals due to its high efficiency and low cost. In addition to gold, gravity separation remains a primary means of concentrating iron, tungsten, tin and coal ores.

Process plants (mills) for gold need not be large and in fact they are often manufactured and assembled in large industrial centers where skilled trades people are readily available. By employing modular construction techniques, equipment can be brought into a mine site by truck, air transport and in the case of tidewater locations, by sea barge. The various modular sections are simply joined together like a kid’s Lego set on the mine site. As the operation expands, new modules can be shipped to the site and added to the existing plant facility.

In order to reduce capital requirements, companies often employ contractors to mine their mineral deposits at a fixed price, locking in costs for the term of the contract. With contract mining, a company need not acquire in-house mining expertise or equipment that would only be utilized on a seasonal basis in any event. For smaller operations, contractors can provide services for a sufficient length of time to develop a stockpile for year round milling operations.

What’s surprising about today is the reluctance of many companies to consider the small scale, staged development of mineral deposits which is much less risky from both a financial and technical standpoint. In gold’s case, some of that reluctance no doubt relates to the belief by analysts that any company producing less than 100,000 ounces won’t get adequate market recognition. But as we’ve seen during the global financial crisis, analysts sometimes make a habit of being just plain wrong.

Nonetheless, in an escalating commodity price environment, the appeal of these modest-sized operations is certain to increase, especially where possibilities exist for multi-sourced production that will boost consolidated output to even more attractive levels. This has been a feature of China’s mining industry for generations and is certain to catch on in the West before too long.

Physical gold output – even on a small scale basis – provides price leverage to companies in the marketplace, especially for situations where the exploration potential leaves room for future production growth.

The Royalty Model

Less mainstream perhaps but even more attractive to the market are royalty companies who either purchase royalty interests (and gold production) in producing mines or seek to acquire royalty production through exploration successes.

Companies bringing new mines into production are sometimes willing to sell Net Smelter Royalty (NSR) interests in their operations to offset some of the capital costs. But these royalties are prohibitively expensive for junior companies with limited access to such capital.

This is not an issue for royalty companies that employ an exploration model, however. In these situations, companies with strategic land positions in established gold belts deal off their holdings to third parties in exchange for a royalty interest should the property achieve commercial production. In the interim period, the royalty partner agrees to make staged exploration expenditures and property rental payments (usually escalating) until commercial production is achieved.

The premise behind this royalty strategy is that companies can discover gold at a much lower cost by utilizing their exploration expertise and core assets as opposed to purchasing production on the open market. Clearly, it’s a strategy whose time has come!

Posted at 4:28 PM (CST) by & filed under General Editorial.

Dear CIGAs,

I bring to you the following with the specific permission of Alf Fields.

I have suggested to you often in the past that once the price of gold reaches into its maximum potential it will not repeat the fall of the 1980s.

I foresee gold re-entering the system in a new and unique form that does not include convertibility. It will not be tied to interest rates as it once was in its previous form.

I have written to you various times about the Federal Reserve Gold Certificate ratio, modernized and revitalized, which now may well be associated with an SDR form of an International Central Bank. The tie between the ratio and gold would be a measure of international liquidity considered zero or 100 on the day of adoption.

The following is Alf’s statement yesterday, with his permission to post:

“Gold cannot decline from its highs as it will be incorporated into the national and international monetary systems at that time.”
–Alf Fields, May 20, 2009

Now do you have any questions why Fund Wizard Paulson just got long a few billion dollars worth of Gold ETFs and a few major gold producers?

Finally a major event has taken place that is a US dollar milestone.

The financing and extremely important event is the arrangement between China and Brazil displaces the dollar as China becomes the major trading partner with Brazil. Since then the Rial has been celebrating and the dollar has been depressed.

This is a once in approximately a century replacement of a trading currency that has always meant a dethronement of the deposed and coronation of a new currency king.

The last time this happened was when the US dollar supplanted the British Pound as the major trading currency and entity with Brazil 79 years ago.

It took the Brits 300 years to supplant the Portuguese Escudo with the British Pound.

Only twice has this occurred in 379 years. This is obscure to most but not to Mr. Paulson the hedge wizard. Obscure to most, but not to our gang at JSMineset.

The dollar died in Rio and that means everywhere.\

The dollar is in for a very cold winter.

There is one thing that is absolutely certain and that is Gold is now headed to at least $1650 and in all probability much higher. This is happening NOW!

What more do you need to know?

Posted at 3:45 PM (CST) by & filed under Uncategorized.

Dear CIGAs,

The following is an important website you should check often.

http://www.usdebtclock.org/

Jim Sinclair’s Commentary

Alf’s 3rd wave is beginning.

Gold refiner responds to demand for gold bars
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.
Tuesday, 19th May 2009 (87 views)

Gold refiner and producer Argor-Heraeus has switched its focus to gold bars in order to meet rising demand.

The company, based in Ticino, Switzerland, is responding to increased investment in solid gold as a result of the global economic crisis by manufacturing a larger number of bars, AFP reports.

Argor-Heraeus chief executive Erhard Oberli told the news source that he had "never seen anything like" the current levels of demand since he started working in Ticino around 20 years ago.

He added that gold has been "out of fashion in Europe" in recent years, but that has "changed totally", with bars seen as a "safe haven" by investors who have lost confidence in financial markets.

Delivery times for gold bars have risen from ten days to around two months and the firm is moving production activity from its semi-finished products arm to increase supply.

Speaking to Reuters recently, president of the RPG Foundation DH Pai Panandiker predicted that gold supplies will "shrink" as mines mature, making the precious metal an ideal choice for long-term investment.

More…

 

Jim Sinclair’s Commentary

In terms of disturbance to the social order, there is no more serious a problem than the brushed aside, aided in avoidance, increasingly default prone pension programs in terms of what they are worth versus the normal climbing commitments to pay out.

Bailouts are sure to come as it is quite evident, assuming you can add one and one with the result of two, that the agency has no financial capacity to cover the problem even though they make bald faced claims otherwise.

A guaranty is only worth what the guarantor is worth. Should that lesson not be evident now?

You have to love this entity taking the 5th.

I wager you I could give them better advice then what they got from the Wall Street firms at 1/10th of what they paid.

Shortfall Triples at U.S. Pension Guaranty Agency
By DARRELL A. HUGHES and JOHN D. MCKINNON
MAY 21, 2009

The federal agency that backstops corporate pension plans reported that its deficit tripled in the last six months, to $33.5 billion. Despite the shortfall, the agency said it has enough assets to pay benefits for many years, even if the holder of one of the largest retirement programs, General Motors Corp., were to file for bankruptcy.

The news came as the Pension Benefit Guaranty Corp.’s former director invoked the Fifth Amendment in response to lawmakers’ questions about possible mismanagement under the Bush administration. The PBGC’s inspector general last week issued a report saying that the former director had violated prohibitions on contacting bidders that were seeking investment contracts.

The former director, Charles Millard, has denied allegations that he had inappropriate contacts with several Wall Street firms that won contracts to advise the agency, and said his actions were approved by agency counsel. But his attorney, Stanley Brand, said in a statement that it was best if Mr. Millard didn’t testify at a Senate hearing Wednesday, in what he described as a "biased and hostile environment."

The PBGC deficit stood at $11 billion, compared with its long-term obligations, as of Sept. 30. The agency attributed the deterioration of its finances since then to the assumption of pension-plan obligations from insolvent companies, as well as investment losses and the current low interest-rate environment.

The PBGC also warned that distressed companies are likely to terminate more pension plans, leading the agency to take on more of those obligations.

More…

 

Jim Sinclair’s Commentary

If S&P lowers their "make believe" credit rating on Great Britain’s debt, the S&P will have to do likewise on US debt in time.

I am sure that Gitmo will still be there so these executives of S&P will have a fine view of the Caribbean from their new airy chicken coup homes. Swimming lessons will be provided on a water board. The group will be lead nude by dog collar and leashed to the swim lessons by that nice lady in all those old pictures.

Who knows, they might like it.

Britain’s debt outlook lowered to negative
Britain’s debt outlook lowered to negative from stable by Standard & Poor’s

LONDON (AP) — Britain faces the unsettling possibility of seeing its debt rating downgraded, after credit ratings firm Standard & Poor’s said Thursday it has revised the country’s outlook to negative from stable.

Though the ratings agency reaffirmed the country’s long-term triple-A credit rating — reserved for the least risky bond issuers — it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.

The outlook revision does not trigger a formal re-evaluation of Britain’s rating — unlike being put on credit watch — but does mean that policy makers have to be aware that a downgrade may happen if public finances do not improve.

The pound slumped by over 2 U.S. cents to just below $1.56 after the news, but recovered most of its ground to trade around $1.57.

Meanwhile the FTSE share index fell nearly 140 points, or around 2.8 percent, though like other markets around the world it was facing selling pressure after the U.S. Federal Reserve warned that the U.S. economy would shrink by more than anticipated this year.

More…

Jim Sinclair’s Commentary

Sorry, he is wrong. The day of reckoning for the US dollar has already come and gone.

I promise you an arctic freeze for the dollar this winter. It will be cold and ugly!

Day of reckoning looms for the U.S. dollar
Alia McMullen, Financial Post  Published: Wednesday, May 20, 2009

The U.S. dollar’s day of reckoning may be inching closer as its status as a safe-haven currency fades with every uptick in stocks and commodities and its potential risks – debt and inflation – are brought under a harsher spotlight.

Ashraf Laidi, chief market strategist at CMC Markets, said Wednesday a "serious case of dollar damage" was underway.

"We long warned about the day of reckoning for the dollar emerging at the next economic recovery," Mr. Laidi said in a note.

Mr. Laidi said economic recovery would weigh on the greenback as real demand for commodities, coupled with improved risk appetite, caused investors to seek higher yields in emerging markets and commodity currencies. This would draw investment away from the U.S. dollar, which was dragged down by growing debt and the risk quantitative easing would eventually spark a surge in inflation.

The U.S. dollar slid against most major currencies Wednesday, hitting a five-month low of US$1.3775 against the euro and pushing the Canadian dollar up US1.21¢ to a seven-month high of US87.69¢.

More…

Jim Sinclair’s Commentary

Goodbye Standard and Poors.

UK JOINS THE PIGS – GOLD IS YOUR ONLY PROTECTION
May 21st, 2009 by Egon von Greyerz

We have told investors that the rating of US and UK sovereign debt is a farce and that they both will be downgraded.

Today the UK is on its way to joining the PIGS countries as Standard and Poor’s lower the UK’s AAA outlook from “stable to negative”. The PIGS countries are the hopelessly weak European countries (Portugal, Ireland, Greece and Spain) which have all been downgraded this year. The UK government deficit is estimated to reach £175 billion in 2009 (it will probably be a lot higher). This represents 12.4% of GDP.  Total UK government debt is forecast to reach £800 billion or 57% of GDP.

In our February Newsletter, “The Bankrupt saving the Bankrupt”, we took the UK economy as an example of the bankrupt state of the world economy. Therefore, it should be no surprise to our readers that the UK will be the next country to be downgraded.  So it is not the slightest bit unexpected that the UK is joining the poorest of the major European countries.

The implications of the UK downgrade are much more serious than that. In our May newsletter, “It ain’t over ’til the fat lady sings”, we stated that the US AAA rating is a farce. The US government deficit is forecast at $1.8 trillion for 2009. That is 13% of GDP. US government debt will reach at least $13 trillion, and probably a lot more, this year. That is almost 100% of GDP! So the US figures are much worse than the UK figures. It is only a mater of time before US debt is downgraded. But downgrading it to AA is just the beginning since US government paper is junk and the US government bankrupt.

Take our word, US government debt will be downgraded very soon. Either the market will force the downgrade by dumping the US dollar and US government debt or Standard and Poor’s will wake up do the inevitable deed. But a downgrade of the debt of the  world’s reserve currency has such serious ramifications for the world economy that S&P’s will drag their heels and probably wait until the market forces them.

We have forewarned  our investors and readers about these events for quite some time.  In our Commentary last week, “Goodbye Dollar – Hello Gold“, we stated “….that the era of the dollar as a reserve currency is coming to an end soon and that the strongest and safest currency is gold”.

More…

Posted at 2:10 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

It was a very volatile day in the markets today with the gold, Forex, and bond markets making big swings. The Bond market in particular utterly collapsed during the session as looming supply fears rattled bond bulls even as equities dissolved.  As the bonds dropped through support, the Dollar was smashed lower and gold catapulted higher forcing a wave of short covering and attracting more new buying. That momentum took it easily through yesterday’s session high with price also besting round number psychological resistance at $950. The move is most impressive and the charts are showing an acceleration higher which is coming out of a period of grinding consolidation. I have noted that the RSI is also confirming the upward move with that indicator finally bettering horizontal resistance drawn off the last swing high.

Volume in yesterday’s breach of resistance at $930 was very high and accompanied by a strong surge in open interest. Both are technically bullish, especially the volume reading. Today’s session is showing good volume as well which is serving to confirm the upward thrust. Traders are slowly beginning to roll out of June and into the August contract ahead of the delivery period.

The weekly charts of the HUI and the XAU both look very strong technically. The HUI has finally bested the difficult 50% retracement level drawn off the March 2008 peak near 520 and the October 2009 low near 150. It has had trouble with that level since the beginning of this year so yesterday’s achievement is very significant. It now has a clear shot at the 61.8% retracement level that comes in near the 379 level. If it can conquer that, technically it will be in position to make a run to near the 455-460 level. Most importantly from a trending perspective, the HUI took out the 100 week moving average yesterday which came in near the 359 level. That is no small feat. All of the major moving averages on the weekly chart are either moving upwards or are getting ready to turn higher.

The XAU also has taken out stiff resistance at its 50% retracement level on the weekly drawn off the peak and bottom made in the same months as denoted for the HUI. It has 153-154 standing in front of it which if that can be bested, sets it up for a run to near 200. I should also note that the 100 week moving average is at 150 for the XAU. Unlike its counterpart HUI, the XAU has yet to take out that 100 week moving average.

The Dollar – what more can be said about it other than the fact that it is finally reacting to the spendathon coming out of Washington DC. Violent selling of the nature hitting the Dollar is the result of long liquidation by the trading funds which according to the most recent Commitment of Traders report were net long by over 6,000 contracts. Quite simply- they got trapped long and wrong playing the safe haven game and getting snookered in the process. Now that so many important downside technical support levels have been violated, their algorithms are taking them out with the result that they will be positioning on the short side. Interestingly enough, the small specs have correctly played the Dollar as they were net shorts going into this week.

On the weekly Dollar chart, it has now closed solidly below the 50 week moving average. The ten week moving average has made a downside bearish crossover of the 20 week and is threatening a downside crossover of the 40 week moving average. The 100 week moving average is 79.20, which corresponds exactly to the last swing low made back in December 2008. Should the Dollar make two consecutive weekly closes below this level, gold will be at $1,000 + and the Dollar will be headed down towards 78.45 and then 76.00. The Greenback is very oversold so a blip upward cannot be ruled out but it is hard to envision it moving too far north before eager sellers step back in.

Something I find quite interesting is the strength in the Japanese Yen. Normally yen strength has been synonymous with gold weakness as it has denoted risk aversion. However, the Yen has rallied even as gold and the rest of the commodity complex as indicated by the CCI has moved higher. It would appear that the Dollar is so tainted, that even the lowly Yen is moving higher against it. That bears watching because a move higher in the Yen alongside of the Euro will shove the USDX down even harder because the Yen makes up approximately 13% of the basket weighting that comprises the USDX. It has tended to move lower alongside of the Dollar until recently and if this pattern is breaking down, it will mean an acceleration in the dollar’s rate of descent.

With crude oil breaking out above the $60 level and with index funds pouring money into the entire commodity sector, it is very difficult for the commodity bears to gain much downside traction. The sum of money flowing into tangibles is enormous as a great deal of those funds were sitting in cash on the sidelines and waiting for a signal to get long. That they have done and are now doing and that is where the buying pressure is originating from across the entire commodity complex. Keep in mind that they will buy until they get their allocation done irrespective of any particular fundamental factors. Technical money flows more and more dominate the world of trading and investing and arguing against that kind of money is worse than spitting into the wind. Just like when they are blindly selling – these guys blindly buy and very few are willing to step in front of such a freight train whether it is coming or going.  When it comes to gold we know that the bullion banks, thanks to the largess of the US monetary authorities, are among the few participants who will fight such buying but even they cannot take on the entire world of index and hedge funds without the buying momentum pushing them back. I still often wonder what it would be like to see gold trade freely without their constant interference.

I am a bit surprised to see that the reported holdings of GLD have only increased a relatively minor amount these last few days. Perhaps that will change with the technical breakout above $930 and the sharp move higher today.  We’ll see.

Silver has its 2009 peak targeted – that comes in near the 14.61 – 14.63 level. If it can best this level convincingly, there looks to be a lot of air between it and 16.25.

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

clip_image001

Posted at 12:30 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

To answer Marc’s question about India buying gold, the simple answer is yes they will buy more gold.

The full answer is more complicated. As you know, most gold jewelry buyers in India are the poor and they are price sensitive.

Indians with money usually buy gold bullion or coins in the US or in Europe, because they are worried about taxes and capital controls in India.

So we will see Indian jewelry buying within India remaining price sensitive and total gold buying will be helped by wealthy Indians buying abroad. The government runs deficits so the Indian government does not have a lot of money to buy gold, but they generally favor gold.

When they start to run surpluses I would expect them to be a gold buyer

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Hi Jim,

The dollar has served us well and its passing is so acknowledged accordingly.

Il Silenzio provides that mark of respect.

This is as magnificent a rendition of Taps. This version is played by a young girl at an Andre Rieu concert.

CIGA Al

Click here to listen to the WMA audio file…

Dear Al,

Yes, respect is always called for. Playing Taps is quite appropriate.

Regards,
Jim

Hello Jim,

A friendly reminder to the delayed gold buyers, we have a cut-off date for Gold/Silver purchases on May 27th. The next cutoff date will be June 26th. Those who wish to take delivery before the end of this quarter don’t have much time left. We can get COMEX gold at spot price, delivered and insured for about $12 an ounce (give or take the miles from NYC). We have also become sellers of legal tender gold and silver coins and can beat most dealers prices. Get protected or get out of the way, and as always, Happy Trades To You!

CIGA JB Slear
Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104

Dear Jim,

I am certain that someday soon as we already know this headline may read “Chinese gold buying ‘boosting African mining sector.’

CIGA Marc

Chinese gold buying ‘boosting Australian mining sector’
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.
Tuesday, 19th May 2009 (78 views)

Increased gold buying by China is dominating the Australian mining industry, a new report has claimed.

According to Companies and Markets, Chinese companies are purchasing stakes in Australian assets as “foreign investment rules are liberal and encourage inward investment”.

A number of approaches from Chinese businesses for Australian assets are being considered by the government, including a AU$2.6 billion (£1.3 billion) bid for Oz Minerals by China Minmetals.

The Australia Mining Report for the second quarter of 2009 also revealed that the country remains a “world leader” in the industry and is the third-largest producer of gold behind China and South Africa.

Some of the biggest names in the global mining sector operate in Australia and Companies and Markets predicted that “the election of a more business-friendly liberal government” that took place in September 2008 will benefit the industry.

Meanwhile, John Burbank, founder of Californian global hedge fund Passport Capital, recently forecast that China will purchase higher levels of the precious metal in the future, as its gold/gross domestic product percentage is currently relatively low at around 0.8 per cent, Manual of Ideas reported.

More…

Jim Sinclair’s Commentary

Courtesy of CIGA Barry.

China on the rise once more across the East
If any more evidence of China’s steady ascent towards Asian regional dominance was needed, the climax of Sri Lanka’s war has provided the proof.
By David Blair, Diplomatic Editor
20 May 2009

An ally of Beijing has fought a bitterly controversial conflict to a final victory, while shrugging off international protests along the way. India, the other Asian giant, is only 50 miles from Sri Lankaacross the waters of the Palk Straits, yet it has been shown to have far less influence on its neighbour than China.

Through a combination of strategic investments in seaports and pipelines, along with direct financial and military support for friendly governments, China is building a web of influence across South Asia. Many of Beijing’s immensely ambitious projects are years away from fruition, yet the repercussions of these ventures are already being felt.

In Sri Lanka, Beijing began constructing a port in Hambantota in 2007 and the scheme is scheduled for completion in 2022. This forms the basis of China’s alliance with President Mahinda Rajapaksa’s government and helps explain the diplomatic support Beijing gave Sri Lanka during the war against the Tamil Tigers.

The official line is that Hambantota is only a “commercial” trading venture and the facility will handle civilian shipping and nothing else. “Any attempt to distort the facts would be invalid,” said Ma Zhaoxu, a Chinese foreign ministry spokesman.

More…

Hi Jim,

Sorry to be pesky. I‘ll be brief.

You said today: “In summary It Is Now and all positions should be held, putting trading on HALT.”

Are you saying to hold onto share positions without trading anymore? No more selling 1/3rd into strength?

Thanks!
CIGA Gil

CIGA Gil,

Yes, the 1/3 sale would be executed at much, much higher prices, especially among those gold shares of merit with the largest short positions. Let’s assume that I am correct (I do) then you can be sure$1224 and $1650 is in the offering. Would you want to sell too soon?

Do you see my point Gil?

You are not a pest. You are a man seeking clarity. I am here to try and provide that. You honor me by asking.

Jim

Posted at 10:30 AM (CST) by & filed under General Editorial.

Dear Friends,

It is graduation time for all those who have applied themselves.

The answer to understanding markets is always a combination of indicators, systems, disciplines and experience.

Today things are more difficult because whatever you are doing from investment, trading or corporate management is akin to swimming in a sea of organized crime in which the police are compromised.

Alf has the prices nailed.

Armstrong has the Business Sentiment correct.

The primary criterion for dollar strength/weakness is Business Sentiment concerning the USA.

The primary criterion for the gold price is the US dollar in the inverse.

With relationships understood, next you have the means of controlling decisions.

The means of controlling decision-making is the basic TA I have taught you on this site. This was given to you so that you might enjoy and prosper in major moves.

Yesterday’s email to you drew attention to the relationships. Now handle the information market-wise by using your basic TA tools.

Respectfully yours,
Jim

Posted at 3:11 PM (CST) by & filed under General Editorial.

Dear Extended Family,

This is without a doubt the most important piece of information we will present to you this year. What you will read ahead addresses the pivot point of the literally thousands of missives we have posted here on www.JSMineset.com telling you this is coming. It is happening here and now. Be prepared and stay strong.

We are approaching the beginning of the final drama in this unfolding OTC derivative meltdown. This is the beginning period for the 3rd leg of Alf Field’s correct analysis.

This is the re-acceleration of the long down wave in Martin Armstrong’s Business Cycle analysis. This is the approach of the acceleration of the gold price into my price objective of $1650 by January 14, 2011.

Click chart to enlarge in PDF formatMay2009001.jpg

Sure the US dollar will be defended at the .8100 level that has been put out there as support by the major investment banks TA departments, but it will not reverse what is now in place.

Yes, the COMEX gang is too short of gold for it to launch here, so the battle to prevent it will be Titanic, yet fail miserably and soon.

You can see the shorts of the junior gold shares doing everything known to mankind, from dirty tricks to pounding on any small gold reaction to destroy share prices, but they too will fail miserably and soon.

All the paper gold and share demons will accomplish is an increase in their short positions. They will not get the panic selling follow through to cover that they so desperately want.

Listen to Alf Fields in 2005:

We are on the cusp of Alf Field’s 3rd Wave of his gold price projection. It will follow directly along the lines of the Armstrong timing as a result of Sentiment in the US dollar moving into its major down leg NOW.

Major ONE up from $256 to approximately $750 (a Fibonacci 3 times the $255 low)
Major TWO down from $750 to $500 (a serious decline of 33%);
Major THREE up from $500 to $2,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $2,500 to $2,000 (another serious decline);
Major FIVE up from $2,000 to $6,000 (also a 3 fold increase, same as ONE)

A case can be made for an 8 fold increase in Major FIVE, which would continue the Fibonacci sequence 3, 5, 8. You can do the math if you like, but the fact is you can pick your own number for the gain in Major FIVE. Three times the low of $2,000 was actually the conservative expectation, producing a bull market peak target of $6,000.

Martin Armstrong’s business sentiment cyclical analysis suggest that on or slightly after May 18th the underlying problems that have been overshadowed by media reports of green shoots will again impact the mind of the marketplace.

That is in perfect accord with the US dollar taking out major support in the .8100 – .8200, giving respect to the fact that major Forex traders are convinced that .8100 means something that it does not.

You ask why now?

The following chart of “The Recession Hits the Treasury” is the revelation of the impact of the Formula that now has become apparent to major money sources.

In summary It Is Now and all positions should be held, putting trading on HALT.