Posted at 9:37 PM (CST) by & filed under In The News.

Dear CIGAs,

Fred has lost his sight and ability to walk without arthritis pain, but as a good CIGA he will get the best of care.

He arrives at the office ready to do his arrival (woof) alert work.

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Jim Sinclair’s Commentary

What do you think the implication of Milan’s actions would be, if sustained, on the Federal Reserve’s Balance Sheet? Not one penny of taxpayer’s funds have been lost by the Fed purchases. Do you really think so? How about the impact on cartoon valuations at the BIS?

Milan is treating this as alleged FRAUD of the instruments themselves. If it sticks, the OTC derivative instrument’s entire tower of babel, spin and fabrications falls on itself.

This is the most severe test these financial OTC derivative WMDs have faced yet.

Milan Police Seize UBS, JPMorgan, Deutsche Bank Funds
By Elisa Martinuzzi

April 28 (Bloomberg) — Milan’s financial police seized 476 million euros ($620 million) of assets belonging to UBS AG, Deutsche Bank AG, JPMorgan Chase & Co. and Depfa Bank Plc amid a probe into alleged fraud linked to the sale of derivatives.

The police froze the banks’ stakes in Italian companies, real estate assets and accounts, the financial police said in a statement today. The assets seized yesterday also include those of an ex-municipality official and a consultant, the police said.

The City of Milan is suing the four banks after it lost money on derivatives it bought from the lenders in 2005. The securities swapped a fixed rate of interest on 1.7 billion euros of bonds for a variable rate that was losing the city 298 million euros as of June. Milan is among about 600 Italian municipalities that took out 1,000 derivatives contracts worth 35.5 billion euros in all, the Treasury said.

“Milan is an important case because it can be used as an example by others,” said Alfonso Scarano, who is heading a study into the trades by AIAF, a group representing Italian financial analysts. “This is a unique time for borrowers to shed light on their potential losses and renegotiate contracts” to take advantage of interest rates that have fallen to record lows. AIAF will next week testify before the Italian Senate’s inquiry into the cities’ use of derivatives contracts.

Officials at all four banks declined to comment. In January, JPMorgan filed a lawsuit against the city in London. The bank is seeking to have dispute heard in the U.K., according to two people familiar with the claims.

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Jim Sinclair’s Commentary

Two important but brief notes:

1. With China having just emerged as a major gold holding central bank from practically no gold at all, the inviting question is if the Central Bank of China still holds mega dollar instruments. I suspect not, at least by the value of the gold as bought, but maybe much more.

The Chinese are determined to follow their financial plan to be the most powerful economic entity on the planet. They will not permit the dollar to alter this.

The Chinese know exactly where the dollar is headed. Yes they also know where the price of gold is going as well.

2. When is enough, enough? When will people say no, this is enough, stop. Today evil is a virtue, and virtue is stupid according to modern thinking, acting and reporting. When will those that deal in this evil push the wrong person too hard? Maybe it has already happened.

One such person is CIGA Marie. She has dug in, had enough and is doing something quite significant about it. Her actions have such a dynamic potential to level the evildoers that you will have to ask her what it is.

Marie McDonnell
Truth In Lending Audit & Recovery Services, LLC
Mortgage Fraud and Forensic Analysts
[email protected]

Jim Sinclair’s Commentary

STAY FOCUSED.

This is indicative of what is coming in a crash of Federal Income Revenues that leads to a ballistic rise in the Federal Budget Deficit. This has significant implications for the US dolalr and thence for gold, believe it or not!

UPDATE 1-NYC personal income tax revenues plunge in April
Mon Apr 27, 2009 8:19pm BST
By Joan Gralla

NEW YORK, April 27 (Reuters) – New York City’s net personal income tax revenues plunged 51 percent in the first 24 days of April, compared with the same period a year ago, the city comptroller’s office said on Monday.

New York City’s economy has been hurt by the devastation of Wall Street, its largest hometown industry, following the collapse last September of Lehman Brothers Holdings and a series of bank mergers amid the credit crisis. In the month of March alone, for instance, Wall Street shed 3,100 employees, according to the state’s Department of Labor. For more, see [ID:nN16285952]

U.S. states and cities, just like the federal government, usually see tax revenues surge in April because the month includes the April 15th annual tax deadline.

New York City often pays out more in refunds than it collects in taxes during April.

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Jim Sinclair’s Commentary

The following was sent in by CIGA JB Slear:

"Since late 2006 342 major U.S. lending operations have "imploded""
http://ml-implode.com/

Nesbitt Burns Investors Guide to Avian Flu Pandemic Aug2005.pdf

BMO Nesbitt Burns Research published An Investor’s Guide to Avian Flu in August 2005. The authors, Sherry Cooper, PhD and Donald Coxe provide one of the first carefully thought out assessment of the effect a pandemic would have on financial investments. What distinguishes their report was its being based upon a scenario for the pandemic that allowed for the authors to use economic modeling to make economic projections for the macroeconomy that could then be assessed from a sector-by-sector viewpoint.

From Page 30 of the report:
Flight to safety in financial markets would be a knee-jerk reaction. Initially gold, the U.S. dollar and U.S. Treasuries would benefit. Gold prices would rise and remain high for sometime, despite potential jewelry liquidation. We saw gold prices pop immediately after 9/11, and declined only after the immediate crisis abated. People would be concerned that the Treasury market would subsequently be vulnerable to massive selling by Asian central banks whose holdings, particularly in China and Japan, are enormous. These sales might arise as government coffers are drained in these regions and more money is needed for assistance and prevention. Interest rates, however, would ultimately fall sharply, as in the Depression, as deflationary forces take hold, economic activity would slow and credit demand would plummet. Credit risk premia would rise sharply, taking the spread between corporate and government bonds up meaningfully. Many who are now over-extended with debt would lose their homes and their businesses. The surging supply of houses and rental properties (as tenants and homeowners die or can no longer afford them) would burst the housing bubble.

Link to full report…

Jim Sinclair’s Commentary

An interesting article for a day when Gold is being disregarded because people foolishly associate hyperinflation with booming business conditions – a total error without economic, currency or historical support.

But hey, let’s not allow facts to get in the way of a good story.

How Does $9000 Gold Sound?
by: Marc Chandler April 26, 2009

In recent days the Canadian and Swedish central banks have joined the majority of other G10 central banks by indicating that they too may engage in quantitative easing now that the interest rates have been reduced to 25 and 50 basis points respectively. The ECB is wrestling with ways to extend its own form of quantitative easing and an announcement is likely at its next meeting on May 7th.

While some observers have focused on the potential debasement of the US dollar by the aggressive monetary and fiscal policies of both the Bush and Obama Administrations, many investors are worried about the viability of the whole universe of paper money.

As Gillian Tett, award-winning journalist at the Financial Times, put it earlier this month, there has been a four-decade long experiment with fiat currencies not backed by gold or silver. This crisis is so profound that increasingly it appears to have shaken confidence in the experiment. At the same time, the crisis looks to have widened the range of possibilities.

The Special Drawing Rights that the Chinese and others have suggested to eventually replace the dollar does not get beyond paper money. The SDR is a basket of fiat currencies. It is not and cannot be a serious alternative to the US dollar.

Consider that 44% of an SDR is the dollar. The IMF’s figures show that roughly two-thirds of the world’s reserves are in dollars. If countries’ reserves were allocated according to the SDR, the dollar’s share of reserves would fall by about a third. While the euro would pick up some slack the big winners would be the yen and sterling, whose share of the SDR is 11% a piece, two to three times larger than their reserve allocation.

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Jim Sinclair’s Commentary

Look where we are going. This is not the stuff of strong currencies and freedom.

U.S. Tries to Broker Sale Of Chrysler’s Loan Arm
Takeover by GMAC Is Meeting Resistance
By David Cho, Binyamin Appelbaum and Peter Whoriskey
Washington Post Staff Writers
Tuesday, April 28, 2009

The Treasury Department is racing to engineer the sale of Chrysler’s financing arm in a move the administration deems vital to saving the troubled automaker, but other federal agencies have not given their support, sources familiar with the matter said.

The Obama administration wants the nation’s largest auto-financing company, GMAC, to buy Chrysler Financial, which is the primary source of lending for Chrysler dealerships and car buyers, industry officials said. But GMAC needs a new round of backing to buy its longtime rival, sources said.

Treasury officials have not yet obtained the agreement of the Federal Deposit Insurance Corp. and the Federal Reserve, sources said. The FDIC, created to backstop the banking industry, is balking out of concern that its resources would be drained in support of an auto manufacturer. And the Fed, which regulates banks, would need to grant a waiver from a long-standing rule that separates banking and commerce.

More…

GM’s New Road Map: Partial Nationalization
Automaker to Shed Brands and Workers; Future Hinges on Deal With Bondholders
By Steven Mufson
Washington Post Staff Writer 
Tuesday, April 28, 2009

Once a symbol of capitalist might and U.S. industrial prowess, General Motors would be half owned by the Treasury under a new sweeping plan that would also shut down GM’s Pontiac operations, lay off 21,000 workers and impose harsh terms on the company’s bondholders.

The partial nationalization proposal ? a last-ditch effort developed by GM and the Obama administration’s auto task force to keep the leading U.S. carmaker out of bankruptcy ? raised hackles in Congress and ratcheted up the game of brinksmanship with the company’s bondholders, who have until May 8 to accept or to try to negotiate better terms.

If the bondholders reject the terms, GM would probably declare bankruptcy, chief executive Fritz Henderson said, potentially raising uncertainties for suppliers, workers and customers. That possibility loomed large Monday after bondholders called the offer "neither reasonable nor adequate."

If the plan goes forward, it would mean a leaner and less indebted GM, formally controlled by the federal government. As it is, the government has been playing a large role at the company, asking for the resignation of the previous chief executive, G. Richard Wagoner Jr., and ordering that the company’s board be reconstituted. The move would represent one of the largest ownership stakes the U.S. government has ever taken in an American manufacturer.

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Jim Sinclair’s Commentary

The following is a small note that was buried deep in copy released late yesterday:

"Although it’s called swine flu, this new strain is not infecting pigs and has never been seen in pigs. The threat is person to person transmission."

Vials of swine flu virus explode on train
April 28, 2009 – 9:50 AM

Vials of innocuous swine flu virus have exploded on an intercity train, prompting police to stop passengers before they arrived in Lausanne.

A laboratory technician from a Geneva hospital had been transporting the vials on Monday evening from a veterinary institute in Zurich. The Federal Health Office had called for the development of a diagnostic test for the illness that has killed as many as 150 people worldwide.

Near Fribourg the technician heard a muffled pop. Built-up gas from dry ice surrounding the vials had caused the package to explode.

The carriage in which the technician was travelling held 61 passengers at the time. The Federal Railways did not learn of the incident until 40 minutes later after the train had already passed through Fribourg. Police then stopped the train near Lausanne, inspected passengers and wrote down their names as a precaution.

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Jim Sinclair’s Commentary

Surprise, surprise!

Bank of America, Citigroup may need more capital
Apr 28, 8:05 AM (ET)

WASHINGTON (AP) – Bank of America Corp. (BAC) (BAC) and Citigroup Inc. (C) (C), which have each received $45 billion in government bailout funds, have been told by regulators that "stress test" results show they may need to raise additional capital, The Wall Street Journal said Tuesday.

Charlotte, N.C.-based Bank of America is looking at a shortfall in the billions of dollars, the paper said, citing people familiar with the situation. Both banks plan to rebut the preliminary findings, according to the paper, with Bank of America expected to respond Tuesday ahead of its shareholder meeting Wednesday.

Citigroup declined to comment; Bank of America officials weren’t immediately available to comment.

As executives of the nation’s largest banks review their stress-test results, even the top performers are lobbying regulators to raise their scores before the numbers are finalized Friday.

Fed officials told reporters Friday that all 19 banks that took its "stress tests" will be required to keep an extra buffer of capital reserves beyond what is required now in case losses continue to mount. That would mean some banks will likely have to raise additional cash. But the Fed stressed in a statement that a bank’s need for more capital reserves to meet the requirements should not be considered a measure of the "current solvency or viability of the firm."

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Jim Sinclair’s Commentary

There are mixed opinions at the ECB regarding gold. Now the question is what is the real level of US Treasuries held by China?

ECB’s Wellink welcomes China gold purchases
AFX UK Focus) 2009-04-28 10:50

AMSTERDAM, April 28 (Reuters) – European Central Bank Governing Council member Nout Wellink welcomed China’s move to buy gold, but said the ECB plans to renew a central bank agreement that limits its gold sales to the open market.

China revealed on Friday it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

"That China has bought gold doesn’t surprise me," Wellink said on Tuesday. "This is a positive development and I appreciate the move."

Asked whether the ECB had been approached for sales of gold to China, Wellink said the ECB plans to renew for a five-year period its commitment to the Central Bank Gold Agreement (CBGA), under which European central banks agree to limit their gold sales onto the open market.

(Reporting by Reed Stevenson, writing by Aaron Gray-Block)

Posted at 9:56 AM (CST) by & filed under General Editorial.

Dear Extended Family,

Stay Focused.

The first fallout casualty of the Flu panic today is a $50 billion dollar request to the IMF by Mexico. Quantitative Easing is going to shift into high 8th gear everywhere.

COT are such a lucky bunch perfectly positioned to hammer gold from unchanged to minus $3 hard since about 5am today.

If you throw away your gold protection, as some of you are right now, you might as well take off your mask on the Swiss train car with the exploding virus vials or run up to someone in Mexico City and say please sneeze on me a few times.

Sinclair4

Keep your eye on the ball.

Respectfully yours,
Jim

Posted at 6:36 PM (CST) by & filed under In The News.

Dear CIGAs,

A recent huge gold buyer flexes their muscle. He who has the gold makes the rules? Sounds like a modernized and revitalized Federal Reserve Gold Certificate Ratio would do nicely.

China calls for reform of global monetary system

WASHINGTON (AFP) — China called Sunday for reform of the global currency system, dominated by the dollar, which it said is the root cause of the global financial crisis.

"We should attach great importance to reform of the international monetary system," Chinese Vice Finance Minister Li Yong told the spring IMF/World Bank Development Committee meeting in Washington.

A "flawed international monetary system is the institutional root cause of the crisis and a major defect in the current international economic governance structure," Li said, according to a statement.

"Accordingly, we should improve the regulatory mechanism for reserve currency issuance, maintain the relative stability of exchange rates of major reserve currencies and promote a diverse and sound international currency system."

As the world’s main reserve currency, US dollars account for most governments’ foreign exchange reserves and are used to set international market prices for oil, gold and other currencies.

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Jim Sinclair’s Commentary

This world is getting stranger every day.

White House official apologizes for N.Y. plane incident

April 27th, 2009
Posted: 06:36 PM ET
NEW YORK (CNN) — A White House official apologized Monday after a low-flying Boeing 747 spotted above the Manhattan skyline frightened workers and residents into evacuating buildings.

The aircraft was a White House plane taking part in a classified, government-sanctioned photo shoot, the Federal Aviation Administration told CNN.

“Last week, I approved a mission over New York. I take responsibility for that decision,” said Louis Caldera, director of the White House Military Office. “While federal authorities took the proper steps to notify state and local authorities in New York and New Jersey, it’s clear that the mission created confusion and disruption.”

Witnesses reported seeing the plane circle over the Upper New York Bay near the Statue of Liberty before flying up the Hudson River. It was accompanied by two F-16s.

The incident outraged many New Yorkers, including Mayor Michael Bloomberg.

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Jim Sinclair’s Commentary

Fear of Pandemics puts pressure on commodities, lifts the dollar and bonds.

Please pardon me, but it is the most market convenient Pandemic disaster in human history should it spread virulently.

Shadow statistics reports:
- "Adverse" Stress Test Assumptions Close to Standard CBO Projections
- Economy Is Not in Recovery
- More than Half of Existing Home Sales Are "Distressed"

Shadowstats.com is by subscription and is a bargain for what you get!
http://www.shadowstats.com/article/437

Posted at 1:54 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Volatile trading was the norm in today’s session as news of an outbreak of a dangerous form of flu sent markets reeling as traders attempted to sort through the various news report and make some sense out of the constant stream of news releases.

Before I get into the technical action in gold, let me mention here that I believe it is extremely unfortunate, rather almost reckless, for the media to refer to this new form of flu as “swine” flu. First of all, there is absolutely no proof or evidence at this time that a single pig anywhere in the US or in Mexico has contracted or even incubated this new form of flu. The Mexican Organization of Pork Producers and Hog Industry, Ornapor, inspected all hog production facilities in the vicinity of Mexico City’s 20 million people and did not find a single contaminated pig. Here in the US, there have also been no reported instances of any hogs or hog herds having contracted the disease. The authorities are completely baffled as to the source of this form of flu and yet the media continues to label it as “swine” flu merely because the experts have “conjectured” that it “might have been” incubated in a pig because pigs are known as mixing vehicles for various forms of flu and this one has elements of human, pig and bird flu in it.

So based on this “weighty” analysis, an entire industry here in the US has been shoved into extreme economic distress with even China and Russia succumbing to the hysteria and slapping bans on imports of US pork. It all just serves to show how reckless and irresponsible reporting can destroy hard working farmers and livestock producers especially when even the health authorities all will emphasize that one cannot contract the disease by eating properly cooked and prepared pork.  As far as I am concerned they might as well have called the stuff “Armadillo Flu” because for all we know, some damn armadillo incubated it. It is nice to know that I have been joined in my views about this nomenclature by none other than the World Organization for Animal Health, also known as the OIE, a Paris-based organization which also is calling the term “swine” flu misleading and suggest another name such as North American influenza based on its area of origin. Perhaps, just perhaps, our pork producers will be spared this madness if the media and the rest of the authorities actually do the right thing and change its nomenclature.

Meanwhile, I am actually far more concerned about our hogs here in the US contracting the disease from humans rather than humans contracting it from hogs. Hog producers out there make sure that you follow strict bio-security measures and protect your hog herds from excessive exposure to visitors and closely monitor the health of your swine herders. I would suggest you cut out all unnecessary guests from your barns until such time as the authorities get a better feel for the true dynamics of this flu. It may very well be that the flu cannot actually be contracted by hogs but as of yet we are unsure so caution and prudence are in order.

Now if further investigation reveals and actual herd of pigs in Mexico as the source, then I will be the first to retract what I have said above but until that time, the use of the term “swine” flu should be banned as far as I am concerned. One other point, thus far all of the cases here in the US show no exposure whatsoever to any pigs or pig products. Rather the flu was apparently spread by human to human contact. Just keep this in mind as this situation unfolds.

Back to the various markets – equities, grains, crude oil, nearly everything commodity, were all sharply lower overnight as the news about the new form of flu spread and traders sold first and asked questions later. If the flu turns out to be the beginning of a serious epidemic world-wide, then fears of a slowdown in consumer spending will be justified as people attempt to minimize as much as possible exposure to the general public. In Mexico the cancellation of soccer games, school classes and other assorted activities gives one a sense of where things might go should this thing ramp up further. I am not a physician or a health expert of any kind but at least this outbreak is occurring during the late spring and summer months here in the northern hemisphere and not during the colder months that we normally associate with flu outbreaks. That is at the very least helpful.

Gold was higher overnight on the news and maintained its gains until, (you guessed it), it came into New York where the usual culprits smashed it down. Don’t ask me to give a reason why it was sold down – I have none other than that which we all know already. Silver also was taken down after surging above $13.20 overnight. The gold shares held up better with the HUI and XAU weaker, albeit only slightly at one point with the XAU actually working into positive territory. Getting a read on any market with today’s flu related volatility is going to be extremely difficult and traders and investors would do well to withhold dogmatic assertions based on price behavior until things simmer down some and we can get a true reading on some of these markets.

With that caveat, gold ran into selling resistance near the downsloping trendline shown on the price chart with the market losing its footing above the 40 day moving average. Bulls need to force price above the $930 level to spark a further round of short covering and to tip the technical picture firmly in their favor. Gold is still registering a mixed picture with very short term signals friendly but the intermediate term picture bearish with the longer term picture still bullish with the monthly chart showing the $1,000 level holding the bull charge contained while the 20, 40, 50 and 100 month moving averages are trending solidly higher. Neither side has a clear advantage at this time with the gold shares’ price action probably tipping the balance of power in the favor of one camp or the other. The knee-jerk rush back into the Dollar for a safe haven play against flu fears (I am merely reporting what these mindless cretins are doing) is leading to gold selling with the risk aversion plays the dominant theme for today. Sure – I get it – North American flu fears mean buying the North American US Dollar… no further comment….either way – stronger dollar leads to price capping and gold selling.

May Silver will be going into its delivery process this week so we will get a chance to see how that fares especially with the recent drawdown in Comex silver warehouse stocks associated with the sale of SLV.  Heavy deliveries with little to none in the way of retenders will be encouraging. We will have to wait and see how things go.

Bonds moved higher as equities plunged overnight also helped by $7 billion in Fed buys but surrendered their gains as the stock market recovered from its losses with tech leading the way higher. Bonds look increasingly vulnerable to a technical breakdown here but I have been predicting that for some time now and have been thwarted repeatedly as they rise from the edge of the precipice just about the time they look to be dropping off the ledge. Only 12 ticks separate them from taking out the big range day of the Fed’s quantitative easing policy announcement. This market is becoming a real key to what we can expect in the months ahead so let’s keep a close eye on these things. If we can see the danger on the charts, rest assured the Fed’s chart watchers can see it also and will attempt to shove them away from the danger zone. Our illustrious money overlords do not want higher long term rates.

Natural gas is getting quite ugly and severely oversold but cannot seem to muster even much of a bounce at this point. Crude oil managed to recapture the $50 level during the session after being down as much as $3.00 barrel at one point but could not maintain its footing above that level for long. At least energy is still cheap, for now.

In closing let me offer a funeral dirge for the grand old Pontiac division of GM. Those of us who were hot rodders in our day will fondly remember the glorious Trans AM Firebird, which was one of the finest muscle cars ever made, not to forget the old “GOAT” or GTO. No one seeing the Trans AM  in its hey-day will ever forget the awe-inspiring combination of design and power that it projected with those stylish spoilers and throaty pipes. Requiescat in Pace old friend.

Dear Dan,

Media runs out of junior gold companies, attacks Swine.

Regards,
Jim

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 9:00 AM (CST) by & filed under General Editorial.

Martin Armstrong says Major Turn at Hand – batten down the hatches, or…
Written by Martin Armstrong – former chairman of Princeton Economics International Ltd.
Friday, 24 April 2009 07:44

A turn date in Martin Armstrong’s Economic Confidence Model passed on April 19th or 20th, depending on how many days you use to calculate a year.  The graphic shows that the model is predicting a top at this turn date before heading down into a long-term low in June 2011.  As Martin explains in the essay below, the model does not necessarily mean that a top in the Dow Industrials is at hand.

For instance,  the 1989 turn date forecasted a top in the Japanese Nikkei.  The Economic Confidence Model was created with inputs from around the world and therefore is not limited in scope to just pinpointing stock market tops and bottoms.  Personally, I am looking at the US Dollar, the Treasury market or the Shanghai market for signs of a top.  All these markets have experienced strong rallies off of recent bottoms and might be ready to turn lower.

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Why Models Are Our Only Hope?

Should we create a model to manage our social-economy?

In the real world, experience counts as the primary attribute in any field. The question we face in the middle of this economic crisis is simply this: "Is there anyone at the helm who has any experience at all?" Can we disregard gathering the experience of those who have gone before us by constantly re-inventing the wheel for every crisis? Wouldn’t it be nice to have gathered a database so when an economic panic took place, and we tried a particular stimulus, the result was a particular effect. Yet for every economic crisis, we seem to start at the beginning retaining no knowledge or experience from the past assuming in our arrogance that that was then.

It is time to start taking advantage of the collective progress of man that has particularly developed during the last Century. We have not merely landed on the Moon, we have developed sophisticated computers to get us there. We have even conquered many forms of disease, also through the process of scientific learning.

More…

Posted at 8:00 AM (CST) by & filed under Jim's Mailbox.

Dear Friends,

We received this note on Friday from noted UK gold author Tim Green who believes that Chinese buying of gold could be a significant factor going forward in the marketplace. Tim is the author of "The Ages of Gold" which is available on the GFMS (Gold Fields Mineral Services) website at: http://www.gfms.co.uk/

David Duval

"The story today that China has quietly increased its offical gold stocks since 2003 from 600 tonnes to l,054 tonnes is regarded here as very significant for the gold market.

Although it is a relatively small amount spread over several years, and bought from local scrap and mines, analysts here say it could signal a trend over the next few years. Gold still only accounts for 1.6% of China’s reserves, but it might make purchases on the open market. Even go for the propsed IMF sales, if they materialise. In short, it is an interesting signal.

No doubt it helped the price today. And will probably encourage investors – and maybe some other central banks with too many dollars.

Incidentally, I amused one leading analyst here this morning by pointing out that in Ages of Gold, I report Chinese Emperor Wang Mang in AD23 had gold stocks of l55 tonnes; so China today has only 7 times as much as 2000 years ago.   So there is room for further buying!

Best,
Tim"

Dear XXXX,

I am an admitted gold bug , (perhaps later to be committed). I have been reading your missives for 2 years now, and frankly can’t figure out which side of the fences you are on half the time. I am sorry that you seem to hold some animosity towards my mentor, Jim Sinclair. I find much comfort in the fact he is honest, knowledgeable, transparent and straightforward, with no hidden agendas. Unfortunately I don’t gain that feeling from your chameleon like writing. From today’s writing and on another note altogether, I highly doubt it will be the world’s poor that will be damned, regardless of what I choose to do with my gold.

CIGA Dave

Dear Dave,

This world is full of judgement, making people who simply hate for the sake of hate.

Asking them why does not penetrate the hatred that has no basis, however your note was kind and to the point.

Regards,
Jim

Jim,

Greenspan is whispering to Bernanke in this picture…

"Gold still represents the ultimate form of payment in the world."

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard."

–Quote from Alan Greenspan

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CIGA "The Gordon"

Posted at 5:19 PM (CST) by & filed under In The News.

Dear CIGAs,

The following is a collection of information in PDF format regarding the Swine Flu outbreak.

- Antiviral Recommendations for Patients with Confirmed or Suspected Swine Influenza A H1N1 Virus Infection and Close Contacts
- Antiviral Agents for Seasonal Influenza Side Effects and Adverse Reactions
- CDC Briefing on Public Health Investigation of Human Cases of Swine Influenza
- CDC Health Advisory – Swine Flu
- Human Swine Influenza Investigation 26APR09
- Interim Guidance for Swine influenza A H1N1 – Taking Care of a Sick Person in Your Home 25APR09
- Interim Guidance on Case Definitions to be Used For Investigations of Swine Influenza A H1N1 Cases 26APR09
- Media Availability on CDC Investigation of Human Cases of Swine Influenza 25APR09
- Prevention and Control of Influenza recommendations of acip 2008
- Swine Flu Q&As
- Dosage of Seasonal Influenza Antiviral Medications for Treatment and Chemoprophylaxis for the 2008 09 Season United States

Google Maps Plot of the Swine Flu (H1N1) Outbreak (Click to enlarge)

SwineOutbreakMap

Jim Sinclair’s Commentary

This is one way to really wreck your weekend.

Obama is greeted by an archaeologist upon his visit to Mexico. The archaeologist dies next day from the flu.

Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak
By Thomas Black

April 25 (Bloomberg) — Mexican President Felipe Calderon declared an emergency in his country’s swine flu outbreak, giving him powers to order quarantines and suspend public events.

Authorities have canceled school at all levels in Mexico City and the state of Mexico until further notice, and the government has shut most public and government activities in the area. The emergency decree, published today in the state gazette, gives the president authority to take more action.

“The federal government under my charge will not hesitate a moment to take all, all the measures necessary to respond with efficiency and opportunity to this respiratory epidemic,” Calderon said today during a speech to inaugurate a hospital in the southern state of Oaxaca.

At least 20 deaths in Mexico from the disease are confirmed, Health Minister Jose Cordova said yesterday. The strain is a variant of H1N1 swine influenza that has also sickened at least eight people in California and Texas. As many as 68 deaths may be attributed to the virus in Mexico, and about 1,000 people in the Mexico City area are showing symptoms of the illness, Cordoba said.

More…

Swine Flu Prompts U.S. to Declare Public Health Emergency
By KEITH BRADSHER and JACK HEALY
Published: April 26, 2009

American health officials on Sunday declared a public health emergency over increasing cases of swine flu, saying that they had confirmed 20 cases of the disease in the United States and expected to see more as investigators track down the path of the outbreak.

“We are seeing more cases of swine flu,” Dr. Richard Besser, acting director of the Centers for Disease Control, said in a news conference in Washington. “We expect to see more cases of swine flu. As we continue to look for cases, I expect we’re going to find them.”

“This is moving fast,” Dr. Besser said, “but we want you to understand that we view this more as a marathon.”

Although officials said most of the cases have been mild and urged Americans not to panic, the emergency declaration intensifies the government’s response to the infections, freeing resources to be used toward diagnosing or preventing additional cases and releasing money for more antiviral drugs.

Homeland Security Secretary Janet Napolitano, speaking at the same news conference called the emergency declaration “standard operating procedure,” and said it should be considered a “declaration of emergency preparedness.”

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Jim Sinclair’s Commentary

Now here is a new wrinkle. Thank goodness we can depend on government organizations to keep us properly and completely informed.

WHO is well known for its prose.

WHO Fukuda: No Evidence Swine Flu Is Bioterrorism Attack

ZURICH -(Dow Jones)- The World Health Organization said Sunday there is no evidence an outbreak of swine flu in Mexico represents an act of bioterrorism.

"There are no signs we are dealing with purposeful actions," Dr. Keiji Fukuda, the WHO’s temporary assistant director-general for Health Security and the Environment, said on a media call.

Fukuda was responding to a question about U.S. President Barack Obama’s recent visit to Mexico, where at least 81 people have died from severe pneumonia caused by the flu-like illness in Mexico, according to the WHO.

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Jim Sinclair’s Commentary

Do you remember signing up for this? Who monitors the monitors? This is from 2005 but is still relevant today.

Scientists Resurrect Deadly Flu Virus
By William Hathaway
As published in The Hartford Courant, October 6, 2005.

Scientists have resurrected one of the world’s great killers in the laboratory, hoping that the genetic secrets within the 1918 influenza virus will help them predict and combat the next major microbial threat to mankind.

In a contained laboratory at the federal Centers for Disease Control and Prevention in Atlanta, scientists used reverse genetics to re-create the 1918 flu virus that killed 20 million to 50 million people, according to studies released Wednesday. Scientists say that although the 1918 strain probably does not represent a significant human health threat today, it can provide insight into dangerous types of contemporary influenza, such as the highly lethal avian strain now circulating among birds, which some scientists fear could evolve into the next catastrophic pandemic.

"This is truly a spectacular event," Dr. John Shanley, professor of medicine and director of infectious diseases at the University of Connecticut Health Center, said of the studies published in the journals Nature and Science. "To resurrect a virus and gain useful scientific information from it is remarkable."

An analysis of the genetic structure of the 1918 strain, also known as Spanish flu, reveals that it was an avian influenza, like the current H5N1 strain that has infected poultry and migratory birds in Asia and caused scores of human deaths.

The 1918 virus’s jump from birds to humans, perhaps through intermediary animals such as pigs, was different from the two other outbreaks of pandemic influenza that occurred in the 20th century. Those pandemic strains in 1957 and 1968 occurred when novel influenza genes mixed with existing human influenzas.

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Mexico flu: Your experiences

Readers in Mexico have been emailing the BBC describing the sense of fear gripping the country as a result of a flu virus outbreak, which has so far claimed more than 80 lives.

The World Health Organization says the virus has the potential to become a pandemic.

Read a selection of BBC readers’ comments below.

I’m a specialist doctor in respiratory diseases and intensive care at the Mexican National Institute of Health. There is a severe emergency over the swine flu here. More and more patients are being admitted to the intensive care unit. Despite the heroic efforts of all staff (doctors, nurses, specialists, etc) patients continue to inevitably die. The truth is that anti-viral treatments and vaccines are not expected to have any effect, even at high doses. It is a great fear among the staff. The infection risk is very high among the doctors and health staff.

There is a sense of chaos in the other hospitals and we do not know what to do. Staff are starting to leave and many are opting to retire or apply for holidays. The truth is that mortality is even higher than what is being reported by the authorities, at least in the hospital where I work it. It is killing three to four patients daily, and it has been going on for more than three weeks. It is a shame and there is great fear here. Increasingly younger patients aged 20 to 30 years are dying before our helpless eyes and there is great sadness among health professionals here.

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Jim Sinclair’s Commentary

The Secretary of the US Treasury had some luck taking the equity rally up, so why not Summers? An uptick rule with teeth will come when talks fail. Two more months is too long to wait as a hard break down is the stuff that kills rallies.

Summers says U.S. economy’s freefall has ended
Sun Apr 26, 2009 12:19pm EDT
By Donna Smith and Will Dunham

WASHINGTON (Reuters) – The sense of "unremitting freefall" in the U.S. economy has ended and the picture is no longer completely negative, but rather mixed, President Barack Obama’s economic adviser Lawrence Summers said on Sunday.

Speaking on the "Fox News Sunday" program, Summers also said the "vast majority" of U.S. banks are well capitalized and expressed hope that the auto negotiations between Chrysler and Italian carmaker Fiat SpA would work out.

"Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically. Today, the picture is much more mixed," Summers said.

"There are some negative indicators, to be sure. There are also some positive indicators. And no one knows what the next turn will be," he said. "But I think that sense of unremitting freefall that we had a month or two ago is not present today. And that’s something we can take some encouragement from."

The U.S. economy, now in its 16th month of recession, shrank at a 6.3 percent annual rate in the fourth quarter of 2008, the steepest quarterly plunge in more than 26 years. Economists expect a report on Wednesday to show it slipped a further 5 percent in the first three months of this year.

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Jim Sinclair’s Commentary

No problem. Central banks will simply create more capital. The magic trick has a fancy name, Quantitative Easing, which was formerly known as monetizing new debt.

The capital well is running dry and some economies will wither
The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.
By Ambrose Evans-Pritchard

Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.

Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.

Commerzbank said every European bond auction is turning into an "event risk". Britain too finds itself some way down the AAA pecking order as it tries to sell £220bn of Gilts this year to irascible investors, astonished by 5pc deficits into the middle of the next decade.

US hedge fund Hayman Advisers is betting on the biggest wave of state bankruptcies and restructurings since 1934. The worst profiles are almost all in Europe – the epicentre of leverage, and denial. As the IMF said last week, Europe’s banks have written down 17pc of their losses – American banks have swallowed half.

"We have spent a good part of six months combing through the world’s sovereign balance sheets to understand how much leverage we are dealing with. The results are shocking," said Hayman’s Kyle Bass.

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Jim Sinclair’s Commentary

Therefore the West will do what, and when?

Clinton Says Pakistan Cannot Let Atomic Arsenal Fall to Taliban
By Indira A.R. Lakshmanan

April 26 (Bloomberg) — Secretary of State Hillary Clinton says the U.S. is worried about the “unthinkable” in Pakistan – - that the Taliban and al-Qaeda could topple the government, giving them “the keys to the nuclear arsenal.”

Clinton, in an interview with Fox News last night in Baghdad, said the U.S. cannot “let this go on any further, which is why we’re pushing so hard for the Pakistanis to come together around a strategy to take their country back.”

After failing to vanquish Taliban forces in Pakistan’s Swat Valley, the government in Islamabad signed a peace accord in February permitting the imposition of Islamic law in the region, 100 miles (161 kilometer) from the capital. The Taliban has taken advantage of the truce to challenge government authority in adjacent districts closer to Islamabad.

Last Friday, Prime Minister Yousuf Raza Gilani insisted his country will fight back. The extremists threaten “Pakistan’s very existence,” U.S. Army General David Petraeus told a House of Representatives subcommittee in Washington the same day.

Clinton told Fox that “we can’t even contemplate” the consequences if the Taliban were permitted to overrun nuclear- armed Pakistan because of the failure of the government “to beat them back.”

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Posted at 5:07 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

I thought the following might be of interest to you:

Best,
Your CIGA, thenose

(Excerpts From Article)

Gold
Its Role within the Modern Investment Strategy
08/94 Princeton Economic Institute
By Martin A. Armstrong

There have been numerous people who have argued that gold is THE hedge against inflation. Many will tout their fancy statistics and point to all sorts of charts in support of their case. Others will argue that gold rises during geopolitical uncertainty and at the first outbreak of war it should be bought. And yet there are still others who claim that gold has LOST its luster and is a throw back to ancient times. In their boasts, they claim that inflation has been vanquished and that gold is no longer needed to stabilize the world monetary system.

In an effort to answer these questions in hope of separating the MYTH from REALITY, it demanded that a very long database be constructed. Looking at gold’s performance over the past 20 or 30 years is simply NOT enough historical perspective to come up with a realistic outcome untainted by subjective theories and biases.

To start, we gathered one of the more consistent time series on inflation – the US Wholesale Price Index. The prices of raw commodities at the producer level have always been a more definitive view of inflation rather than the politically manipulated CPI (Consumer Price Index). Due to the fact that the CPI is used to adjust taxes, real interest rates, social security payments and entitlement increases of all sorts, the formula for the CPI has undergone at least 14 MAJOR revisions since World War II. The last revision of major importance took place back in 1983 when real estate was largely replaced by rents. This revision was significant due to the fact that it accounted for 40% of the total CPI prior to that time. The revision was carried out under the pretense that housing was better reflected by rent than value. Appreciation in housing itself was viewed as an investment – not part of the true cost of living

Conclusion

The illustration of gold’s rise in the face of declining confidence in government is endless. The hoarding of gold was so severe during the Great Depression that Roosevelt ended up outlawing the private ownership of gold and confiscated everything the government could find. Quite a drastic police state tactic. Nevertheless, it did happen here in the United States!

In this brief overview of financial history, one striking common theme arises from the trials and tribulations of man – gold rises NOT as a hedge against mere inflation, but as a hedge against the UNSOUND PRACTICES OF GOVERNMENT and/or POLITICAL UNCERTAINTY. Steady rising inflation DOES NOT act as an underlying support mechanism for gold. Its role within the modern investment strategy is a hedge against political and economic uncertainty. Gold has always risen the MOST when the confidence in the government is at its LOWEST!

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Dear Jim,

Concerns about the Swine Flu outbreak turning into a Global Pandemic are escalating. The World Health Organization is already considering whether to issue nonbinding recommendations on travel and trade restrictions, and even border closures.

If this turns into a Pandemic at a time when Pakistan is on the verge of collapse, the global economy is in crisis, and hyperinflation begins to spin out of control, then the Four Horsemen of the Apocalypse will be upon us.

Swine flu fears prompt quarantine plans, pork bans
By FRANK JORDANS, Associated Press Writer Frank Jordans, Associated Press Writer

GENEVA – Canada became the third country to confirm human cases of swine flu Sunday as global health officials considered whether to raise the global pandemic alert level.

Nations from New Zealand to Spain also reported suspected cases and some warned citizens against travel to North America while others planned quarantines, tightened rules on pork imports and tested airline passengers for fevers.

Nova Scotia’s chief public health officer, Dr. Robert Strang, said the east coast Canadian province had confirmed four "very mild" cases of swine flu in students ranging in age from 12 to 17 or 18. All are recovering, he said.

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You and the team at JSMineset have done an extraordinary job keeping your readers informed of the long-range implications regarding all of these issues.

May God bless you all and keep you safe.

All the best,
CIGA Black Swan