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!

More…

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.

More…

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

Posted at 7:51 PM (CST) by & filed under David Duval.

Dear CIGAs,

Evaluating the merits and future prospects for a junior exploration company is a highly subjective process. Intangibles such as political risk, financial risk, market risk, commodity risk, technical risk and a host of other variables confront companies across the entire minerals industry spectrum. Nonetheless, no matter what the relative size of the company or the commodities segment it’s actively involved in, the best place to start your evaluation is with management.

This is especially true for junior gold explorers, the segment of the minerals industry that accounts for the largest proportion of global exploration expenditures and, predictably, the vast majority of new gold discoveries.

In reality, these are the “feeder companies” for the major gold producers whose primary focus is usually weighted to production (i.e. bread and butter issues) rather than exploration. In order to maintain the annual production rates that underpin their share price valuations, these majors need new sources of gold production and junior explorers are usually the ones that feed their insatiable appetites. Not surprisingly, when push comes to shove they are generally willing to pay a king’s ransom for undeveloped, economically viable gold resources in the ground.

Let’s have a broad look at several important criteria one should examine before determining a suitable investment in this often complex but infinitely exciting investment sector.

Management: Do the Litmus Test

It shouldn’t come as any surprise that good management can spell the difference between success and failure. So how does one determine if management is good or bad?

First and foremost past success is arguably among the best litmus tests for gauging management, although it’s certainly no guarantee. In this Internet age, regulatory filings and Google searches can often reveal a library of information on specific individuals and corporate entities.

A good CEO with a track record that includes at least one notable success generally has the ability to attract risk capital because people like to bet on a jockey that’s won a race already. In addition to having market recognition from past successes, they often tend to be magnets for high quality exploration projects.

Most investors in this market sector have observed seemingly well qualified management ruin good exploration companies because of bad technical judgements and even poorer market decisions. In the latter case, non-market oriented executives often forget that markets and exploration-related activities are closely aligned – if not joined at the hip. Those who manage one without paying attention to the other do so at their peril.

These days it’s quite uncommon for industry executives to have a personal investment in the companies whose future they control. Instead, they elect to take large salaries and award themselves cheap stock options which are typically re-priced lower when the company’s stock price reflects their lack of success.

Executives who are willing to risk their own money with ordinary shareholders have an added incentive to be successful. In old fashioned terms, it’s called “putting your money where your mouth is” – a lesson that unfortunately is largely ignored by most contemporary mining executives. Their shareholding need not necessarily be large but it should at least be meaningful.

It’s also wise to look for management with a broad knowledge of the minerals industry and capital markets, both of which are integral to running a successful company. These attributes need not be exclusive to the CEO but they should feature prominently within the corporate management team including the board of directors.

Senior executives don’t necessarily have to be geologists or engineers but they should at least have the ability to attract, manage and motivate a multi-disciplined group of industry professionals who share the corporation’s philosophy and objectives. Who can forget Paul Penna who brokered penny stocks in Toronto before he became the guiding force and chief executive behind one of the most successful mining companies in the world, Agnico-Eagle?

Personal integrity and the ability to communicate the company’s message to shareholders and the marketplace round out the critical attributes that one should look for in public company management.

Summary:

In the minerals business, past performance is often a good indicator but not a guarantee of future success. Pick management with strong track records and preferably at least one notable success (i.e. mineral discovery). The ability of management to raise capital to fund the company’s activities on an ongoing basis is also critical as the price of any exploration company’s stock is results driven – and getting those results costs money.

Management integrity can be determined by examining the way a company conducts its business, especially in foreign jurisdictions. In the case of developing economies, this would include a strong commitment to the principles of sustainable development.

Also, one should keep in mind that a company can be a success in the marketplace without taking a project to commercial production. In fact, the majority of mineral explorers never achieve such a distinction, selling out instead to an operating company with production expertise, perhaps retaining a royalty in future production.

Project Selection: The Best Place to Find a Mine is Where There is One

There are many aspects to selecting a good minerals project. But smart companies attempt to reduce some of the geological risk by exploring areas with known mineral potential as well as active mining operations.

Most of the world’s gold production comes from greenstone belts, ancient volcanic and sedimentary rocks that feature prominently in the mining industries of Canada, Australia and South Africa. These belts typically host a broad range of metals including gold, silver, platinum, nickel, copper, lead, zinc and even diamonds.

When you examine the evolution of these belts from a precious metals standpoint, new discoveries are being made well over one hundred years after the initial discoveries. Emerging greenstone belts, including the Lake Victoria Greenstone Belt in Tanzania, are relatively early in their development and will likely account for increasing amounts of gold and base metals production in the years ahead. In these regions, the larger the land position you have the better!

Companies exploring such areas are generally good exploration bets because the infrastructure in these regions tends to be better and the local population generally has a cultural affinity towards mining.

Summary:

Pick companies with large strategic landholdings and exploration projects in areas with proven geological potential, active mining operations (= good infrastructure), and a recent history of discovery and new mine development.

Project Development: Establishing the Big Picture

Exploration methodology has changed little in decades with the exception of data processing which today is understandably highly computerized. “Boots on the ground” remains the most effective method of discovering mineral deposits and that’s not likely to change any time soon – if ever.

Evaluating an exploration project is most meaningful at the drilling stage and this is when investors usually step into the marketplace. Market activity during this period is generally based on the timely release of exploration results. Understandably, diamond drilling or rotary drilling results are considered the “Gold Standard” during this phase of exploration because these results comprise most of the input data for resource calculations.

In Canada, geologists must adhere to the 43-101 standard when reporting resources for any commodity. This standard is a codified set of rules and guidelines for reporting and displaying information related to mineral properties; and it applies to any company listed on a Canadian exchange which is where the majority of the world’s junior explorers are trading.

Resource estimates are by far the most misunderstood feature of the 43-101 reporting standard. Investors like to apply values to resources that have not been proven economically viable which is a long, costly process. This is particularly true for “Inferred Resources” which have a great amount of uncertainty as to their existence, along with their economic viability. It cannot be assumed that all or any part of any Inferred Mineral Resource will ever be upgraded to a higher category.

For large exploration projects, most companies focus on developing the property-wide potential with widely-spaced drill holes. The reason for this is actually quite simple and practical. Drilling is expensive so rather than expend money tightening up drill hole spacing to produce a resource with no economic legitimacy, companies prefer to assess the global potential to ensure they end up testing the most attractive targets.

Summary

When assessing the potential of a mineral property, make sure your analysis falls within a big picture context. One thing to look for is a broad distribution of gold values on the property. You can find comprehensive information on exploration companies from publicly disseminated news releases and regulatory filings. The technical information in these filings has to be 43-101 compliant, providing a high measure of security to investors. Be careful not to apply economic viability to any resource category, especially inferred resources. Even resources that are included in a full fledged feasibility study are subject to various assumptions including future commodity prices.

Exploration Agreements: The Devil is in the Details

Minerals exploration is often conducted under joint venture agreements. In these situations a corporate entity has the right to earn a specific interest in an exploration project for a set expenditure over a specific period of time. In most cases, the expenditure commitment would include money for exploration and staged option payments to the property owner. Look closely at the JV agreement to determine what interest the optionee can earn (the larger the better) and the cost associated with earning that interest.

Junior partners involved in exploration joint ventures with major companies are at a distinct disadvantage. Make sure they have the internal ability or have sought professional help to ensure their joint venture agreements do not subject them to any derivative-related exposure or accounting related issues at production that will prevent them from achieving a timely return on their investment.

Summary

Exploration agreements are important and can make or break a company. Make sure you know exactly what interest the company will end up with after the earn-in period. Also, beware of excessive financial commitments (including non-exploration related option payments) that can put the company at risk during periods of market weakness. In the event commercial viability is established, ensure the production agreement with the major allows for a timely return on the junior partner’s investment.

Royalty Agreements: Low Risk, Premium Market Valuation

Some companies opt for Net Smelter Royalty agreements (NSR) which limits the financial risk associated with funding exploration work themselves. The royalty model allows for industry partners to earn up to a 100% working interest in an exploration project for a firm exploration commitment and rental (option) payments over a specific time period. In this particular case the property vendor would receive a sliding scale royalty (based on the gold price) should the property achieve commercial production. Because achieving commercial production is the responsibility of the project operator, the royalty partner does not suffer any dilution of shareholder’s equity or development capital risk.

A net smelter royalty (NSR) is the amount actually paid to the mine or mill owner from the sale of ore, minerals and other materials or concentrates mined and removed from mineral properties. This type of royalty provides cash flow that is free of any operating or capital costs and environmental liabilities. A percentage of an NSR royalty on an ore body can effectively equate to a larger percentage of the economic value of the ore body.

Royalty companies have low overhead, are relatively easy to evaluate, and generally command a premium in the marketplace.

Summary

The royalty model is virtually risk free but realizing royalty income from an exploration property is dependent upon the project operator achieving commercial production. For exploration companies, holding a strategic land position in a developing gold camp is an essential requirement to attract royalty partners. Royalty exploration companies operate under the principle that you can find gold cheaper through exploration than you could by purchasing production through royalty agreements on the open market. Royalty companies are attractive because they typically command a premium in the marketplace.

Posted at 7:49 PM (CST) by & filed under In The News.

Dear CIGAs,

Here is another important calendar period for the Gold Community. The third week of October 2009. Write it down

Jim Sinclair’s Commentary

Never say never has proved quite true when it comes to China taking action to protect itself against the US bred OTC derivative meltdown actions by the US Fed and Treasury.

Currency traders eye China for clues
By William L. Watts, MarketWatch
Last update: 4:30 a.m. EDT April 24, 2009

LONDON (MarketWatch) – While foreign exchange is unlikely to be the subject of bold public pronouncements when the world’s most powerful finance ministers and central bankers meet Friday in Washington, China’s call for the replacement of the U.S. dollar as the world’s leading reserve currency is likely to be a hot topic behind closed doors, currency strategists said.

Namely, foreign-exchange traders will be looking for any clues to discussions with Chinese officials as policy makers around the world attempt to piece together the implications of remarks by China central bank governor Zhou Xiauchuan in March for the eventual replacement of the U.S. dollar as the world’s main currency with special drawing rights, the quasi-currency issued by the International Monetary fund.

The implication of such a policy would be a weaker dollar, as central banks move to diversify away from the world’s largest reserve currency. And that’s something that makes a number of policy makers, including officials from the 16-nation euro zone, nervous, analysts said.

The prospect of a substantially weaker dollar is unwelcome to policy makers in the euro zone, Japan or other countries worried about their own exports.

The main thrust of China’s message is that it wants to diversify holdings of foreign exchange reserves in a way that more closely mimics the make-up of SDRs, said Simon Derrick, currency strategist at Bank of New York Mellon.

More…

Jim Sinclair’s Commentary

1. Pakistan goes Taliban.
2. Israel makes a miscalculation.
3. Turkey is a Victim.

Turkey defends its pro-Iran stance in Geneva
Thu, 23 Apr 2009 22:29:51 GMT

Turkey has defended its delegation’s decision not to leave the Geneva conference during a speech by Iran’s President, Mahmoud Ahmadinejad.

Ahmadinejad in the UN’s Durban Review Conference in Geneva Monday slammed Israeli atrocities in Palestine and called Israel ‘a cruel and repressive racist regime’.

During his speech, many Western delegations left the conference venue in a move to protest his comments.

Turkey’s Minister for EU Affairs Egemen Bagis who is in Paris for an official visit, highlighted the importance of ties between Turkey and its neighboring Iran, IRNA reported on Thursday.

In a news conference Thursday, when Bagis was asked why the Turkish delegation did not leave the conference venue during Ahmadinejad’s speech, he replied, "Turkey and Iran have historical ties and vital economic relations."

More…

Jim Sinclair’s Commentary

Please read and act:

Martin Armstrong is looking quite good with his insistence that April 19th would figure extremely high on the calendar of the gold community. June is the next important period. His chart of market sentiment gave you the equity rally spot on for both sides.

I point out to you talent, now you need to download his entire library and study it.

All of our incarcerated genius – Armstrong:

http://www.scribd.com/people/documents/6120543/folder/82090

Use Martin Armstrong for TIMING and Alf for PRICE as I stand on the wall regardless of what is incoming to be your WATCHMAN.

All of this requests nothing from you but a bit of respect.

Jim Sinclair’s Commentary

For your information.

Possible Swine Flu Outbreak At NYC Prep School
Department Of Health Officials Testing 75 Students At St. Francis Preparatory School In Queens

As many as 75 students at St. Francis Preparatory School in Queens got sick on Thursday. More got sick on Friday. What health officials want to know is was it swine flu or something more benign.

There are mounting fears about a deadly swine flu virus that is reported to have killed as many as 60 people in Mexico, one that health officials fear has already seeped into the United States.

St. Francis Prep was ordered to cancel an evening program Friday night because the New York City Department of Health isn’t sure what made students sick Thursday and Friday with flu-like symptoms.

"I just saw lot a lot of kids lined up along the wall near the nurse’s office," sophomore Kelsey Dittmeir said.

If it’s the flu, the question is what kind of flu? And could it be the unique strain suspected in 20 recent deaths?

Tests are underway.

"It could be a strain we’ve seen before. It could be the regular flu," Dr. Ross Weiss said. "It could be flu B that happens late in the year. It could be any of those so we really can’t speculate at this point. That’s why we were very anxious to get samples to the lab and get them tested so we can find out what we are dealing with."

More…

Jim Sinclair’s Commentary

The USA is quite concerned, but when it comes to markets it is so far from TARP or Stress Tests to factor in. There is no more important situation on the planet than Pakistan willingly going Taliban.

U.S. ‘extremely concerned’ about Taliban movements in Pakistan – CNN.com
updated 9:02 p.m. EDT, Fri April 24, 2009

WASHINGTON (CNN) — The United States is keeping a close eye on Pakistan after this week’s Taliban surge into the Buner district brought them just 60 miles from the capital, Islamabad.

A Pakistani government official said Friday that the insurgents had completely withdrawn from the district by the end of the week, but a human rights group said people in Buner were reporting that local Taliban remained in the district.

And senior U.S. officials cautioned that any withdrawal by the Taliban was likely meaningless and that the fundamentalist group now holds large areas of the country with the government seemingly unable to stop them.

"We’re certainly moving closer to the tipping point," Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff said on NBC’s "Today" show Friday.

In the interview from Afghanistan, Mullen said he was "extremely concerned" about indications the Taliban is moving closer to Pakistan’s capital of Islamabad.

More…

Jim Sinclair’s Commentary

Markets are totally devoid of geopolitical concerns while geopolitical concerns move absolute center stage.

Petraeus: Afghanistan could be harder than Iraq
updated 1:52 p.m. EDT, Fri April 24, 2009

(CNN) — Defeating extremists and stabilizing Afghanistan and Pakistan will require a "sustained, substantial commitment," Gen. David Petraeus, the chief of U.S. Central Command, said Friday.

Afghanistan and Pakistan contain "the most pressing transnational extremist threat in the world," he told a House appropriations subcommittee, while expressing confidence that President Obama’s strategy constitutes the type of commitment that is needed.

Obama last month announced a new plan for the region, calling for more U.S. troops, greater economic assistance, improved Afghan troop training and added civilian expertise.

Petraeus said Friday that although more military forces are clearly necessary, "they will not by themselves, be sufficient to achieve our objective."

"It is equally important that the civilian requirements for Afghanistan and Pakistan be fully met. To that end, it is essential that the respective civilian elements be provided the resources necessary to implement this strategy," he said, urging Congress to fully fund the State Department, the United States Agency for International Development and the U.S. Interagency Civilian Response Corps.

More…

Posted at 12:14 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

If China could have bought this much gold secretly without anyone knowing, who is to say that they haven’t bought more than this and are just not saying anything about it? Just something I thought I would offer for consideration.

CIGA Dr. Bob

Dear Bob,

Or sold dollars instruments?

Regards,
Jim

Chinese Purchase Could Lead to Structural Shift in Gold Holdings, Says WGC
On Friday April 24, 2009, 1:49 pm EDT

NEW YORK & LONDON–(BUSINESS WIRE)–News that China has increased its gold holdings by more than 75% is a clear indication of the critical role that gold plays in central bank reserves, World Gold Council said today.

Welcoming the announcement by China’s State Administration of Foreign Exchange (SAFE) that the country’s official gold reserves have risen from 600 tonnes in 2003 to 1,054 tonnes, the CEO of World Gold Council, Aram Shishmanian, said:

“The Chinese government’s decision further demonstrates the leadership it is increasingly taking and its public recognition of gold’s proven role as a store of value and portfolio diversifier. We are closely monitoring developments at other central banks to determine whether they will follow China’s bold and thought-leading move, particularly those in Asia.

More…

Dear Mr. Sinclair,

The grim reaper strikes again: Friday evening, four more banks were closed by the regulators, but I take note of a "new twist"

“…The Federal Deposit Insurance Corp. said it could not find a buyer for First Bank of Beverly Hills, and would pay its nearly $1 billion in insured deposits directly. (The bank had about $179,000 in uninsured deposits). The failure is estimated to cost the agency about $394 million.”

Reuters Link…

American Bankers Link (registration required)…

Best regards,
CIGA Annette

Four More Failures Cause $700M Loss

Four banks and thrifts totaling $2.3 billion in assets failed Friday on another busy — and expensive — night for the Federal Deposit Insurance Corp.

The failures — estimated to cost the FDIC roughly $700 million — were $1.5 billion-asset First Bank of Beverly Hills in Calabasas Calif.; $489 million-asset First Bank of Idaho FSB in Ketchum; $185 million-asset Michigan Heritage Bank in Farmington Hills; and $112 million-asset American Southern Bank in Kennesaw, Ga.

The failure toll has now hit 29 this year — four higher than the total number of collapses last year.

Despite the closures, depositors lost money in only one of the failures Friday evening. The Federal Deposit Insurance Corp. said it could not find a buyer for First Bank of Beverly Hills, and would pay its nearly $1 billion in insured deposits directly. (The bank had about $179,000 in uninsured deposits). The failure is estimated to cost the agency about $394 million.

But no customer at the smaller institutions lost a penny.

Depositors at First Bank of Idaho — which was closed by the Office of Thrift Supervision — will become customers of the main bank subsidiary of Minneapolis-based U.S. Bancorp.

U.S. Bank agreed to pay a 0.55% premium for First Bank of Idaho’s $261 million in nonbrokered deposits. (The FDIC will pay about $113 in brokered funds directly). The acquirer also will buy nearly $18 million of the failed bank’s assets, the FDIC said. The failure was estimated to cost the agency about $191 million.

The FDIC said Bank of North Georgia, in Alpharetta, paid a 0.003% premium to assume American Southern’s $55 million in nonbrokered deposits, while the agency said it would pay the bank’s $48.7 million in brokered deposits directly.

Bank of North Georgia also agreed to buy about $31 million of American Southern’s assets. The failure — the 10th in Georgia since the start of 2008 — is estimated to cost the Deposit Insurance Fund $41.9 million.

Michigan Heritage’s nonbrokered deposits — totaling about $102 million — will be assumed by Level One Bank, also in Farmington Hills, for a 1.16% premium. The FDIC will pay out the failed bank’s $50 million in brokered deposits.

Level One also agreed to buy about $46 million of the failed bank’s assets. The FDIC said the failure was estimated to cost $71 million.

Jim,

Still, we’re told everything is fine

http://www.fdic.gov/bank/individual/failed/banklist.html

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

Posted at 8:51 PM (CST) by & filed under Jim's Mailbox.

Hey Jim,

Added a few things….

US$ outflows and rapid change of flows implies the dollar rally doesn’t have long to last.  Also, notice the big inflows in the 10-year (most of the yield curve) prior the treasury auctions http://www.treas.gov/offices/domestic-finance/debt-management/auctions/auctions.pdf. Inflows into the energy complex; Nothing significant yet, but any change in direction given the state of world affairs is worth noting.

Markets of Interest

U.S. Dollar:
http://www.facebook.com/photo.php?pid=1557966&l=be2e2aaea0&id=557304509
Commercial "hook" beginning to form after the end of the bear market rally. This could last another 1-2 weeks. Continued outflows will mark the end of the dollar bounce. In general, gold trades inversely to the dollar.

Swissie:
http://www.facebook.com/photo.php?pid=1557964&l=5820b383ff&id=557304509
http://www.facebook.com/photo.php?pid=1557965&l=52fd1f165f&id=557304509

Bullish money flows continue.

Yen:
http://www.facebook.com/photo.php?pid=1557967&l=0b4436683b&id=557304509

Bullish money flows continue.

Regards,
CIGA Eric

Jim,

"This argument is interesting, but more so is the inevitability of hyperinflation, the reality of energy as a currency hedge and the scariest of all, Pakistan."

Now is the time to be buying, not selling oil.

CIGA Eric

clip_image001

Dear Mr. Sinclair,

The article below is a pretty good summary of many things you’ve been saying for a long time, summarized best by saying "don’t throw away your insurance":

“….Who is going to win the gold wars? Holders of gold? The big winners will be Indian wives whose fathers gave them a lot of gold as a dowry. The rest of us gold bugs will also do well. The general public will never catch on in time, and by the time that it occurs to even 10% or 20% of investors that they better buy gold, it will cost them so much to get into the market that they will not make the kinds of profits that today’s gold investors are going to make….”

Link…

I found the link on the GATA website.

It looks like a nice and finally warm weekend coming up in our neck of the woods.

Best regards,
CIGA Annette

Dear Annette,

This still misses the point! The mindset is wrong.

I am not in gold for profits.

I am in gold to SURVIVE that which we cannot control.

My work is for your total survival. I am making progress in all my efforts, or why would anyone waste time attacking my 50 years of participation in the financial industry, member of most major exchanges, under administrative law, and success in all my efforts?

Regards,
Jim

Posted at 3:42 PM (CST) by & filed under In The News.

Dear CIGAs,

This argument is interesting, but more so is the inevitability of hyperinflation, the reality of energy as a currency hedge and the scariest of all, Pakistan.

Each equate to a higher oil price, potentially much higher when least anticipated and less understood.

"The certain cure for low oil prices is low oil prices."

Jim Sinclair’s Commentary

The key to exit is the ability of any country to handle it own affairs.

Iraq bomb blasts send death toll to 140 in 24 hours
April 24, 2009

A double suicide bombing at Baghdad’s most revered Shia shrine has left at least 60 people dead, the latest in a bombing blitz that has killed and maimed up to 140 people in just 24 hours.

The attack on Friday prayers at the golden-domed Qaddumiyah mosque in northern Baghdad came a day after security forces claimed to have captured one of the leading al-Qaeda figures in Iraq. The two kamikaze attackers blew themselves up in a crowded market just outside the shrine, one of the holiest in Shia Islam.

At least 20 pilgrims from neighbouring Iran were killed in the back-to-back blasts after thronging to Iraq’s Shia holy places. The Qaddumiyah shrine was also attacked by a suicide bomber in Spring 2004, killing scores of people.

Iranian pilgrims made up the vast majority of the 56 victims of a suicide bombing at a restaurant just north of the capital yesterday, which itself came hard on the heels of another attack inside Baghdad that slaughtered almost 28 internally displaced people as they gathered to collect food aid from police officers.

The onslaught has recalled some of the worst days of Iraq’s sectarian bombings, when al-Qaeda sought to ignite civil war by blowing up Shia shrines and market places, killing thousands of people.

More…

Jim Sinclair’s Commentary

For your information.

New, deadly swine flu hits Mexico, may spread
Fri Apr 24, 2009 6:13pm BST
By Noel Randewich and Armando Tovar

MEXICO CITY (Reuters) – A deadly strain of swine flu never seen before has broken out in Mexico, killing as many as 60 people and raising fears it is spreading across North America.

The World Health Organization said it was concerned about what it called 800 "influenza-like" cases in Mexico, and also about a confirmed outbreak of a new strain of swine flu in the United States. It said about 60 people had died in Mexico.

Mexico’s government said it had confirmed that at least 16 people had died of the swine flu in central Mexico and that there could be another 45 fatal victims.

The government canceled classes for millions of children in its sprawling capital city and surrounding areas on Friday after it noticed a higher number of deaths involving flu-like illness than normal in recent weeks.

"It is a virus that mutated from pigs and then at some point was transmitted to humans," Health Minister Jose Angel Cordova told the Televisa network.

More…

Jim Sinclair’s Commentary

Pakistan


Israel: Pakistan’s nukes could fall to Taliban | International …
Defense official: If Taliban gets bomb, it will be &quota nightmare for the West and will also affect us."
JPost International – http://www.jpost.com/

Jihad Watch: Pakistan: Karachi churches vandalized with "Long live …
By Marisol 
More signs of escalation as Pakistan continues its deterioration into a failed state — a failed state with nuclear weapons. "Taliban attack Christians in Karachi," by Qaiser Felix for AsiaNews, April 23: Karachi (AsiaNews) – Armed men …
Jihad Watch – http://www.jihadwatch.org/

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BBC News

Key talks on Pakistan Sharia deal
BBC News – UK
Officials in North West Frontier Province in Pakistan are meeting to discuss a peace deal with the Taleban that has sparked deep US concern. …
See all stories on this topic

Taliban Advance, Pakistan’s Wavering Worry Obama Team
Washington Post – United States
By Karen DeYoung The Obama administration reacted with increasing alarm yesterday to ongoing Taliban advances in Pakistan, warning the Pakistani government …
See all stories on this topic

Faced with mortal threat, Pakistan chooses denial
USA Today – USA
Nuclear-armed Pakistan is unraveling at a frightening pace. Equally alarming,Pakistan’s leaders appear far less concerned than their American counterparts. …
See all stories on this topic

Clinton warns of Pakistan nuke risk
Washington Times – Washington,DC,USA
By Nicholas Kralev (Contact) and Barbara Slavin | Friday, April 24, 2009 Secretary of State Hillary Rodham Clinton warned Thursday that Pakistan has …
See all stories on this topic


Pakistan – Taliban Nuclear Nightmare : Homeland Security News
By national 
Pakistan Taliban Nuclear Nightmare. Nuclear-armed Pakistan is unraveling at a frightening pace. Equally alarming, Pakistan’s leaders appear far less concerned than their American counterparts. You have to wonder what they’re thinking in …
Homeland Security News – http://www.nationalterroralert.com/

 

Epoch Times – Obama’s Afghanistan-Pakistan Quandary
By By Ashley J. Tellis 
If success in Afghanistan is to be achieved, Washington will have no choice but to erect an effective Afghan state.
Epoch Times | All headlines – http://www.theepochtimes.com/

Posted at 3:23 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Gold bulls managed to build on yesterday’s technical gains and moved prices on up and into the 40 day moving average before selling appeared the blunt the change higher. It has still not broken free of that downsloping trendline which dominates its daily chart but it is closing in on it. The short term 10 day moving average has turned up which is friendly especially since gold bounced higher off of its rising 100 day moving average but the 40 and 50 days are still moving lower. Thus there is still no clear trend that has been defined – the long term is up (rising 100 day MA), the intermediate is still down (falling 40 and 50 day MA) and the short term is up (rising 10 day MA). That works to give a bit of a mixed signal which is why we need to see further strength next week to build on this week’s impressive performance. Price must take out both the downsloping trendline and the 40 day MA and then 50 day MA to give the bulls all the wind at their back. Bears are hoping to thwart the rise near $920 – $925. The weekly chart looks much better now.

The mining shares as indicated by the HUI and the XAU outperformed their counterpart at the Comex. The HUI in particular has victory within the bulls’ grasp if it can maintain it gains going into the closing bell today. It looks to have confirmed a double bottom near 275 as long as it can close convincingly above the 305 level. A failure here when it closes will embolden bears. That is why it is critical that bulls stand their ground if they hope to engender more short covering and attract new allies. As price now stands on that index at the time I am writing this, it has moved above last week’s high, taken out the 40, 50 and 20 day moving averages, bounced from the 100 day moving average and flipped the 10 day MA higher. It still has some work to do to repair the sharp plunge that occurred in the first week of April but the price action is quite bullish in the short term.

Euro gold has been hovering near the 680 level and thus far looks to be finding fairly good support near that region the last few days. Sterling gold is oscillating around the 610 level. It would be helpful to see it stabilizing and moving higher from here as the ideal setup for sustained gold rallies is a simultaneous move higher for gold priced across a wide basket of currencies. Remember, the last leg higher in gold was led by a move higher while priced in terms of the European currencies. Gold rallies that tend to be only in Dollar price terms do not have the staying power that the alternative does.

Speaking of the Dollar, it suffered a major technical setback in today’s session plunging beneath the 10 , 20, and most importantly, the 100 day moving average. The weekly chart is threatening a breakdown of a bearish pennant formation which would tend to validate the double top formed just above the 89 level. The Dollar has significant double bottom technical support near  83.50 on that same chart and if that were to give way we could see a sharp, swift move down to near the 82 level. It will have to climb back above 87 to get out of immediate danger. For the most part it continues to move inversely to the US equity markets falling when they rise and rising when they fall.  I should note here that the measure of risk sentiment, the Euro-Yen cross, is strongly higher today.

Gold deliveries for April reached 1.28 million ounces. The last two trading days, open interest has increased in the April gold contract and deliveries have increased also. The stoppers obviously have clients who want physical bars or are obtaining them for their own accounts.

Copper recovered a large portion of yesterday’s losses today but it is difficult at this point to say whether this was just shorts ringing the cash register after its sharp decline from the $2.20 level this week or the end of a correction in price after a prolonged, sustained rally dating back to March of this year. Next week’s price action will be most telling as to its future course. Copper has been drawing support from Chinese buying of the metal for restocking purposes and should that buying abate for any reason, it will be left to fend for itself

Crude oil not only managed to claw its way back to the $50 level but exceeded that and pushed on up almost $52. Between strength in crude, sugar and the metals, the CCI (Continuous commodity Index) moved higher today recapturing just about all of this week’s previous losses. It continues to move along a gently, upcurving or rounded bottom formation. It is evident that the commodity markets are no longer pricing in deflation but have now moved to a more forward looking inflation problem down the road ahead. Only a break below the December 2008 low would cause me to change that view. As stated here previously, a rising CCI is beneficial for gold. Again, the kind of chart pattern being carved out by this index is one that does not anticipate a sharp upturn in economic activity but rather a sort of rising crawl out of the current morass. At some point the inflationary impact of the reckless quantitative easing policies of more than a few Central Banks is going to turn this index into a steeper uptrend in price. We will be able to see the shift in psychology take place by monitoring this chart. My fear is that this genie will in no wise be able to be shoved back into his bottle.

That brings me to the action in the bond market. After managing a brief bounce yesterday and allowing the bond bulls to breathe a sigh of relief, bonds resumed their downward trend within that broad range defined by the huge range day of the Fed’s quantitative easing announcement. Bonds are now within a whisker of taking out the low of that day (16 ticks to be exact). If they do break down, the Fed’s intention to artificially prop up the market and by consequence shove long term rates lower, is going to be severely tested. It is looking increasingly likely that the bond market vigilantes – those extinct or at least hibernating species – are making a reappearance. And why should they not? The sum of money that is being printed into existence is a virtual guarantee that the plague of inflation is going to descend on this nation and consume all that it touches, in much the same fashion as the locust swarm did to biblical Egypt. Thus far the locusts have not visited us – but price action in the bond market will tell us when to expect their arrival. The scene I envision in my mind as I watch the price action in the bonds is a picture of a peasant with a straw broom in his hand wildly swinging away at a cloud of locusts swarming all around him and attempting to beat back the millions of invading insects in the desperate hope of avoiding complete ruin.

About the only saving grace that I can see for the bond have been equity weakness. If equities fail near current level then bond bulls will probably dodge a bullet. Barring that however, they are in a tenuous condition to say the least.

Meanwhile US equities continue to move blithely higher in apparent obliviousness to all that ails us. My pal Dave informed me this AM in an email that insider selling has reached levels last seen in October 2007, right before the market peaked and the 17 month bear market began. That is something that should not be ignored.

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

april2409gold1230pmcdt1

Posted at 2:31 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Where there is smoke, there is always fire – rumors of Chinese gold buying have now been proven to have been correct. If anyone wants to know one of the main buyers on any price setbacks in gold, look no further than the emerging global financial power…

Talk of IMF gold sales should receive a dose of reality based upon this revelation from the Chinese monetary authorities. They have indeed been quietly diversifying and accumulating gold and would no doubt welcome any large sales by the IMF, should that even occur at all.

Trader Dan

REUTERS  UPDATE 2-China reveals it has 1,054 tonnes of gold –Xinhua
By Alfred Cang and Lucy Hornby

SHANGHAI/BEIJING, April 24 (Reuters) – China revealed on Friday that it had quietly 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.

Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.

The world gold market has been buzzing with talk about China buying gold for years as the country’s foreign exchange reserves have rocketed, and speculation has picked up since the global economic crisis threatened to weaken the value of those reserves.

Gold prices <XAU=> jumped on the news and were up 1 percent on the day at $910.80 an ounce at 0540 GMT. By a Reuters calculation, China’s holding of gold would be worth $30.9 billion at current prices.

China recently reported the change in its gold holdings to the International Monetary Fund and would include the latest change in central bank reports and balance of payment statistics, Hu said.

China’s reserves were now the fifth biggest in the world, with only six countries holding more than 1,000 tonnes, she said.

China had increased its stocks by buying on the domestic market and from domestic producers.

Gold market participants said Hu’s revelation was good news for the market and signalled likely further buying.

"The comments indicate that China will buy more gold as reserve to improve its foreign reserve portfolio. This is a trend," said Yao Haiqiao, president of Longgold Asset Management.

Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes.

"It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis," he said.

"The financial crisis means the U.S. dollar value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage."

The European Central Bank recommends its member banks hold 15 percent of their reserves in gold, but among Asian nations the percentage is far smaller, said Albert Cheng, World Gold Council managing director for the far east.

(Additional reporting by Chris Buckley in Beijing, Polly Yam in Hong Kong, Nick Trevethan in Singapore and Chikako Mogi in Tokyo; Editing by Tom Miles and Nick Macfie)
(([email protected]; +86 10 6627-1200; Reuters Messaging: [email protected]))
((If you have a query or comment on this story, send an email to [email protected]))

China Increases Gold Reserves 76% to Fifth-Largest (Update4)
By Eugene Tang and Bob Chen

April 24 (Bloomberg) — China boosted its gold reserves by 76 percent since 2003 and has the world’s fifth-biggest holding by country, said Hu Xiaolian, head of the State Administration of Foreign Exchange.

The nation increased its reserves by 454 tons to 1,054 tons through domestic purchases and refining scrap metal, Hu said in an interview with the Xinhua News Agency today. The amount is more than Switzerland’s 1,040 tons, World Gold Council data show, and is worth $31 billion at current prices.

China has the world’s largest foreign exchange reserves at $1.95 trillion as of March 31, according to state administration data. The holdings have climbed about sixfold in the past six years as the country had record trade surpluses and inflows of foreign investment. Gold prices have almost tripled to more than $900 an ounce from $337.

“Chinese foreign-exchange reserves have absolutely exploded in the past few years,” said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. “We shouldn’t be surprised that they’re adding a lot of all asset classes. I don’t think they’re shifting away from U.S. dollars into gold.”

Gold climbed to a record $1,032.70 an ounce on March 17 last year and traded 0.9 percent higher today at $912.08 an ounce at 3:18 p.m. local time in Singapore.

More…

China admits to building up stockpile of gold
Alfred Cang and Tom Miles, Reuters
Published: Friday, April 24, 2009

SHANGHAI/BEIJING – China revealed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes – or a pot worth about US$30.9-billion – and confirming years of speculation it had been buying.

Hu Xiaolian, head of the State Administration of Foreign Exchange, told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.

The confirmation of its surreptitious stockpiling is likely to fuel market talk about Beijing’s ability to buy secretly and its ambitions for spending its nearly US$2-trillion pile of savings. And not just in gold: copper and other metals markets are booming thanks to China’s barely-visible hand.

Speculation has gathered speed over the last year, since the tumbling dollar has threatened to weaken China’s buying power – and give it yet more reason to diversify into gold, oil and metals.

Gold prices jumped on the news of Chinese buying and were up more than 1% on the day at US$912.05 an ounce at 0715 GMT. By a Reuters calculation, China’s holding of gold would be worth around US$30.9-billion at current prices.

More…