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

Dear CIGAs,

The following is an important website you should check often.

http://www.usdebtclock.org/

Jim Sinclair’s Commentary

Alf’s 3rd wave is beginning.

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

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

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

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

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

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

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

More…

 

Jim Sinclair’s Commentary

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

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

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

You have to love this entity taking the 5th.

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

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

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

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

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

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

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

More…

 

Jim Sinclair’s Commentary

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

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

Who knows, they might like it.

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

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

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

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

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

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

More…

Jim Sinclair’s Commentary

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

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

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

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

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

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

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

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

More…

Jim Sinclair’s Commentary

Goodbye Standard and Poors.

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

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

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

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

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

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

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

More…

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

Dear CIGAs,

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

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

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

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

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

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

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

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

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

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

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

clip_image001

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

Dear Jim,

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

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

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

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

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

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Hi Jim,

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

Il Silenzio provides that mark of respect.

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

CIGA Al

Click here to listen to the WMA audio file…

Dear Al,

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

Regards,
Jim

Hello Jim,

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

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

Dear Jim,

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

CIGA Marc

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

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

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

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

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

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

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

More…

Jim Sinclair’s Commentary

Courtesy of CIGA Barry.

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

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

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

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

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

More…

Hi Jim,

Sorry to be pesky. I‘ll be brief.

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

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

Thanks!
CIGA Gil

CIGA Gil,

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

Do you see my point Gil?

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

Jim

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

Dear Friends,

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

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

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

Alf has the prices nailed.

Armstrong has the Business Sentiment correct.

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

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

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

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

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

Respectfully yours,
Jim

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

Dear Extended Family,

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

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

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

Click chart to enlarge in PDF formatMay2009001.jpg

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

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

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

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

Listen to Alf Fields in 2005:

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

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

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

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

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

You ask why now?

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

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

Posted at 9:34 PM (CST) by & filed under In The News.

The fact that the money and power are leaving for China has escaped everyone in our leadership. They are totally blind to this. They cannot conceive that we have given up the lead to anyone, because we are so perfectly good. This is called Hubris and is a tool of the Gods to destroy any who dare to become Godlike.

cartoon-taxpayer

Dear CIGAs,

Gold is a currency. In fact gold is the ultimate currency. It cannot be expanded to meet the needs of politicians as can paper currency.

Under .8200 the wheels of hyperinflation start to turn.
Under .7200 the impact of hyperinflation is in Main Street.
Under .5200 Zimbabwe Economics reaches the USA.

Gold and the USD as trend events are attached inversely at the hip. Hedge funds have played with that relationship but cannot change it.

Central Banks have NO tools that can drain the liquidity that has been injected into the INTERNATIONAL system over the last two years. Those in Europe that have been more conservative will be less effected even thought they are now derided for their heel dragging.

Asia will rule the economic world.

DJ MARKET TALK: Comex Gold Closes Higher As Dollar Eases

1742 GMT [Dow Jones] – Comex gold recouped some of the previous day’s pullback. "Part of it is the retreating dollar we are seeing today," said Carlos Sanchez, precious-metals analyst with CPM Group. "We were heading toward $1.35 [for the euro versus the dollar], but now are slightly back above $1.36."

Also, gold managed some technical strength when it bounced right back after an overnight dip below its 10-day moving average, says Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. Just ahead of gold’s close, this average stood at $921.30 an ounce. June gold settled up $5 to $926.70. Gold seemed to take its cue from the dollar since equities, which had dictated much of the metal’s direction lately, were largely flat, Nedoss adds. (ALS)

 

Jim Sinclair’s Commentary

Governments have never been able to operate or profitably influence the operation of businesses.

Few in leadership have ever operated at risk businesses, yet nationalization (their business management) in a functional sense has its tentacles now everywhere.

Once you have accepted money or a benefit from the government you have sold your soul.

There is no refund policy.

Fannie and Freddie in ‘critical’ condition
Regulator says companies still suffer from severe operational and financial weaknesses. Recruiting executives also tough.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: May 18, 2009: 4:08 PM ET

NEW YORK (CNNMoney.com) — Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday.

The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance.

"With new senior management teams, each enterprise has made strides in remediating problems," the agency said. "But they still face numerous significant challenges including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship."

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) play a vital role in the national housing market, accounting for a combined share of 73% of mortgage originations in the second half of 2008. They also serve central roles in the Obama administration’s foreclosure prevention plan.

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Jim Sinclair’s Commentary

Green shoots are shot and over for the next seven months of down leg. The point here is what do you think 2000 dealerships devolving into nothingness means in an economy? The 2000 dealerships does not include all that Ford is doing likewise without media coverage.

OTC derivatives are at fault for this and nothing else. What would have been a mild four year recession is now a multi decade disaster.

The OTC derivative dealers have all been bailed out and are as rich as cream, safe in their Greenwich, CT mansions. The OTC derivative manufacturers and distributors have become billionaires while this poor guy and a multitude like him are going straight down the drain. Take this story and times it by 2000, then think of the additional fallout the domino effect has in each town and village. Car dealerships are not small potatoes.

Housing and Autos were the drivers of the big boom of the 2000s. They are both the victims of OTC derivatives and now the downward spiral drivers of a disaster yet to be admitted to as the cause is still out there flourishing.

Nothing at all has been done to help this fellow and therefore nothing has been done to help the economy outside of more fancy paper shuffling of the Wall Street ilk mucking up everything it touches as usual.

God help us all.

Letter from a Dodge dealer
May 19, 2009

letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month.  All depend on our business for part of their livelihood.  We are financially strong with great respect in the market place and community.  We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees.  Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy.  This will also cause our 50+ employees to be unemployed. How will they provide for their families?  This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Jim Sinclair’s Commentary

FASB will certainly go to hell for this. There is no redemption for canning the mark to market requirements.

FASB tightens off-balance-sheet loan rules
05/19/2009

WASHINGTON_The board that sets U.S. accounting standards on Monday moved to end companies’ use of a device that allowed them to park hundreds of billions of dollars in loans off their balance sheets without capital cushions and has been blamed for helping stoke banks’ losses in the housing boom.

The change will tighten the use of so-called "qualifying special purpose entities" by requiring companies to report to regulators the loans contained in them and to increase their capital reserves in proportion as a cushion against potential losses.

It was the lack of disclosure and absence of capital supporting ballooning subprime mortgage loans in these special entities that aggravated the massive losses sustained by banks, regulators say.

The change by the Financial Accounting Standards Board could result in about $900 billion in assets being brought onto the balance sheets of the nation’s 19 largest banks, according to federal regulators. The information was provided by Citigroup Inc., JPMorgan Chase & Co. and 17 other institutions during the government’s recent "stress tests," an analysis designed to determine which banks would need more capital if the economy worsened.

In its quarterly regulatory filing earlier this month, Citigroup said the rule change could have "a significant impact" on its financial statements. Citigroup estimated it would result in the recognition of $165.8 billion in additional assets, including $90.5 billion in credit card loans.

More…

Jim Sinclair’s Commentary

I would pay a reasonable premium for this assurance.

$4bn Swiss Gold ETF: Paranoia premium or plain expensive?
By Rob Mackinlay 19 May 2009

One of Europe’s largest and fastest growing physical gold ETFs is facing an industry backlash after suggesting that its higher trading costs are justified because its product is ‘safer’, in a case that throws the spotlight on charges paid by investors for different funds holding the same underlying asset.

The performance of physical gold exchange traded funds (ETFs) should not deviate much as they all aim to track the same underlying commodity and many of the products charge the same 0.4 per cent annual management fee.

This leaves investors with a handful of factors to consider when choosing a physical gold ETF, including trading costs and security. For buy and hold investors – and the many extremely risk averse investors buying these products – security is the key. For investors looking for quick returns, the trading cost will be the decider.

Until now investors would not have seen these two issues as being in conflict. But statements by Swiss ETF provider ZKB have raised the stakes by suggesting that this is indeed the case – security versus trading costs – and the ETF industry is now embroiled in a debate over the merits of the argument.

With many physical gold ETF investors paranoid about fundamental security issues (Could owning gold be banned? Hedge fund warning) anything that eases their minds could command a premium. One of Europe’s largest and fastest growing gold-backed ETFs, the Swiss  ZKB Gold ETF, has sparked a heated debate by suggesting that its product does just this, and that it is safer than its peers.

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Jim Sinclair’s Commentary

This article is right on the money.

It is too bad, but the West defines everything according to their reality. It is unfortunate that the West’s reality has no application at all in Pakistan, Iran, Iraq and Afghanistan.

U.S. stirs a hornet’s nest in Pakistan
ERIC MARGOLIS
MAY 18, 2009

PARIS — Pakistan finally bowed to Washington’s angry demands last week by unleashing its military against rebellious Pashtun tribesmen of North-West Frontier Province (NWFP) — collectively mislabelled "Taliban" in the West.

The Obama administration had threatened to stop $2 billion US annual cash payments to bankrupt Pakistan’s political and military leadership and block $6.5 billion future aid, unless Islamabad sent its soldiers into Pakistan’s turbulent NWFP along the Afghan frontier.

The result was a bloodbath: Some 1,000 "terrorists" killed (read: mostly civilians) and 1.2 million people — most of Swat’s population — made refugees.

Pakistan’s U.S.-rented armed forces have scored a brilliant victory against their own people. Too bad they don’t do as well in wars against India. Blasting civilians, however, is much safer and more profitable.

Unable to pacify Afghanistan’s Pashtun tribes (a.k.a. Taliban), a deeply frustrated Washington has begun tearing Pakistan apart in an effort to end Pashtun resistance in both nations. CIA drone aircraft have so far killed over 700 Pakistani Pashtun. Only 6% were militants, according to Pakistan’s media, the rest civilians.

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Jim Sinclair’s Commentary

Yes, another present from our OTC derivative manufacturers and distributors as an increase in crime comes with increased unemployment and a decreased police presence.

VIOLENT CRIME WAVE JOLTS TRENDY DOWNTOWN
By JAMIE SCHRAM and MURRAY WEISS
Last updated: 9:03 am May 19, 2009

Downtown Manhattan, the city’s party mecca, has been hit by an alarming spike in vicious street violence.

Assaults in Greenwich Village lead the frightening upturn, with a whopping 43 percent increase so far this year compared with the same period in 2008.

"I’ve never seen it like this before — never, ever," said G. Simon Chafik, a female photographer who has lived in Manhattan for 15 years.

"I’m a big New Yorker. New York is one of the safest cities. [But] I’m beginning to question that."

Other hot Manhattan neighborhoods tainted by the crime wave include TriBeCa, with a nearly 17 percent jump, and Gramercy, which has seen a 24 percent increase in assaults.

The danger zones also include the East Village from East 14th Street to Houston Street and the East River to Broadway, which has seen a 27.7 percent rise, from 47 to 60 assaults.

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Jim Sinclair’s Commentary

The Devil is always hiding in the details, but a nice headline to see in the Wall Street Journal anyway.

China Gold Reserves May Back Yuan Internationalization-Report
MAY 17, 2009, 10:54 P.M. ET

SHANGHAI (Dow Jones)–China’s gold reserves may serve as backing for the yuan as Beijing promotes its use overseas, said Zheng Lianghao, managing director of the World Gold Council’s Far East division, the Shanghai Securities News reported Monday.

Zheng, who was speaking at a forum over the weekend, said increasing gold holdings would provide China with a useful hedge as the dollar faced the possibility of depreciation, according to the report.

In late April, the official Xinhua News Agency quoted Hu Xiaolian, the head of China’s foreign exchange agency, as saying China’s gold reserves had risen 454 metric tons since 2003 to 1,054 tons.

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Jim Sinclair’s Commentary

South Florida, the crime capital of the USA (outside of Washington) fires police, keeps politicians?

The Long Layoff Arm of the Law
The Broward Sheriff’s Office told 177 employees Monday that their services were no longer needed
By TODD WRIGHT
Updated 5:45 PM EDT, Mon, May 18, 2009

Times are so hard, even the lawman has had to swing a heavy ax.

The Broward Sheriff’s Office notified 177 employees on Monday that they will be laid off as part of a cost-cutting measure to meet the 2010 budget. The employees’ last day will be July 31.

The cuts include 48 current deputies currently patrolling the streets. In total, BSO is eliminating 264 positions, 77 of which were tabbed for deputies, said BSO spokesman Jim Leljedal. Some of the positions were vacant.

Broward Sheriff Al Lamberti warned county commissioners it would come to this when they asked him to cut $54 million from his budget. BSO still employees over 5,000 people, including law enforcement and fire rescue personnel, but losing so many can’t help but have a detrimental impact on service and safety.

One old saying goes, you never miss a cop until you need one. Well these cuts will put that adage to the test.

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Jim Sinclair’s Commentary

The filth coming out of pay to play is going to be topped only by the horrid condition of what is left of the asset value of pension funds not required to mark to market.

How Pension Placement Agent Exploited Political Ties
By Martin Z. Braun and Gillian Wee

May 18 (Bloomberg) — After raising more than $1 billion for Democratic candidates, Eileen Kotecki transformed herself into a marketer for hedge funds and private-equity firms, eventually racking up more than $6.5 billion in sales.

Within weeks of wrapping up the 2000 campaign, Kotecki’s own attorneys said later in a lawsuit, she had begun “seeking to exploit” an “impressive network of contacts” gained in part from “extensive experience as a political fundraiser” to sell investment services to public pension funds and endowments.

Taking advantage of political work for private gain isn’t illegal. Yet Kotecki’s career shift from former Vice President Al Gore’s chief fundraiser into the placement-agent business illustrates how it has become the province of the well- connected, including campaign operatives, out-of-office politicians, former public pension officials and even a Pro Football Hall of Fame wide receiver.

“When you look at some of who the placement agents are, you say these are people who are really not in the financial business,” said Orin Kramer, who oversees pensions as head of New Jersey’s Investment Council. “These are politically connected intermediaries, and that’s not a way it ought to operate.”

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Posted at 9:30 PM (CST) by & filed under Jim's Mailbox.

Jim,

Just this side of heaven is a place called Rainbow Bridge.

When an animal dies that has been especially close to someone here, that pet goes to Rainbow Bridge. There are meadows and hills for all of our special friends so they can run and play together. There is plenty of food, water and sunshine, and our friends are warm and comfortable.

All the animals who had been ill and old are restored to health and vigour. Those who were hurt or maimed are made whole and strong again, just as we remember them in our dreams of days and times gone by. The animals are happy and content, except for one small thing; they each miss someone very special to them, who had to be left behind.

They all run and play together, but the day comes when one suddenly stops and looks into the distance. His bright eyes are intent. His eager body quivers. Suddenly he begins to run from the group, flying over the green grass, his legs carrying him faster and faster.

You have been spotted, and when you and your special friend finally meet, you cling together in joyous reunion, never to be parted again. The happy kisses rain upon your face; your hands again caress the beloved head, and you look once more into the trusting eyes of your pet, so long gone from your life but never absent from your heart.

Then you cross Rainbow Bridge together….

CIGA Tom

Dear Tom,

This means so much to those of us who have bonded tightly with our pets only to be separated in a time frame that seems so brief.

You know Mr. Fred has had a stroke, is blind and can’t walk well. I am privileged to carry the little guy wherever he needs to go. I hope to spend 24/7 with him so when his time comes, he is not alone. I pray that Rainbow Bridge is there because a heaven without our dear little ones cannot be much of a heaven at all.

Thank you and good night Tom.

Regards,
Jim

Dear Mr. Sinclair,

The article from the owner of the Dodge dealership made me sick to my stomach this evening.  Being a small business owner in America, it appears it is only a matter of time before the government in some way finds a way to either put me out of business directly or tax me into oblivion. I will fight on nonetheless in the spirit of my family, our forefathers and the grit and determination you have taught me via MineSet. As always I can never say "thank you" enough.

My thought, a separate subject, is in regards to Monty’s email and the momentous stock market rise in India.  Being the World’s largest consumer of gold I suspect that a strong Indian economy supported by increasing stock market wealth will be wildly bullish for the Indian buyers of gold and create even more significant demand for the yellow metal.  It’s only a matter of time before the insurance you have requested we protect ourselves with is called on to perform. I know many people who have taken your advice and learned from your efforts.  We are forever grateful.

Best Regards,
CIGA Marc

Marc,

I am honored to be your friend. Men like you give me hope for a future.

Respectfully,
Jim

Dear CIGAs,

As Jim has often said, China is going for the commodities. We can see them buying commodities with dollar loans, allowing them to diversify from dollars to commodities.

Respectfully yours,
Monty Guild

China, Brazil Agree to $10 Billion Loan, Exploration (Update1)
2009-05-19 11:11:00.536 GMT
By John Liu

May 19 (Bloomberg) — China, the world’s second-biggest energy user, and Brazil signed 13 accords, including a $10 billion loan and agreements on oil exploration and crude trade.

China PetroChemical Corp., the nation’s largest refiner, will explore for oil in two areas in Brazil, Zhang Guobao, the head of the National Energy Administration, said before a signing ceremony to be attended by Brazilian President Luiz Inacio Lula da Silva and his Chinese counterpart Hu Jintao.

Petroleo Brasileiro SA and China Development Bank agreed to a $10 billion loan agreement.

Petrobras, as Brazil’s state-owned company is known, has been in talks with China about a loan since last year. The company has sought alternatives to international bank lending and bonds to finance its spending plan amid the global credit crunch. China is securing energy resources to power its economy, the world’s third-largest, by offering loans to oil-producing countries including Russia, Venezuela and Kazakhstan.

Petrobras will supply 150,000 barrels of crude oil a day to China this year and 200,000 barrels in 2010 under one of the agreements signed today, Chief Executive Officer Jose Sergio Gabrielli said in Beijing, without giving details.

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Jim,

The prospects for college graduates have never been worse.

If they can’t find jobs, how will they pay off their student loans?

Best Regards,
CIGA Wallace

Poll Shows Sink or Swim for Grads
Calvin Woodward And Ann Sanner, Associated Press Writers

May 19, 2009

WASHINGTON – School’s out, surf’s up, summer beckons. Time for college students to see if they can stay afloat in the worst economy their generation has known.

Young people are carrying a load heavier than they normally bear as they scatter from campuses, judging from an AP-mtvU poll that finds students anxious about their finances, job prospects after graduation and the pressures facing their folks back home.

Josh Donahue, 23, an Oregon State University economics graduate, is living on food stamps. First in his family with a university degree, he stays with relatives and scrapes even for a menial job instead of the bank gig he’d dreamed about.

"A degree in economics," he said, "doesn’t really prepare you to understand the economy very well."

To be sure, tight budgets are a rite of passage at college. Ramen noodles build character.

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Another answer for Cape Town, RSA:

You ask if my date in 2011 or Armstrong’s date in 2011 coincides with Alf’s 5th wave high.

The right person to ask would be Alf.

The answer is that probabilities support that conclusion, but I suspect not.

My answer therefore since I do not hedge is NO.

 

Jim,

“Create disorder in their forces and take them”
–Sun Tzu

The UDX has completed the three drives to a top formation.  The next down leg in the UDX has started.

Three Drives to a Top 08-09:

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Three Drives to a Top 05-06:

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Failure of the swing low on the UDX to Gold Ratio will signal an acceleration of money away from paper (UDX) to gold. It’s only a matter of time. The C-wave strength will be difficult to control on the COMEX. Stand for delivery, “Create disorder in their forces and take them.”

UDX to Gold Ratio:

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It amazes me how reality TV star and politician indiscretions capture more of America’s attention than the protection of the U.S. Dollar. While the former is good coffee house fodder, the latter, used to cloth and feed hard-working families, is life.

Currency debasement is being used to relieve America’s debt burdens. This strategy, despite the rhetoric, carries a heavy price. That price comes in the form of reduced standard of livings for American families unprotected against currency debasement.

CIGA Eric

Posted at 8:33 PM (CST) by & filed under General Editorial.

My Dear Friends,

I firmly believe those of you who have been reading this site for at least two years have been given the ability not only to navigate these rough economic waters, but to prosper along the way as well.

You have been given the best resources I know, their strengths defined, with nothing withheld.

You have been taught basic technical analysis and warned not to assume you are a fledgling Livermore or Seligman.

You have been taught what cycles really are, which is far different from what people think they are.

You have been given tools generally used for navigation, woodworking and architecture and shown how to apply them to understand pricing.

You have been taught the Austrian and Chicago School economics to better understand the economic laws that will defeat all attempts to nullify and deny them.

You have been given all you need to connect the dots in order to put it all together in a package of guidance that I do not think can be equalled anywhere, at any price. This was all given to you for free.

You must do the work for yourself. Like Alf, I will not do the interim for you, yet it is all there screaming to be understood.

Every day the news is reviewed, the rumors are defrocked and light is brought into a dark world of media madness designed to keep you as sheeple rather than people.

This earns me derision from some and attacks from others on my person as well as my projects, but when it is all said and done you will see that I have put my reader’s and stockholder’s interests infinitely ahead of myself in this crossing of deadly economic currents.

Here are my questions to you:

Have you learned?

Do you feel an absolute conviction to the ways, means and answer?

If not, what are you missing?

Send your answers to Editor Dan as I prepare to make a new video conference to address these details. You can email him at [email protected]

The reason I ask is that you have the keys to the kingdom if only you look, be silent and listen.

Respectfully yours,
Jim