Posted at 5:00 PM (CST) by & filed under Guild Investment.

“He who asks is a fool for five minutes, but he who does not ask remains a fool forever.”
-Chinese Proverb

DEBT LEVELS IN G-7 COUNTRIES

We continue to be positive on Asia.  One of the major reasons we currently favor Asia is the fact that public debt in the G-7 nations (U.S., Britain, France, Canada, Germany, Japan, and Italy) is expected to be over 119% of their combined GDP in 2014; a stunning figure.

Imagine owning a business with gross revenues of $1 million, outstanding debts of $1.19 million, and cash flow from your business to service the debt of about 5% of gross revenues.  This means the company has only $50,000 per year to service the outstanding debt.  If the average interest rate on the company’s debt is 5%, the debt load on your company would be increasing your debt each year.  Your repayment of $50,000 would be less than your interest expense about $59,500.

Imagine further that you forgo using the cash from the business for debt payment, and choose to borrow more to keep your debt payments current.  Bankruptcy would seem to be only a matter of time for the company.  At some point, finding suckers (lenders) will be difficult.

DEBT LEVELS IN EMERGING ASIA
By 2014, emerging Asia is expected to see their debt burden decline from 35% of GDP to 32% of GDP.

THE CRISIS OF THE EUROPEAN SOCIALIST MODEL

Greece’s problems have been widely reported.  It is rumored and expected that Ireland, Spain, Portugal, and Italy may soon join them in asking for handouts from their neighboring European countries.

The problems stem from the countries’ highly-paid government employees and the long-term promises made to government employees.  Relative to the private sector, public sector employment does little to generate GDP growth.  The European welfare states handed out politically-expedient gifts to large public employee unions, and now the countries are facing bankruptcy as a result.

In a recent London Telegraph article by Ambrose Evens-Pritchard, the author captures German sentiment by quoting an article in a German newspaper, the Frankfurter Allgemeine.  The German paper asked why taxpayers should bail out the debts of a country that thinks it an outrage to raise the retirement age to 63.  “Should Germans have to work in the future until 69 instead of 67 so that Greeks can enjoy early retirement?”

Evans-Pritchard goes on to say, “Europe’s leaders still refuse to face the awful truth: that monetary union is unworkable as constructed.  That different labour markets, different sensitivities to interest rates, different economic structures, have caused the gap between north and south to grow ever wider; that a chunk of Europe…is on the cusp of a debt deflation spiral.”

This spells big belt-tightening in the aforementioned five heavily indebted European countries.  It also puts the entire Euro community in danger of losing its common currency over time; it is possible that several countries will have to leave the Euro and reestablish their own currencies at devalued levels.

Below is a link to an important New York Times article about how global investment banks helped Greece and other countries hide the truth about their finances for many years.

To Read Article Click Here.

OUR MARKET VIEWS

GOLD AND CURRENCIES

We believe the current and ongoing European crisis gives gold an impetus to move higher.  We have been adding to our gold positions at current levels and will continue to buy if prices fall.

Yesterday’s transparent attempt by the IMF to scare the gold market down by announcing a sale of gold by European IMF contributors has been a failure.  This reminds us very much of the situation in the 1970’s when the IMF gold sale was met with strong demand.  When the markets recognized that there was strong demand in spite of the IMF sales, gold moved much higher within a few months.

Today, it is clear that there is large demand for gold from central banks.  China, India, Sri Lanka, and Russia have been buyers at these price levels, and we are sure there are others.  Many nations have openly discussed their intention to expand the gold component of their reserves.  Technically, gold look remarkably strong in the face of attempted downward manipulation.

The Australian and Canadian dollars appear to be building technical bases and will resume their rise.  On the other hand, we remain bearish on the Euro and prefer the U.S. dollar to that currency.

GLOBAL STOCKS

On dips, we are gradually accumulating Chinese, Thai, Malaysian, Indonesian, and other undervalued foreign stocks.

Within the developed world, we are focusing on Canadian and Australian energy and precious metals companies, and a few U.S. technology companies which are fast-growing and selling at low valuations.

OIL

We are buying oil related companies which we believe will make substantial new discoveries in coming months.

SUMMARY

In general, we prefer to be conservative; making purchases on market weakness to capitalize on the current volatile, and often irrational, markets.  After China finishes raising interest rates to reign in run-away real estate prices, and rising food prices, we expect the faster growing countries’ stock markets will resume their rising pattern.

Thanks for listening.

Monty Guild and Tony Danaher
www.GuildInvestment.com

Posted at 4:24 PM (CST) by & filed under In The News.

"The enemy has only images and illusions behind which he hides his true motives. Destroy the image and you will break the enemy."
–Teacher to Lee (Bruce Lee), "Enter the Dragon," 1973.

 

Thoughts For The Day:

1. Judging from today’s action in gold how can you not be assured that gold is going to do all we have spoken about for the last nine years?

2. A major personality in finance and hedge fund operator said at Davos that gold was the ultimate BUBBLE while he was buying gold according to fund reports.

Nobody gives a damn and it is accepted as business as usual in this sorely degraded market climate.

 

"It is the absolute right of the state to supervise the formation of public opinion."
–Paul Joseph Goebbels

Jim Sinclair’s Commentary

Without a consumer base there is no recovery, and sustainability is a bad joke.

Real, Uglier American Unemployment
by Joel S. Hirschhorn

Can you trust national averages?  As bad as the jobless data you hear are, you have not been told the whole truth.  If you think the terrible impact of America ’s Great Recession is shown by an official unemployment rate of about 10 percent, think again.

Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at Northeastern University in Boston .  The report noted: “What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets.”  The researchers found a correlation between household income and unemployment rate in the last quarter of 2009:  Look carefully at these numbers and see how unemployment rises as income drops:

$150,000 or more, 3.2 percent
$100,000 to 149,999, 8 percent
$75,000 to $99,999, 5 percent
$60,000 to $75,000, 6.4 percent
$50,000 to $59,000, 7.8 percent
$40,000 to $49,000, 9 percent
$30,000 to $39,999, 12.2 percent
$20,000 to $29,999, 19.7 percent
$12,500 to $20,000, 19.1 percent
$12,499 or less, 30.8 percent

Ten times worse unemployment in the lowest class than in the highest class!  Truly amazing and disheartening, don’t you think?  And you can also infer that in some hard hit geographical areas the poorest people and people of color are being even more adversely impacted.  And don’t think for a minute that things have really improved in 2010.

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Jim Sinclair’s Commentary

This is the IMF sale from a different viewpoint. It is easy to understand, and accurate.

IMF Gold Sales v. the Alchemy of Gold Futures – What’s the Impact on Gold Prices?
Submitted by smartknowledgeu on 02/18/2010 02:17 -0500

The recently announced IMF sale of 191.3 tonnes of their gold reserves, though it caused an immediate sharp knee-jerk reaction in gold futures markets, will have a negligible effect on the long-term price of gold.  Here’s why.

In December, 2009 the commercial bullion banks that serve as agents for the leading Western Central Banks were net short 303,791 contracts of gold. Each COMEX gold futures contract represents 100 troy ounces, so the Commercials were net short 30,379,100 troy ounces of gold. With the average price of gold $1,134.72 per troy ounce in December 2009, this net short commercial position represented $34.47 billion worth of gold.  There are 32,150.74533 troy ounces in one metric tonne. So 30,379,100 troy ounces/ 32,150.74533 troy ounces = 944.90 metric tonnes of gold. Since gold contracts are supposed to be good for physical delivery, the commercial bullion banks that were short nearly 38% of annual world production of gold this past December should have had 944.90 physical metric tonnes of gold in their vaults to back up their short position at that time. In reality, this situation never exists.

The amount of physical gold that the COMEX delivers on a daily basis is negligible compared to the massive historical short positions that have existed for decades. For example, during a two-week span across January and February, COMEX arranged for the physical delivery of 543,500 troy ounces of gold with their contracted warehouse depositories, a figure that represents an average of just 38,786 troy ounces of gold per day. At this rate of daily delivery, it would take the COMEX more than two years to deliver all the gold represented by the current net commercial short position should the holders of long contracts ask for settlement in physical delivery.

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Jim Sinclair’s Commentary

I am telling you, without any doubt, that the hopefuls on F-TV or as part of the administration signing off on a recovery of any merit simply are not looking out the window.

Wal-Mart’s Sales Trail Its Forecast After Price Cuts (Update2)
By Chris Burritt

Feb. 18 (Bloomberg) — Wal-Mart Stores Inc., the world’s largest retailer, reported fourth-quarter sales that trailed its projection after cutting grocery and electronics prices, and predicted a “challenging” first quarter for U.S. stores.

Sales at U.S. stores open at least a year fell 1.6 percent, the Bentonville, Arkansas-based company said today in a statement. Wal-Mart had projected sales to decline no more than 1 percent.

Wal-Mart reduced prices on laptop computers, along with turkeys and cranberry sauce for holiday meals, to attract shoppers living paycheck to paycheck. The deflation hurt sales, and disruptions caused by store remodeling also contributed to a “slight decline” in customer visits to U.S. stores, Chief Financial Officer Tom Schoewe said on a call with reporters.

“We see the influence of the paycheck cycle as pronounced now as it’s been in the past,” Schoewe said. Customers continue to be under pressure, he said.

The lower range of Wal-Mart’s full-year forecast trailed analysts’ projections. Earnings from continuing operations will be $3.90 to $4 a share, Wal-Mart said. That compares with the $3.98 average of analysts’ estimates compiled by Bloomberg.

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Jim Sinclair’s Commentary

This is contrary to the MOPE on F-TV which yesterday actually said that if states fail (using California as an example) it means nothing to the US dollar. That is the same as saying if subsidiaries of a public company fail it means nothing to the share value.

What garbage affronts us every day.

States Sink in Benefits Hole
FEBRUARY 18, 2010, 1:32 P.M. ET
By AMY MERRICK

State governments face a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them, according to a new report from the Pew Center on the States.

States promised current and retired workers a total of $3.35 trillion in benefits through June 30, 2008, said the report from the nonprofit research group, a division of Pew Charitable Trusts. But state governments had contributed only $2.35 trillion to their benefit plans to pay current and future bills, the report said.

The Pew report said its estimate of the funding gap would likely prove conservative, because it didn’t account for the massive investment losses pension funds suffered during the second half of 2008. Although there was a slight rebound last year, it wasn’t nearly enough to cover the previous losses, Pew said.

Researchers compiled the data by reviewing each state’s comprehensive annual financial report for fiscal year 2008, which for most states ended June 30, 2008. They also looked at pension-plan annual reports.

The pension problems started well before the recession. Even in good times, states were skipping pension payments, leaving larger holes to fill in future years. State legislatures also increased benefit levels without setting aside extra money to pay for them.

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Jim Sinclair’s Commentary

It sounds to me like no buyers means no value, notional or real.

De-risked sound to me like it is zero value and therefore no more risk.

AIG to keep part of derivatives portfolio.
AIG (AIG) plans to keep up to a quarter of a derivatives portfolio from its AIG Financial Products, the unit responsible for the insurer’s near collapse. A spokesman said AIG decided it no longer wanted to sell these derivatives, which have $300B-$500B in notional value, because they have been de-risked and have potential upside as the markets improve.

Thought For The Morning:

Today’s market was a perfect exercise in Management of Perspective Economics.

Yesterday’s market put major interests at high risk.

Today’s action was a media phenomena that reduced those risks.

 

Jim Sinclair’s Commentary

We are moving forward.

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Jim Sinclair’s Commentary

The promised recovery and sustainability is certainly in question.

US bank lending falls at fastest rate in history
Bank lending in the US has contracted so far this year at the fastest rate in recorded history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus.
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:43PM GMT 17 Feb 2010

David Rosenberg from Gluskin Sheff said lending has fallen by over $100bn (£63.8bn) since January, plummeting at an annual rate of 16pc. "Since the credit crisis began, $740bn of bank credit has evaporated. This is a record 10pc decline," he said.

Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. "The shrinking in banking sector balance sheets renders any talk of an exit strategy premature," he said.

The M3 broad money supply – watched by monetarists as a leading indicator of trouble a year ahead – has been contracting at a rate of 5.6pc over the last three months. This signals future deflation. The Fed’s "Monetary Multplier" has dropped to a record low of 0.81, evidence that the banking system is still broken.

Tim Congdon from International Monetary Research said demands for higher capital ratios and continued losses from the credit crisis are both causing banks to cut lending. The risk of a double-dip recession – or worse – is growing by the day.

"It is absurdly premature to think of withdrawing stimulus while bank credit is still sliding. To have allowed this monetary collapse to occur a full 18 months after the financial cataclysm is extreme incompetence. They seem to have forgotten that the lesson of the 1930s was the falling quantity of money," he said.

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Jim Sinclair’s Commentary

The Greek Takedown. Guess who threw the bat today?

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Jim Sinclair’s Commentary

Even if you believe .09% is good news for manufacturing, this has to temper your belief in the promised recovery and it sustainability heralded in December.

Between the softening of the economy, the awful debt to GDP ratio for the US dollar, and the volatility of the euro, gold starts to look better than any currency especially as a reserve.

US new jobless claims post surprise jump
Published: Thursday February 18, 2010

New claims for jobless insurance benefits in the United States posted a surprise rise, the Labor Department said Thursday amid concerns unemployment could dampen economic recovery.

The seasonally adjusted initial claims in the week ending February 13 rose to 473,000, an increase of 31,000 from the previous week’s revised figure of 442,000, the Labor Department said.

The latest claims reading was larger than the forecast of most economists of around 430,000, as the world’s largest economy emerged from its worst recession in decades with unemployment posing a key challenge.

Claims had tumbled to 432,000 during the week that ended January 2 to their lowest level since mid-2008 but they had been volatile since the beginning of the year, casting doubts about a labor market recovery.

"It is important not to read too much into a week’s worth of data, though; the general trend in claims in recent months has pointed to slow improvement in the labor market," said Andrew Gledhill, an economist at Moody’s Economy.com.

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Jim Sinclair’s Commentary

Russia gets it. The ECB fabricates it. The US media denies it. The Dark Side set it up.

The US dollar is no safe haven and the euro is being operated.

Stay the course. Whatever state the EU ignores Russia will adopt. This is how the goals of the financiers plays directly into the hands of Russia politically and China economically.

The profiteers of the Dark Side are loyal to nothing or anybody, not even each other or their clients. If the price is right the Dark Side would sell their mothers for profit.

Putin calms Greece, says U.S. debt big too
Russian PM plays down Greece’s economic woes, telling his visiting Greek counterpart the U.S. is no better than Greece in handling its debt and fiscal deficit
Gleb Bryanski – Moscow
Reuters Published on Tuesday, Feb. 16, 2010 12:03PM EST Last updated on Wednesday, Feb. 17, 2010 7:39AM EST

Russian Prime Minister Vladimir Putin played down Greece’s economic woes on Tuesday, telling his visiting Greek counterpart that the United States were no better than Greece in handling its debt and fiscal deficit.

“As we all know, the global economic crisis started neither in Greece, nor in Russia, nor in Europe,” Mr. Putin told a news conference after talks with George Papandreou. “It came to us from across the ocean,” he said in a clear reference to the United States.

“There (in the U.S.) we can see similar problems – massive external debt, budget deficit,” Mr. Putin added, suggesting Russia and Greece should concentrate on the “real economy” to weather the economic crisis.

Mr. Papandreou arrived in Moscow amid rumours that the cash-strapped euro zone member may turn to Moscow, still running the world’s third biggest foreign exchange reserves and eager to boost its political clout, for financial assistance.

Iceland began loan talks with Russia in October, 2008, after its main banks and currency collapsed. The tiny NATO member eventually secured funding from the International Monetary Fund and Nordic neighbours and the Russian loan never materialized.

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Jim Sinclair’s Commentary

There has never been a time in US economic history when there were as many challenges simply to both survival of a system as well as an economy.

There has also never been a time in US economic history when we have had to navigate through such blatant lies and distortion.

U.S. state pension funds have $1 trillion shortfall: Pew

WASHINGTON (Reuters) – U.S. states face a total shortfall of at least $1 trillion in their funds for employees’ pensions and retirement benefits, and their financial problems are quickly mounting, according to a report released by the Pew Center on the States on Thursday.

Illinois is in the worst shape, with only 54 percent of its pension obligations funded, according to the report, which looked at fiscal year 2008.

Because the analysis did not encompass the final six months of calendar year 2008 — most states’ fiscal year’s end during the summer — it does not include the market downturn that devastated many funds’ investment portfolios.

"The funding gap will likely increase when the more than 25 percent loss states took in calendar year 2008 is factored in," the report said.

Regardless of stock market fluctuations, pension funds were destined to fall down a budget hole, the non-profit research center found.

"Over the last 10 years, many states have shortchanged pension plans in good times and bad," said Susan Urahn, the center’s managing director, who called the beginning of the century a "decade of irresponsibility."

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Jim Sinclair’s Commentary

The fallacy is a recovery in the US that is sustainable. Muni’s are in big trouble, most certainly, the guaranteed one guaranteed by paupers.

Threat: Cities Weigh Chapter 9
by Ianthe Jeanne Dugan and Kris Maher
Thursday, February 18, 2010

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk.

"People believe that municipal debt is safe based on assumptions that are no longer true," says Kenneth Buckfire, managing director and chief executive of Miller Buckfire & Co., an investment bank that has worked with corporations on restructurings and now is advising municipalities. For example, it isn’t safe to assume that governments can raise taxes to cover shortfalls, he says.

Even threatening bankruptcy signals that municipalities are willing to compromise the security of bondholders, says Richard Raphael, an analyst at Fitch Ratings. That makes it harder for cities and towns to raise money from investors and will slow the U.S. economic recovery.

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Jim Sinclair’s Commentary

Believe me I know. It seems to me the size of the health bill cost climbs up like Mt Everest. This is now a large hidden tax on business. Inflation takes many forms that the CPI fails to measure.

HHS Warns of Double-Digit Increase in Health Premiums
By PATRICK YOEST

WASHINGTON—The Department of Health and Human Services took aim Thursday at health insurers for what it characterized as "massive increases" in insurance premiums, highlighting one company’s 39% premium increase for an individual plan in California.

Health and Human Services Secretary Kathleen Sebelius held a news conference to highlight a department report showing double-digit percentage increases in health insurance premiums in California, Michigan, Connecticut, Oregon and Maine. The report specifically cites Anthem Blue Cross of California, a company owned by Wellpoint Inc., for premium increases as high as 39% for their insurance plans on the individual market.

The report argues that health-care overhaul legislation—a White House priority that has seen its prospects fade this year—would make the insurance market more competitive by making more information available about how companies are using premiums. An insurance "exchange" created by the legislation could also bar companies from offering plans if officials decide that premiums are out of line with the benefits offered by the plans.

"Unfortunately, this is pretty widespread," Ms. Sebelius said of the dramatic rate increases. "What we’d like is transparency for every company in every state of the country."

The report comes as the White House prepares to hold a Feb. 25 summit on health care, in which President Barack Obama and congressional leaders of both parties will discuss their health care proposals. The administration is trying to make its case that House and Senate-passed health-care legislation, which saw almost no support from Republicans, would bring down costs for consumers and enable more people to purchase health insurance.

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Posted at 4:21 PM (CST) by & filed under Jim's Mailbox.

Jim,

The clock is ticking. There is nowhere left to hide. Every click has been foreshadowed here:

-"This is it"
-"It is now"
-"Now it is out of control"
-"This is the End"

Salud,
CIGA Pedro

Greek Debt ‘Twilight Zone’ Spurs Rise in Sovereign Credit Risk
By Abigail Moses

Feb. 18 (Bloomberg) — Credit-default swaps on sovereign debt rose on investor concern that Greece may be unable to borrow unless it gets a pledge of financial support from the European Union.

Greece needs to raise 53 billion euros ($72 billion) this year and faces about 16 billion euros of bond redemptions by May as it struggles to narrow a budget deficit that’s more than four times the EU limit. A political ally of German Chancellor Angela Merkel said yesterday that “not a single euro” should go to help Greece.

“It feels a bit like we are in the Twilight Zone,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to investors. “We are left with a stand-off that probably has to be resolved before Greece next comes to the market.”

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Dear Jim,

Like Goldman doesn’t hide their debt via swaps. Pushing around weak countries, while foolish, is SOP for the untouchables.

Sure was. While I always respect the opposing side of the trade (enemy so to speak), I never let it (respect) blind me of their weaknesses. The primary weakness is the illusion requires a lot of moving pieces to maintain. This implies great complexity. As complexity rises, the room for breakdown or mistakes also increases. This does not go unnoticed by those opposing this trade.

The reaction in the bond market leading up and following the news is certain to raise some eyebrows. http://edegrootinsights.blogspot.com/2010/02/long-bonds-cot.html.

I have watched and studied markets in detail for some time. History is repeating, but I expect few to realize it.

CIGA Eric

 

Change we can believe in … not
CIGA Eric

BETWEEN THE negligible interest they pay us and the bonanza bonuses they pay themselves, we have reason to hate big banks.

Here’s one more: One of them may be shorting you on the free coin-counting service it offers.

Better spend or count those change jars first!

Funny how short-changing a coin count can bring the wrath, but the far more insidious and damaging devaluation of the currency that people work hard to obtain and carry in the pocket does not. This largely explains why the official policy playbook on how to manage a depression is what it is.

More…

Jim,

It seems like we need a proper label for the bastards that keep using derivatives to destroy our nation and our planet. If a "Venture Capitalist" is somebody who puts their money at risk in a venture, enterprise or business to gain a return on investment from the growth of the venture then there should be a name for the entity who puts money at risk hoping to see the demise of a venture.

They are capitalists in both cases but one values productivity the other does not.

My thoughts are "anti-venture capitalist", "destruction capitalist", "crapout capitalists", "demise capitalists" or perhaps "demicapitalists". The last one suggests a "half capitalist" as in they want the venture to be worth half when they are done.

Have a golden day.
CIGA Tim

Biden: US got ‘money’s worth’ from stimulus act
CIGA Eric

Vice President Joe Biden asserted in an interview Wednesday that taxpayers have "gotten their money’s worth" out of the $787 billion stimulus program that Congress passed during the depths of the recession.

Another classic case of Damned if you do, damned if you don’t. Whether or not taxpayers have gotten money’s worth is certainly debatable.

What is clear is that most taxpayer supported stimulus has followed the law of diminishing returns since 1953. In other words, they are not getting as much income (bang) for the debt based stimulus (buck) as in the past. This trend towards shrinking income rewards from debt based stimulus must end before the next long-term recovery can occur. If this point is not realized, there will a time when no amount of debt creation (stimulus) will create growth. The recent and continued exodus of the political base might be a indirect acknowledgement of this possibility.

Annual Income Growth per Debt Creation:
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Source: finance.yahoo.com

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Yen ETF
CIGA Eric

The fill of the 2/4 gap on nearly half the volume reflects decreasing downside energy of the tape. The COT flows, despite the delay, will setup the turn.

Yen ETF (FXY):
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Posted at 10:23 PM (CST) by & filed under Trader Dan Norcini.

My Dear Extended Family,

I agree fully with Trader Dan’s assessment of the IMF statement. This is a duplicate of the IMF action in the 1970s. It turned out to be the most positive event as each time the IMF held an auction of their gold they facilitated entry for large investors at singular prices.

It will be no different this time around. Gold will rise because of IMF selling as it did in the 1970s.

I assure you that history will repeat itself on the same circumstances.

Respectfully,
Jim

Dear Friends,

After the pit session trade had already closed for the day in New York, news came out that the IMF was planning on selling the remainder of 403.3 tons of gold, 191.3 to be exact, on the open market. Gold was immediately taken down hard in the thin trading conditions, dropping more than $14 on the day.

There are several things about this that should be noted. First is the timing – it comes on the heels of a resumption of the uptrend in gold with many technical indicators having moved into the buy mode. It also coincides with another brand new all time high in the price of Gold priced in Euro terms at the London PM Fix.

Those of us who have been around the gold market long enough know full well that the timing of this announcement is therefore no coincidence but was timed to attempt to derail the returning bullish sentiment in the yellow metal. Why announce the sale publicly which is guaranteed to receive a lower price for the metal than if the IMF had just quietly sold the metal into the market. This is reminiscent of then Prime Minister Gordon Brown’s announcement that England intended to sell its hoard of gold. That guaranteed that Britain would receive the lowest price possible.

Secondly, China was one-upped by India’s purchase of some 200 tons of gold late last year and got caught flat footed. The spin on this gold sale is that the IMF announcing that they would sell the gold into the open market means that Central Bank demand for gold is not as vibrant as the market was led to believe. That is an interesting tall tale. The simple truth is that Central Banks do not generally buy gold and announce their intentions to do so beforehand. Neither do they tend to buy when prices are moving higher as the momentum based hedge funds do. Time and time again we have seen that the CBs buy gold during episodes of price weakness. Once news hit the wire last year that India had bought 200 tons of gold, the price never looked back and shot straight to $1220+. Any Asian Central Bank that missed buying the gold as a result is certainly not going to panic and rush into the market to obtain it. They are waiting for lower prices where they will acquire the metal. To state therefore that Central Bank demand for gold must not be as robust as originally thought is quite shallow analysis.

My view is that this announcement means nothing in the longer term scheme but was rather a cheap trick to take the market lower. We have already seen this week how some noted elites were pooh-poohing gold and trash talking the metal all the while they were acquiring a position in it. Nothing ever changes in this gold market. It is still one of the least transparent markets on the planet and perhaps the most prone to official sector interference.

Do not be disturbed by the news. It is probably going to be a one or two day wonder and then that will be it. Gold will then go back to trading the currencies taking its cues from the action in the Dollar.

Incidentally, this sale is supposedly going to be phased in over an extended period of time. Rest assured, the IMF would love nothing better than to sell the whole 191 tons in one lump sum to another Asian Central Bank.

Respectfully,

Trader Dan

 

Dear Jim,

I thought the IMF was prohibited from open market sales. Am I wrong?

Sincerely,
CIGA Arlen

Dear Arlen,

You are correct. The headlines are totally wrong as they pertain to “open market sales.” This is another example of MOPE garbage we have to face.

There will be no open market sales. That is an implicit part of their obligation not to disrupt the price of gold in their activities.

More than likely they will adhere to their rules and sell via an auction. That means they will auction 21.25 tons per month if they start in April.

That will have no effect on the market once the sheeple get run out by the Gold banks.

Regards,
Jim

Posted at 10:19 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Today was a closely strategized day starting with an Administration review of the results of the stimulus plan, a media slam on Greece followed by the IMF repeating its mistake pricewise of the 1970s.

The sheeple ran over each other.

I assure nothing has changed. Gold will trade at $1650 and then on to Alf and Martin’s price objectives.

The sharp rally of the euro yesterday was blasted today in the media. The release below was repeated every six or so minutes on the scrolling news on F-TV all day. It was relentless.

Goldman Sachs, Greece Didn’t Disclose Swap Contract
February 17, 2010, 01:34 PM EST
By Elisa Martinuzzi

Feb. 17 (Bloomberg) — Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.

No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.

Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.

“The price of bonds should reflect the reality of Greece’s finances,” Blain said. “If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled.”

Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment.

More…

 

Jim Sinclair’s Commentary

Another name for vigilantes is SHORTS.

Bond Vigilantes Say EU Needs Better Plan to Fix Greece Deficit
By Matthew Brown and Anchalee Worrachate

Feb. 18 (Bloomberg) — European Union leaders are failing to persuade bond investors that Greece can fix its budget.

The yield on Greece two-year notes have remained above 5 percent, the highest in the EU by more than 3 percentage points, even after officials urged the nation this week to reduce its deficit. The premium investors demand to hold the notes instead of benchmark German securities has held above 4 percentage points, the most since the Mediterranean nation joined the euro and more than 10 times its 35 basis point average the past decade.

After driving yields to the highest in 10 years, bond investors are keeping up the pressure on the EU to support Greece. Concern that the nation’s inability to narrow a deficit that is more than four times the EU limit will be replicated in countries such as Portugal and Spain prompted Societe Generale SA’s top-ranked strategist Albert Edwards to predict Feb. 12 that the euro region was poised to break up.

“The market has replaced the EU as the chief enforcer of fiscal discipline, and the movement in spreads is testament to that,” said Charles Diebel, senior interest-rate strategist at Nomura International Plc in London. “What the bond markets have done to Greece could be the salvation of Europe.”

No Specific Measures

Investors who push up debt yields in an effort to alter government policy are known as vigilantes, a term coined in 1984 by economist Edward Yardeni, president of Yardeni Investments Inc. in New York. They were credited with forcingBill Clinton to cut the U.S. deficit after he came into office in 1993, helping drive10-year Treasury yields down to about 4 percent by November 1998 from above 8 percent in 1994.

More…

Jim Sinclair’s Commentary

At 5:45 PM EST and the most illiquid time in gold trading as Asia is just coming online, the following was released.

See Trader Dan and my comments above on this MOPE event where management becomes manipulation.

IMF to Start Open-Market Sales of Its Gold ‘Shortly’ (Update1)
By Sandrine Rastello

Feb. 17 (Bloomberg) — The International Monetary Fund, which set out in September to sell about 13 percent of its gold reserves, said it will “shortly” expand sales to the open market after central banks bought 212 metric tons in private deals.

“In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time,” the Washington-based IMF said in an e-mailed statement today.

The institution has 191.3 tons left to sell after purchases by the central banks of India, Mauritius and Sri Lanka. Central banks still have the option to buy more of the metal, which would reduce the amount available on the market, the IMF said.

The lender’s executive board on Sept. 18 approved the sale of 403.3 tons of bullion as part of a plan to shore up its finances and lend at reduced rates to low-income countries. With the gold price surge last year, the fund pocketed $7.15 billion from its sales to central banks.

After the IMF’s announcement, gold futures in New York fell as much as 1.3 percent in after-hours trading. Gold for April delivery traded at $1,107 an ounce as of 4:53 p.m. on the Comex unit of the New York Mercantile Exchange, after dropping as low as $1,105.50. Earlier, the contract settled at $1,120.10.

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Jim Sinclair’s Commentary

What got airplay every 6 minutes on F-TV was "Goldman Sachs, Greece Didn’t Disclose Swap Contract," not what is below.

Merkel Slams Greek ‘Scandal’ as Attention Turns to Goldman Role
By Tony Czuczka

Feb. 18 (Bloomberg) — German Chancellor Angela Merkel said it would be a “scandal” if banks helped Greece massage its budget figures, as attention turned to Goldman Sachs Group Inc.’s role in Greek efforts to conceal the size of the country’s deficit.

“It’s a scandal if it turned out that the same banks that brought us to the brink of the abyss helped fake the statistics,” Merkel said in a speech in northern Germany late yesterday, without naming Goldman Sachs directly. Greece “falsified statistics for years.”

Merkel’s comments came as her government questioned whether Goldman Sachs, Wall Street’s most profitable securities firm, helped Greece hide its deficit as it struggled to comply with European Union limits. Michael Meister, financial affairs spokesman for Merkel’s Christian Democratic Union, said Feb. 15 that a swap agreement managed by New York-based Goldman Sachs in 2002 “broke the spirit of the Maastricht Treaty.”

EU regulators this week ordered Greece to disclose details of currency swaps after an inquiry by the country’s Finance Ministry uncovered a series of agreements with banks that it may have used to conceal mounting debts. The swaps were employed to defer interest payments by several years, according to a Feb. 1 report commissioned by the Finance Ministry in Athens.

Merkel’s remarks, made during a 30-minute speech to party supporters, followed opposition from within her coalition to providing any financial aid for Greece. Horst Seehofer, leader of her Bavarian allies, said yesterday that “not a single euro” should go to Greece from Germany.

More…

Thought For This Morning:

The political solution to any situation is to form a committee.

 

Jim Sinclair’s Commentary

Not according to the speech that I just listened to.

New wave of foreclosures by end of 2010 is feared
About 4 million U.S. homeowners are 90 days or more delinquent on their loans or in foreclosure proceedings, Moody’s Economy.com says. A federal loan modification program is helping a relative few.
By Jim Puzzanghera and Don Lee
February 16, 2010 | 6:59 p.m.

Reporting from Washington – Experts fear that a new wave of foreclosures will hit this year as prolonged unemployment makes it difficult for millions of homeowners to pay their mortgages — and many of them aren’t likely to get much help from a federal program aimed at keeping them in their houses.

Banks participating in the Home Affordable Modification Program, announced a year ago this week by President Obama, have been slow to turn temporarily reduced mortgage payments into permanent ones.

"The overarching sense is that the mortgage modification process has not worked that well," said Bert Ely, an independent banking consultant.

Obama administration officials acknowledge that the $75-billion program, which offers banks cash incentives to reduce payments, has had growing pains, and they said they were considering revisions to make it more effective.

Still, the program is expected to show continued progress when data from January are released Wednesday after a strong push by Treasury Department officials to get banks to make more of the modifications permanent.

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Jim Sinclair’s Commentary

Quite scary, yet totally logical.

Drowning in Debt: What the Nation’s Budget Woes Mean for You
Economists Predict Cutbacks, Tax Increases That ‘Aren’t Even Imaginable’
By DEVIN DWYER
WASHINGTON, Feb. 17, 2010

American political and economic leaders have sounded the alarm for years about the red ink rising in reports on the federal government’s fiscal health.

But now the problem of mounting national debt is worse than it ever has been before with — potentially dire consequences for taxpayers, according to a report by the nonpartisan Peterson-Pew Commission on Budget Reform.

"It keeps me awake at night, looking at all that red ink," said President Obama in Nashua, N.H., on Feb. 2. "Most of it is structural and we inherited it. The only way that we are going to fix it is if both parties come together and start making some tough decisions about our long-term priorities."

Obama will sign an executive order tomorrow that establishes a bipartisan National Commission on Fiscal Responsibility and Reform to make recommendations on how to reduce the country’s debt.

Over the past year alone, the amount the U.S. government owes its lenders has grown to more than half the country’s entire economic output, or gross domestic product.

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Jim Sinclair’s Commentary

These are the 2nd largest buyers of US Treasuries. Acrimony is sure to take them to the 20th largest buyer of US Treasuries.

The herd of talking heads says they will never sell Treasuries.

US vs. China: a dangerous phase has begun
China is a formidable adversary whose ultimate strength is not its military hardware but its economic prowess, and whose diplomatic weapon is not saber rattling but great patience.
By Martin Jacques / February 16, 2010

The spats between the United States and China appear to be getting more numerous and more serious. The Chinese objected in strong terms to Washington’s latest arms deal with Taiwan and threatened to take sanctions against those firms involved. President Obama recently accused the Chinese of currency manipulation. At Davos, Larry Summers, the director of the White House’s National Economic Council, made an oblique attack on China by referring to mercantilist policies.

The disagreement between China and the US at December’s Copenhagen climate summit has continued to reverberate. The Chinese government reacted strongly to Google’s claims – supported by the US administration – that cyberattacks against it had originated in China and its statement that it would no longer cooperate with government censorship of the Internet. The US has been increasingly critical of China’s unwillingness to agree to sanctions against Iran. And finally the Chinese government is accusing the US administration of interference in its internal affairs by insisting on the meeting this week between Barack Obama and the Dalai Lama in Washington.

The issues of contention have come thick and fast. For the most part, however, they are hardly new. The Chinese reaction to the Taiwan arms deal was entirely predictable, the only novelty being the threatened sanctions. Taiwan remains the most important priority for Chinese foreign policy. Their response to the Dalai Lama in Washington is equally predictable.

Obama’s and Summers’ statements about currency manipulation and mercantilism, respectively, are a little different. True, they are not entirely new; Treasury Secretary Timothy Geithner accused the Chinese of currency manipulation in January 2009. But since Mr. Geithner’s ill-judged remark, the US administration has until now chosen to be more discreet.

Google and climate change are relatively new bones of contention. But we should not be surprised by these disputes. China’s rise means that it is now involved in areas of the world and on issues where previously it had little or no stake. As China increasingly becomes a global power with interests to promote and defend around the world, it is bound to come into conflict with the United States on a growing number of subjects.

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Jim Sinclair’s Commentary

OTC derivatives are not victimless transgressions against mankind.

Rising tide of suburban homeless across U.S.
‘Truly reaching a stage of being alarming,’ one official says
updated 4:02 p.m. MT, Tues., Feb. 16, 2010

ROOSEVELT, N.Y. – Homelessness in rural and suburban America is straining shelters this winter as the economy founders and joblessness hovers near double digits ― a “perfect storm of foreclosures, unemployment and a shortage of affordable housing,” in one official’s eyes.

“We are seeing many families that never before sought government help,” said Greg Blass, commissioner of Social Services in Suffolk County on eastern Long Island.

“We see a spiral in food stamps, heating assistance applications; Medicaid is skyrocketing,” Blass added. “It is truly reaching a stage of being alarming.”

The federal government is again counting the nation’s homeless and, by many accounts, the suburban numbers continue to rise, especially for families, women, children, Latinos and men seeking help for the first time. Some have to be turned away.

“Yes, there has definitely been an increased number of turnaways this year,” said Jennifer Hill, executive director of the Alliance to End Homelessness in suburban Cook County, Illinois. “We’re seeing increases in shelter use along the lines of 30 percent or more.”

More…

Jim Sinclair’s Commentary

Why comment on the obvious?

Goldman Sachs, Greece Didn’t Disclose Swap, Investors ‘Fooled’
By Elisa Martinuzzi

Feb. 17 (Bloomberg) — Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.

No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.

Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.

“The price of bonds should reflect the reality of Greece’s finances,” Blain said. “If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled.”

Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment.

More…

Jim Sinclair’s Commentary

I am listening to a speech concerning the magnificent recovery, and freedom from further business challenges.

CMBS Delinquencies and Special Servicing Hit Record Highs
by DIANA GOLOBAY
Monday, February 15th, 2010, 11:57 am

As HousingWire reported over the weekend, the delinquency rate on commercial mortgage-backed securities (CMBS) conduit and fusion loans posted the largest single monthly increase on record. US CMBS loans are also transferring to special servicing status faster and greater than ever before.

The delinquency rate on CMBS conduit and fusion loans, structured finance revolving liquidity platforms, rose by 52 bps in January, driving the total rate to 5.42% in February, according to a report by Moody’s Investors Service.

The total delinquent balance is more than $36bn – a $3bn rise over the previous month. It marks the largest increase in the delinquency rate, by dollars and basis points, as recorded in the current downturn by Moody’s:

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A total 409 CMBS conduit and fusion loans became newly delinquent in January.

The multifamily loan category grew 63 bps to 8.77% delinquent in January. The South region led multifamily delinquencies; although this district represents 30% of the overall multifamily balance, it represents more than 40% of the overall newly delinquent balance. The southern multifamily delinquency rate grew 85 bps in January, reaching 12.3% delinquent – the highest of the four regions.

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Jim Sinclair’s Commentary

This is a great time for a public stoning of Toyota in DC.

Actually, this is too stupid to be stupid.

Japan becomes top Treasury holder.
Foreign demand for Treasurys fell by a record amount in December. China sold $34.2B in Treasury holdings, paring its holdings to $755.4B. This made Japan into the largest holder of U.S. government debt with $768.8B, the first time it has claimed the top spot since August 2008. Though China’s sales don’t necessarily reflect a loss of confidence in the U.S., economists have long worried what would happen if China ever chose to give up its role as one of the country’s key creditors.

Jim Sinclair’s Commentary

Not even wealthy nations will use their assets to make things right.

The profit of taking down countries does come with certain additional risks.

Spanish intelligence probing debt "attacks"-report

MADRID, Feb 14 (Reuters) – Spain’s intelligence services are investigating the role of investors and media in debt market turbulence over the last few weeks, El Pais reported on Sunday.

Currencies

Citing unnamed sources, El Pais said the National Intelligence Centre (CNI) was looking into "speculative attacks" on Spain following the Greek debt crisis.

"The (CNI’s) Economic Intelligence division…is investigating whether investors’ attacks and the aggressiveness of some Anglo-Saxon media are driven by market forces and challenges facing the Spanish economy, or whether there is something more behind this campaign," El Pais said.

Officials at the CNI were not available for comment.

The report comes days after Public Works Minister Jose Blanco protested "somewhat murky manoeuvres" were behind financial market pressure on Spain.

"None of what is happening in the world, including the editorials of foreign newspapers, is coincidental or innocent," Blanco said.

Economists have cast doubt on forecasts that Spain’s economy will grow by some 3 percent by 2012, on which the government has based predictions it will cut back on its gaping budget deficit.

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Jim Sinclair’s Commentary

MOPE says this was continuing anger over the death of a teenager in a police incident?

Bomb explodes outside JP Morgan Athens, none hurt
Wed, Feb 17, 2010
Reuters

ATHENS (Reuters) – A bomb exploded on Tuesday outside the Athens offices of JP Morgan, the second largest U.S. bank by assets, causing minor damage and no injuries, police and the company said.

The explosion is the latest in a series of blasts that have rocked the country since the police killing of a teenager in December 2008 sparked the country’s worst riots in decades.

"It was a time-bomb outside JP Morgan’s offices at the second floor of an Athens building," said a police official who declined to be named.

"The explosion damaged the door, furniture, computers and smashed some windows," the official added.

Police had cordoned off the area after a local newspaper received a warning call. Ambulances and fire engines blocked streets in the upmarket central district of Kolonaki, where JP Morgan’s Greek offices are situated, a Reuters witness said.

JP Morgan confirmed the incident and said there were no injuries.

More…

Posted at 2:43 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Gold was strong throughout overnight Asian trade but as it approached the opening of New York pit session trade, it ran into selling pressure (Gee – where have we seen this act before) which continued throughout the majority of the session. Even at that, it was holding relatively well until the Euro gave up the ghost, sinking more than a point and half against the Dollar. That allowed additional selling to emerge in gold but dip buyers were lurking in the wings and took it up off its worst levels and back into the plus column as the pit session entered its last 30 minutes of trade. Chart painters came in on the close to and attempted to push it back to unchanged.

It is interesting to note that gold’s recovery coincided with that of copper’s, which also experienced selling pressure as the Dollar gathered upside strength, but it too moved off its session lows as the morning wore on and eventually popped into positive territory.

Crude oil also experienced a similar bout of buying which lifted it into positive territory at one point. One can see the flow of managed money moving into and out of these markets as the algorithms do their thing. Any weakness in the Dollar immediately generates buying in the commodity sector even though prices may be down on the day. As the Dollar works higher, the buying dries up and the selling pressure dominates. Back and forth it goes as the struggle between the inflationists and the deflationists goes on.

You have to hand it to the Dollar bulls – they are trying to put up one helluva fight to defend those downside support levels on the technical price charts. They pushed price back off the 20 day moving average and above the 10 day completely erasing the losses from yesterday. Even at that however, the technical momentum indicators continue to flash bearish divergences. Only a closing push above the recent high in the Dollar near 80.85 is going to be able to negate those. Bulls will attempt to do just that while bears will first attempt to take price below yesterday’s low and then preferably 79.00 to kick off a wave of long liquidation.

Considering the fact that the Dollar erased all of yesterday’s losses, gold’s stubborn reluctance to break sharply lower, especially with the Euro surrendering as much ground as it did, is further confirmation that the metal is functioning more like the currency of choice for nervous investors.

Gold will need to see additional buying strength to generate an upside crossover of the 20 day moving average by the 10 day. Resistance is first at today’s high near $1,128 followed by $1,140 – $1,144.

Initial support for the metal lies at yesterday’s low which also coincides with the 20 day MA. Below that is support between $1,080 – $1,074.

The HUI is acting like it is unsure of what to do next. Its technical picture continues to improve but it will need to clear the 420 level to generate stronger buying enthusiasm and spark increased activity on the volume front of things. On the downside, a closing break below 390 will damage the fledging uptrend and perhaps allow for a retest of the strong support region near 370.

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

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Posted at 12:28 PM (CST) by & filed under Jim's Mailbox.

Jim,

Here are my comments posted to the Wall St. Journal’s story on Soros’ remarks on gold:

2:46 pm February 17, 2010
hkm wrote:
You misinterpret Mr. Soros’ remarks regarding gold. He meant it is the ultimate asset bubble in the proper sense of the meaning of the word “ultimate”:
ultimate /ˈʌltəmɪt/ –adjective 1. last; furthest or farthest; ending a process or series: the ultimate point in a journey.

He means it will be the last asset standing at the denouement of the GFC! Hence, he is a buyer.

CIGA HKM

Jim Sinclair’s Commentary

Three guess who was the gold bear at Davos.

Soros Doubles Down on Gold
CIGA Eric

George Soros’s hedge fund more than doubled its bet on the price of gold during the fourth quarter, as the firm reported total U.S.-listed equity holdings of $8.8 billion at the end of 2009, Reuters reported

Remember Soros’s Davos interview that got everyone’s knickers in a twist?

In comments delivered on the fringe of the World Economic Forum, Mr Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold."

Talking one’s book is standard operating procedure (SOP) in the trading world. The Chinese do it. To the dismay of many (now), Soros obviously does it. Yet, the line to dump gold during the Davos pow-wow was long and fashionable.

More…

 

NYSE Composite
CIGA Eric

The equity rally, setup and driven by the brute force of money flows, created some shock and awe yesterday. A closer inspection of the tape, however, revealed weakness. The 2/4 NYSE breakdown gap was filled on -25% contraction of total exchange volume. This large contraction in exchange volume warns of weakening upside force. What cannot break resistance with force, will eventually reverse and attempt to break support with force. This is only something to watch for nominal (U.S. dollar focused) investors/traders.

Generally, the above is nothing more than noise within a dominant negative REAL trend. The Weimar Republic history lesson reminds us that stocks can trade higher despite dire economic conditions. That is why real, not nominal, prices must be the yardstick of the true trend.

NYSE Composite Index with NYSE Volume:

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Notes From Underground: Putin the screws to the U.S.
Yra | February 16, 2010 at 9:52 pm

In a day where the risk on trades were back in vogue, we saw metals, commodities, equities and all currencies except the DOLLAR and YEN stage a rally. With Asia closed for Chinese New Year, all eyes were focused on the European debt situation and the politics that kept negotiations at center stage.

A new ECB vice-president was named, Vitor Constancio of Portugal, considered by ECB watchers to be a dove on money and credit policy as would befit a past socialist leader of the debt-stressed Portugal. Whatever happened to Magellan? It is now conjuctured that Germany will certainly get Axel Weber as the next ECB president, as it will be important to have a hard money man at the helm. The Italians still believe that Mario Draghi, their choice for the top position, still has a prayer but we would go all in on that bet. We remember the Germans being less than lukewarm on the Italians entrance into the EURO on its initial formation. (As the Greeks are taken to task on the manipulation of their books to meet the Massstricht requirements, the Italians will certainly be under the microscope.) In addition, Chancellor Merkel would be viewed as a weak leader if she failed to grab the stop ECB spot for a German. The polls recently taken in Germany on a Greek bailout have been less than supportive and the only possibility of getting voter acceptance is if Merkel brings home some political trophy.

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Jim,

I thought Soros said at Davos that Gold was the ultimate bubble.

Since he can redeem SPDR in "baskets" of 100k shares or more, we can assume he won’t be hung out to dry like the average Joe investor when delivery fails right?

Best,
CIGA Pedro

Pedro,

Yesterday the euro rallied hard against the dark side short and this morning out came the MOPE to both talk up their position and establish a legal defense.

Actually the dark side has some smart attorneys if smart is considered preventing the problem before it hits.

I can’t believe what I see as it is so degraded.

Regards,
Jim

Soros More Than Doubled Gold ETF Stake in 4th Quarter (Update1)
By Katherine Burton and Glenys Sim

Feb. 17 (Bloomberg) — Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9 percent to a record.

The $25 billion New York-based firm became the fourth- largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the U.S. Securities and Exchange Commission yesterday. Its investment was worth about $663 million, the fund’s largest single investment, as of Dec. 31.

Soros joined China Investment Corp. and central banks including those in China and India in acquiring gold. China Investment, the $300 billion sovereign wealth fund based in Beijing, took a 1.45 million- share stake in the SPDR Gold Trust worth $155.6 million, according to a SEC 13F filing posted on Feb. 5.

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Posted at 7:53 PM (CST) by & filed under General Editorial.

Dear Friends,

Jim Sinclair will be hosting a complimentary talk on markets February 25, 2010 from 2pm to 4pm at the Marriott Toronto Downtown Eaton Center Hotel. The talk will be followed by a short question and answer period.

Due to the extremely limited space, we expect this event to fill up immediately.

If you wish to attend this seminar, YOU MUST REGISTER by emailing 2010CIGAMeeting@gmail.com.

Once registered, you will receive an invitation to the event. Due to the extremely limited capacity, only those presenting invitations at the door will be permitted to enter.

DVDs of the talk will be made available at a later date for those of you who are not able to attend.

Thank you all for your continued support!
Jim Sinclair and the JSMineset Team