In The News Today

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Jim Sinclair’s Commentary

All is well and if it isn’t the G 20 will make it well. Come on, you’re dreaming.

Commercial real estate loan defaults skyrocket
Defaults on loans for office buildings, shopping malls soar as economic picture worsens
Alan Zibel, AP Real Estate Writer
Thursday March 26, 2009, 5:46 pm EDT

WASHINGTON (AP) — With loan defaults rising, analysts say the struggling commercial real estate industry is poised to fall into the worst crisis since the last great property bust of the early 1990s.

Delinquency rates on loans for hotels, offices, retail and industrial buildings have risen sharply in recent months and are likely to soar through the end of 2010 as companies lay off workers, downsize or shut their doors.

The commercial real estate market’s fortunes are tied closely to those of the sinking economy, especially unemployment, which hit 8.1 percent in February.

"Until jobs start coming back and industry starts doing better we don’t see performance increasing" among landlords, said Christopher Stanley, an associate with research firm Reis Inc.

While the commercial real estate industry’s woes led to the recession of nearly 20 years ago, this time the industry is "the victim of the economic and financial crisis," said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services in Walnut Creek, California.

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Jim Sinclair’s Commentary

And the 1 Trillion G20 SDR creation will fix this problem even though the more than 10 trillion spent by the USA has produced the following…

U.S. consumer loan delinquencies soar to record
Thu Apr 2, 2009 6:00pm IST

NEW YORK, April 2 (Reuters) – More U.S. consumers have fallen behind on loan payments than ever before, and the problem may worsen as millions more find themselves out of a job, a study released Thursday shows.

According to the American Bankers Association, which represents most large U.S. banks and credit card companies, the percentage of consumer loans at least 30 days late rose to a seasonally-adjusted 3.22 percent in the October-to-December period from 2.9 percent in the prior quarter.

The ABA said the fourth-quarter rate was the highest since it began tracking the data in 1974, with delinquencies rising in nearly every category. It said these credit trends are unlikely to improve before 2010. Many consider the deep recession the worst since the Great Depression of the 1930s.

"Job losses have really hurt the economy and will continue to inflict pain for several months," James Chessen, the ABA’s chief economist, said in an interview. "The greater the losses are, the more severe an impact it has on all credit markets."

The ABA study covers direct auto, indirect auto, closed-end home equity, home improvement, marine, mobile home, personal, and recreational vehicle loans. It excludes bank credit card and education loans. (Reporting by Jonathan Stempel; editing by John Wallace)

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So Much Ado About So Little

"A sale of 12.9 million ounces of gold as ‘probably the most viable’ option to ensure the long-term funding of the IMF. Proceeds would be used for an interest-bearing endowment."
–WSJ, 26 February 2008.

12.9 million ounces of gold at $906 per ounce, as I write, is slightly less than $12.4 billion. The Chinese would buy $12.4 billion in gold with a telephone call.

Central banks would be willing to buy twice or even ten times that amount.

How foolish the IMF and Gordon Brown have been in gold. Both sold to major buyers at historic lows in price. Brown sold at $248 and the IMF started their sales at $106 in the 70s.

What in the world are you worried about?

Their sales at any amount will, as in the past, be an enduring monument to their lack of acumen in knowing the gold price.

In fact they are both the two dumbest gold haters that exist.

Jim Sinclair’s Commentary

What are you worried about? Listen to your intellect, not your emotions.

IMF gold available for sale is worth less at $906 than 1% of the amount of monetary stimulation done by the US Fed and the US Treasury.

Jim Sinclair’s Commentary

The Lesson of 1923 is the Weimar Retenmark, a commodity currency.

The lesson of 1923 for those hammered by the Weimar experience is if you owned gold you had no problem at all.That is the key lessons of Weimar.

Weimar 1923 may have more lessons than US 1932
Are we heading for another Great Depression?
By Martin Hutchinson, breakingviews.com
Last Updated: 5:02PM BST 01 Apr 2009

Many baffled forecasters are asking just that, and studying what the US did wrong after the stock market crashed in 1929. But the more relevant policy errors might have been those made earlier across the Atlantic – in Weimar Germany from 1919 to 1923.

Policymakers have learned from the US mistakes. This time around, there has been no shrinkage of the money supply and no repetition of President Hoover’s increase in tariffs in 1930 and income taxes in 1932. On the contrary, money supply has expanded rapidly while fiscal policies have been expansionary and protectionism limited.

But look at the Weimar government. Suffering from the trauma of defeat in the First World War and the burden of reparations, it was too weak to raise taxes. It ran large budget deficits instead. Interest rates were kept far below the rate of inflation, while money supply expanded rapidly. About half of government expenditure was funded by newly printed money.

The great economist John Maynard Keynes provided an acid comment in 1920. "The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance."

In Germany, the result was hyperinflation. By November 1923, the mark was worth one trillionth of its 1914 value. Pay packets were collected in wheelbarrows. Foreign depositors in German banks were wiped out.

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Jim Sinclair’s Commentary

Pakistan today:

Japan adviser says Pakistan key for Afghan security
Reuters – USA
By Yoko Kubota TOKYO (Reuters) – Stabilising Pakistan’s economy and fighting poverty there are key to combating the insurgency in neighbouring Afghanistan, …
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Attacks in Lahore "aimed at Pakistan’s heart"
Reuters – USA
By Robert Birsel LAHORE, Pakistan (Reuters) – Militants who have launched two audacious attacks in the Pakistani city of Lahore in the past month want to …
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U.S. aid to Pakistan: Democrat warns that $1.5 billion could …
Chicago Tribune – United States
chairman of the Senate Armed Services Committee, said he thought the Pakistanstrategy would be effective only if Pakistanis have decided to forcefully …
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Sen. Carl Levin questions Pakistan aid plan
Los Angeles Times – CA,USA
The US will increase its cross-border cooperation and intelligence-sharing with neighboring Pakistan, a top American military official said….
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World Report: Disunity at Arab League summit, terror in Pakistan
The Daily of the University of Washington – Seattle,WA,USA
Armed gunmen stormed a police academy in Lahore, Pakistan Monday, beginning a siege that lasted eight hours and ended with more than 12 dead, raising fears …
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Missile Strike Said to Kill 10 in Pakistan
New York Times – United States
By PIR ZUBAIR SHAH and ALAN COWELL PESHAWAR, Pakistan — Missiles fired from what was believed to be an American drone struck a militant training camp in …
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Jim Sinclair’s Commentary

This article is correct and worth reviewing today.

Gold To Gain As Currency, Inflation Play-Fund Manager

NEW YORK (Dow Jones)–Gold prices appear set to rise over the short to intermediate term as investors buy the metal as an alternative currency, and there may be more gains in store longer term if inflation increases when the economy exits its recession, a precious metals fund manager said Thursday.

Even though he sees prices rising, Mark Johnson, portfolio manager with the USAA Precious Metals and Minerals Fund (USAGX), said gold mining stocks are likely to outperform the commodity itself as input costs decline, boosting margins.

"We’re anticipating much wider profit margins in 2009," Johnson told Dow Jones Newswires in an interview. "This is the year for the stocks rather than the commodity."

In the short to intermediate term, gold prices are likely to be strong as the amount of paper currencies grows with government financial and economic stimulus efforts, he said. Investors often buy gold as an alternative currency.

As the Federal Reserve’s quantitative easing continues, the effective printing of money will likely lead to higher inflation in the longer term whenever the U.S. emerges from its recession, Johnson said. After that, he does not see the Fed draining money out of the system quickly because the central bank will want to make sure economic strength has taken hold and avoid a "double-dip" recession.

In addition to its role as an alternative currency, investors buy gold as a hedge against inflation because they see it holding its value more strongly in an environment of rising prices.

In recent years, gold as a commodity has outperformed stocks of the companies that explore for and produce the metal because company margins were squeezed by rising input costs, such as those for oil, and by tightening credit.

But that is changing as the metal’s price rises while input costs fall, Johnson said.

As for companies, Johnson said AngloGold Ashanti Ltd. (AU), the world’s third-largest producer of the precious metal, is probably the best-valued senior gold company.

"It’s a management turnaround story," he said. Some of his smaller picks include Anatolia Minerals Development Ltd. (ANO.T) and Great Basin Gold Ltd. (GBG.T).

He expects that smaller exploration companies, known as juniors, will reverse their recent underperformance of larger producers.

"Value is at the smaller end of the spectrum," Johnson said.