In The News Today

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Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com

– Patterns of Slowing Growth Have Re-Emerged
– Inflation from High Oil Prices Still Impacting Broad Economy
– 2011 Average Annual Consumer Inflation: 3.2% (CPI-U), 3.6% (CPI-W), 10.7% (SGS)
– 2011 Average Annual Wholesale Inflation: 6.1% (PPI)
– Perils of Poor-Quality Inflation Data and Bad Assumptions

"No. 413: December CPI, PPI, Production, Housing Starts, Real Retail Sales"
http://www.shadowstats.com

Jim Sinclair’s Commentary

Conrad Coleman, a relative by marriage of my middle daughter is now both a champion, but also a hero.

His Dad who he speaks about here was a major Chicago grain trader.

Wellington ocean racer rescues teammate
Last updated 14:38 16/01/2012

A Wellington skipper saved his British teammate from the cold waters off the South Island coast, after he fell overboard in the final stages of the Global Ocean Race.

The youngest team in the competition – Wellington’s Conrad Colman and co-skipper Sam Goodchild – won the second leg of the race on December 30 after 30 days and 22 hours of often gruelling sailing.

But before crossing the finish line in Wellington, their 12,070km journey from Cape Town was disrupted when a wave threw Goodchild overboard without a lifejacket, the Global Ocean Race website reported.

Colman, 28, said the experience made him think of his father who died in a boating accident when he was 11 months old. He was not wearing the appropriate safety equipment.

"That came rushing back," he said. "I made a very conscious promise that I wasn’t going to let Sam be alone out there."

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Jim Sinclair’s Commentary

In 2012 the Fed will be out of the closet on QE3 which is the impetus for the recovery in gold shares in market acceptability and gold in the $1700 to $2100 range. 2012 is the year of Actions and Consequences.

Fed’s Latest Easing Could Cost $1 Trillion: Economists

With the Fed’s Open Market Committee set to meet next week, expectations are rising that the languishing housing market will drive the central bank to buy up mortgage-backed securities.

The goal of the purchases will be to drive down interest rates even further from current record-low levels, and, less obviously, to spur confidence that more monetary tools remain to stimulate the economy.

Of course, the announcement also could push stock prices higher, as did the Fed’s last balance sheet expansion begun in November 2010.

Just a few months ago, market observers speculated that another round of quantitative easing – QE3, in this case – would be politically infeasible and probably unnecessary given hopes for better growth in 2012.

But with housing stuck in neutral and a European recession on the horizon, economists believe QE3 is all but certain.

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Jim Sinclair’s Commentary

Where oh where will the IMF get the big bucks?

Yra Harris is dead right that it should come from gold via gold backed IMF bond issues, but do not hold your breath. It will not involve gold sales as gold is the only operating asset that central banks have. 2012 will be a year that central banks move closer to, not further away from gold.

Gold, if used for IMF bonds as a guarantee, alludes to convertibility and building a new currency called IMF gold backed bonds.

It is more likely that, as members of the IMF, each central bank will continue to get touchy about anyone putting their hands on national gold. You already see that trend by non-US people when in Europe they find out that all their gold resides in a cellar in the New York Federal Reserve Bank.

The US Fed used the ECB as a beard for global QE3. The IMF will most likely become a beard for more global QE3.

The gold will be used to lend credibility to the new and forthcoming virtual reserve currency. Maybe that currency will be called the "Barack."

IMF Seeks More Funds to Gird for Euro Crisis
BY SUDEEP REDDY

WASHINGTON—The International Monetary Fund wants to raise hundreds of billions of dollars to boost its financial firepower—despite U.S. resistance—to cope with the effects of Europe’s debt crisis.

The IMF said Wednesday it is seeking $500 billion in new lending capacity, including about $200 billion in commitments last month from euro-zone members.

The IMF plans indicate a growing willingness of some nations to bear the costs of rescuing the troubled euro zone, but also a lack of consensus on how to do so. The fund didn’t say how it might seek to raise the money or how it would be used.

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Jim Sinclair’s Commentary

Extreme, but a sure way to hold the fort in an election year if everything else fails.

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Jim Sinclair’s Commentary

You were warned here before it happened to anyone, anywhere. What are you doing about it?

IIROC accuses Barrett of exposing customers to ‘immense risk’
John Greenwood Jan 17, 2012 – 9:41 AM ET | Last Updated: Jan 17, 2012 1:25 PM ET

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Canada’s investment industry watchdog is accusing a small Toronto commodities brokerage of manipulating client accounts and issuing false statements as part of what it alleges is an “elaborate trade allocation scheme” that went undetected for years and that now leaves customers “at immense risk of harm.”

Barret Capital Management has experienced “a pervasive failure of its operating procedures,” according to the Investment Industry Regulatory Organization of Canada (IIROC), which is seeking the immediate cancellation of its brokerage licence at a hearing in Toronto on Tuesday.

According to its website, Barret offers trading for primarily retail customers across a host of metals, minerals and agricultural products. One of its main focuses is a precious metals service where clients are able to buy physical gold or silver bars suitable for RRSP accounts.

But the website appears to make no mention of the IIROC allegations.

The regulator said Barret “juggled winning and losing trades among client accounts based on the capital available in those accounts without regard to particular client objectives or investment instructions. As a result of the company’s efforts to cover its tracks “it is not possible to accurately trace individual investors’ funds,” it said.

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Jim Sinclair’s Commentary

2 up-manship

Fitch May Cut Six EU Countries on Review by 1 or 2 Levels
January 18, 2012, 1:12 PM EST
By Chiara Remondini and Chiara Vasarri

Jan. 18 (Bloomberg) — Fitch Ratings may cut six euro-area countries currently on review by one or two levels by the end of this month, Managing Director Edward Parker said.

“We would expect the review will lead to downgrades of one to two notches for all the countries under review,” Parker said today in Milan.

Fitch placed Spain, Italy, Ireland, Cyprus, Belgium and Slovenia on review in December for possible downgrades, citing Europe’s failure to find a “comprehensive solution” to the region’s debt crisis. Fitch also lowered the outlook on France’s AAA rating at the same time, though executives this month said France’s rating would not likely be cut this year.

Parker said the risk of a breakup of the euro region was “very small” and that Fitch didn’t expect Italy to default on its 1.9 trillion-euro ($2.4 trillion) debt. The country is too big to be allowed to fail, he said. Prime Minister Mario Monti, who came to power in November, has been helping restore confidence in Italy, he said.

Italy is “absolutely critical to the euro zone future as a whole,” Parker said today. “The new government has to deliver on fiscal reforms and go ahead with reforms to increase growth. We’re quite encouraged by the steps that Monti’s government has made.”

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Jim Sinclair’s Commentary

"Hello! I am the government and I am here to help you."

Somehow this sound more like having another brand of sheeple buy up what will eventually be government property.

You know nothing really ever changes. Our Chinese brothers are dyed in the wool Maoist’s that now are focused on money and minerals – world domination via economics rather than by brute force.

Brute force has fallen to the Western World at great economic cost.

China’s banks urge man on the street to invest in gold
With gold consumption in China expected to overtake that of India in the next few years, some of the country’s leading banks are already reaping the benefits as customers flock to new gold products.
Author: By Rujun Shen (Reuters)
Posted:  Thursday , 19 Jan 2012

SINGAPORE (Reuters) – For Chinese shipping executive Ping Bo buying gold is the best way to protect his family’s wealth and give his 10-year-old son a headstart into adulthood.

"For my son, the idea is that he will get a nice stash of gold that he can cash out when he turns 21 or when he gets married," said Ping, one of over 2 million people that have opened accounts in the past two years to accumulate gold at the Industrial and Commercial Bank of China (ICBC).

The ICBC launched the accounts in April 2010. The gold that it has bought to back them is only a fraction of total Chinese demand, but the explosive growth in the number of investors that have signed up is a symptom of the wider demand for the precious metal in the world’s most populous country.

China, expected to overtake India as the world’s top gold consumer in the next few years, accounted for 23 percent of the world’s total consumer physical gold demand in the first three quarters of 2011, up from 19 percent in 2010, according to the World Gold Council (WGC).

Growing wealth in a traditional culture that favours gold, economic uncertainty and looser regulations on the domestic gold market together have combined to create rapid growth in China’s gold demand.

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Jim Sinclair’s Commentary

America is becoming a nation of food stamps and six inch deep boxboards for eternal rest.

No need to be concerned if you live in Greenwich, CT.

Third world America: Bodies driven to a pauper’s burial in a U-Haul as tough economic times lead to more mass graves
By DAILY MAIL REPORTER
Last updated at 2:25 PM on 19th January 2012

It’s a practice more closely associated with third world countries, but in bleak times in a Chicago-area suburb, 30 people were buried in a mass grave on Wednesday.

The pauper’s burial section at Homewood Memorial Gardens was established for those who could not afford to pay for a burial plot.

And it is a problem that’s sweeping America as tough economic times have led to an increase in the number of indigent burials the morgue must perform.

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Mass burial: Workers fill a pauper’s grave at Homewood Memorial Gardens with remains from the Cook County, Illinois morgue

No mourners were present for the burial at the cemetery, which lies 25 miles south west of Chicago.

The gruesome discovery of the pauper’s burial section at Homewood was made last year, sparking a call for more strict federal regulations for cemeteries.

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Jim Sinclair’s Commentary

The significant selling of US treasuries is reason alone for QE3. Operation Twist cannot handle the rate impact of this growing trend.

TIC: China Net Seller Of US Treasurys In Nov; Remains Top Holder
2012-01-18 16:03:45
By Ian Talley and Jeffrey Sparshott

WASHINGTON (Dow Jones)–China sold U.S. Treasurys in November, reducing its net holdings but remaining the largest foreign holder amid the growing sovereign debt crisis in Europe, the Treasury Department said Wednesday.

Overall, foreigners were net buyers of long-term U.S. financial assets in November according to the monthly Treasury International Capital report, known as the TIC.

China’s net holdings fell $1.5 billion to $1.133 trillion, following net selling of more than $14.2 billion in October. Analysts caution the data may not reflect the full spectrum of China’s activity in the market, however. For example, Treasury last year adjusted its estimation of China’s holding based on use of proxies in other countries. Also, the net figure is a sum of short and long-term activities.

Japan, meanwhile, continued to be a heavy net buyer of Treasurys, accumulating Treasuries to record levels and threatening China’s top holder position. Japan remained the second-largest holder of Treasurys, lifting its holdings to $1.039 trillion from $979.0 billion in October.

Among all foreign investors, net purchases of U.S. Treasury notes and bonds totaled $54.0 billion, compared with net buying of $15.3 billion in the previous month. Private foreign investors bought a net in $28.1 billion Treasury notes and bonds, after buying a net of $18.6 billion in October.

The closely watched figure of net long-term securities transactions showed total buying of $59.8 billion in long-term U.S. securities in November, after purchases of $8.3 billion the month before.

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