In The News Today

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Many of life’s failures are people who did not realize how close they were to success when they gave up.
–Thomas Edison

Jim Sinclair’s Commentary

For your information.

 

Jim Sinclair’s Commentary

“Business is getting globally better so reliance on QE may not be as required."

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Jim Sinclair’s Commentary

Trends start as isolated events and develop into torrents. The following is such an event.

All of this fits into the declining utilization of the US dollar in settlement.

Brazil declares new ‘currency war’
By Samantha Pearson in São Paulo
March 1, 2012 9:53 pm

Brazil has declared a fresh “currency war” on the US and Europe, extending a tax on foreign borrowings and threatening further capital controls in an effort to protect the country’s struggling manufacturers.

Guido Mantega, the finance minister who was the first to use the controversial term in 2010, said the government would not “sit by passively” as developed nations continue to pursue expansionary monetary policies at the expense of Brazil.

“When the real appreciates, it reduces our competitiveness. Exports are more expensive, imports are cheaper and it creates unfair competition for businesses in Brazil,” he said on Thursday after announcing changes to the so-called IOF tax.

In a presidential decree, the government extended the existing 6 per cent financial transactions tax on overseas loans maturing in up to three years. Previously, the levy was applied only to loans with maturities of under two years.

President Dilma Rousseff later weighed in on the debate, vowing to defend Brazilian industry and stop developed countries’ policies from causing the “cannibalisation” of emerging markets.

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Jim Sinclair’s Commentary

The most important economic event of 2012 is the deceleration of international use of the dollar in settlement.

This decline in utilization will have a major impact on the dollar as the reserve currency simply now by default.

China ditches the dollar (sort of)
March 2, 2012 10:00 am by Simon Rabinovitch

China has earned a reputation as a hypocritical investor over the past few years. It has repeatedly warned the US that quantitative easing was debasing the dollar, only to turn around and plough even more of its vast foreign wealth into dollar-denominated assets.

But perhaps those warnings weren’t so hollow after all. The latest data from the US Treasury suggests that China has in fact executed a major diversification away from the dollar.

The Wall Street Journal’s Tom Orlik has parsed the numbers to produce quite a startling revelation. The portion of China’s foreign exchange reserves invested in dollars appears to have fallen from 65 per cent at the end of June 2010 to 54 per cent a year later.

These figures are unavoidably rough. China does not publish the composition of its $3.2tn foreign exchange reserves and the US is one of the few countries to give a breakdown of which foreigners hold its assets.

However, Orlik is an authority on Chinese economic data and his estimates are as good as any out there. The point is not that China has been selling dollars; rather, it appears to have been accumulating them at a slower rate and instead investing much more in other currencies.

This evidence of diversification raises two intriguing points.

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Fractal Analysis: Gold to $3,500 this year still likely despite crash
Technical analysis sees the overall strong upward trend in the gold price very much intact despite yesterday’s big falls in gold and silver prices.
Author: Goldrunner
Posted:  Thursday , 01 Mar 2012

As we have discussed in a previous article, our Fractal Model suggests the wave for Gold in US Dollars will sweep up into the $3500 to $3600 area into the mid-year time-frame. The leading edge of that time-frame begins in May and extends out for a few months.  A potential for Gold to spike to a $3900 extended fib level exists. Like all parabolic moves in Gold, the late stages create the biggest price movements. Personally, I would be happy with a huge Gold run up to the $3200 level.

Our description of the Gold tsunami wave to come this year as a result of the huge wave of Dollar Inflation initiated by the $600 Billion US Dollars sent to Europe back in December of 2011 is beginning to be noticed by the markets. This is a very important "point of recognition."

The fundamentals for this wave in gold are as follows:

The massive world debt load demands that we either see a deflationary depression; or that we devalue the debt by devaluing the paper currencies.  The politicians have chosen to dramatically devalue the paper currencies.

The Federal Reserve is the only Central Bank with the right to print to infinity, thus, US Dollar printing will remain the leader going forward.

Gold moves almost directly inverse to the value of the Dollar.  Thus, the acceleration of Dollar Devaluation will drive the price of $Gold in its accelerating parabolic climb.  (The USD Index has little to do with the "value of the Dollar" as we will soon show via "The Fractal Dollar" in a different writing.)

This current leg of Dollar Printing via in the $600 Billion Dollars sent to the European Central Bank in a swap arrangement back in December of 2011 is just the start of this wave with Dollar printing demands to increase the debt ceiling, to cover losses by Fannie and Freddie, to continue to pay extended unemployment insurance benefits, and so on.  Yet, the "lowly sum" of $600 Billion of Dollar Printing via QE drove Gold up to the $1920 level, and that much kicked off this round.

Debt monetization via QE sends no new Dollars directly into the economy since the newly printed Dollars go directly from Uncle Sam’s hands to cover the item listed, above.  Thus, these newly printed Dollars only "replace Dollars" that were never allotted for all of the above items and other responsibilities like the unfunded Social Security Funds and Federal Pensions.  As such, the economy is not directly helped by the new Dollar printing.  As the economy continues to deteriorate it demands an acceleration of new Dollars to be printed.  It’s like a cat chasing its own tail.

The US needs to devalue the US Dollar to the point that the debt is devalued to manageable level.  The Dollar is devalued against "relatively constant valued Gold"; just like the late 70’s when Gold went parabolic.  Unfortunately, the massive amount of Dollar printing this time around could not be done via the loan multiplier system where the new Dollars go directly into the economy.  So Dollar creation via direct debt monetization, QE, had to be done after the loan multiplier system was "blown out" in 2007 and 2008.

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Jim Sinclair’s Commentary

Now add global QE to infinity as both function under a barrage of MOPE by MSM that would make Goebles cring.

Gold can scale new peaks without QE springboard
Thu Mar 1, 2012 5:25pm GMT
By Amanda Cooper

LONDON, March 1 (Reuters) – Gold can still make new highs this year, even as the Federal Reserve shows no sign of continuing market-sweetening bond purchases and the European Central Bank hints it won’t supply any more half-trillion euro sugar rushes.

Gold lost nearly 5 percent on Wednesday in its biggest-one day fall since mid-December after Fed Chairman Ben Bernanke issued a downbeat assessment of the U.S. economy, but did not spell out that there would be more quantitative easing, the anchoring of bond yields through government debt purchases.

The ECB, which has loaned over a trillion euros in two roughly equal-sized portions of low-rate, highly-attractive cheap cash to commercial banks to encourage lending and avert recession in the euro zone, has warned the financial sector not to get hooked on these offerings.

Low interest rates and ample liquidity provide a favourable backdrop for gold, which can thus compete more effectively for investor cash against stocks, bonds or currencies that bear yields or dividends that can be eroded by loose policy.

Gold has doubled in price since the Fed embarked on its $2.5 trillion bond-buying spree in late 2008 and is still up 10 percent so far this year around $1,720.00 an ounce, further underpinned by the U.S. central bank’s commitment to leave rates unchanged until at least late 2014.  

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What Caused Silver’s Take-Down? (SLV, AGQ, ZSL, GLD, PSLV, SIVR)
ETF Daily News
That’s what happened, today,” 40-year bullion market veteran James Sinclair told King World News (KWN) on Thursday. “Mainstream media put the emphasis on …