In The News Today

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

Jim Sinclair’s Commentary

Here is today’s story in gold. The cash number for the boys is $1775. This would represent the 10th major operation by gold banks to keep CASH gold below that $1775. It has much more to do with $1775 than this morning’s challenge of $1800.

Someday, sooner than expected, both $1775 and $1800 will behind us with the manipulators pushing gold higher, not lower. Behind us is not one or two dollars.

All this talk in the community of cycles and one more decline before a bonanza rise strikes me as disinformation and meaningless when $3500 is pulling gold up. As soon as the big boys have all your gold and gold shares you are willing to give them of the good gold companies, the manipulators will be on the long side just like in 1979-1980.

There is no way that the present giant shorts in the good gold shares can cover. The only reason they are not yet in panic is their long period of winning has made even the smartest of them stupid.

If you did not need to cover for a long time you dream that you will never have to. If today was not an experience of "Shaking the Tree to Pick Up the Fruit" in both shares as well as gold, I have not been watching gold and currency for more than 50 years.

The manipulators take their lead from the euro these days and push gold hard in the same direction. Watch the euro to define the direction of gold on the day. Good charts are available to you on


Jim Sinclair’s Commentary

You might consider PIMCO a leading edge of the Establishment. As such it give some credence to my feeling this period is the "Shaking of the Tree."

$1775 really means nothing as a number to pick to block gold so some Establishment TPTB just came up with it.

What will follow will be a run to $3500 and beyond.

PIMCO Calls Gold ‘Compelling Inflation Hedge’
By PIMCO Oct 01, 2012 3:40 pm

Gold valuations are not as stretched as a naïve look at its nominal price might suggest.

Editor’s note: This story is an excerpt of a larger piece by PIMCO.

When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it’s an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner.

Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: Given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies.

The reason is that the supply of gold is not at the whim of any governmental power; it is fundamentally supply constrained. Total outstanding above-ground gold stocks – the amount that has been extracted over the past few millennia – are roughly 155,000 metric tons. Each year mines supply roughly 2,600 additional metric tons, or 1.7% of the outstanding total. This is why gold can be thought of as the currency without a printing press.

There is no doubt that gold prices, which averaged $1,630 in August, are high. However, in inflation-adjusted terms, gold is 12% below its 1980 peak. Inflation in 1980 hit 15% year-over-year, and inflation today is running much lower so some may question the validity of comparisons to 1980. While we believe that inflation over the next several years is likely to be higher, on average, than it has been over the past 20 years and that the tail risks are for much higher inflation, this speaks more to the outlook for the nominal price of gold. 


Jim Sinclair’s Commentary

Pensions will have to be bailed out. It will be direct by the government or tangentiality by the Fed.

DeMint joins national effort to keep feds from bailing out state pension systems
Published September 30, 2012

Illinois Democratic Gov. Pat Quinn is getting hit with a nationwide backlash over his suggestion that the federal government bail out the state employees’ pension program.

Critics have in the past several days pounced on the suggestion, made last year when Quinn, in announcing the state’s fiscal 2012 budget, said part of Illinois’ long-term effort to reduce the estimate $167 billion in under-funded liabilities would be to seek “a federal guarantee of the debt.”

Among those leading the charge is Republican Sen. Jim DeMint. The South Carolina senator has joined the Illinois Policy Institute’s national “No Pension Bailout” campaign — an effort to stop Congress from attempting to rescue failing state and municipal pension plans.

“Our greatest concern is states will assume they can run their pension systems into bankruptcy and then turn to the federal government for bailout,” DeMint said Thursday.

He also suggested the problem is the result of state legislators trying for decades to win over voters through pension promises based “on accounting methods that would put any business in jail.”

The conservative policy group estimates the total amount of under-funded pension liabilities in states is at least $2.5 trillion, with Illinois leading the nation.

The basic plan floated by Quinn would be for the federal government to rescue the pension program through buying the state’s bonds, which critics say are too financially risky to attract investors. 

Quinn said after announcing the budget that seeking the federal guarantee was only a precaution, then later called the related wording a “drafting error,” according the non-partisan Citizens Against Government Waste, which nevertheless gave the governor its September 2012 “Porker of the Month” award.