In The News Today

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Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.
–Winston Churchill

Jim Sinclair’s Commentary

I promised you that the manipulators would shift to the long side of gold before the final parabolic move.

I imagine that Goldman has a huge buy order for special clients, that is themselves.

When was the last time Goldman Sachs did the world of investment and investors a good turn?

IT’S OVER: Goldman Calls The End Of The Great Gold Bull Market
Joe Weisenthal | Dec. 5, 2012, 8:38 AM |

Goldman commodity analyst Damien Courvalin is out with a big call: The top in gold is in.

The firm says that the primary driver of gold prices is real interest rates (which have been super-low in the United States, in part thanks to aggressive Fed easing) and that with the economy coming back, this era is coming to an end.

Before you get the details of this specific call, you have to understand the firm’s overall view of the economy.

Last Week, Goldman economist Jan Hatzius made a big economic call … that the era of sub-par, post-Financial Crisis growth would come to an end some time in the second half of 2013. And Courvalin, in lowering his gold outlook, is keying off of this call.

Here are the two key paragraphs from the report:

Improving US growth outlook offsets further Fed easing
Our economists forecast that the US economic recovery will slow early in 2013 before reaccelerating in the second half. They also expect additional expansion of the Fed’s balance sheet. Near term, the combination of more easing and weaker growth should prove supportive to gold prices. Medium term however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth. Our expanded modeling suggests that the improving US growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013. Risks to our growth outlook remain elevated however, especially given the uncertainty around the fiscal cliff, making calling the peak in gold prices a difficult exercise.

Gold cycle likely to turn in 2013; lowering gold price forecasts
We lower our 3-, 6- and 12-mo gold price forecasts to $1,825/toz, $1,805/toz and $1,800/toz and introduce a $1,750/toz 2014 forecast. While we see potential for higher gold prices in early 2013, we see growing downside risks.

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Rage Against The Machines
Friday, November 30, 2012 at 10:15 am

In a world dominated by momo-chasing HFT computers, sometimes you’ve got to step back and use actual intelligence and not artificial.

As we’ve been discussing here for months, America is racing toward the dreaded "Fiscal Cliff". Earlier this year, the common term for this event was Taxmageddon but, apparently, Fiscal Cliff sounds more dramatic when accompanying the MSM "BREAKING NEWS" alert at the top of every hour. So, what the heck is this Fiscal Cliff stuff and why do the metals seem to trade up and down based upon whichever way the wind is currently blowing?

In its simplest terms, the Fiscal Cliff is this: If no legislative action is taken before January 1, 2013, a whole host of current tax breaks will expire. The resulting tax increase will dramatically slow the U.S. economy as tax-planning uncertainty will combine with this massive transference of wealth from the private to the public sector, making even 1% GDP growth unlikely in 2013. Additionally, Congress must once again to raise the debt ceiling from its current $16T+ level to something like $18T. Yikes!

So why is it that rumors of a "deal" tend to make gold go UP and rumors of "no deal" make gold go down? It’s the WOPRs, silly. Many are programmed to buy and sell off of headlines, and for some reason, these computers are selling on every headline that suggests "no deal". But this is completely, 100% wrong and I need you to use actual, human intelligence for a moment. There are four, possible scenarios here. Let’s take them one by one.

1. No deal at all. America heads over the Fiscal Cliff. Massive tax hikes hit on 1/1/13 and, more importantly, the U.S. reaches the debt ceiling and is unable to borrow any additional funds at auction. This is wildly bullish for gold (and silver). The collapse of the U.S. economy guarantees huge, additional QE and the dollar will decline steeply in value. Lack of funding for government spending ramps up the requirement for even more dollar printing by The Fed. Gold demand also surges as countries, central banks and individuals around the world seek "safe haven" from the storm.

2. A deal on the debt ceiling but no deal on Taxmageddon. This is also bullish for gold as The Fed will, undoubtedly, be standing by with massive QE liquidity injections in an attempt to blunt the economic slowdown brought forth by the tax hikes. Additionally, no deal on Taxmageddon means that no spending cuts were initiated. This lack of "austerity" combined with the $2T+ debt ceiling hike will almost certainly lead to another round of downgrades to the U.S. credit rating and, as we saw in August of 2011, downgrades of the U.S. are quite bullish for gold.

3. A deal postponing Taxmageddon and no deal on the debt ceiling. This scenario plays out simply because The Congress decides to "punt" the issue and head home for the holidays, instead. They figure that Tiny Tim will figure out a way to cook the books until March or so, thereby leaving the problem for the new Congress to tackle in January. This complete disregard for the seriousness of the issue leaves S&P et al with no choice but to downgrade the credit rating of the U.S. which, as noted above, is a situation that has proven in the past to be extremely bullish for the metals.

4. A complete deal where taxes are raised, real spending cuts initiated and the debt ceiling increased. Even this is bullish for the metals. Why, you ask? Once again, raising the debt ceiling by $2T+ is bullish. The link between U.S. debt and the price of gold is indisputable. And, again, from where will this money come? QE∞, of course. The tax increases with spending cuts is also a plan for higher gold prices as this will almost certainly slow the U.S. economy into recession and, as we know, the only monetary policy left to combat economic slowdown is the overt printing of new dollars.

So, do you see where I’m headed here? It doesn’t matter! Next month, ignore the headlines and the endless MOPE and SPIN emanating from Washington and New York. Just buy gold (and silver, too). Physical precious metal continues to be your only financial protection from the true Economic Armageddon we are facing.

TF

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Jim Sinclair’s Commentary

This one came from a hoarding situation. Ditti Sinclair is ready for Christmas.

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Mr. Freddy may be a tad long in the tooth, but he is also ready for Christmas.

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Jim Sinclair’s Commentary

When in doubt take a nap with a friend. Then email Jim. It will all be ok.

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Then wake up! Remove the debt ceiling allowing infinite debt growth as part of a Fiscal cliff compromise? The Fed is the best customer of Treasury paper?

Gold is going to and through $3500.

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Jim Sinclair’s Commentary

Just stay where you are and before 2015 you will qualify.

Do You Live In A Death Spiral State?
11/25/2012 @ 8:13AM

Don’t buy a house in a state where private sector workers are outnumbered by folks dependent on government.

Thinking about buying a house? Or a municipal bond? Be careful where you put your capital. Don’t put it in a state at high risk of a fiscal tailspin.

Eleven states make our list of danger spots for investors. They can look forward to a rising tax burden, deteriorating state finances and an exodus of employers. The list includes California, New York, Illinois and Ohio, along with some smaller states like New Mexico and Hawaii.

If your career takes you to Los Angeles or Chicago, don’t buy a house. Rent.

If you have money in municipal bonds, clean up the portfolio. Sell holdings from the sick states and reinvest where you’re less likely to get clipped. Nebraska and Virginia are unlikely to give their bondholders a Greek haircut. California and New York are comparatively risky.

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Jim Sinclair’s Commentary

A report for those of us who are dog lovers. Your action is requested.

North Side family says prized puppy was unjustly shot by cop
Posted: Dec 03, 2012 7:02 PM MST Updated: Dec 04, 2012 1:40 PM MST
By Larry Yellen, FOX 32 News Legal Analyst

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Jim Sinclair’s Commentary

Regulations? What a waste of time because any that threaten the present camouflaged weak banking system simply will not happen.

EU Says It Won’t Meet January Deadline to Implement Basel III
Jim Brunsden, ©2012 Bloomberg News
Published 9:07 a.m., Monday, December 3, 2012

Dec. 3 (Bloomberg) — The European Union said it will join the U.S. in missing next month’s deadline to legally implement an overhaul of Basel bank rules, as EU debate drags on over issues including banker bonuses, liquidity rules and leverage limits.

“The legal entry into force of CRD IV is no longer realistic for January 2013,” Stefaan De Rynck, a spokesman for Michel Barnier, the EU’s financial services chief, said in Brussels today, referring to the bloc’s draft law to apply the Basel measures. Any delay should be as “short as possible,” he said.

EU governments and lawmakers have struggled to agree on how the bloc should apply the international rules, which were agreed on by the Basel Committee on Banking Supervision. The standards more than triple the core capital that lenders must hold to absorb losses, and were drawn up in response to the turmoil that followed the collapse of Lehman Brothers Holdings Inc. The so- called Basel III measures are scheduled to phase in from Jan. 1, 2013, to 2019.

Finance ministers from the EU’s 27 nations will discuss tomorrow how negotiations on the draft law should advance, according to a note prepared by Cyprus, which holds the rotating presidency of the EU. Legislators from the European Parliament and Cypriot officials are also scheduled to meet next week for talks.

Even if a political deal is reached on the draft law by the end of the year, this won’t leave enough time for it to be formally adopted and codified as legislation, De Rynck said.

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Jim Sinclair’s Commentary

Whatever is required will be provided.

Euro ministers approve Spanish bank aid
By Peter Spiegel and Joshua Chaffin in Brussels
December 3, 2012 10:52 pm

Eurozone finance ministers approved €39.5bn in aid to Spanish banks on Monday night, formally ending a months-long effort to draw a line under a crisis that had threatened to push the country into a full-blown bailout.

The approval was largely preordained, particularly after the same finance ministers said in June they were ready to provide up to €100bn for Spain’s banks, which have been brought low by the collapse of the country’s housing bubble.

But while ministers’ approval – coming just hours after Madrid formally announced the request for funds – was expected, the amount is far less than many private-sector analysts believe is necessary, particularly as Spanish banks continue to suffer in a deepening recession. Some economists believe the eventual needs could be two or three times that amount.

European officials are hoping the injection of outside capital into the banks, combined with an easing of tough EU-mandated government budget targets announced last month, will take the pressure off Madrid and enable it to avoid any further rescue aid.

Yields on Spain’s benchmark 10-year bonds dropped to 5.25 per cent on Monday after Madrid announced the request for bank aid, the lowest borrowing costs in eight months.

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