Posts Categorized: General Editorial

Posted by & filed under General Editorial.

Dear Friends,

Gold last evening was trading at $780. On the Comex it was trading at $765. That has to motivate you to fight back.

Gold moved back, influenced by the firming euro.

Gold is a currency and the Comex cannot change that, however you have the power to change the COMEX.

Respectfully yours,
Jim

Posted by & filed under General Editorial.

Dear Friends,

Taking delivery is one thing, but leaving the delivery at the COMEX is another. Leaving the gold at the COMEX warehouse does something but NOT MUCH. In order to level the playing field you must take the delivery OUT OF the COMEX warehouse.

Do not for a moment buy the disinformation that if you take delivery of a 100 ounce gold bar from the COMEX that is has to be re-assayed to sell it. That is DISINFORMATION as it is a COMEX rule put in to dissuade you from, taking delivery out of the warehouse. You get registered bars by serial number in COMEX delivery exactly how you would get from any international bank. Those bars, after examination, will not be questioned in the selling process away from the COMEX.

I am giving you today the cost of storage of gold at the Zurich Airport Free Zone in SEGREGATED FORM. A German Bank purchased this depository with offices in Switzerland. After having checked every international storage point for you, the charges are reasonable. Shipping it there is totally legal. Having valuables in a safe depository is not having a foreign account. Please confirm that point with your tax or general attorney.

You will shortly get the cost of shipment and insurance by Brinks or a similarly rated shipper of valuable as soon as I am able to compare charges to see you are treated as any other professional would be.

Jim,

I called Tom Kelly whom I spoke with this morning at Brink’s regarding storage. I spoke with him to get information just on transport to and from as follows:

NY to Zurich – he would need to have the exact business info/addresses for to and from locations. Each sealed package/container must not exceed 50-60 pounds and you would need to advise them how many there are. You need to submit this to them via email and it takes a few days to get a response.

Dar-Zurich – he would need to contact their offices with the above information and to get clarification on whether they could actually transport the gold.

Regards,

CIGA Anna

Jim Sinclair’s Commentary

With this information you need not place a financial intermediary between you and your gold. You do not need to buy certificated gold in Australia or send any money to a website.

You handle the entire situation yourself with the help of JB. I will be teaching JB how to see that the gold is properly transferred from COMEX delivery to the shipper, making your life even easier. JB has promised me that he will not solicit your business in speculative dealings but simply aid you in taking delivery and shipping to an international depository where it will be held in segregated form.

Don’t think for a moment that using Australia or the Internet offers you any privacy because if the boys want to know you can be sure the records of an Australian, Canadian or US website can be secured by the proper authority or for that matter any authority today.

I believe in doing things in the light of day.

Please be assured I have no financial relationship with either the depository, the bank that owns it or CIGA JB Slear, either directly or indirectly.

Anyone wishing a sworn affidavit concerning the above will receive it.

Click here to view the depository website for your respective country

Click images to enlarge storage rate data in PDF format.

VAL_LAGER_2008_E_Page_1 VAL_LAGER_2008_E_Page_2 VAL_LAGER_2008_E_Page_3

Trader Dan says:

The more buyers that can be recruited to this effort, particularly buyers of large size, the more difficult the life of the paper shorts will become. Short of taking delivery of the actual metal, preferably pulling it out of the warehouses, the shorts can reign supreme over this market. What’s more – they are doing this with impunity as they pay no price financially to do so and profit quite handsomely I might add. Strip them of the metal and they are cooked. Then they will have to compete on a level playing field like the rest of us. Who was it that said, “He who sells what isn’t his’n, must pay the price or go to prison”? If the paper shorts are selling what doesn’t exist, namely tons of actual gold, forcing them to show us the actual metal will work to modify their behavior.  This is the only way to keep the Comex gold market honest.

Speaking of deliveries, another 307 deliveries were assigned this morning. I can tell you that 43 of those were retenders by Greenwich Capital Markets. The total so far this month is 11,473 contracts or 1,147,300 ounces. I want to see the warehouse totals over the next couple of days before commenting on that. Time is needed to actually move the metal that is going out.

Posted by & filed under General Editorial.

Dear CIGAs,

In all probability, today’s action in Gold confirms that the Fed’s last real meaningful weapon to fight deflation is coming into play very soon.

This effort is to disqualify gold as a currency. I question the intelligence of this from the deflationary/inflationary perspective that is so important to the Fed right now.

As I have told you multiple times, there is no such thing as the Exchange Stabilization Fund in the sense of employees with real names, faces and addresses.

The Exchange Stabilization Fund is nothing more than an account at a major international investment firm known well to you and represented on the floor of the COMEX by name. It is prominent in the COT figures.

The Chairman of the Federal Reserve, the President of the United States or their designee, runs the Exchange Stabilization Fund.

This is why the commercial dealers get the inside information on the gold price and currencies short to medium term, having eyes to see, ears to hear and a back office that must know.

This is why the paper exchange can do what they have done today as long as the COMEX warehouse remains full to back them up.

Today the public has the standard definition of deflation on their mind only, being taken advantage of by the Exchange Stabilization Fund to fain a story that gold is not a currency. The paper gold COMEX fellows who are the floor brokers for the Exchange Stabilization Fund and having this information are extending the drop to the best of their ability. They do trade even on the day, you know.

Gold is a currency. It has been a currency since the beginning of time. It will always be a currency.

The role of gold as the primary currency will be in place no matter what the efforts are made to cloud the issue.

Regards,
Jim

Posted by & filed under General Editorial.

Dear Friends,

The minus $42 in Gold so far this morning is a gift from the Comex and will be proven in time. Aren’t you tired of being had on a constant basis? If so, then do something rather than simply complain. Click here for information on taking delivery from the Comex.

I disagree that the Fed has sterilized, in a practical sense versus an academic sense, much of its recent explosion in monetary policy.

The buyer of the T-bills has been primarily China while 90% the liquidity has been injected into US entities.

Be that as it may, failure to stimulate business is the theme of markets this morning.

There is little left for the Fed to do but what is said below.

The Master of Depression, Mr. Bernanke, knows this well and will embrace the strategy whole heartedly quite soon.

This will probably start between December 15 and the New Year while world markets tend to be secondary to the season.

Remember the FACT that gold is a CURRENCY that move inverse to the US dollar.

Our friends at the Comex magnified today’s gold price action before the US market was fully there.

This article is highly technical except for the clearly understandable statement, which is the headline, and quote below that:

If all else fails, devalue the dollar

“Bernanke then wonders why – if the policy options for fighting deflation are so varied – did Japan fail, through its quantitative easing programme? Tellingly, he concludes that the problem there was as much political as economic.

The question then, is whether the US quantitative easing program will succeed.

In the event it does not, one final deflation-fighting measure to consider, from Ben:

Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it’s worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt’s 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation.”

The Fed is mothballing its $559bn supplementary financing program. Or, to put it even more obliquely:

Washington – The balance in the Treasury’s Supplementary Financing Account will decrease in the coming weeks as outstanding supplementary financing program bills mature. This action is being taken to preserve flexibility in the conduct of debt management policy in meeting the government’s financing needs.

The SFP is the principle means by which the Federal Reserve has been offsetting – since September – its massively expanded liquidity operations.”

More…

Posted by & filed under General Editorial.

Dear Friends,

It is not a coincidence that the appreciation in the dollar and fall in the euro both began to lose their respective momentum when it became clear that Quantitative Easing was now the primary strategy of the Federal Reserve. This method does not replace other methods, but is instead an addition to the multiple other approaches already in place.

In the same timeframe it appears the last of the weak longs exited the energy group.

I believe that the advent of Quantitative Easing is the beginning of Gold’s move to $1200 and $1650.

I believe the dollar rally is done at Harry Schultz’s PO of .88-.89 on the USDX.

The low in the euro has occurred.

All of this is a product of Quantitative Easing without sterilization.

When Bernanke referred to the Helicopter Drop of electronically created money without limits, he was referring to the following now famous speech:

Deflation: Making Sure "It" Doesn’t Happen Here
Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

Since World War II, inflation–the apparently inexorable rise in the prices of goods and services–has been the bane of central bankers. Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an "inflation bias" in the policies of central banks, and still others. Despite widespread "inflation pessimism," however, during the 1980s and 1990s most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon. Although a number of factors converged to make this happy outcome possible, an essential element was the heightened understanding by central bankers and, equally as important, by political leaders and the public at large of the very high costs of allowing the economy to stray too far from price stability.

With inflation rates now quite low in the United States, however, some have expressed concern that we may soon face a new problem–the danger of deflation, or falling prices. That this concern is not purely hypothetical is brought home to us whenever we read newspaper reports about Japan, where what seems to be a relatively moderate deflation–a decline in consumer prices of about 1 percent per year–has been associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems in the banking and corporate sectors. While it is difficult to sort out cause from effect, the consensus view is that deflation has been an important negative factor in the Japanese slump.

So, is deflation a threat to the economic health of the United States? Not to leave you in suspense, I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small, for two principal reasons. The first is the resilience and structural stability of the U.S. economy itself. Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency. A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape. Also helpful is that inflation has recently been not only low but quite stable, with one result being that inflation expectations seem well anchored. For example, according to the University of Michigan survey that underlies the index of consumer sentiment, the median expected rate of inflation during the next five to ten years among those interviewed was 2.9 percent in October 2002, as compared with 2.7 percent a year earlier and 3.0 percent two years earlier–a stable record indeed.

More…

The following articles should also be reviewed.

Sincerely yours,
Jim

M3, where art thou?

With quantitative easing under way, money supply is going to become an increasingly important gauge.

Morgan Stanley notes the measure will be a key indicator of when ‘QE’ actually starts to kick in. Before adopting QE, all excess reserves created by the Fed were being hoarded by banks. Rather than increasing, the so-called money multiplier (the link between the Fed’s balance sheet and the money supply) had actually plummeted. The only other time this has happened is during the Great Depression, say Morgan Stanley. But there is reason to be optimistic. They write:

“…there now appear to be some tentative signs of a turnaround. In the latest weekly data reported by the Fed, M1 jumped a whopping US$44 billion. And this follows on the heels of a US$33 billion jump in the prior week. To be sure, the monetary aggregates can be quite volatile, and special factors such as the recent hike in the deposit insurance cap can lead to short-term distortions, but going forward we will be watching the growth in the money supply in order to gauge the effectiveness of QE.”

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The pictorial Quantitative Easing

3200

In words: The Fed’s liquidity programmes, such as the TAF, have combined to inject about $1,100bn into the financial system (Figure 10) — and simultaneously jacked up the Fed’s assets. Normally the Fed offsets an increase in its assets by selling new treasuries, which decreases the amount of currency in circulation and conversely increases its liabilities. This is called sterilisation and is one way the Fed can increase assets without expanding the money supply.

The Fed’s primary method of draining the excess liquidity (The SFP programme) has only gotten rid of about $500bn of that $800bn increase. The Fed is not fully sterilising its massive increase in assets — in effect it is increasing the money supply.

This is not necessarily a bad thing. For a start, inflation helps you pay off debts — which are fixed, and of which there are a lot in the US — by essentially devaluing your debt (and conversely, in a perverse sort of way, making the savings of those who had the foresight tendency to err on the side of prudence, worth less).

The inflationary effect is, however, mitigated by one thing — the breakdown of the money multiplier as bank lending has seized up. Thus, money supply has increased, in this case measured by M1, but it’s increased less than the rise in the base money supply would suggest.

A final word on the matter, from BoA’s Jeffrey Rosenberg, regarding yesterday’s announcement that the Fed would start buying mortgage-backed stuff (MBS) from the GSEs Fannie and Freddie (emphasis our own):

Today’s Fed announcement on GSE purchases launches explicit QE that kills two birds with one stone. QE offsets the current deflationary impact of financial system distress and directing these purchases towards GSE debt and MBS may help reduce mortgage rates, a key goal to stabilizing the housing market. While QE may offset current deflationary risks, longer term these measures must be temporary to avoid creating their own problems of inflation and dollar devaluation, a risk highlighted by today’s USD decline and increase in gold…

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Posted by & filed under General Editorial.

Dear CIGAs,

If this can happen in Bombay (Mumbai) it can happen in NYC, LA, Toronto or anywhere.

This is a city under siege. This is no minor event. It is an unthinkable kind of war and Westerners are the major hostages at the 10 locations this is taking place.

These hotels presently under attack were hosting meetings for major international corporations at the times of the attacks.

The government of India and the government of Pakistan just announced mutual assistance plans to fight terrorism.

This was well planned and well executed. This is not a small thing but rather ratchets up the geopolitical risk the world faces everywhere.

Don’t kid yourself for a second. This is a city as vibrant as NYC but larger. There is no place there presently under attack that I have not stayed or gone to.

When the story is finally told you will see the terrorists in Pakistan have a major hand here. I have warned you that Pakistan is the greatest problem the world has.

Mumbai rocked by deadly attacks
Thursday, 27 November 2008

Gunmen have carried out a series of co-coordinated attacks across the Indian city of Mumbai (Bombay), killing at least 80 people and injuring 200 more.

At least seven high-profile locations were hit in India’s financial capital, including two luxury hotels where hostages were reported to be held.

A fire is sweeping through the Taj Mahal Palace, Mumbai’s most famous hotel, which is now ringed by troops.

Police said four suspected terrorists have been killed and nine arrested.

Flames and black smoke billow from the Taj Mahal Palace hotel, Mumbai

The situation is still confused but the city’s main train station, a hospital, a restaurant and two hotels – locations used by foreigners as well as local businessmen and leaders – are among those places caught up in the violence.

There are reports of gunfire and explosions taking place elsewhere in the city, and reports of a hostage situation at a hospital.

Commandos have now surrounded the two hotels, the Taj Mahal Palace and the Oberoi Trident, where it is believed that the armed men are holding dozens of hostages.

One eyewitness said that the attackers had singled out British and American passport holders.

More…

Posted by & filed under General Editorial.

Dear CIGAs,

As you know, it was Chairman Volcker who predicated the Hunt loan on my presence to advise on liquidation of the Hunt metal position.

I know him to be a brilliant realist.

In 1979 he had a totally different situation and the full backing of the Administration.

This time his job is the absolute opposite of what it was in 1979–1980.

This time I know his advice will be friendly to gold and most certainly on the subject of FRGCR. This I know!

Gold was a major items used in the 30s for many reasons, one of which was an attempt to take the deflationary perspective out of the public mind.

1. His assignment is to fight DEFLATION.

2. Obama spoke profusely of differences of opinion in his economic communication today.

3. There is no chance Obama will listen to Volcker other than when it supports administration goals and policies

4. After 7.1 trillion dumped into the economy there is no chance anyone can avoid the consequences.

5. Don’t be a fool and worry.

6. Worry only if you are not protected and insured against what is to come.

Volcker issues dire warning on slump
Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasise after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration as it struggles to restore confidence.
By Ambrose Evans-Pritchard
Last Updated: 10:39PM GMT 17 Nov 2008

"What this crisis reveals is a broken financial system like no other in my lifetime," he told a conference at Lombard Street Research in London.

"Normal monetary policy is not able to get money flowing. The trouble is that, even with all this [government] protection, the market is not moving again. The only other time we have seen the US economy drop as suddenly as this was when the Carter administration imposed credit controls, which was artificial."

His comments come as the blizzard of dire data in the US continues to crush spirits. The Empire State index of manufacturing dropped to minus 24.6 in October, the lowest ever recorded. Paul Ashworth, US economist at Capital Economics, said business spending was now going into "meltdown", compounding the collapse in consumer spending that is already under way.

Mr Volcker, an adviser to President-Elect Barack Obama and a short-list candidate for Treasury Secretary, warned that it is already too late to avoid a severe downturn even if the credit markets stabilise over coming months. "I don’t think anybody thinks we’re going to get through this recession in a hurry," he said.

He advised Mr Obama to tread a fine line, embarking on bold action with a "compelling economic logic" rather than scattering fiscal stimulus or resorting to a wholesale bail-out of Detroit. "He can’t just throw money at the auto industry."

Mr Volcker is a towering figure in the US, praised for taming the great inflation of the late 1970s with unpopular monetary rigour. He is no friend of Alan Greenspan, who replaced him at the Fed and presided over credit excess that pushed private debt to 300pc of GDP.

"There has been leveraging in the economy beyond imagination, and nobody was saying we need to do something," he said. "There are cycles in human nature and it is up to regulators to moderate these excesses. Alan was not a big regulator."

Even so, he said the arch-culprit was the bonus system that allowed bankers to draw forward "tremendous rewards" before the disastrous consequences of their actions became clear, as well as the new means of credit alchemy that let them slice and dice mortgage debt into packages that disguised risk.

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Posted by & filed under General Editorial.

Dear CIGAs,

Numerous members of the community have reported dealers asking $100 or more above spot price for gold!

1. Coin dealers are in the main all related to Pirate Pete and Black Beard. There are no Mother Theresa’s there.
2. If you can afford 100 ounces you never need to pay even one cent above spot.
3. You can buy the COMEX gold contract in the delivery month at the first notice day for delivery.
4. You take delivery of the gold, which will be hallmarked and registered, saleable ANYWHERE WITHOUT RE-ASSAY, EXCEPT THE COMEX.
5. That quirk is only to dissuade you from taking delivery.
6. 100 ounce bars taken delivery of can, if you wish and in the light of day, legally be shipped to a Swiss free zone depository. I will have more information on costs, segregation and so on shortly.
7. You do not need gold certificates or mints anywhere. You do it all yourself therein eliminating all financial agents or certificates.
8. The only way to remove paper gold manipulation is to remove gold from the COMEX warehouse.
9. I am sure that the gold dealer asking $100 or more above spot for gold will not buy any at even $5 above gold’s quoted bid. If they did you could take delivery and with some effort and proper procedures sell to the coin dealer.

"Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. "Stand and Deliver or Go Home" should be the rallying cry of the gold longs to the paper gold shorts." –Trader Dan Norcini

Jim,

There were 11,554 deliveries for the month of October. Thus far for November there have been 1228 deliveries. November is a rather unknown quantity as a contract so I expect to see a very significant number of deliveries as December goes into its delivery period.

Total registered category ounces – 2,804,270

Total eligible ounces 5,713,922

Trader Dan

Dear CIGAs,

To make the taking of delivery meaningful, it must be removed from the COMEX warehouse.

Harry Schultz once told me I was a general without an army because of the principle that you cannot herd cats.

I replied to Harry that I felt that in the main the gold gang were not pussies.

Are you, those who can afford 100 oz?

Regards,
Jim