Posts Categorized: General Editorial

Posted by & filed under General Editorial.

My Dear Extended Family,

Things are now "Out of Control."

This international financial crisis is now out of control as the world asks if the USA has two presidents, one president or no president at all.

It would appear that Paulson is in financial control with Bernanke as his second.

I warned you by personal email long before the statement was proven totally correct that “This is it.” That was followed by “This is it, and it is now.” Many people laughed it off.

This is it, and it is now.
Now it is out of control.
Now we enter the Collapse of Confidence period.
Then we begin the Weimar Experience.

It has all hit the fan, and still the absolute majority have no clue. The OTC derivative dealers broke the system into millions of pieces of glass. This broken glass cannot be put back together.

It is heart rending to see a picture of GM autoworkers holding a prayer meeting for their retirement funds. The retirement money was never funded. It is a lost hope. This is another responsibility the government has undertaken that is going to go wild.

Those of you still in freeze frame are headed for lines around your bank. Your bank will likely be acquired by another bank that also is in deep trouble.

The US dollar, like a leaderless company, will lose its respect and therefore value.

In order of importance the following MUST be done unless you want to be one of the suffering masses that will be all too visible this winter:

1. You must have your assets held anywhere they are in true custodial-ship accounts. That type of account at a bank or broker states clearly that the assets held there are not on the balance sheet of the host financial entity. Those assets are clearly segregated in your name. This must be reviewed by counsel to be sure you have what you think you have. Don’t cheap out. All you have is depending on the validity of true custodial-ship accounts.

You cannot know all the banks are broke, however I feel ALL banks are broke because finance is an intertwined system that if visible would look like a spider’s web. Problems on the top will materialize all along the web. Therefore the singular most important step you must take is the establishment of a true custodial-ship account.

Do not assume you have this type of account unless a competent attorney reviews the account papers.

2. I am extremely concerned about those of you who persist in holding certificates for gold rather than holding the actual metal either delivered to you or held for you in a true custodial-ship type account. The scams out there in gold are plentiful. The only way to avoid these scams absolutely is to have your gold in your own possession.

Every other means of holding gold is steps away from perfection. Some will be ok, but many will not.

3. Why would anyone fail to either take paper certificates or order their financial agent to make direct registration book entry at the transfer agent? In most cases you only have until year-end to accomplish this strategy.

4. Withdraw from ETFs.

5. If you carelessly keep large assets with your broker you are as mad as a hatter. The FDIC DOES NOT have the money to guarantee all they are undertaking. Withdraw excess money constantly from any net broker. If you are so stubborn that you think you can trade to insure yourself when your funds are not making money while still getting your money that counts you are nuts. Admit to yourself you are nothing more than a gambling addict in a downward spiral.

6. Leave no gold or coins with any coin dealer.

7. If you can withdraw from your corporate retirement plan do it.

8. Withdraw from credit unions.

9. Withdraw from all money market instruments.

10. This is it.

11. It is now.

12. It is out of control NOW.

The next two months are going to be shocking, but nothing compared to what you will have to experience in 2009.

Respectfully yours,
Jim

Posted by & filed under General Editorial.

Dear Friends,

What bank is broke, and what bank is solvent is an impossible question to answer. All we hear are lies, distortions and bailouts. There still has not been a definitive statement about all of this being a product of OTC derivatives.

The key to survival as we have already told you is that you keep your assets in a true custodial-ship anywhere.

Soon you will not be able to direct register or get paper shares for most public companies.

What are most you waiting for? You are at risk to your financial agents. For your sake, get off your butt and do the necessary.

INFALLIBLE INSURANCE ON SALE:

Gold is cheap at $800 per ounce.

Gold is the only viable insurance. The US dollar is not viable insurance because there is simply too much of it and that amount is growing every day. That makes the US dollar untrustworthy.

Gold is the only viable insurance. Clearly equities (with the exception of precious metals shares) are not.

Gold is the only viable insurance. US Treasury bills are not because the yelling at all the rating agencies in Washington today just might get US credit downgraded.

General commodities have been viable, but by nature they are too wild and from now on will be selective until Pakistan implodes and Weimar appears.

Banks cannot offer insurance as they are, in the main, bankrupt.

Insurance companies cannot offer you sound insurance.

Money market funds are not insurance, making gold the only viable insurance.

Retirement programs are no longer insurance.

Jobs are no longer insurance as companies are run by lawyers and accountants.

Equity in your home is not insurance because it simply does not exist.

Your family is no longer insurance because they have the same problems you do.

The assumption your kids will take care of you in your old age is not viable insurance no matter what you think.

Gold has no liability attached to it and is therefore the only viable insurance.

Gold is universally exchangeable, making it the only viable insurance.

Gold has historically performed perfectly in maintaining buying power, making it the only viable insurance.

Gold is the only viable insurance because it is Honest Money.

Since gold is the only viable insurance and because everyone needs it, gold will trade at levels of at least $1200 and $1650.

I could go on but gold is all there is that will protect you from the White Wash being applied by the Fed and Treasury on a structure that is in fact in a free fall.

I am not the least concerned about gold and believe you should not be either as long as you have no margin and understand what gold really is: a currency and an insurance policy. There is no other viable insurance in this most unusual situation.

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.

People expect things to return to normal in 2010. That is a fairy tale.

The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn’t look out the window.

Quantitative Easing by the Fed is the massive creation of funds with no sterilization.

All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control, and soon.

The out of control point for major planetary dislocation is NOW for the next two months.

Regards,
Jim

Posted by & filed under General Editorial.

Dear CIGAs,

On or before January 14th, 2011 Gold will trade at or above $1650. This is simply reporting on the symptoms created by my Formula originally posted in 2006 (Click here to review).

30 reasons for Great Depression 2 by 2011
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By Paul B. Farrell, MarketWatch
Last update: 11:53 a.m. EST Nov. 19, 2008

(Excerpted from larger article)

30 ‘leading edge’ indicators of the coming Great Depression 2

Every day there is more breaking news, proof Wall Street’s greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas — anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.

Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time’s running out. We’re already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:

1. America’s credit rating may soon be downgraded below AAA

2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"

3. Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse

4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets

5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea

6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers

7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money

8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states

9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt

10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps

11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up

12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns

13. Fed also plans to provide billions to $3.6 trillion money-market fund industry

14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars

15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion

16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs

17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown

18. Big three automakers near bankruptcy; unions, workers, retirees will suffer

19. Corporate bond market, both junk and top-rated, slumps more than 25%

20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall

21. Unemployment heading toward 8% plus; more 1930’s photos of soup lines

22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists

23. China’s sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai

24. Despite global recession, U.S. trade deficit continues, now at $650 billion

25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities

26. Now 46 million uninsured as medical, drug costs explode

27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt

28. Outgoing leaders handicapping new administration with huge liabilities

29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises

No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan’s Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America’s problems will take years and will burn trillions.

He sees "nothing but large increases in the deficit … I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds." It’ll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."

Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. ‘I just want to get people thinking about this, and to realize this is a road to disaster,’ said Whitehead. ‘I’ve always been a positive person and optimistic, but I don’t see a solution here.’"

We see the Great Depression 2. Why? Wall Street’s self-interested greed. They are their own worst enemy … and America’s too.

More…

 

Note to junior exploration, development and producers:

Unless the person or company is well known to you, already a large "registered" stockholder or a proven long, do not take private placements. The shorts are looking to cover.

Things may well be turning. Deal with well known friends only, not strangers and most certainly none of the bad guys.

When the HUI turns, the cover is on.

Regards,
Jim

Posted by & filed under General Editorial.

Dear CIGAs,

Did you enjoy today and yesterday in the paper gold market? You know the bullion banks are not even good traders in gold. They are only bullies. They could not compete with Trader Dan without their bully advantage.

To create an even playing field the transmutation of the COMEX to cash gold only means margins at 100%. This did occur late in the 1970s but was an entirely different situation.

When does a bully stop bullying? When the victim finally beats the crap out of the bully, that’s when. Nothing stops unless the victim takes action to stop it.

There is only one action that will bring this daily raping of the Gold and Silver market to an end.

If you are tired of being had by paper gold and silver bullies the following is the only course of action as a positive step to end the games being played at your expense.

Ending the bully’s free ride levels the playing field between you and the gold banks.

Do the necessary to stop the daily raping.

Take delivery of your COMEX gold and silver which can be shipped to any bank anywhere in the world.

Do not leave any intermediary between you and any kind of gold or silver you own.

Definitely:

  • DO NOT HOLD GOLD IN CERTIFICATE FORM.
  • DO NOT HOLD GOLD COMMINGLED WITH THE GOLD OF OTHERS.
  • DO NOT TRUST YOUR HARD EARNED GOLD TO ANYONE OFFERING YOU A SHADY DEAL.
  • LEAVE NO COINS WITH ANY COIN DEALER.
  • GOLD OR SILVER BOUGHT AND TAKEN DELIVERY OF ON THE COMEX CARRIES ZERO PREMIUM.
  • THE MARK UP YOU ARE PAYING COIN DEALERS FOR GOLD IS MADNESS WHEN THERE IS NO SUCH NEED IF YOU CAN AFFORD A 100 OZ BAR.
  • NEVER BUY GOLD ROUNDS WHICH ARE NOT COINS OF THE REALM.
  • PRETTY ARTWORK ON A ROUND DOES NOT MAKE IT A COIN OF THE REALM EVEN IF PERMITTED IN WRITING BY A GOVERNMENT AGENCY. ALL THAT DOES IS REGISTER THE PRETTY ROUND.

Here is a question for you to think about. I do not require the answer.

What is the difference between the Franklin Mint, the National Mint, the US Treasury Mint and Down Under?

Posted by & filed under General Editorial.

Dear Friends,

This is the exact point in the market at which the Bush Administration initiated the same actions as Roosevelt, but at a magnitude ten and all at once.

What do you think the Obama Administration will do?

We know the Fed has moved to Quantitative Easing.

Quantitative Easing
guardian.co.uk, Tuesday October 14 2008 12.10 BST

Quantitative easing is what non-economists call ‘turning on the printing press’.

In extreme circumstances, governments flood the financial system with money, easing pressure on banks by giving them extra capital.

Ben Bernanke, the chairman of the Fed, won the nickname ‘helicopter Ben’ when he floated just such an idea earlier this decade. US economist Milton Friedman had originally said it would be theoretically possible for governments to drop large amounts of cash out of helicopters for the public to pick up and spend."

More…

 

Lie-bor lies. If that were not so you would see the trickle down into general corporate paper which is nonexistent.

The dollar rally is from technical currency flows that will end and therein end the dollar rally.

Obama wishes to reduce military spending and increase fiscal stimulus. The latter will prove much easier than the former. Getting out of conflict is much harder than getting into one. Other problems of a military nature sit on the horizon. It is reasonable to assume FISCAL STIMULATION is the Obama plan regardless of other desired routes.

Gold’s decline is not part of the plan.

A strong US dollar is not part of the plan.

Significantly reducing military spending is more rhetoric than part of the plan in a practical sense.

When the boxes take shape we will add Obama to the schematic.

BushRoosevelt

Posted by & filed under General Editorial.

Dear Friends,

There are only two things you need to know:

1. Hyperinflation takes birth and is currency-visible during major economic upheavals. There is NO historical truth that business recovery is a necessary criterion to transmute massive increases in money supply into hyperinflation.

2. What has been the major cause of the transmutation of massive liquidity into hyperinflation has been one form or another of Quantitative Easing combined with a loss of confidence in the inflator.

Quantitative Easing does not sterilize it’s offspring – violent inflation. We will see this offspring not in the far future but in 2009, 2010, 2011 and maybe much further.

It is akin to the Japanese Sci-Fi out of the 70s titled “ The Green Blob That Ate The Earth.” It just grew and grew until it consumed everything.

For the moron financial TV hosts claiming that major inflation is well down the road because inflation requires a business recovery to occur, tell them to review:

Angola 1991-1999
Argentina 1981 – 1992
Belarus 1993 – 2008
Bolivia 1984 – 1986
Bosnia – Herzegovina 1992 – 1993
Brazil 1986 -1994
Chile 1971 – 1981
China 1948 – 1955
Georgia 1993 -1995
Germany 1919 -1923
Greece 1943 – 1953 At the high point prices doubled every 28 hours. Greek inflation reached a rate of 8.5 billion percent per month.
Hungry 1944 – 1946
Israel 1971 – 1985 (price controls instituted)
Japan 1934 – 1951
Nicaragua 1987 – 1990
Peru 1987 – 1991
Poland 1990 – 1994
Romania 1998 – 2006
Turkey 1990 – 2001
Ukraine 1992 – 1995
USA 1773 – not worth a Continental
Yugoslavia 1989 – 1994
Zaire 1989 – present (now the Congo)
Zimbabwe – 2000 to present. November of 2008 – inflation rate of 516 quintillion percent

From http://en.wikipedia.org/wiki/Weimar Republic

Posted by & filed under General Editorial.

Dear CIGAs,

First they geek net out about 40% of OTC derivatives, not knowing the credit conditions of the counterparties to these net outs. Apparently winning and losing does not count. Performance ability of a special performance contract counts less.

After that they declare there is no problem with OTC derivatives due to some magic wand of computer technology that forgets about insolvency, taking notional value to real value and expressing the risks inherent in all OTC derivatives as miniscule compared to notional. If these risks are so small what is all the hubbub about?

Truth in statistics simply does not exist in an amoral world where deceit is a virtue and the most successful predator is the person to be admired. It is a world of takers and destroyers, not givers and builders.

The ability to get an honest number on OTC derivatives no longer exists.

Treat the symptoms and hide the problem is the formula for destruction, not correction.

Posted by & filed under General Editorial.

Dear CIGAs,

If Chairman Volcker became Secretary of the US Treasury at this time that would be friendly to gold. However his suggestions contained herein are the opposite of what Obama has been saying in the last few days.

If Lie-bor was telling the truth Volcker would not have made certain statements. Think about it. Last April people were jumping up and down because of the lies of Lie-bor. Now when it suits them there is total silence.

I present you with this article where an Obama plan for an economy in OTC derivative convulsions is discussed. The problem is until you address the problem you treat symptoms. The problem continues to grow and you fail.

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.

More…

Jim Sinclair’s Commentary

The following are the key points of the article:

1. "Then there is the need for increased public spending on infrastructure and federal grants to state and local governments to offset the collapse of private spending."
2. "Candidate Obama spoke of $150 billion of fiscal stimulus. But if this recession turns out to be the deepest since World War II, as now seems certain, the appropriate figure will be at least four times that large. Anything less would fail to cushion the downturn."
3. "Then there is the problem of the auto industry. The best course normally would be Chapter 11 bankruptcy. This would allow the Big Three to shed bad management and contracts, both of which would be thrown out in the bankruptcy process."
4. "A further complication arises from the fact that cars last for years and when they break down are expensive to repair. Warranties matter, in other words. If a producer was undergoing bankruptcy reorganization, from which it might or might not emerge, consumers would question whether its warranties were worth the paper they were written on."
"But if this is the problem, then the government can guarantee the warranties."
6. He can ramp up spending on education and training.

Commentary: How Obama can fix the economy
By Barry Eichengreen
Special to CNN

BERKELEY, California (CNN) — President-elect Barack Obama has been holding his economic cards close to his vest. He did not participate in person at last weekend’s meeting of G20 leaders.

He has been reluctant to encourage the lame-duck Congress to adopt a major fiscal stimulus package.

He may be right in saying that the U.S. has only one president at a time. But this makes it all the more important that he hit the ground running on January 20.

This will mean, first of all, addressing the credit crisis. Despite all the actions of the Fed and the Treasury, the banks are still not lending. In some cases this is because their own finances are weak. But in others it is because they have other more convenient uses for their funds, ranging from acquisitions to dividend payments.

This reflects a flawed bank recapitalization scheme that gives the government no voting shares in the banks into which it is injecting public funds and hence no say in their decisions. Fortunately (as it were) there will be an opportunity to correct this, since as the recession deepens there will be more loan losses and the need for more capital injections. The next round of public money should come with voting rights so that taxpayers’ interests are protected.

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Jim Sinclair’s Conclusion

The solution remains to throw money at it via quantitative easing and fiscal stimulus. The consequences without any doubt will be hyperinflation in a depression like all other examples of hyperinflation in history. Also keep in mind that the re-emergence of gold in the monetary system will not be as a convertibility item but as a control item in the FRGCR.