Posts Categorized: General Editorial

Posted by & filed under General Editorial.

Dear CIGAs,

As letting Lehman declare bankruptcy proved without any doubt, once you start Federal bailouts of all and everything you cannot stop.

They have opened a Pandora’s Box of providing dollars at home and at the home of all of the near and dear allies.

There is no way out now. The supply of dollars has risen in an unprecedented manner and this is only a harbinger of what lies ahead.

There is no way that a strong dollar can sustain itself alongside an  avalanche of new dollars being created electronically to hold up every major business, OTC derivative manufacturer and financial entity worldwide.

Here are a few requests coming this month.

Officials Seek Transit Rescues 
Total Exposure Could Be Up to $4B Bond Buyer  |  Oct 27 
WASHINGTON – State officials and lawmakers Friday were holding emergency meetings and pressing the Treasury Department to rescue public transit deals facing billions of dollars of payments.

Treasury Urged to Back SILO, LILO Deals Bond Buyer  |  Oct 28 
WASHINGTON – The Treasury Department must take the place of American International Group Inc. as guarantor of transit agency sale-leaseback deals to avoid “financial disaster” for state and local governments, a group of lawmakers warned Treasury and Federal Reserve officials yesterday.

JPMorgan Ditches $300M Deal; Miami-Dade Left in the Lurch Bond Buyer  |  Oct 27 
BRADENTON, Fla. – When JPMorgan Chase refused to renew a standby bond purchase agreement that expired Sept. 29 for more than 90 days, Miami-Dade County was forced to seek a substitute provider for nearly $300 million of variable-rate demand water and sewer bonds issued in 2005.

Alabama Files to Void Swaption 
State Wants to End Deal With JPMorgan     Bond Buyer  |  Oct 30 
BRADENTON, Fla. – Alabama on Tuesday filed a complaint in federal court asking a judge to void a swaption the Alabama Public School and College Authority entered into in 2002 and 2003 with JPMorgan.

S.F. Airport Restructuring No Laughing Matter Bond Buyer  |  Oct 27 
SAN FRANCISCO – As the auction-rate securities market meltdown raged this spring, San Francisco International Airport rushed to restructure hundreds of millions of dollars of ARS with variable-rate demand obligations, trying to beat other issuers to the market before liquidity dried up.

WMATA Seeks Court Order Against Creditors Bond Buyer  |  Oct 30 
WASHINGTON – The Washington Metropolitan Area Transit Authority sought court action yesterday to prevent it from having to make a $43 million termination payment on a sale-leaseback deal guaranteed by American International Group Inc.

Groups Want Facility for ARS Conversions Bond Buyer  |  Oct 29 
As liquidity for municipal issuers remains scarce in the short-term market, a regional broker-dealer group and an organization representing nonprofit student loan lenders are urging the Treasury Department to provide standby liquidity facilities for issuers still trying to convert from auction-rate securities to variable-rate demand obligations.

Posted by & filed under General Editorial.

Dear Friends,

If you are tired of being had by paper gold the following is the only course of action if you wish to take a positive step to end the games being played at your expense.

Delivery Process for Gold or Silver:

Delivery – Prudential holds the receipt in PFG’s account for customer

1. Client buys the futures contract.

2. Client will take delivery between First Notice Day and the Last Trading Day.

3. On delivery day account is debited cost plus a $50.00 delivery fee.

4. Receipt is booked to customers account

5. Monthly storage charge passed on to customer’s account(about $50.00).
Physical Delivery – Customer wants bars in their procession

1. Client buys the futures contract.

2. Client will take delivery between First Notice Day and the Last Trading Day.

3. On delivery day account is debited cost plus a $50.00 delivery fee.

4. We will provide the customer with name and phone number of the individual at the depository to contact.

5. Customer makes arrangements for the physical delivery

CIGA JB Slear, who is in the commodity business, offers his services to assist anyone seeking physical delivery of metals. He will guide you through the entire process, including arrangements for delivery.

To be totally clear, I expect JB not to discuss any type of speculation with you but ONLY help you acquire 100 ounce gold bars. Once 21,000 bars have been taken the paper gold’s reign over the price of gold is over.

CIGA JB Slear can be reached at the following:

Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104

Posted by & filed under General Editorial.

Dear Friends,

I, like yourself, am fed up with the gold bank’s ownership of the gold price via paper instruments. Therefore I respectfully ask those that can afford it to purchase as many Comex contracts as you can afford to take delivery of and do so.

Accept my assurance that I will take delivery of Comex 100 ounce bars on every delivery month from this day forward.

Respectfully yours,
Jim

Posted by & filed under General Editorial.

Dear Friends,

There is absolutely no question in my mind that gold will trade at $1650 on or before (probably much before) January 14th, 2011.

Regardless of what financial TV or popular analysts claiming never to have made an error say, we are correct.

Stay the course. Do not let your guard down. Protect yourself as the most significant dislocation economically in world history for major nations is at our doorstep. In fact it is one foot through your door already. Are you prepared?

You ask why? Then read on!

There seems to be some degree of assumption that each action by the Fed brings the credit lockup closer to being corrected.

There are many challenges to this assumption.

Will banks use funds to patch up their pillaged balance sheet or actually start loaning in a progressive manner? The answer is balance sheet as they really have no alternative.

As in the case of AIG below, is any cash bailout enough to bail out losers? We need to remember that what OTC derivatives do not do to financial or any other entity, the drop in earnings will. Whatever is left over litigation will pick the bone clean of.

Regulators went from 12 to 1 leverage to 40 to 1 leverage where a 2-½% change in total asset value would bust financial institutions. The losses taken are not bookkeeping, but are hard and real.

The only thing bookkeeping did was allow these losses to be maintained in full value because they were OTC derivatives, not listed derivatives with a clearinghouse guarantee. Clearinghouses demand losers pay in and winner are paid out daily while there is no such facility for OTC derivatives. Because of no clearinghouse function, banks and other entities carried the declining value in OTC derivatives at full value at 40 to 1 leverage.

The bailout funds are simply putting a thumb into the leak in the dyke as more holes open up from earnings declines, slow business and serious litigation.

The TIC report is looking quite bad, indicating that dependence on non-US entities to finance a budget deficit that is about to go ballistic cannot be depended on.

All that we have seen is emergency action without limits to hold financial zombies from being discovered by the general public.

The US Fed is in fact holding up the entire world that is near and dear to them. One of the methods is through swaps, which are a form of OTC derivatives and just like the disease, are off balance sheet items.

There is no limit to what the US Fed and Treasury will do in the next few months. It will be discovered in the not too distant future that the US dollar has moved into critical oversupply. At that point expect to the see the US dollar drop like a stone and gold trading at $1200 and $1650.

The US dollars will see.72 again prior to .62 and .52.

The limiting factor to the present terminal financial condition under the Fed and Treasury bandage bailout is the US dollar. There is no escaping the event of publicly recognized dollar oversupply, the ineffectual nature of bailouts and the appearance of hyper-inflation in the midst of non-recovering business conditions.

Keep firmly in mind that retired Chairman Volcker has described this situation as “We have a failed financial structure.” He went on to describe the condition of the financial situation as “Code Blue.”

What you see now is only the beginning of a great economic drama, out of control and nowhere nears its end.

This is it. It is now!

Gold is the only entity that has the capacity of insuring your future buying power, maybe even more.

Enough said.

Respectfully,
Jim

AIG Already Running Through Government Loans
By Mary Williams Walsh, | 30 Oct 2008 | 06:51 AM ET

The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analyst’s say at least part of the shortfall must have been there all along, hidden by irregular accounting.

“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.

Mr. Vickrey says he believes AIG [AIG  1.64    0.09  (+5.81%)   ] must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse and received an $85 billion emergency line of credit by the Fed. That loan was later supplemented by a $38 billion lending facility.

But losses on that scale do not show up in the company’s financial filings. Instead, AIG replenished its capital by issuing $20 billion in stock and debt in May and reassured investors that it had an ample cushion. It also said that it was making its accounting more precise.

Mr. Vickery and other analysts are examining the company’s disclosures for clues that the cushion was threadbare and that company officials knew they had major losses months before the bailout.

More…

Posted by & filed under General Editorial.

Dear CIGAs,

Gold is a currency.

Paper currency insures nothing.

Gold is insurance.

Gold is not a commodity.

Gold will trade at a minimum of $1650 MUCH SOONER THAN I HAVE ANTICIPATED.

The shorts in gold shares will get what they deserve – financial decimation.

Your friend,
Jim

Posted by & filed under General Editorial.

My Dear Friends,

There is nothing normal about this abnormal set of circumstances.

During the Weimar Experience the “Velocity of Money” went wild on the upside.

Think about this because I vigorously disagree with the normal economic crowd that is vocal today. Under present and upcoming circumstances, monetary inflation of this kind, size, speed of injection and constancy cannot be defeated by failure of the normal chains of economic production of increasing prices.

This is not like 1929 or any other previous US liquidity credit crisis. That is why Bernanke is signing the dollar’s final death sentence by following the 1929 experience in creating his reactions.

We shall see, but I warn against being emphatic that the norm is the norm now because it isn’t

Respectfully,
Jim

Posted by & filed under General Editorial.

My Dear Friends,

There is nothing normal about this abnormal set of circumstances.

During the Weimar Experience the “Velocity of Money” went wild on the upside.

Think about this because I vigorously disagree with the normal economic crowd that is vocal today. Under present and upcoming circumstances, monetary inflation of this kind, size, speed of injection and constancy cannot be defeated by failure of the normal chains of economic production of increasing prices.

This is not like 1929 or any other previous US liquidity credit crisis. That is why Bernanke is signing the dollar’s final death sentence by following the 1929 experience in creating his reactions.

We shall see, but I warn against being emphatic that the norm is the norm now because it isn’t

Respectfully,
Jim

Posted by & filed under General Editorial.

Dear Jim,

I believe what happens to the economy in Iceland will be a test-case for the US. Iceland is going for an inflationary depression since the banking system crashed and foreign investors stopped investing in the country. The same is starting to happen in Eastern Europe. I suppose it is only a matter of time when foreign investors stop investing in the US. Then you will soon have the Iceland experience. Shouldn’t we be looking for Weimar in Iceland, then Eastern Europe, then the US, and then the planet?

“Iceland’s economy may contract as much as 10 percent, according to Lars Christensen, chief analyst at Danske Bank A/S in Copenhagen. The central bank on Oct. 15 cut the benchmark interest rate by an unprecedented 3.5 percentage points to 12 percent, indicating policy makers have given up trying to control inflation. Prices may surge as much as 75 percent in coming months, Christensen estimates. “

Click here to view the full article…

Also important, Vladimir Putin warns his countrymen about buying dollars. He called it ‘dubious business’. I guess you are on his side now!

Click here to view the article…

Thank you for some great articles in the last week.

All the best!
CIGA Jeroen

Dear Jeroen,

The most difficult concept for the professional public to understand is that hyperinflation can exist along with a totally disastrous economic environment. Hyperinflation falls flat because it fails to take into account the infinite velocity of money that a Weimar creates during a depression economy as a product of throwing monetary discipline at the wall.

When you pay people three times a day to keep up with prices, consider the mammoth daily increases in all private and business transactions in terms of the total number of currency units. What happens to the velocity of money? The turnover increases with the rate of inflation until both are hyper creating an unstoppable spiral.

Few understand that monetary inflation proceeds and sustains price inflation. For this reason world business in a rat hole with credit still jammed up will lead to hyperinflation in 2009-2010.

If world business is perceived to have bottomed and credit flows are re-established, this will bring hyperinflation in 24 hours.

We have heard both Russia and China chime in today on their clear perception of the pre-election falsely valued US dollar and government interference in not only gold but energy and food.

The PPT is working overtime on those index spreads but they only have a short time (13 to 88 days) before they have to throw it into what is most likely inexperienced hands.

Yes, a planetary Weimar is on the menu. Russia, the Middle East and China may just be the top survivors. Africa might just come into its own in such a scenario due to the amount of raw material and gold resources they have.

Respectfully,
Jim