Posts Categorized: General Editorial

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Dear CIGAs,

Yes, gold is a currency. To deny that is simply idiotic. However there are degrees of relationship that are exaggerated by the gold banks for their perma-bearish short manipulation. Today, like yesterday and all the days before, the Comex gang ripped off your gold price lollypop. Minus $22 between today and yesterday is somewhat over the top. The euro versus the US dollar is a simple equation. It is a financial value comparison between the world’s largest debtor nation’s currencies, the US dollar and a creditor group of nation’s currency, the euro. Now you understand.

Manipulation of the gold price can be stopped if delivery of 21,000 contracts are taken and moved out of the Comex warehouse. We absolutely do not seek to break the exchange, we simply wish to stop manipulation that uses your money to collect their profits.

Two of my friends reading this who we have nicknamed Dr. No and Chung Phat could, if they wished, bring an end to this tomorrow. You can in three months 100oz bar by 100 oz bar.


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Jim Sinclair’s Commentary

From an anonymous Swiss friend:

"Just for your information I have until now been able to buy 100 gram bars through my Swiss Banks.

Today the major Swiss Banks are also out of stock of the 100 gram bar. I can still buy 1 kg and 12 kg bars, but for how long?

As you have read the Swiss mints are working around the clock and seeing unprecedented demand.

With dwindling supply and very strong demand combined with the very favourable economic fundamentals for gold, it can only be a matter of time before the gold price explodes.

Also, the current move in gold is only against weak currencies such as the pound and the dollar. When the real move starts, gold will move up also against the Euro and Swiss Franc and this will be due to gold strength not just dollar weakness."

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Dear Friends,

Now that the wind has turned on both gold and gold shares we must not cease in our fight for what is right – a level playing field as mentioned in point 1. If we do not do our duty, your duty, both the Comex short side manipulators and the naked/pool shorts will be back again.

Respectfully yours,
Jim from Africa


Comrades in Golden Arms (CIGAs),

I call upon you for positive action.

We need 100,000 emails to Cox using the data of #2 below.

1. The Comex must be stopped. I know there are two of you reading this that can by yourself stop the Comex without the need of anyone’s assistance. If I have helped you now it is time to return the favor.

Please stop the Comex. Reduce their warehouse by only 50% and the short manipulators are done.

We do not wish to break the playing board, we only wish to equal the advantage between the public and the up to now pocket picking short gold bank manipulators.

2. The short pools and naked short sellers have caused us unprecedented and undeserved losses of capital value. The total capital value loss in junior gold exploration, development and producer shares is well over $50 billion.

Let us use their Mea Culpa on Madoff to say that the SEC has blown another one by supporting the useless thieves who violate the law daily using Canada as the jitney into the US as naked and pool short sellers. This is so blatant, so clear, so evident that we can only assume that the SEC is purposely looking the other way.

S.E.C. Issues Mea Culpa on Madoff
December 17, 2008

The Securities and Exchange Commission said Tuesday night that it had missed repeated opportunities to discover what may be the largest financial fraud in history, a Ponzi scheme whose losses could run as high as $50 billion.

The commission said it received credible allegations about the scheme at least nine years ago and will immediately open an internal investigation to examine why it had failed to pursue them aggressively.

The S.E.C. issued the statement hours after Bernard L. Madoff, the 70-year-old Wall Street executive accused of operating the scheme, discussed the fraud with federal authorities at a meeting in New York on Tuesday, according to people briefed on the meeting.

Mr. Madoff kept several sets of books and false documents and lied to regulators when they questioned him in previous examinations of his firm, Bernard L. Madoff Investment Securities, said Christopher Cox, the chairman of the S.E.C.

Investigators never used subpoena powers to obtain information, but rather “relied on information voluntarily produced by Mr. Madoff and his firm,” Mr. Cox said.

When he was arrested last week, Mr. Madoff estimated that investors lost as much as $50 billion in the fraud, according to court filings. Mr. Madoff has said the scam was a Ponzi scheme, a type of fraud in which early investors are paid off with money from later victims, until no more money can be raised and the scheme collapses.


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My Dear Friends,

Once again the gold banks stole your golden candy. They will do it again tomorrow and continue until they really have to trade real gold.

My question to the most financially able among you is as follows:

Have you had enough of the daily short side manipulation carried on by the same people blatantly on the floor of the make believe gold paper gold exchange, the COMEX? Over the weekend they thumbed their noses at you in an article concerning the increase in delivery taking. The COMEX member quoted laughed at us saying they had a warehouse of $8 billion that was too big to feel any effort to take delivery.

Maybe Madoff didn’t know about the COMEX. $8 billion in today’s world is chump change, however the chumps at the evil COMEX can’t count the amount of fingers they have.

To our most financially able readers, those who have all the physical gold they want, it only takes 21,000 one hundred ounce bars taken delivery of and removed from the COMEX to convert that market to a cash market from a make believe no gold, paper gold market and price maker.


Respectfully yours,

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AgesofGoldDear CIGAs

I want to bring your attention to some recent correspondence I had with Timothy Green, a veteran journalist and seasoned gold bug. For almost three decades, Green worked as a consultant on the annual gold surveys of Consolidated Gold Fields and Gold Fields Mineral Services (now GFMS), focusing on the Middle East, India and the Far East.

His first book, "The World of Gold," came out in 1968 and has been revised several times. His latest book, “The Ages of Gold,” is reviewed below and no doubt will see several revisions in the years ahead. Green has written for Life, Fortune, The Smithsonian, Readers Digest, the Observer and several other major publications and is eminently qualified to discuss the often complex but never boring subject of gold.

Green believes that gold’s safe haven status has become a key driver in the current marketplace, noting its strong performance against several major currencies including the Euro and Sterling. He’s also certain that "grassroots gold buying of coins and small bars will continue – and, importantly, people will hold that metal for a long time. That kind of buying is not a quick trade, but a generational thing."

"In 1930s in similar situations Europeans became great hoarders of gold coin, especially in France, Belgium and Switzerland, and hung on for decades. When I first looked at the gold market in Paris in l966 the story was still the hoards under the bed and in the cabbage patch. In short, a new generation of long term hoarders is being established," he pointed out.

Green sights Ralph Hawtrey, a distinguished economist at the British Treasury in the late l930s who remarked: "There is a very real convenience in using metallic reserves. Other assets take the form of debts, and every debt depends for its value on the person and local situation of the debtor. Gold is an anonymous asset, and is capable of transportation from one place to another without retaining any link with the place of origin."

"In writing my book, The Ages of Gold, I noted that Hawtrey’s perception of the metal as a unique asset remains true to this day. Thousands of small investors now buying gold coin and small bars seem to agree," he said.

The Ages of Gold is the story of the mines, the markets, the goldsmiths and the merchants who over the past 6,000 years made gold a symbol of wealth and power. Green chronicles gold’s origins in Mesopotamia, Egypt, Troy, Minoan Crete, Greece, Rome, Byzantium, Pre-Columbian South America along with the voyages for West African gold by the Phoenicians. His carefully crafted, well-illustrated 480 page tome masterfully links the modern world of gold with the ancient one which is no small feat.

The Ages of Gold is available online at the GFMS website ( While you are there, don’t forget to check out their annual gold, silver and other metals surveys which are renowned throughout the minerals industry.

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Dear Friends,

This incisive article by Peter Shann takes us from the shock of the creation of more dollars than ever anticipated being ploughed into both financial and industrial concerns to the mechanics of how hyperinflation is created and why it is now unavoidable. All of this was caused by the implosion of the huge mountain of garbage paper, over the counter derivatives.

In terms of forward discounting markets, this could be marketwise tomorrow.

Farming is a credit-based business that has for months been discussed not in terms of farming products, but rather in the sense of its impact on demand in the market for critical products to the farming process. Primary focus has been aimed at South America but applies everywhere.

Grains and meats, as all edibles, certainly qualify as necessities to life. Electricity, heating oil, housing, and medicine are part of what is necessary for life, itself.

Dislocations in supply are easiest to understand when viewing today’s decision to support Motors from the US Treasury. There is still no clear answer if the suppliers to Motors are willing to do business as usual in terms of delivering goods for payment 45 days later. It seems as if supplier will not be happy with this traditional manner of doing business. It may be like beer suppliers to a questionable credit that is “cash on hand,” or no beer.

So here are two examples that will be repeated many times but in the same way as we move faster and faster toward the unseen CONSEQUENCES of a broader and ass backwards approach to the business of government and commerce. That is best understood as when you reward non-production and punish production. The result is ALWAYS non-production.

You would assume that extremely difficult business conditions would be accompanied by an oversupply of all kinds of goods and services, but hard logic and history prove otherwise.

Simply stated, both on the micro and macro level, the present credit lockup and lack of confidence between lender and borrower, between supplier and consumer, and eventually between international suppliers and the currency of the world’s major manufacturer of currency will be the process of why the present unprecedented air bombing of cash (US dollars) will result in hyperinflation as unprecedented as is its cause.

Do some introspection. Does a supply of essential goods seem attractive to you? If the answer is YES here are the mechanics of what you have intuitively understood

Read the following slowly with your major focus on the steps numbered one through ten.

We will name this Peter’s Formula, the natural outcome of Jim’s Formula.


The roots of hyperinflation
I have written the following because I do not think the dangers of hyperinflation and currency collapse are understood;
Peter Shann

The most widely accepted view is that hyperinflation and monetary collapse results from governments introducing large amounts of fiat money into the economy, Wikipedia comments;

"The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run"

This explanation is superficial and doesn’t provide answers as to why governments would in the first instance "massively and rapidly increase the amount of money" nor why they would.

feel compelled to continue with this as inflation increases by factors of thousands of percent and in some extreme instances print banknote in denominations of 100,000,000,000,000 currency units, it also fails to explain why newly issued money is not primarily invested in asset class goods or why goods that can easily be replicated, as can most essential consumables, be often subject to the greatest price inflation.

A prerequisite of hyperinflation and monetary collapse is that a disruption in the availability of essential goods occurs, today this could happen as a result of past reliance on expanding credit and fiat money temporally facilitating dependency on low cost imported goods many of which now feed primary needs leading to a commensurate loss of home production capacity with an inherent delay to the medium-term should such reengagement with manufacture become necessary as it would in the event of off shore suppliers losing confidence in reciprocal worth of monetary instruments offered in exchange for goods, and or shortage of essential goods may arise as a result of natural correction occurring, by way of example from the collapse of speculation driven credit markets and or as a result of collateral damage to the production cycle caused by inappropriate governmental action in further increasing money and credit supplies in attempt to drive a spontaneously occurring and necessary correction back in the direction of instability and in so doing distorting essential work ethics and disincentivising investment in the production cycle,

In my view the most probable sequence of events resulting in hyperinflation and monetary collapse is as follows:

1. A broad based shortage of goods that are thought essential develops and this is not relieved in time to satisfy demand.

2. Consumers trying to acquire essential goods that they believe are in short supply become fearful and are prepared to pay increasingly higher prices and stockpile these goods further increasing shortages and accelerating prices as a sellers market develops.

3. Prices rise for essential goods in short supply as an increasing proportion of the money supply circulates in these goods, also with increasing velocity and as most of these goods are consumables with high turnover upward re pricing quickly occurs.

4. The proportion of available money circulating in goods that are perceived as essential increases and the demand for less essential goods diminishes I.e essentials become disproportionately more expensive than the norm against non essential goods displacing money towards the goods most in demand further fuelling inflation,

5. The shortage of essential goods accelerates as manufactures increasingly focus on short term survival, longer term risk is avoided and investment in the production cycle is reduced accelerating 1.

6. The normal balance of demand for all goods increasingly prefers those goods required to satisfy primary needs and people engaged in making and supplying less immediately essential or non essential goods become unemployed who then pressures governments accelerating condition 9.

7. Eventually goods not immediately required but non the less essential are needed and rapidly increase in price as they also become in short supply.

8. Consumers with least money first find it increasingly difficult to secure essential goods, become frightened and are forced to allocate greater proportions of their money on essential goods and demand greater income,

9. The demand for money forced by need and fear becomes irresistible so governments feel insecure and provide increasing amounts of fiat new money,

10. Consumers first to spend the new money see some value but soon as this new money is distributed and its value is lost, the velocity of money also accelerates as people rapidly exchange money for goods, wealth is seen as best protected when stored as goods rather than cash further increasing price and reinforcing condition 9,

Posted by & filed under General Editorial, Guild Investment.

"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

Dear CIGAs,

Hey all of you Americans. This movie is coming soon to a country near you. Except the headline will read "People Hoard Gold, Jewelry and Other Assets as US Dollar Plunges." In my opinion, it is just a matter of time.

Respectfully yours,
Monty Guild

Russians Buy Jewelry, Hoard Dollars as Ruble Plunges
By Emma O’Brien and William Mauldin

Dec. 11 (Bloomberg) — Moscow resident Tima Kulikov banked on the full faith and credit of the U.S. government, not the Kremlin, when he sold his biggest asset for cash.

The 31-year-old director of a social networking Web site initially agreed to sell his apartment for rubles, then cringed at the thought of the currency weakening as it sat in a lockbox pending settlement of the contract. It wasn’t until the buyer showed up with $250,000 stacked in old mobile-phone boxes and stuffed in his pockets that Kulikov closed the deal.

“The exchange rate we agreed on wasn’t great, but I did it because the money’s going to lie there for a month,” Kulikov said. “Put it this way, the ruble’s more likely to have problems than the dollar.”

Russians are shifting their cash into foreign currencies and buying things they don’t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 percent against the dollar since August, when Russia’s invasion of neighboring Georgia helped spur investors to pull almost $200 billion out of the country, according to BNP Paribas SA.

The central bank today expanded the ruble’s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy.

With the specter of the 1998 debt default and devaluation in mind, Russians withdrew 355 billion rubles ($13 billion), or 6 percent of all savings, from their accounts in October, the most since the central bank started posting the data two years ago. Foreign-currency deposits rose 11 percent.


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Dear CIGAs,

There is a great shift in the gold market that is being consistently leaned against by the Gold Banks. You can be sure they will be back to rip us all off. Please do me and yourselves a great favour: No matter where you are on this planet if you can afford a 100 ounce bar buy the nearby month gold on the Comex, take delivery then remove the delivered gold from the warehouse.

CIGA JB Slear will walk with you the entire way if you want the complexity transmuted into simplicity.

Fear triggers gold shortage, drives US treasury yields below zero
The investor search for a safe places to store wealth as the financial crisis shakes faith in the system has caused extraordinary moves in global markets over recent days, driving the yield on 3-month US Treasuries below zero and causing a rush for physical holdings of gold.
By Ambrose Evans-Pritchard
The Telegraph, London
Wednesday, December 10, 2008

"It is sheer unmitigated fear. Even institutions are looking for mattresses to put their money under until the end of the year," said Marc Ostwald, a bond expert at Insinger de Beaufort.

The rush for the safety of US Treasury debt is playing havoc with America’s $7 trillion "repo" market used to manage liquidity. Fund managers are hoovering up any safe asset they can find because they do not know what the world will look like in January when normal business picks up again. Three-month bills fell to minus 0.01 percent on Tuesday, implying that funds are paying the US government for protection.

"You know the US Treasury will give you your money back, but your bank might not be there," said Paul Ashworth, US economist for Capital Economics.

The gold markets have also been in turmoil. Traders say it has become extremely hard to buy the physical metal in the form of bars or coins. The market has moved into "backwardation" for the first time, meaning that futures contracts are now priced more cheaply than actual bullion prices.

It appears that hedge funds in distress are being forced to cash in profits on gold futures to cover losses elsewhere or to meet redemptions by clients. But smaller retail investors — and perhaps some big players — are buying bullion in record volumes to store in vaults.

The latest data from the World Gold Council shows that demand for coins, bars, and exchange-traded funds (ETFs) doubled in the third quarter to 382 tonnes compared to a year earlier. This matches the entire set of gold auctions by the Bank of England between 1999 and 2002.