Posts Categorized: In The News

Posted by & filed under In The News.

RebuildEconomy

Jim Sinclair’s Commentary

When you read articles like this keep in mind who is the most powerful man on the planet. The answer is the captain of a nuclear launch submarine. He has the power to incinerate nations.

Now think about how India has two Akula type 2 nuclear missile launching (28 per ship) submarines, and Pakistan has mobile nuclear launch vehicles with very long legged missiles.

I would say that is as serious as it gets.

After having a home in India and having lived there for a total of three years in short stays I can assure when it hits the fan the police with the guns and uniforms and the lights turned off are the most dangerous people there in any situation.

India may still strike at Pakistan: US report
19 Dec 2008, 2207 hrs IST, TNN

NEW DELHI: India may have ruled out the military option against Pakistan in the aftermath of Mumbai terror attacks but the international intelligence community continues to believe that strikes in PoK and elsewhere could still happen.

Global intelligence service Stratfor, in its latest report, said, "Indian military operations against targets in Pakistan have in fact been prepared and await the signal to go forward."

It added, "These most likely would take the form of unilateral precision strikes inside Pakistan-administered Kashmir, along with special forces action on the ground in Pakistan proper."

The private sector intelligence service said that unlike the massive movements of 2002 during Operation Parakram, India’s preparations this time were more under the radar and not visible to the world at large. Its only indication was the fact that the Border Security Force (BSF) has been put on high alert on the western sector as well as the eastern sector — this paramilitary force’s main mandate would be to prevent infiltration.

"Sources have indicated to Stratfor that New Delhi is going through the diplomatic motions in order to give Pakistan the opportunity to take care of the militant problem itself — but the Indians know that Islamabad has neither the will nor the capability to address their concerns," Stratfor said.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Quantitative easing combined with fiscal stimulation leads to the advent of the increased velocity of money. This equals lower values for the currency of the largest liquidity producer – the dollar. Confidence sunders when business activity statistics are less ebullient than the real rate of inflation. Confidence is the key as hyperinflation is a currency event, not a business event.

In Zimbabwe the price of food is doubling daily just as it did in all examples of hyper inflation.

$1 trillion is only the beginning for Obama’s fiscal stimulation.

Do you recall the low bailout estimates made when Bear blew up?

Monty Guild’s Commentary

Good call Jim. In my opinion, everything you say is exactly correct. From an economics point of view, the long term effect of these actions will be inflation.

I talk to a lot of economists. Although my Keynesian friends disagree with the inflation from money supply growth thesis, largely because it is a Monetarist viewpoint, they do admit that the current large increase in the supply of bonds could send the dollar lower. Like you and Dan, I strongly believe that the huge issuance of US bonds, and the actual printing of money to which Mr.Bernanke alluded, can only send the dollar lower. In my opinion, this will send gold and foreign currencies much higher.

Obama Team Is Seeking Stimulus Bill by New Year
By JACKIE CALMES

WASHINGTON — President-elect Barack Obama’s advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.

“The goal for completing action on this important legislation should be as close to Jan. 20 as possible,” said an e-mail message from Senate Majority Leader Harry Reid’s office to senior Senate Democratic staff members.

Some Obama advisers have sought to tamp down expectations that Mr. Obama could sign a package immediately after he is inaugurated. The opposition of some Senate Republicans and House and Senate negotiations on a final compromise could force delays into February.

Democrats familiar with the early deliberations say the preliminary price tag has grown to about $800 billion from the roughly $600 billion that House Speaker Nancy Pelosi had estimated in recent days.

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Jim Sinclair’s Commentary

These reports, like the reports on WMDs in Iraq, presages a move into Pakistan "to help" the government of Pakistan kill all the bad guys as a recent article in the Washington Post suggested.

‘ISI killing US troops in Afghanistan’
Fri, 19 Dec 2008 06:01:29 GMT

Pakistan’s powerful spy agency is working with groups that support the Taliban and are killing American troops in Afghanistan, a US report says.

“All of this suggests that the Inter-Services Intelligence (ISI) is no longer certain the coalition forces will prevail in Afghanistan and that it is using militants groups in an attempt to expand its own influence,” the report said.

The report by the bipartisan Pakistan Policy Working Group also cites the Afghan government’s allegations that ISI-supported elements that orchestrated an assassination attempt on Afghan President Hamid Karzai, and that the ISI had a role in the July 7 car bombing of Indian embassy in Kabul.

The 43-page report notes Pakistan may be the greatest challenge for US President-elect Barrack Obama.

The report came as Pakistani major media outlets said that the ISI had been cleared of any involvement in the Mumbai terrorist attacks by the US’ Federal Bureau of Investigation (FBI). According to Karachi-based Dawn, FBI agents interrogated Ajmal Kasab, the lone surviving terrorist for nine hours in Mumbai. They concluded that he was a Pakistani national but ISI was not involved.

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Jim Sinclair’s Commentary

Note how the markets took this both when announced as coming, and on its advent. I feel Obama’s fiscal stimulation will produce a general lift of the equity gang’s spirits, and a good lift to gold as the dollar is weighed down by the cost of fiscal stimulation.

Bush Approves $17.4 Billion Auto Bailout
By DAVID M. HERSZENHORN and DAVID E. SANGER
Published: December 19, 2008

WASHINGTON — President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and another $4 billion available for the hobbled automakers in February with the entire bailout conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.

The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.

The money to aid the automakers will come from the Treasury’s $700 billion financial stabilization fund and shortly after Mr. Bush’s announcement, the Treasury secretary, Henry M. Paulson Jr., who will oversee the aid to the auto industry, said Congress would need to release the second $350 billion for that program in short order.

By law, once Mr. Paulson makes a formal request, Congress has 15 days to reject it and deny the additional money. It was unclear when that request would be sent or if lawmakers who have left Washington for the holidays, would return to debate it. The administration’s handling of the program has come under sharp criticism and several lawmakers in both parties have suggested they would oppose the release of more money.

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Jim Sinclair’s Commentary

It amazes me how the obvious is always ignored as it approaches the full light of day.

Pakistan remains the world’s most serious problem.

NATO Materiel Threatened in Pakistan
Taliban Attacks on Goods for Afghanistan Mission Viewed With Growing Concern
By Candace Rondeaux and Walter Pincus
Washington Post Foreign Service
Friday, December 19, 2008; Page A23

PESHAWAR, Pakistan — A recent increase in Taliban attacks on a crucial NATO transportation route from Pakistan to Afghanistan could imperil efforts to bolster the flagging, seven-year U.S.-led military campaign in Afghanistan, U.S. and Pakistani officials say.

Attacks on NATO supply lines have become a regular occurrence in parts of northwestern Pakistan, including the country’s inhospitable tribal areas near the Afghan border. In the past two weeks, Taliban fighters have mounted at least six assaults on NATO supply depots near the Pakistani city of Peshawar, setting fire to more than 300 armored Humvees, military vehicles and other supply containers.

The attacks come as Pakistanis are increasingly calling for Western forces to stop using their territory for transport: Thousands of people rallied here Thursday to demand that the government cut off U.S. and NATO access to the main transit route.

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Fears grow over Pakistan terror resolve
By James Lamont in New Delhi
Published: December 19 2008 02:00 | Last updated: December 19 2008 02:00

Fears grew last night that Pakistan’s resolve to bring the perpetrators of the Mumbai terror attacks to justice was faltering.

The government said it had lost track of one of India’s most wanted militants following his supposed arrest only a few days ago.

Shah Mahmood Qureshi, Pakistan’s foreign minister, said Masood Azhar, the leader of Jaish-e-Mohammad, a militant group, was not under arrest, contradicting his government’s previous claim that he was in custody.

"Other people have been detained but Mr Masood Azhar is at large. We have no knowledge of his whereabouts," Mr Qureshi told reporters in Islamabad. The Pakistani defence ministry said a week ago that security forces had arrested Mr Azhar, who is suspected of launching an attack on the Indian parliament in 2001 that brought India and Pakistan to the brink of war.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

After a significant reduction of US presence, you can count on this.

Up to 25 Iraq government officials accused in plot
By QASSIM ABDUL-ZAHRA and SINAN SALAHEDDIN, Associated Press Writers Qassim Abdul-zahra And Sinan Salaheddin, Associated Press Writers

BAGHDAD – More than 20 employees of Iraq’s Ministry of the Interior have been arrested on allegations that they were plotting to revive Saddam Hussein’s outlawed Baath party, government officials said Thursday.

Interior Ministry spokesman Maj. Gen. Abdul-Karim Khalaf told reporters that 23 people, most employees of the ministry’s traffic department, have been arrested over the past five days but he dismissed suggestions they were plotting a coup.

A security official put the figure at 25 and said a brigadier general in the traffic police was the highest-ranking figure. Most of the others are low-level ministry employees, he said.

The official, who has access to the investigative file, spoke on condition of anonymity because he was not authorized to speak about the matter to the media.

Another security official said those in custody were believed to have links to al-Awda, or "Return," a Sunni underground organization founded in 2003 to try to restore Saddam and the Baath party to power.

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Posted by & filed under In The News.

Dear CIGAs,

If you feel gold is free of Madoffs you are dreaming.

Jim Sinclair’s Commentary

Gold will go to $1200 and then $1650 on its way to Alf’s lofty levels.

Quantitative Easing and Fiscal Stimulation guarantee that.

After rate cuts: The Fed’s new ball game
With rate cuts doing little to help boost the economy, the Fed has begun to print money to finance its liquidity programs. But that could spell disaster down the road.
By David Goldman, CNNMoney.com staff writer
Last Updated: December 15, 2008: 5:08 PM ET

NEW YORK (CNNMoney.com) — After what is likely to be the last in a long series of interest rate cuts Tuesday, the Federal Reserve is expected to continue its new, perhaps more effective monetary strategy: printing lots of money.

The Fed traditionally uses its rate-cutting tool to encourage lending and boost the economy. But despite a staggering 4.25 percentage points of cuts since September 2007, the economy has not improved – in fact, it has gotten worse, drifting in to a recession last December.

Economists expect the Fed to produce one more cut to its benchmark funds rate at the conclusion of its Federal Open Market Committee meeting Tuesday, trimming the rate to 0.5%, the lowest level on record. Whether one last rate cut will help stimulate economic growth remains to be seen.

At any rate, the Fed will likely continue to use its new favorite tool, quantitative easing, "Fed-speak" for pouring new money into the economy.

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Jim Sinclair’s Commentary

Stop the Comex and I promise you $1250 in gold immediately!

RPT-FEATURE-Nervy investors spur rush at Swiss gold refiners
Wed Dec 17, 2008 8:04am EST
By Arnd Wiegmann and Lisa Jucca

MENDRISIO/ZURICH, Switzerland, Dec 17 (Reuters) – Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.

This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.

"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world’s three largest.

"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.

Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.

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Jim Sinclair’s Commentary

For the real numbers subscribe to www.shawdowstats.com. The real numbers push events after the spin has spun itself out as it has now.

Treasury Reports 2008 Federal Deficit of $1.009 Trillion (GAAP-Based), 
$5.1 Trillion Including Social Security/Medicare
Total U.S. Government Obligations at $66 Trillion
Against what had been the recently publicized, cash-based "official" fiscal 2008 (year-ended September 30th) federal deficit of $454.8 billion, and similar $161.8 billion deficit in 2007, the U.S. Treasury reported this afternoon (December 15th) that the 2008 deficit [change in net position] was $1,009.1 billion, versus $275.5 billion in 2007, using generally-accepted accounting principles (GAAP). Since 2002, the Treasury has been reporting the government’s finances using annual statements prepared using accounting standards similar to those used in corporate America, but the statements typically have minimal, if any, following in the popular financial media.

The new numbers, however, still do not account for the annual change in the net present value of unfunded Social Security and Medicare liabilities. Counting those changes, as a corporation would for its pension and healthcare liabilities for retirees, the 2008 annual deficit was $5.1 trillion, versus $1.2 trillion in 2007. Such showed total U.S. obligations – gross federal debt outstanding plus the net present value of unfunded liabilities – at $66 trillion, roughly 4.6 times the level of reported U.S. GDP, and greater than total estimated global GDP.

These numbers remain unsustainable, already are deteriorating severely for fiscal 2009, and eventually will doom the U.S. dollar to hyperinflation, as discussed in the Hyperinflation Special Report at www.shadowstats.com.

I have not had a chance to review the statements in careful detail, yet, and there apparently have been some minor accounting changes that do not alter the picture meaningfully. A more complete analysis will follow in the upcoming newsletter. The full financial statements, including the GAO’s auditing comments, are available at: http://www.fms.treas.gov/fr/08frusg/08frusg.pdf

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

With a feeding frenzy to point out how the biggest of the big can be major turkeys, no one has asked the inviting question, what did he do with the money? It is hard to spend billions on oneself.

Top banks admit huge losses in Wall Street ‘pyramid’ fraud
Dec 15 09:11 AM US/Eastern

Top world financial groups on Monday revealed massive potential losses from an alleged scam run by Wall Street trader Bernard Madoff, admitting they were fooled by a classic pyramid investment fraud.

British, French, Japanese and Spanish banks and funds said investments totalling billions of dollars (euros) could be wiped off their balance sheets by a scandal that is set to affect some of the richest people in the world.

Royal Bank of Scotland said it could lose about 400 million pounds (598 million dollars, 444 million euros), joining a growing list of banks and investors in Europe, Asia and the United States struck by the scandal.

Shares in Santander, the biggest bank in Spain and the second largest in Europe after HSBC , plunged after the lender said it had an exposure of more than three billion dollars to Madoff Investment Securities in New York.

France’s Natixis investment bank, already brought low by subprime losses, put its maxiumum exposure at 450 million euros (606 million dollars). Retail banking giant BNP-Paribas revealed potential losses of 350 million euros.

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Jim Sinclair’s Commentary

Where is the money?

Wall Street ‘fraud’ victims continue to rise
December 15, 2008

The list of institutions and individuals set to lose billions of pounds after investing in a fund run by Bernard Madoff, the Wall Street broker and former Nasdaq chairman, is growing by the hour.

The list of institutions and individuals set to lose billions of pounds after investing in a fund run by Bernard Madoff, the Wall Street broker and former Nasdaq chairman, is growing by the hour.

Royal Bank of Scotland (RBS), the bank majority-owned by the Government, today admitted that it had an exposure of £400 million to the $50 billion alleged fraud.

It joins Man Group, the world’s largest listed hedge fund manager, HSBC and Santander, the Spanish group that owns Britain’s Abbey, Alliance & Leicester and Bradford & Bingley, which are exposed to Mr Madoff’s business.

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Jim Sinclair’s Commentary

The moment these non US entities dumped Fanny and Freddie and jumped into practically no interest US Treasuries for safety, the US dollar rally crumbles and kicks those geniuses in the rear.

Foreign investors fled agencies, bought T-bills
Monthly inflows hit record as investors sought safety from U.S. troubles in U.S. assets
By Laura Mandaro, MarketWatch
Last update: 1:47 p.m. EST Dec. 15, 2008

SAN FRANCISCO (MarketWatch) — Foreign investors shed their holdings of Fannie Mae and Freddie Mac debt after the U.S. government’s takeover of the floundering mortgage institutions, and instead piled into short-term Treasury bills, October data released Monday show.

The rush to safety lifted monthly inflows of net foreign investments in U.S. securities to a record high of $286.3 billion, said the U.S. Treasury in its monthly Treasury International Capital, or TIC, report.

The upshot was that foreigners increased their holdings of U.S. dollar assets even after the U.S. financial system delivered a list of historic failures and near-misses, including the September bankruptcy of Lehman Brothers, and then had its worst October for stock trading since 1987. See article on October trading records.

"For now, the U.S. dollar has reassumed its reserve-currency primacy," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Foreign private investors, central banks and other overseas institutions sold a net $50.2 billion in Fannie Mae and other government agency bonds in October, a reversal from the $6.2 billion in net purchases made in September, the U.S. Treasury said.

The rush for the exits followed the U.S. government’s decision to seize formal control of Fannie Mae and Freddie Mac after the government-sponsored enterprises – which had operated as independent, publicly traded mortgage financers with the implicit backing of the U.S. government – skirted near bankruptcy.

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Jim Sinclair’s Commentary

Oh what beautiful morning. Those that flamed the planet with their OTC derivatives and gold bearishness are becoming a bad chapter in world history.

Citadel joins rush to lock up funds
By Henny Sender in New York
Published: December 14 2008 19:00 | Last updated: December 14 2008 19:00

Citadel Investment Group has joined the rush of hedge funds suspending redemptions to investors, a development that is in effect locking up hundreds of billions of dollars in cash during a volatile period in global markets.

Ken Griffin, Citadel’s founder, sent a letter on Friday to investors in the group’s flagship Kensington and Wellington funds telling them that the group had decided to hold on to their money at least until March.

Citadel has about $15bn under management after suffering big recent losses.

Citadel trades in many of the markets hardest hit by recent volatility – including convertible bonds, corporate bonds, credit derivatives and so-called “pipes”, or private investments in public equities.

Citadel did not respond when called for comment.

Citadel joins a growing list of hedge fund groups – including Tudor, Farallon and DE Shaw – that have imposed restrictions on the ability of investors to withdraw money.

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Jim Sinclair’s Commentary

Kerry forgot to add to his statement the Pakistani Intelligence, the Pakistani Military Leaders, Pakistani Military Grunts and a significant amount of Pakistani civilians.

I imagine the Washington Post meant a great deal of the Pakistan population makes up the bad guys this article suggests be killed forthwith.

The more of this rhetoric, the closer we come to some entity with support from the US, Great Britain and others sending in troops. This will come after a major PR campaign to color the place all bad, making them all fair targets.

U.S.’s Kerry urges Pakistan to control spy agency

Mon Dec 15, 2008 8:05am EST

NEW DELHI, Dec 15 (Reuters) – The Pakistan military’s powerful spy agency must be tightly controlled and not allowed to act independently, U.S. Senator John Kerry said on Monday after meeting Indian leaders to discuss the deadly Mumbai attacks.

India has blamed last month’s attacks that killed 179 people on the banned Islamist militant group Lashkar-e-Taiba, which analysts say has long had ties with the Pakistan military’s Inter-Services Intelligence (ISI) spy agency.

New Delhi has also demanded Islamabad do more to stop such militant groups from using Pakistani soil to launch attacks on Indian cities.

The Mumbai attacks have renewed suspicion in India and elsewhere about ties between Lashkar and the ISI, ratcheting up tensions between the nuclear-armed neighbours.

"In the United States, our intelligence agency is obviously held accountable, not just to the administration that runs it but also to the United States Congress and, through the Congress, to the people," Kerry told reporters in New Delhi after meeting Indian Prime Minister Manmohan Singh.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Pakistan, a rolling disaster becoming visible.

The Washington Post recently said that if Pakistan won’t or can’t uproot its home grown terrorists groups, said Robert Kagan, the world would have to step in. The international community should declare parts of Pakistan, "ungovernable" and send troops to help the Pakistan government round up and kill the bad guys.

The article goes on to ask itself "would this violate sovereignty? Of course it will answers the author. He went on to declare that nations should not be able to declare sovereign rights when they cannot control territory from which terrorist attacks are launched.

That seems to me like a slippery slope into financial and geopolitical Armageddon when the nation under discussion is nuclear capable with delivery systems. Keep in mind the military and intelligence is pro-Taliban. It seems to me the first to battle is not the government but rather the military with plans predicated on intel.

This is not Iran, Iraq or Afghanistan that truthfully lacks world class teeth. They do not vaporize their invaders, they just practice the age old strategy of bury your weapons, all fall down, now when the invading nation ensconce themselves, get up, get your weapons and bleed the enemy slowly using ancient technology until the war drains the invading nation to death.

This bunch can throw nukes if they deem themselves to be facing a force beyond their ability to repulse by traditional means, considering it not help but rather invasion. The government that the Washington Post has deemed a non nation’s present government has said, "do not do that." We will consider your offer of help if executed as an invasion of our sovereign territory.

There will be an invasion of Pakistan soon, by someone supported by the USA, GB and Israel. That you can be sure of.

Pakistan ‘linked to 75% of all UK terror plots’, warns Gordon Brown
December 14, 2008

Sam Coates, Chief Political Correspondent, and Jeremy Page, South Asia Correspondent, in Islamabad

Gordon Brown demanded "action, not words" from Pakistan today, blaming Pakistani militants for last month’s attack on Mumbai and revealing that three quarters of the gravest terror plots under investigation in the UK had links to Pakistan.

Winding up a two-day tour of Afghanistan, India and Pakistan, the Prime Minister urged Asif Ali Zardari, Pakistan’s President, to "break the chain of terror" linking Islamist militants in Afghanistan and Pakistan to attempted terrorist attacks in Britain.

British military officials believe there are a "handful" of British militants fighting alongside the Taleban in Afghanistan, often entering the country through northern Pakistan, where al Qaeda and Taleban leaders are thought to be sheltering.

Officials also believe that there are currently around 30 major terrorist plots in the United Kingdom with 2,000 suspects being watched by police and the intelligence services.

"Three quarters of the most serious plots investigated by the British authorities have links to al-Qaeda in Pakistan," said Mr Brown in a press conference alongside Mr Zardari in the presidential palace in Islamabad. "The time has come for action, not words."

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Jim Sinclair’s Commentary

The financial problems are behind us? Not a chance. What OTC derivatives did not do, imploding earning and litigation will.

Wall Street shock as Goldman Sachs is expected to post losses of £1.35billion
By DAILY MAIL REPORTER
Last updated at 8:09 PM on 14th December 2008

As the shock waves of former Nasdaq chairman Bernard Madoff’s arrest over an alleged £33.5billion fraud continues to reverberate around Wall Street, dealers in New York are braced for yet more grief from the battered banking sector.

For the first time in a decade as a publicly listed company, Goldman Sachs is expected to report a loss for the fourth quarter tomorrow.

Analysts believe chief executive Lloyd Blankfein could post a loss of £1.35billion caused by further huge write-downs on the value of its investments and a fall in revenues as investment banking, sales and trading activity all take a further downturn.

The firm’s revenue for the first three quarters fell by almost 33 per cent from a year earlier, as investment banking fees dropped 26 per cent and trading and principle investment revenue slid 45 per cent.

Goldman, which converted into a bank-holding company in September to help it survive the global credit crisis, last month slashed about 3,200 jobs or one tenth of its staff.

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Jim Comments on President Elect Obama’s appointments:

There are two similarities pervading Obama’s appointees.

1. Harvard University
2. Intellectuals.

Therefore decisions made will be from the overeducated and lead to impractical programs and solutions following closely to a liberal manifesto.

There is a tendency when you are surrounded by what boils down to same university fraternity house to have formed a team of YES people.

 

Jim Sinclair’s Commentary

The good guys at GATA bring this to our attention

Trace Mayer: A problem with GLD and SLV ETFs
Submitted by cpowell on 08:25AM ET Sunday, December 14, 2008. Section: Daily Dispatches
11:20a ET Sunday, December 14, 2008

Dear Friend of GATA and Gold:

In an essay published yesterday, Trace Mayer, an accountant, lawyer, journalist, and proprietor of the Internet site RunToGold.com, has done a wonderful job exposing the weaknesses of gold and silver exchange-traded funds, as those weaknesses are acknowledged in their own prospectuses. Mayer observes, "There is no assurance that the ‘gold’ held in the ETFs is actually the same gold as defined under the periodic table."

Mayer’s essay is headlined "A Problem with GLD and SLV ETFs" and you can find it at Run To Gold here:

http://www.runtogold.com/2008/12/a-problem-with-gld-and-slv-etfs/

Posted by & filed under In The News.

Jim Sinclair’s Commentary

This article puts focus on the shocking exposure of a NASDAQ trading house’s Boss running a massive Ponzi scheme.

I firmly believe the scams in gold, once disclosed, are going to set your hair on fire.

These will take the form of no gold gold certificates, paper gold rather than bullion confirmed as bullion to simply taking your money, sending you a confirmation without anything whatsoever behind it.

Dr. Fekete’s warning of gold scams don’t even scratch the surface of what I assure you will surface.

Just because someone says or writes what you want to believe, don’t for a second assume the author has ethics when there is a request for your money or an offering of a gold/silver deal.

Bernie Madoff’s alleged $50bn fraud may be just a foretaste of what’s to come
First come the losses and the stupidities committed by bankers working for their own self-interest.
By Rob Cox, breakingviews.com
Last Updated: 5:47PM GMT 12 Dec 2008

Then come the rogue traders, who are unable to ‘fess up on market bets gone wrong. The last to arrive is the "bezzle".

That was economist JK Galbraith’s word for the outright frauds built up when markets are good. These can be kept hidden for as long as the lies hold up. But the truth will out.

The first big outing in the current financial crisis is an alleged scam that may cost investors as much as $50bn. It was committed, according to a US criminal indictment, by a highly respected member of the financial community, a one-time Nasdaq executive and a legendary trader in New York.

Bernard Madoff is accused of orchestrating a multi-year fraud in which generous returns were manufactured for sophisticated investors. The technique was the usual Ponzi scheme. Old investors were paid off by the new funds lured into to Madoff’s art-laden New York headquarters.

Losses of $50bn would probably make Madoff the biggest single fraudster in history. But in fairness, such an accomplishment shouldn’t come as a great surprise. In Galbraith’s model of a speculative cycle, good times spawn the excess and corruption which eventually bring them to end. The last good times were especially profitable, fertilising the ground for especially large frauds.

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Jim Sinclair’s Commentary

Scotty beam me up please.

This world is coated with abhorrent stinking slime, and is terminally disintegrating.

Fed Refuses to Disclose Recipients of $2 Trillion in Lending
By Mark Pittman

Dec. 12 (Bloomberg) — The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, who oversees about $14 billion at New York-based ICP Capital LLC.

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Jim Sinclair’s Commentary

I always suspected this guy was hiding something. Actually this is a serious article that nails the foundational problem now being thoroughly assaulted by instant karma.

Blame the Bailouts on Mister Rogers?
By Elizabeth MacDonald

mr_rogers1-150x150 - 20081212_175403 Mister Fred Rogers, the children’s TV star, who, beginning in 1968, started every show telling us that we were “special” just the way we were.

Blame all of those preening child-rearing experts who encouraged an excruciatingly costly culture of entitlement, a culture of narcissism, of excessive self-righteous self-indulgence, where generations grew up believing they were entitled to follow their own codes of conduct, a chronic “me first, I get what’s mine first” attitude–to the point where one survey shows one in three teenagers expect to be famous.

Better yet, blame the bailouts on everyone who forgot the most important part of the Mister Rogers’ Neighborhood show, a willful ignorance that has led to a mass dereliction of civic duty, of civic vision–Rogers’ emphasis on “neighborhood.”

Blame it on a post World War II culture of “me-ism,” of individuality over community, of “I’m special, you owe me,” a culture of anything goes in this Age of Aquarius.

A mindset which has resulted in more than half of the country’s annual $14 tn in GDP, $7.8 tn, a quantum leap in fiscal debt, now being committed to bail out the economy.

Concrete proof that equal opportunity means everyone will have a fair chance at being incompetent, to quote Laurence J. Peter, author of the “Peter Principle.”

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Jim Sinclair’s Commentary

25 down, 2075+ to go.

Georgia, Texas Banks Seized as Foreclosures Push Failures to 25
By Margaret Chadbourn and Alison Vekshin

Dec. 12 (Bloomberg) — Georgia and Texas banks with $544 million in deposits were closed by state regulators today, pushing the toll of failures to 25 as mortgage delinquencies and home foreclosures surge to records during a deepening recession.

Haven Trust Bank of Duluth, Georgia, was seized and sold by the Federal Deposit Insurance Corp. to BB&T Corp. of Winston- Salem, North Carolina, which will reopen four offices northeast of Atlanta on Dec. 15 as branches, the FDIC said. Sanderson State Bank was shut by Texas regulators and its assets were sold to Pecos County State Bank of Fort Stockton, which will open Sanderson’s southwest Texas office as a branch on Dec. 15.

Acquisitions by BB&T, the fifth-best performing stock in the KBW Bank Index this year, and Pecos County were “the ‘least costly’ resolution for the FDIC’s deposit insurance fund,” the Washington-based FDIC said in a statement.

Regulators have closed the most banks in 15 years, and the annual total now exceeds the combined toll for the previous six years, with the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. among the biggest in history. The U.S. entered a recession a year ago and President-elect Barack Obama on Dec. 7 said the slump will worsen before a recovery begins.

BB&T will buy about $55 million of Haven’s $572 million in assets and pay $112,000 for the failed bank’s $515 million in deposits, the FDIC said. The agency will retain the remaining assets “for later disposition.” The deposit insurance fund, supported by fees on insured banks, will pay an estimated $200 million, the agency said.

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Jim Sinclair’s Commentary

This might make India feel good but it is a terrible implications for the world and serious risks for Israel.

You can be sure if there is an Armageddon it lives in Pakistan.

Israeli experts help India prepare commando raids into Pakistan
DEBKAfile Exclusive Report
December 6, 2008, 11:45 AM (GMT+02:00)

New Delhi has asked Jerusalem to assist in the operational and intelligence planning of Indian commando cross-border strikes against Islamist terrorist havens in Pakistan – including al Qaeda, Indian counter-terror sources report.

The Indian government’s decision to embark on these in-and-out incursions in reprisal for the Mumbai outrage of Nov. 26-29 was first revealed in DEBKA-Net-Weekly 375 published Dec. 4 (Indian Retaliatory Raids inside Pakistan Impending).

DEBKAfile adds: Israel is willing to help the Indians carry out punitive forays into Pakistan because it has its own scores to settle for the brutal murder of six Israelis in Mumbai’s Chabad Center by the Islamist terrorists and for the Pakistani Inter-Services Intelligence (ISI) agency’s hand in the atrocity.

Security sources in New Delhi disclosed Saturday, Dec. 6, that ISI officers actively trained the terrorists on military lines and selected their targets, including two big hotels and the Jewish-Israeli center.

Indian sources told DEBKAfile that Israel was asked for assistance because its special undercover forces were long seasoned in plotting and executing reprisals for terrorist attacks; above all, they were expert in getting away after covert operations without leaving a trail. New Delhi wants its commando operations in Pakistan to be stealthy and focused, and does not propose to admit responsibility.

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Jim Sinclair’s Commentary

Most? I would say all. This is because of the interdependency of every regional bank and regional area on the spider web of financial products spun by the money center and investment banks, all without limit or any concern of the consequences to others.

Jim Rogers calls most big U.S. banks "bankrupt"
Thu Dec 11, 2008 1:53pm EST
By Jonathan Stempel

NEW YORK (Reuters) – Jim Rogers, one of the world’s most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.

Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government’s $700 billion rescue package for the sector doesn’t address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.

Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research, Stock Buzz). Some of the funds are being used for acquisitions.

"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.

"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics."

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Are you tired of those Gold banks that specialize in stealing your gold price lollypop on a daily basis, as they did once again today? I am.

There is only one way that we can permanently corral these costly nuisances.

If you can afford to buy 100 ounces of gold, buy it as the near trading month future on the Comex and then take delivery. Please move your gold bar or bars out of the Comex warehouse. You will have no problem reselling a bar like a Johnson Matthey or some other major refiner registered serial numbered bar.

The Comex requirement of re-assay before sale is simply a means to dissuade you from removing your gold from their warehouse. It only applies to sales on the Comex.

The entire process can be handled at every point with you by CIGA JB Slear. He has promised not to solicit you but only to serve you.

CIGA JB Slear can be reached at the following:

Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104
Please for all of us, and certainly for your best interest, do the necessary.

There is no other means of defense against these grinches. It is the only way to stop our pockets being picked daily as the Comex sees itself being moved toward a cash exchange by the longs.

If you have the financial capacity to do this and do not then do not moan when these knuckle dragging apes knock a few hundred dollars off gold from time to time while the physical market is devoid of gold due to massive demand (like now).

Comex Gold Surges As Dollar Falls, Oil Soars
Thu, Dec 11 2008, 19:38 GMT
By Allen Sykora

Gold futures hit a seven-week high Thursday as the dollar tumbled, crude oil rallied sharply and investors turned to the metal as an alternative to low or non-existent yields in the Treasury markets, analysts said.

Nevertheless, gold stalled around chart resistance and some profit-taking set in after a sharp run-up in recent days.

February gold rose $17.80 to $826.60 an ounce on the Comex division of the New York Mercantile Exchange.

"We broke some major technical levels on the dollar index, which is going to be supportive for gold going forward," said Rob Kurzatkowski, futures analyst with optionsXpress.

The dollar index fell as far as 83.282, its weakest level since Oct. 30. And the euro hit a high of $1.3403 that was its strongest level against the greenback since Oct. 20. Traders often turn to gold as a hedge against dollar weakness.

"The dollar looks like it has broken out of its trading range and we may have seen a top in the dollar for a while," said Bill O’Neill, one of the principals with LOGIC Advisors.

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Jim Sinclair’s Commentary

The Comex gold bear manipulation must be stopped. Demand today in the physical market was immense yet the Comex knocked $20 off the gain.

Fear triggers gold shortage, drives US treasury yields below zero
By Ambrose Evans-Pritchard
Last Updated: 9:26AM GMT 11 Dec 2008

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.

"It is sheer unmitigated fear: even institutions are looking for mattresses to put their money 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 0.01pc 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.

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Jim Sinclair’s Commentary

This is a global event caused by a singular scam. That scam is OTC derivatives. OTC derivatives have turned a normal economic correction into a global disaster.

Financial life has met its global killer and will not survive.

Until the focus of fixing looks at OTC derivatives as the only culprit, no solution can be anticipated ever.

The longer it takes for derivates to take the problem limelight, the less chance there is for anyone to do anything but sit back and watch the world implode.

Globally at the instant this started, all OTC derivative of all kinds should have been drafted into a Resurrection Trust, taking the profits from the profit makers and loses from the loss makers.

All the derivative makers should have been arrested and their assets seized. Those entire assets would be credited to the Resurrection Trust.

All tax havens and bank secrecy states would have to cooperate only where the OTC derivative culprits are concerned or their banks would get no part of the pie. Actually if you had done that the math would have worked.

The only problem with this plan is then there would not be jails big enough. The District of Columbia would be a wasteland and country clubs would have been decimated. The Columbus Club would be empty and there would be no more bridge games at Jimmy’s condominium mansion.

BOJ’s Nishimura Sees No End to Financial Turmoil (Update1)
By Mayumi Otsuma

Dec. 10 (Bloomberg) — Bank of Japan Deputy Governor Kiyohiko Nishimura said there’s no end in sight to the global financial crisis that began with the collapse of the U.S. home mortgage industry last year.

“The turmoil in financial markets and the financial system, which was triggered by the U.S. subprime loan problems, continues to spread worldwide,” Nishimura said in a speech in Tokyo today. He said Japanese banks are becoming more wary of lending to small businesses as the economy stagnates.

The credit crunch in the U.S. and Europe has spread to Japan, as investors grow reluctant to lend cash on concern companies won’t be able to repay debt. Japan’s first recession since 2001 is deepening as companies including Sony Corp. and Toyota Motor Corp. cut production, jobs and spending.

“With the global economic slowdown prolonging, it’s becoming increasingly clear that Japan is slipping into a severe recession,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The Bank of Japan will be forced to take more policy action eventually.”

Nishimura said that while being more prudent about lending may seem reasonable to individual banks, if they all hoard cash at the same time that would worsen the economic slowdown.

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Jim Sinclair’s Commentary

This is a global event caused by a singular scam. That scam is OTC derivatives. OTC derivatives have turned a normal economic correction into an irreversible global disaster.

Heavy withdrawals hit Gaisano bank as more banks close

CEBU CITY — Alarmed by the bank holidays declared by rural banks under the Legacy Group, depositors have flocked to a Gaisano-owned bank since Wednesday in a bid to withdraw their money.

Three of the seven branches of the Rural Bank of Subangdaku (RBS) in Metro Cebu and one in Dumaguete City in Negros Oriental suffered from heavy withdrawals since Wednesday, said spokesperson and administrative manager Maritess Obenza.

Despite this, she assured that they had no plan to declare a bank holiday in any of the affected branches.

"The board (of directors) is still meeting on how to address the withdrawals although we have contained these because we were able to explain to our depositors and convince them that there’s no need to panic," Ms. Obenza said.

RBS depositors panicked after rural banks under the Legacy Group declared bank holidays. The affected RBS branches are located near the Legacy banks.

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Jim Sinclair’s Commentary

Here it comes on a global basis. That is Quantitative Easing plus Fiscal Stimulation at the same time. QE means saturation bombing the world with newly minted money.

U.K. May Expand Toolkit to Halt Recession Slide (Update3)
By Gonzalo Vina

Dec. 10 (Bloomberg) — The U.K. government and central bank are considering plans to pump billions of pounds into the economy as the bank rescue package and the lowest interest rates since 1951 fail to halt a slide into recession.

The Bank of England and the Treasury are weighing a strategy known as “quantitative easing” where authorities increase money supply to boost bank reserves. The initiative was last used by Japan at the start of the decade.

Prime Minister Gordon Brown’s government is frustrated that banks are rationing credit after tapping the Treasury for cash and guarantees to prop up their own balance sheets. Policy makers both in the U.K. and the U.S. Federal Reserve are looking beyond traditional interest-rate tools to revive the economy.

“The Bank of England has to step up to the plate,” said Neil Mackinnon, chief economist at ECU Group Plc in London. “They are thinking hard about quantitative easing. But they probably won’t announce anything until the next quarter, and they’ll follow the Fed.”

A U.K. Treasury spokesman said it is prudent for the government and the central bank to consider all options as the Bank of England’s benchmark lending rate approaches zero. He denied that a decision has been made and declined to be identified in line with government policy.

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The unthinkable has happened
Posted by Tracy Alloway on Nov 10 15:49.

Just two weeks after Deutsche Bank issued a note discussing the possibility of Japan-style quantitative easing in the US, it’s happening.

DB’s previous note was titled “The unthinkable.” This one is “Losing control of monetary policy.” From the note:

We are already close to a zero interest rate policy and quantitative easing, given the recent behavior of the effective fed funds rate and reserve balances.

Monetary policy has become more stimulative than indicated by the fed funds target, implying increasing loss of control of monetary policy.

FT Alphaville discussed most of the ins and outs of this last week. Deutsche Bank adds more meat to the argument today:

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Jim Sinclair’s Commentary

I am much too conservative at $1650. I believe Alf Fields has nailed it. Kudos to Alf.

RETURN TO $11-$13 SILVER?
Trend of gold as store of wealth ‘may start to snowball’–ScotiaMocatta
Deep-rooted global financial problems will escalate the demand for gold as a safe haven.
Author: Dorothy Kosich
Posted:  Wednesday , 10 Dec 2008

RENO, NV – In its December Metals Matters report, ScotiaMocatta suggests that global financial problems "seem so deep rooted that demand for gold as a safe haven is expected to escalate."

On silver ScotiaMocatta advised, "Investors remain key to silver’s fate, but its monetary attributes should keep investment demand strong."

Their analysis also noted that low PGM prices, especially for palladium, are "likely to rebalance the PGM markets before too long-thus providing long term investment opportunities.

Gold

Although ScotiaMocatta remains bullish for gold "we are concerned that gold prices are not considerably higher given the current bullish climate. "

"We see two possible reasons for this. Firstly, funds and investors have been in liquidation mode and industrial commodities have been hard hit. As gold is a component in commodity baskets, which were popular investment vehicles in the commodity boom, gold has been sold as investors have sold their commodities. "

"Secondly, gold has traditionally been bought for a ‘rainy day’ and many hedge funds and other institutional investors have indeed been having a ‘rainy day,’ according to ScotiaMocatta. However, as central banks’ measures to tackle the financial rout start to work, the level of redemptions is likely to slow and that should provide less selling pressure in gold."

ScotiaMocatta’s analysis revealed that gold lease rates have been soaring and "likely to put an end to the gold carry trade, at least for a while. With interest rates falling, the profit margin on gold carry trades has diminished significantly. This means that as former carry traders come to the end of their term, gold will be withdrawn from the system and returned to central banks."

"As carry trades are closed the pressure on the spot market will switch from selling pressure to buying pressure," they advised.

If people lose faith in the financial system and their currencies, ScotiaMocatta forecasts "the growing trend in wanting some gold as (a) store of wealth may start to snowball."

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