Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

When Pakistan blows, which it will, it will cause tremendous dislocation in the Middle East. Crude will rise from wherever it is trading by $100 in 60 days.

India demands Pakistan hand over terror suspects
Tue Dec 2, 7:16 AM
By Ramola Talwar Badam, The Associated Press

MUMBAI, India – India picked up intelligence in recent months that terrorists were plotting attacks against Mumbai targets, an official said Tuesday, as the government demanded that Islamabad hand over suspected terrorists believed living in Pakistan.

A list of about 20 people – including India’s most-wanted man – was submitted to Pakistan’s high commissioner to India on Monday night, said India’s foreign minister, Pranab Mukherjee.

India has already demanded Pakistan take "strong action" against those responsible for the attacks, and the U.S. has pressured Islamabad to cooperate in the investigation. America’s chief diplomat, Secretary of State Condoleezza Rice, will visit India on Wednesday.

The diplomatic wrangling comes as the government faces widespread accusations of security and intelligence failures after suspected Muslim militants carried out a three-day attack across India’s financial capital, killing 172 people and wounding 239.

The only surviving attacker has told police that he and the other nine gunmen had trained for months in camps in Pakistan operated by the banned Pakistani militant group Lashkar-e-Taiba.


Jim Sinclair’s Commentary

Are Narco States reliable sources of energy?

37 killed in Tijuana over 3 days
Toll includes 4 children and 9 decapitated men; police chief fired
The Associated Press
updated 7:27 p.m. MT, Mon., Dec. 1, 2008

TIJUANA, Mexico – At least 37 people were killed over three days in the Mexican border city of Tijuana, including four children caught in shootouts and nine men found decapitated, the state attorney general said Monday.

More than 200 people have been killed in the past month in Tijuana, where officials say rival cells of the Arellano-Felix drug cartel have been waging a bloody battle across the border from San Diego.

Tijuana’s police chief was fired Monday after the wave of violence. A statement from the office of Tijuana Mayor Jorge Ramos says Alberto Capella was replaced by his second-in-command, army Cmdr. Julian Leyzaola.

No reason was given for Capella’s abrupt dismissal.

Baja California state Attorney General Rommel Moreno said three police officers were among the nine decapitated men, whose bodies and heads were discovered in a poor Tijuana neighborhood. Their police credentials were found stuffed in their mouths.



Jim Sinclair’s Commentary

There is no doubt about the advent of Fiscal Stimulation, but you can doubt the number on the extremely low side to what is to come by June 2009.

Obama pledges to work with governors on economy

(CNN) — Plagued by rising unemployment, falling tax revenue and increased demand for state services, the nation’s governors met with President-elect Barack Obama and Vice President-elect Joe Biden on Tuesday to press for federal money to ease their fiscal strain.

Obama and Biden told those at the National Governors Association meeting that the federal government needs to build a deeper relationship with the governors in order to put America on the path to long-term prosperity.

"Change is not going to come from Washington alone," Obama said.

"It’s going to come from all of you. It will come from a White House and statehouses all across the country that are working together, and that’s the kind of partnership I that I intend to forge as president of the United States," Obama said at the conference in Philadelphia, Pennsylvania. "I hope that this is the beginning of laying that foundation."

Obama said he wants the governors to help draft his economic plan instead of just helping to implement it.



Jim Sinclair’s Commentary

With the cost now at $8.5 Trillion does it not seem that $700 billion is a false flag audit?

$700 billion bailout to get first audit
Government Accountability Office to deliver an oversight report to Congress on the $700 billion bailout plan.
By David Goldman, staff writer
December 2, 2008: 6:02 AM ET

NEW YORK ( — The federal government’s $700 billion financial rescue plan will get its first official review Tuesday.

The Government Accountability Office will present Congress with a report Tuesday on the bailout’s progress and the Treasury Department’s handling of the program. It is the first of a series of reports that the GAO must submit to lawmakers on a bi-monthly basis, as one of three oversight components required by the Emergency Economic Stability Act.

The bailout has received its fair share of criticism from lawmakers and economists. Some argue that Treasury should require banks to use their capital injections for lending to other financial institutions. With the credit markets still largely frozen, Treasury had hoped the fresh capital would encourage banks to lend, but some have used bailout funds to finance purchases of other institutions instead.

Other critics of the bailout have said the bailout does not address the housing market, which most economists point to as the root of the recent economic downturn.


Jim Sinclair’s Commentary

Look at who is Famous!

DJ MARKET TALK: Comex Gold Moving Inversely To Dollar

1625 GMT [Dow Jones] – Comex gold is modestly higher on a day when the dollar is slightly lower. Feb gold is up $2.60 to $779.40 an ounce. The metal is moving inversely to the greenback at the moment, says J.B. Slear, CEO of Fort Wealth Trading Co. He eventually looks for further gains in gold. "The printing of dollars, and the lack of ability to print gold, will send gold prices higher," he says. Technically, gold could correct downward some more first, he adds. If gold were to close below $746, it could slip to roughly $716, but Slear looks for "very strong support" around this area. "If get up to around $800 by the end of this week, it will be a bullish connotation," he adds. He describes the metal as largely "coiling" sideways since August although in a broad range. (ALS)



Jim Sinclair’s Commentary

There is such irony in measuring the drop in credibility of US Treasuries by quoting a measure which is an OTC derivative that is of the kind that was part of the package of crap that caused all the problems in the first place.

What an economic circus is taking place. God help us all.

US Treasury 10-yr CDS hits record high
Mon, Dec 1 2008, 11:34 GMT

LONDON, Dec 1 (Reuters) – The spread or risk premium on 10-year U.S. Treasury credit default swaps hit a record high on Monday, extending a recent trend as market participants continued to fret about the scale of the government’s financial rescue programmes.

Ten-year U.S. Treasury CDS widened to 68.4 basis points from Friday’s close of 60 basis points, according to credit data company CMA DataVision.

Five-year Treasury CDS widened to 52.5 basis points from 46 basis points at Friday’s close, it said.

(Reporting by Emelia Sithole-Matarise)
((Reuters Messaging:,
Email:; +44 20 7542 6752)

Jim Sinclair’s Commentary

All I can say to this is Holy S***, these guys are in a total panic and bouncing off the walls.

Treasury Should Consider 100-Year Debt, BlackRock’s Fisher Says
By Thomas R. Keene and Michael J. Moore

Dec. 2 (Bloomberg) — BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion.

“If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

The Treasury last month tripled its estimate of planned debt sales in the final three months of the year to a record $550 billion as it attempts to fund bailouts for banks and fiscal stimulus programs to jump start economic growth. Treasury Secretary Henry Paulson told a conference in Washington Nov. 17 that the U.S. will issue some $1.5 trillion worth of Treasury securities in the fiscal year that began Oct. 1.

Fisher, Treasury undersecretary from August 2001 to October 2003, eliminated 30-year bond auctions in 2001 to reduce government borrowing costs after four years of federal budget surpluses. The U.S. hasn’t been in the black since. The government revived sales of the security in February 2006.

Treasury yields have plummeted as investors have flocked to the safety of U.S. government debt during the worst financial crisis since the Great Depression. Bonds rallied for a fourth day yesterday, sending yields on two-, 10- and 30-year debt to the lowest since the Treasury began regular sales of the securities.


Posted by & filed under In The News.

Where is the outrage!
By Greg Hunter 12/01/08

The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that "getting out while the getting was good." Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many "lending" facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has congress asked the banks for a plan make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …"the big banks are going to need more capital!!!! " More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!

This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM. I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a "price discovery" and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what "assets" the banks are unloading on the government. I suspect these "assets" are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be "helpful". THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is that this money printing will "unclog" the credit markets and get things back to "normal." These toxic "securities" or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new "normal" and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!

Jim Sinclair’s Commentary

Alf has been spot on now for a significant time. It might be interesting for the Elliot gang out there to study his work. For that matter, it might be interesting for everyone.

You have to understand that no chart work will tell you what the Exchange Stabilization Fund will do. Today’s action demonstrates short term limitations to TA.

Alf field’s Elliott Wave Chart of Gold Shows Gold To Be In Elliott Wave 3 Up
Monday, 22. October 2007, 21:05:09

The Elliott Wave chart of gold from the article Elliott Wave Gold Update 16 by Alf Field shows gold to be in an Elliott Wave 3 Up.

Elliott Wave Gold Update 16 by Alf Field



Jim Sinclair’s Commentary

The only meaningful tool left for the Fed is "Benign Neglect" of the US dollar. That means not referring to it in public addresses with glee and not softening declines via the Exchange Stabilization Fund when it tries to break down out of its recent technical money flow up trend. Basically, this means putting a muzzle on the Media Spin Team as they have no clue that a rising dollar, for any reason, is totally contra-productive to all other methods of anti-deflation employed in central bank moves. The trend in the dollar will become market related. Market related means rejoining its long term down trend.

Gold is a currency and it will be proven once again in the inverse to the dollar very soon.

Gold’s primary excuse for existence is monetary.

Gold priced at $248 reflected its monetary performance.

Gold at $1650 will be a totally monetary event.

The monetary boss spoke today and the equity market regurgitated.

You can be sure it is panic time at the Fed in which every tool, even the tools of last resort will be employed. Today was an example of just that

This headline should be changed to “Dow Plunges 680 Points As The Chairman Of The Federal Reserve Presents His Plans To Avoid An Equity Implosion.”

Dow Plunges 680 Points as Recession Is Declared

The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.

But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.

The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.

Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.


Jim Sinclair’s Commentary

This is the understatement of the century

India warns of ‘grave setback’ to Pakistan ties

MUMBAI (AFP) — India warned on Monday that the Mumbai attacks had dealt a "grave setback" to relations with Pakistan, as the United States urged Islamabad to show "absolute" cooperation with India’s probe into the assault.

"What has happened is a grave setback to the process of normalisation of relations and the confidence-building measures with Pakistan," Minister of State for External Affairs Anand Sharma told AFP.

Sharma said the Islamist gunmen who launched their devastating attack on India’s financial capital on Wednesday evening were "all from Pakistan" and stressed that it was time Islamabad delivered on its promise to prevent Pakistani soil being used for attacks on India.

India and Pakistan , both armed with nuclear weapons, have fought three wars and were on the brink of a fourth over a 2001 militant assault on the Indian parliament.

Pakistan has denied any involvement in the latest attacks which left more than 170 dead and threatens to derail a slow-moving peace process launched in 2004. Pakistan President Asif Ali Zardari has urged India not to "over-react."



Jim Sinclair’s Commentary

Yeah sure!

Pakistan denies TV reports envoy to India summoned
Mon Dec 1, 2008 5:50pm IST

NEW DELHI, Dec 1 (Reuters) – Pakistan denied on Monday Indian TV reports its envoy to India had been summoned, an embassy official in New Delhi said.

"We have not been summoned. It was a pre-planned, routine meeting."


Posted by & filed under In The News.

Dear CIGAs,

$8.5 trillion is unthinkable in terms of paying back the depreciated value of financial and non financial business entity portfolios. Assume someone came to your door and asked you how your investments were going. When you explain to that person that a bad man in Toronto organized a group of really nasty people named hedge funds to naked short your shares and as a result you have lost 90% of your retirement fund, that person hands you a check to cover your loss.

Would you then characterize the money from that check as neutralized funds only filling a black hole in your balance sheet having no real economic impact on you?

That opinion, held by many, is so academic. The idea that $8.5 means nothing because it fills some black hole of losses is "form" over "substance" and simply too academic to believe. This is $8.5 trillion!

Now with that thought in mind contemplate $8.5 trillion dollars (for starters) before President Elect Obama’s fiscal stimulation for the creation of 2.5 million jobs, then a condition called, "Out of Control."

Posted by & filed under In The News.

Dear CIGAs,

Pakistan is the world’s most serious problem. As 2011 approaches so does the fragile nature of the international geopolitics focus on oil.

RED ALERT – Possible Geopolitical Consequences of the Mumbai Attacks

If the Nov. 26 attacks in Mumbai were carried out by Islamist militants as it appears, the Indian government will have little choice, politically speaking, but to blame them on Pakistan. That will in turn spark a crisis between the two nuclear rivals that will draw the United States into the fray.

At this point the situation on the ground in Mumbai remains unclear following the militant attacks of Nov. 26. But in order to understand the geopolitical significance of what is going on, it is necessary to begin looking beyond this event at what will follow. Though the situation is still in motion, the likely consequences of the attack are less murky.

We will begin by assuming that the attackers are Islamist militant groups operating in India, possibly with some level of outside support from Pakistan. We can also see quite clearly that this was a carefully planned, well-executed attack.

Given this, the Indian government has two choices. First, it can simply say that the perpetrators are a domestic group. In that case, it will be held accountable for a failure of enormous proportions in security and law enforcement. It will be charged with being unable to protect the public. On the other hand, it can link the attack to an outside power: Pakistan. In that case it can hold a nation-state responsible for the attack, and can use the crisis atmosphere to strengthen the government’s internal position by invoking nationalism. Politically this is a much preferable outcome for the Indian government, and so it is the most likely course of action. This is not to say that there are no outside powers involved — simply that, regardless of the ground truth, the Indian government will claim there were.

That, in turn, will plunge India and Pakistan into the worst crisis they have had since 2002. If the Pakistanis are understood to be responsible for the attack, then the Indians must hold them responsible, and that means they will have to take action in retaliation — otherwise, the Indian government’s domestic credibility will plunge. The shape of the crisis, then, will consist of demands that the Pakistanis take immediate steps to suppress Islamist radicals across the board, but particularly in Kashmir. New Delhi will demand that this action be immediate and public. This demand will come parallel to U.S. demands for the same actions, and threats by incoming U.S. President Barack Obama to force greater cooperation from Pakistan.

If that happens, Pakistan will find itself in a nutcracker. On the one side, the Indians will be threatening action — deliberately vague but menacing — along with the Americans. This will be even more intense if it turns out, as currently seems likely, that Americans and Europeans were being held hostage (or worse) in the two hotels that were attacked. If the attacks are traced to Pakistan, American demands will escalate well in advance of inauguration day.

There is a precedent for this. In 2002 there was an attack on the Indian parliament in Mumbai by Islamist militants linked to Pakistan. A near-nuclear confrontation took place between India and Pakistan, in which the United States brokered a stand-down in return for intensified Pakistani pressure on the Islamists. The crisis helped redefine the Pakistani position on Islamist radicals in Pakistan.

In the current iteration, the demands will be even more intense. The Indians and Americans will have a joint interest in forcing the Pakistani government to act decisively and immediately. The Pakistani government has warned that such pressure could destabilize Pakistan. The Indians will not be in a position to moderate their position, and the Americans will see the situation as an opportunity to extract major concessions. Thus the crisis will directly intersect U.S. and NATO operations in Afghanistan.

It is not clear the degree to which the Pakistani government can control the situation. But the Indians will have no choice but to be assertive, and the United States will move along the same line. Whether it is the current government in India that reacts, or one that succeeds doesn’t matter. Either way, India is under enormous pressure to respond. Therefore the events point to a serious crisis not simply between Pakistan and India, but within Pakistan as well, with the government caught between foreign powers and domestic realities. Given the circumstances, massive destabilization is possible — never a good thing with a nuclear power.

This is thinking far ahead of the curve, and is based on an assumption of the truth of something we don’t know for certain yet, which is that the attackers were Muslims and that the Pakistanis will not be able to demonstrate categorically that they weren’t involved. Since we suspect they were Muslims, and since we doubt the Pakistanis can be categorical and convincing enough to thwart Indian demands, we suspect that we will be deep into a crisis within the next few days, very shortly after the situation on the ground clarifies itself.


Who’s Behind the Mumbai Massacre?
By SIMON ROBINSON Friday, Nov. 28, 2008

Even as the siege of Mumbai was still going on, the finger-pointing began. India’s Prime Minister Manmohan Singh said "external forces" were behind the attacks, a thinly veiled reference to India’s neighbor and longtime foe Pakistan. Foreign Minister Pranab Mukherjee went further, telling reporters that "elements with links to Pakistan" were involved. But Pakistan’s President and Prime Minister both condemned the attacks and rejected any talk of Pakistani involvement. Pakistani officials also announced that the head of the powerful Inter-Services Intelligence organization (ISI) often accused of orchestrating terrorist assaults on India would travel to India to offer assistance in investigating the Mumbai massacre.


India blames "elements" in Pakistan for attacks
By MUNEEZA NAQVI 4 hours ago

NEW DELHI (AP) India pointed the finger of blame at Pakistan on Friday, saying preliminary investigations into the bloody attacks on its commercial capital showed that "some elements" inside the rival nation were responsible.

The coordinated series of attacks, which began Wednesday night, targeted 10 sites across Mumbai, including an iconic hotel and a landmark train station. More than 150 people were killed in the rampage, including at least 16 foreigners four of them Americans.

Local media speculation quickly settled on Lashkar-e-Tayyeba, a Pakistan rebel group that has fought troops in Indian-controlled Kashmir, but newspapers and TV channels have offered little evidence for the suspicion.

Indian federal home minister Jaiprakash Jaiswal said a captured gunmen had been identified as a Pakistani while R. R. Patil, a top official in Maharashtra state, said, "It is very clear that the terrorists are from Pakistan. We have enough evidence that they are from Pakistan."

Earlier, Prime Minister Manmohan Singh blamed "external forces" for the violence a phrase sometimes used to refer to Pakistani militants, whom Indian authorities often blame for attacks.


Jim Sinclair’s Commentary

NEVER say never.

Al Qaeda’s Goal: Cripple Amtrak’s N’east Corridor

Heightened Security In Place At Penn Station; Attack Could Paralyze Transit Between Boston, Washington…Cops, Feds Armed With M16s On Patrol For Forseeable Future
Marcia Kramer

NEW YORK (CBS)  The world’s economic fears were violently pushed aside on Wednesd ay by another global threat — terrorism.

A massive coordinated attack was launched in Mumbai, India just hours after the FBI warned that Al Qaeda may be targeting New York’s subways and railroads.

If Al Qaeda terrorists have their way there will be chaos and mayhem here this holiday season, a mass transit bomb plot that would probably affect all the subway and train lines at Penn and Grand Central stations.

"The threat is serious, the threat is significant, and it is plausible," said Congressman Peter King, R-Long Island, a member of the House Homeland Security Committee.

Uniformed officers, including this NYPD Counter Terrorism Squad members and Amtrak cops with M-16s, flooded Penn Station Wednesday after the FBI said it had received a "plausible but unsubstantiated" report that Al Qaeda operatives discussed a plan two months ago to bomb New York City’s mass transit system.



Jim Sinclair’s Commentary

The naked and pool short sellers who have decimated people seeking safety by illegal means should focus on a harsh but accurate insight of an early economic theorist known as "The Prince"

"Kill a man’s father, and he will hate you. Take away a man’s property, and he will kill you."

The power-tripping Toronto cliques should consider that what they have done has in truth taken more property from people than most wars in history and all crimes since the Jurassic Age.

So far they have practiced their demonic craft with impunity, but things are turning. Everything has it’s season, and I assure you that theirs is over here and now.

Jim Sinclair’s Commentary

We have gone through plans A to J and are now on K.

It is starting to look like children in a panic.

Which PR hack makes up all these names?

Treasury Adds Two Programs to Financial Rescue Plans
Wednesday, November 26, 2008

It’s been 60 days since Congress gave the Treasury Department authority to launch a massive rescue of the financial markets — and in those 60 days, the plan has changed three times.

When the $700 billion Troubled Asset Relief Program, or TARP, was first authorized, the idea was to use the lion’s share of the funds to buy toxic assets on financial companies’ balance sheets. That quickly morphed into the Treasury instead opting to buy equity stakes in financial companies and backing off buying the bad assets. Now the Treasury has done an about face and over the past weekend announced it will indeed by toxic assets at least from Citigroup.

But wait — there’s more.

On Tuesday, the Treasury Department posted on its Web site details of another new program to save the financial institutions called the Systemically Significant Failing Institutions Program and a third unnamed program to provide the financial institutions with government cash.

A Treasury spokesperson told Fox Business Network’s Peter Barnes the $20 billion in capital infusion to Citigroup on top of the $25 billion it got when the government bought stakes in the banks, did not come from the Systemically Significant Failing Institutions Program, but the third, unnamed program. The spokesperson said details of the new unnamed program will be forthcoming.

“It’s a separate program — neither the capital purchase program or the program AIG was under,” said Treasury spokesperson Brookly McLaughlin in an email to Fox Business Network.  American International Group’s (AIG) $40 billion investment by the Treasury Department fell under the Systemically Significant Failing Institutions Program. When asked for detail on the third program, McLaughin said: “the law required reporting on all that after the transaction closes.”  Based on the timing for when the Treasury posted details on the program used to help AIG, details on the third program could come in about two weeks.


Posted by & filed under In The News.

Dear CIGAs,

Soon the power tripping Toronto short of gold shares clique may get a surprise. This is also a good basis for taking delivery of the paper gold COMEX contract, therein putting an end to their bearish manipulation every day.

Structural deficit’ in gold supply could send prices higher
Wellington West Capital Markets analysts suggest that investors “revisit investing in the junior and intermediate gold producers.”

Author: Dorothy Kosich
Posted: Thursday , 27 Nov 2008

Based on the assumption that current strong physical gold demand highlights an existing supply deficit, Toronto’s Wellington West Capital Markets forecasts that, "if the increased structural deficit in gold supply continues, gold prices should adjust higher."

Wellington metals analysts also advised, "Given the potential change in market fundamentals, we believe it is time investors revisit investing in the junior and intermediate gold producers."

The analysts said their data indicates that a Central Bank Gold Agreement (CBGA) signatory "has become a gold buyer, putting further pressure on the existing supply deficit in the bullion market." In their analysis, Wellington suggests that China is building a strategic gold reserve.

Meanwhile, possible Russian, Ecuadorian and Iranian gold liquidation in the face of internal credit woes "has not fazed the market," the analysts advised.

Analysts Catherine Gignac, Paolo Lostritto, John Miniotis, and Ryan Walker also noted that investment demand for physical gold increased by 179% in the third quarter of this year.

"Severe stock shortages of bars and coins were reported among bullion dealers in many parts of the world. A continuation of strong gold investment demand has been seen so far in Q4/08, leading to the Perth Mint being forced to suspend orders until January," they said. 


Jim Sinclair’s Commentary

USSR payback time? A little extreme, but we are on the fast path to dollar perdition. That is a fact!

Russian Professor Says U.S. Will Break Up After Economic Crisis
By Robin Stringer

Nov. 24 (Bloomberg) — A professor at the diplomatic academy of Russia’s Ministry of Foreign Affairs said the U.S. will break into six parts because of the nation’s financial crisis.

“The dollar isn’t secured by anything,” Igor Panarin said in an interview transcribed by Russian newspaper Izvestia today. “The country’s foreign debt has grown like an avalanche; this is a pyramid, which has to collapse.”

Panarin said in the interview that the financial crisis will worsen, unemployment will rise and people will lose their savings — factors that will cause the country’s breakup.

“Dissatisfaction is growing, and it is only being held back at the moment by the elections, and the hope” that President- elect Barack Obama “can work miracles,” he said. “But when spring comes, it will be clear that there are no miracles.”


Posted by & filed under In The News.

Dear CIGAs,

Note that the Fed herein confirmed that they will print as many dollars as required. That sounds like infinity if you ignore the most recent BIS figures on derivatives going back one reporting period at one quadrillion, one thousand one hundred and forty-four trillion.

U.S. Details $800 Billion Loan Plans
Published: November 25, 2008


WASHINGTON — The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system.

The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy.

In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan.

Those obligations include about $1.4 trillion that has already been committed to loans, capital infusions to banks and the rescues of firms like Bear Stearns and the American International Group, the troubled insurance conglomerate. But they also include additional trillions in government guarantees on mortgages, bank deposits, commercial loans and money market funds.

The mortgage markets were electrified by the Fed’s announcement that it would swoop in and buy up to $600 billion in debt tied to mortgages guaranteed by Fannie Mae and Freddie Mac. Interest rates on 30-year fixed-rate mortgages fell almost a full percentage point, to 5.5 percent, from 6.3 percent.

But analysts said the program would do little to reduce the tidal wave of foreclosures. That is because most of the foreclosures are on subprime mortgages and other high-risk loans that were not bought or guaranteed by government-sponsored finance companies like Fannie Mae.



Jim Sinclair’s Commentary

If anyone knows it should certainly be these fellows.

Citigroup says gold could rise above $2,000 next year as world unravels

Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity, according to an internal client note from the US bank Citigroup.
By Ambrose Evans-Pritchard
Last Updated: 4:48PM GMT 26 Nov 2008

The bank said the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before.

This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

"They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank’s chief technical strategist.

"The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed though into an inflation shock.

"Or it will not work because too much damage has already been done, and we will see continued financial deterioration, causing further economic deterioration, with the risk of a feedback loop. We don’t think this is the more likely outcome, but as each week and month passes, there is a growing danger of vicious circle as confidence erodes," he said.



Jim Sinclair’s Commentary

There are social implications when a currency totally tanks in the midst of stinking business conditions and excessive liquidity.

A near-riot and parliament besieged: Iceland boiling mad at credit crunch
Published Date: 24 November 2008
By Omar Valdimarsson

THOUSANDS of Icelanders have demonstrated in Reykjavik to demand the resignation of Prime Minister Geir Haarde and Central Bank governor David Oddsson, for failing to stop the country’s financial meltdown.

It was the latest in a series of protests in the capital since October’s banking collapse crippled the island’s economy. At least five people were injured and Hordur Torfason, a well-known singer in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down.

As crowds gathered in the drizzle before the Althing, the Icelandic parliament, on Saturday, Mr Torfason said: "They don’t have our trust and they are no longer legitimate."

The value of the Icelandic krona has been cut in half since January.



Jim Sinclair’s Commentary

I wonder if a gold junior could take over a few banks, obtain access to the Begging Bowl Loan window and some TARP, plus a little Quantitative Easing funds…

I am kidding of course.

FDIC Expands Process To Allow Bidders Without Bank Charters
Wednesday November 26th, 2008 / 22h36

DOW JONES NEWSWIRES Federal Deposit Insurance Corp., grappling with an unprecedented number of bank failures, will allow parties without bank charters to bid on the deposits and assets of failed institutions.

The FDIC said it will also consider abbreviated information submissions and applications, noting time constraints, but said interested investors must have conditional approval for a charter and meet FDIC standards.

Last week, the FDIC finalized its policy to temporarily back debt issued by banks and thrifts, which government officials hope will shore up confidence in the banking sector.

Twenty-two banks in the U.S. have failed this year, including three more that failed Friday as government officials scrambled to contain the spreading financial turmoil. The failures have hit financial institutions of all sizes this year, from $18.7 million Hume Bank in Missouri to $307 billion Washington Mutual Inc.’s banking operations.


Posted by & filed under In The News.

Dear CIGAs,

See the section I bolded below – Now we know who is going to step up to the plate and buy Fannie and Freddie debt seeing that the custodial account reports have shown that Foreign Central Banks have been disgorging nearly $100 billion worth of their paper since July of this year! I find it no coincidence that is the exact amount the Fed has announced that they will purchase!  We knew it was just a matter of time before the Fed had to come in and buy FNM and FRE debt since no one else was willing to do so – without that debt having a market there is no way to backstop home mortgages!


Fed Commits $800 Billion More to Unfreeze Lending (Update2)
By Scott Lanman and Dawn Kopecki

Nov. 25 (Bloomberg) — The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.

With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.

“They’re trying to put funds into the system, trying to unfreeze these markets,” said William Poole, the former St. Louis Fed president, in an interview with Bloomberg Television. “Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk.”

The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae, the statement said.

Help for Housing

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Fed said.

Fannie and Freddie bonds rallied. The yield premium on Fannie Mae’s five-year debt over similar-maturity Treasuries tumbled 21.5 basis points to 114.7 basis points as of 8:35 a.m. in New York, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.



Jim Sinclair’s Commentary

You know it is worse than this. They know it is worse than this. It is almost embarrassing to report to you what we all know is pure fabrication.

FDIC Shows Massive Growth In Problem Banks, But The Data Is Still Wishful Thinking

Today, the FDIC issued banking data from the third quarter ended September 30, which showed that the number of insured institutions on the FDIC’s "Problem List" increased from 117 to 171 and the assets of "problem" institutions rose from $78.3 billion to $115.6 billion during the quarter. The FDIC said this is the first time since the middle of 1994 that assets of "problem" institutions have exceeded $100 billion.

The FDIC said during the third quarter 73 institutions were absorbed in mergers, and 9 institutions failed. This was the largest number of failures in a quarter since the third quarter of 1993, when 16 insured institutions failed. Among the failures was Washington Mutual Bank, an insured savings institution with $307 billion in assets and the largest insured institution to fail in the FDIC’s 75-year history. The number of insured commercial banks and savings institutions fell to 8,384 in the third quarter, down from 8,451 at midyear.

The FDIC data also showed that net income of $1.7 billion was the second-lowest since 1990, and loan-loss rates rose to a 17-year high. On a positive note, net interest margins registered improvement.

Like it was in the second quarter (they left-out WaMu), the data the FDIC is issuing on the problem bank assets in the third quarter is misleading. We all know now that Wachovia (NYSE: WB) was near failure at the end of the third quarter and at the very start of the fourth quarter it was merged with Citi (NYSE: C) then later Wells Fargo (NYSE: WFC). Wachovia’s assets base would have easily surpassed the $115.6 billion the FDIC mentioned as the total in the problem list. In addition, yesterday Citi (NYSE: C) needed a U.S. government rescue plan. How can it be that this data is so wrong? Is it the fear factor that they feel would be created if they were truthful. Maybe certain institution don’t qualify as "troubled" but should. They need to look at how they qualify a troubled bank. Assets of troubled institutions should be in the trillions not $100 billion.


Jim Sinclair’s Commentary

FDIC will guarantee even for a day? Their cash is crashing. They can’t.

They haven’t got the money, just like credit default derivatives guaranteed without any chance of performing.

Who IS FDIC kidding? You?

Goldman to sell $2 billion in FDIC-backed bonds: source
Mon Nov 24, 2008 5:25pm EST

NEW YORK (Reuters) – Goldman Sachs (GS.N) plans to sell at least $2 billion of new debt that will be guaranteed by the Federal Deposit Insurance Corp, with pricing expected Tuesday, according to a market source familiar with the sale.

The debt will mature no later than June 30, 2012, the source said. Goldman Sachs is the sole bookrunner, while Citigroup and Morgan Stanley are joint leads, the source said.

The debt is guaranteed under the FDIC’s Temporary Liquidity Guarantee Program, and investors are watching the deal as a test case for demand under the new program.

The new debt is expected to price at 85 basis points over midswaps, plus or minus 3 basis points, the source said.

Goldman is expected to be the first firm to tap the FDIC’s new program. The FDIC on Friday approved a program to guarantee to banks’ new senior unsecured debt, potentially allowing the firms to issue debt with top "AAA" ratings.


Jim Sinclair’s Commentary

Don’t compare what is happening now to the Japanese zero bound conditions.

What is below did not happen in Japan on any scale near what has already occurred in the USA and is bound to grow by orders of magnitude.

That comparison is total nonsense that reveals ignorance, not intelligence.

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)
By Mark Pittman and Bob Ivry

Nov. 24 (Bloomberg) — The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”