Posts Categorized: In The News

Posted by & filed under In The News.

Dear Friends,

Here is an interesting question for us to ponder.

It does not take a brain surgeon to figure out that there has been the largest theft in human history in the past two years.

What is it that makes the perps firmly believe that they can do this in blatantly obvious ways and totally get away with it? I do not accept political contacts as the legislative is a loose cannon in such a case.

What is it that gives them such comfort?

Why was it so important to do in their minds that doing it almost publicly gives them no concern?

This tells me to be prepared for a substantive world changing occurrence within the time frame we have been discussing as positive for gold on the maximum momentum basis. That time is between now and 2012.

Are you prepared?



Jim Sinclair’s Commentary

Don’t let the numbing spin and off the scale development with equities put you in an exposed mode. The dollar is dead – that is becoming quite clear.

The ramification of the demise of the dollar this year are severe. The sheeple are sleeping, dope smoking, snorting or doing something else to disengaged their brains.

Gold is going to $1650 then on to Alf’s numbers. The dollar is going to .52 and maybe lower on the USDX. The long bonds are going to Hades. The IMF is going to be the world Federal Reserve.

There will be a SDR tied to gold as I have suggested, in the form of a basket of mainly non-dollar currencies that will be the one world currency.

The agenda of those that seek the above is unfolding. Democracy will become an underground movement. About all this there is no question.

Are you prepared?

Dollar Declines as Nations Mull Reserve Currency Alternatives
By Oliver Biggadike and Chris Fournier

June 2 (Bloomberg) — The dollar weakened beyond $1.43 against the euro for the first time in 2009 on bets record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency.

The euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound rose to the highest level since October and the Canadian dollar traded near an eight-month high on speculation signs of a recovery in U.S. and U.K. housing will spur higher-yield demand.

“There’s been a lot of talk out of Russia about a new global currency, and that’s contributing toward this latest bout of dollar weakness,” said Henrik Gullberg, a currency strategist in London at Deutsche Bank AG, the world’s largest currency trader. “These latest comments are just adding to the general dollar weakness we’ve seen recently.”

The dollar slid 1.1 percent to $1.4317 per euro at 4:21 p.m. in New York, from $1.4159 yesterday. It touched $1.4331, the weakest level since Dec. 29. The dollar depreciated 1.1 percent to 95.54 yen, from 96.59. The euro traded at 136.77 yen, compared with 136.78.

Sterling rose as much as 0.9 percent to $1.6596, the highest level since Oct. 30, while the Canadian dollar advanced 1.2 percent to C$1.0806, near the strongest level since Oct. 3.


Jim Sinclair’s Commentary

Didn’t the media inform us yesterday that China was CONFIDENT concerning US debt? This does not read like a confident bull on either the US dollar or US debt.

China’s Yu Tells U.S. Not to Be Complacent About Debt (Update1)

June 2 (Bloomberg) — China’s former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn’t be complacent about China continuing to buy Treasuries.

“I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’,” Yu said in an interview yesterday. “The euro is an alternative. And there are lots of raw materials we can still buy.”

Yu said he is scheduled to meet Geithner today at the Grand Hyatt Hotel in Beijing.

China is the biggest foreign holder of U.S. Treasuries with $768 billion at the end of the first quarter. Premier Wen Jiabao in March called for the U.S. “to guarantee the safety of China’s assets” and central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.

“China will be shooting themselves in the foot if they push this issue too hard,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “If they are too alarmist and contribute substantially to a dollar and Treasuries sell off, they are going to feel more pain than just about anybody in the world.”


Jim Sinclair’s Commentary

Let’s have a round of applause for those OTC derivative dealers that are giving many a vacation experience called "Hutment at the Horwith Station."

Be assured it will be an experience that millions of US citizens will never forget.

Are you prepared?
Uncle Dave Macon explains the origin of our financial plight:

Jim Sinclair’s Commentary

It always starts on the West Coast, but certainly moves into all states in one degree or the other.

Schwarzenegger says day of reckoning is here
Sacramento Business Journal – by Kathy Robertson Staff writer

The state wallet is empty. The bank closed. Credit has dried up, Gov. Arnold Schwarzenegger told lawmakers in a special Tuesday morning address at the Capitol.

“California’s day of reckoning is here,” he said. With no action, the state will run out of cash in 14 days. Three months after the state budget was approved, California faces a $24 billion deficit.

Schwarzenegger has already proposed massive cuts to education, health care and prisons. Now he’s looking for structural reform to make government more efficient and stretch taxpayer dollars.

He’s asked the State Board of Education, for example, to make textbooks available in digital formats — a move that could save millions.

In 2004, the governor talked about blowing up boxes and consolidating agencies, but the initiatives never gained traction.


Jim Sinclair’s Commentary

I would suggest the key comment in the Dow Jones story below is the lack of new reserves which inherently says how important the juniors are.

"We are simply not finding any new reserves anywhere in the world," Jacobsz said at a New York Society of Security Analysts metals and mining conference. Further, deposits where gold can be relatively easily extracted are being tapped out, he said.

DJ Inflation, Economy, Waning Supply To Support Gold – Producers

NEW YORK (Dow Jones)–Declining supply and investor demand driven by economic uncertainty and future inflation are likely to keep gold prices high, mining company officials said Tuesday. "Our view is that the gold market is in probably one of its most promising phases," said Willie Jacobsz, head of investor relations with Gold Fields Ltd. (GFI).

He cited economic uncertainty around the world, future inflation and "a very real decline in global mine supply" as cause for his company’s optimism on the gold price.

"We are simply not finding any new reserves anywhere in the world," Jacobsz said at a New York Society of Security Analysts metals and mining conference. Further, deposits where gold can be relatively easily extracted are being tapped out, he said.

Meanwhile, investors have been snapping up the metal as a currency, uncertainty and inflation hedge.

"The current rally in the gold price is driven by investment demand," Jacobsz said. "We don’t see sentiment changing very soon."

Gold prices will remain strong as long as investors keep flocking to the metal, said Victor Flores, senior mining analyst with HSBC.

"There has been a great deal of interest in gold from investors," Flores said. "As long as gold ETF [exchange-traded fund] demand remains robust, you will see gold [prices] hold up." Although deflationary pressures are strong at the moment, higher inflation and weaker currencies will probably assert themselves down the road as results of government stimulus efforts to fight the economic downturn, Flores said.

"At the moment we are fighting deflation," Flores said. "What’s really lurking around the corner is inflation."

Investors historically have bought gold as a hedge against inflation because they see it holding its value more strongly than other assets amid rising prices. It is also bought as a safe-haven in times of political and economic uncertainty.

"Gold is the only asset class that withstood the current economic downturn," said William Biggar, president and chief executive of North American Palladium Ltd. (PAL), which last month completed the acquisition of Cadiscor Resources Inc. and its gold mine in Quebec.

"Our growth strategy is focused on precious metals and acquiring quality gold assets," Biggar said.

-By Matt Whittaker, Dow Jones Newswires; 201-938-5959;

Jim Sinclair’s Commentary

As a multi-rated pilot I can assure you that none of us wish to speak with the FAA, declare an emergency, or worst of all, tell them about anything flying near us that is not another aircraft with a clearly visible tail number.

The hassle is beyond your wildest imagination, yet this commercial pilot opted to file a report knowing what it means.

He must firmly believe that the aircraft was shot at with the intention of taking him down.

What would the police find if a hand held surface to air was used by a trained person?

Liberty Co., FAA to discuss report of object near plane
June 1, 2009, 11:38PM

Liberty County Sheriff’s officials are expected to meet with the FAA on Tuesday to discuss what a Continental Express pilot reported as a “missile or rocket” flying near his airplane.

A pilot reported to the Federal Aviation Administration that at about 8:15 p.m. Friday, an object passed within 150 feet beneath the aircraft, sheriff’s officials said.

The aircraft was near the southern edge of the county, flying at about 13,000 feet, officials said.

“The pilot, from what we understand, was former military. He was able to get the coordinates down real quick,” said Cpl. Hugh Bishop with the Liberty County Sheriff’s Department.

Sheriff’s deputies searched Friday night for signs of evidence where a missile might have been launched or landed.

“We couldn’t find anything,” Bishop said.


Posted by & filed under In The News.

Dear CIGAs,

I don’t often ask you to review two postings. Today I have to.

Who knows best what Communism looks like than former and maybe present Communists?

Secondly, the letter posted yesterday written by Andrew Cuomo, AG of New York State, is revealing of the calibre of financial leadership we have. Today is the day the US officially enters into a Communist state, if not by edict then certainly in practice.

God help us all!

American capitalism gone with a whimper
Stanislav Mishin
From June 1, 2009

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.



Jim Sinclair’s Commentary

The key point to China’s increase in gold holdings is that the world was informed not over six years, but practically speaking, in one day.

What does that mean for the dollar when young Chinese students are smart enough, if not a tad rude, to laugh when the Secretary of the US Treasury informs them that the dollar is safe?

Why is China Buying Gold?
Jun 1st, 2009 | By Byron King

Remember the old expression, “I wouldn’t do that for all the tea in China.” People used to associate China with tea. Well, now it’s time to associate China with gold, and a lot of it. Because the Chinese recently announced that they control over 33.89 million ounces of gold for monetary purposes. That’s an increase of 75% in Chinese gold holdings over the past six years.

This kiloton of Chinese gold makes the Middle Kingdom the world’s sixth largest holder of the yellow metal. The U.S. — courtesy of President Roosevelt’s gold confiscation in 1933 – tops this list of the world’s largest gold holders, followed by Germany, the IMF, France and Italy.

How did the Chinese accumulate so much gold? China purchased it over the past six years through its State Administration of Foreign Exchange (SAFE). SAFE is quite distinct from the People’s Bank of China (PBOC). The SAFE purchases meant that the gold did not appear as part of China’s officially reported monetary reserve figures.

The Chinese gold purchases, evidently, were part of a slow and steady buying program between 2003 and the present. It makes you wonder what the Chinese were thinking back in 2003. I happen to know, courtesy of an acquaintance at the Naval War College, that the Chinese were quietly forecasting that the U.S. would destroy its dollar by going to war in Iraq.


Jim Sinclair’s Commentary

Factor the following in to the absolute truth that if when GM and Chrysler come out of bankruptcy, post 60 day car sales MUST BE RISING or the s**t will hit the fan big time for whatever is then left of the US dollar.

Subprime meltdown over; now comes the bad news

So much has been made of the subprime mortgage meltdown that you would think it was almost totally responsible for the economic collapse, and that once the subprime problem was fixed then the worst would be over.

Unfortunately nothing could be further from the truth, despite hitting new highs in foreclosure listing. Instead it was the first round of a three part collapse, and we are on the edge of the second round.

I will demonstrate with a fantastic series of charts below, most of them were created by the T2 Partners.

Round One

First, let’s take a look at the subprime and overall housing market.


As you can see, the huge wave of subprime mortgages resettings from "teaser" rates to market rates has virtually ended.


Jim Sinclair’s Commentary

Northwestern Mutual is generally known as a responsible company. No doubt like other insurers it probably lost a fair amount on dodgy fixed income in the past few years.

Note his comment on downside potential in stocks vs. gold.

Northwestern Mutual Makes First Gold Buy in 152 Years
By Andrew Frye

June 1 (Bloomberg) — Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time in 152 years to hedge against further asset declines.

“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”

Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. Gold futures for August delivery slipped 30 cents to $980 at 11:47 a.m. in New York.

“The downside risk is limited, but the upside is large,” Zore said. “We have stocks in our portfolio that lost 95 percent.” Gold “is not going down to $90.”

Policyholder owned Northwestern Mutual, based in Milwaukee, ranks thirds by 2008 life insurance premiums according to data from the National Association of Insurance Commissioners. The data excludes annuities.



Jim Sinclair’s Commentary

Today investors have rewarded failure by goosing equities over 200 points. Bankruptcy is failure no matter how it is spun. The new means of bankruptcy in screwing the bond holders therefore has to be considered as having punished production.

There has never been nor ever will be a society that can survive in leadership with that approach.

The entire mass of money bunny glee assumes that car sales will be no less than holding the 10,000,000 level after bankruptcy.

I am sure all government buying of vehicles will take place the month after GM and Chrysler come out of bankruptcy.

If car buying craters after that, as President Obama said today – what is good for GM is good for the USA. The other side of that is what kills the Second Coming of GM and Chrysler will tank the US dollar as the common share of the USA.

This is going to be a cold, hard winter.

U.S. Auto Sales Likely Tumbled 35% on Chrysler, Jobs (Update1)
By Alex Ortolani and Doron Levin

June 1 (Bloomberg) — Chrysler LLC, idling plants and shutting dealerships in bankruptcy, probably helped shrink the U.S. auto market by 35 percent in May as the industry endured its worst start to a year since at least 1976.

The seasonally adjusted sales rate tumbled to 9.2 million last month from 14.2 million a year earlier, based on 7 analysts surveyed by Bloomberg. Chrysler may have fallen 51 percent and General Motors Corp., which filed for bankruptcy today, may have fallen 37 percent, according to 5 analysts.

May sales at that rate would mark a fifth straight month at fewer than 10 million units, the deepest slump in 33 years of Bloomberg data. U.S. joblessness at the highest since 1983, Chrysler’s Chapter 11 case and GM’s slide toward court protection all likely helped keep buyers out of showrooms.

“It’s still a rough road out there,” said Jeff Schuster, an automotive sales analyst with J.D. Power & Associates in Troy, Michigan. “There’re still a lot of issues with the economy and a lot of uncertainty in consumers’ minds.”

GM, the biggest U.S. automaker, and No. 3 Chrysler began receiving emergency federal loans in December while they worked to restructure outside of court.


Jim Sinclair’s Commentary

Even the kids in China understand the future of the US dollar.

Geithner gets laughed at by Chinese students when saying $ assets are safe
June 1, 2009
Tom Bawden

Geithner tells China its dollar assets are safe

Mr Geithner, in China on his first visit as US Treasury Secretary, reiterated that US would cut its huge fiscal deficits

Timothy Geithner moved today to reassure the Chinese Government that its huge holdings of dollar assets were safe as he reaffirmed his faith in a strong US currency.

Mr Geithner, in China on his first visit as US Treasury Secretary, sought to allay concerns that Washington’s growing budget deficit would fan inflation which, in turn, would undermine the dollar and US bonds.

“Chinese assets are very safe,” Mr Geithner said, answering a question after his opening address at Peking University this morning.

His answer was greeted with laughter by the students, who question the wisdom of China spending huge amounts of money on US bonds instead of improving domestic living standards.

China is the biggest foreign owner of US Treasury bonds, holding $768 billion (£468 billion) at the end of March.


Jim Sinclair’s Commentary

Just because they busted their bank with unregulated paper isn’t a good enough reason for regulation of their affairs in their opinion.

Even in Crisis, Banks Dig In for Fight Against Rules
June 1, 2009

As the financial crisis entered one of its darkest phases in October, a handful of the nation’s largest banks began holding daily telephone sessions. Murmurs were already emanating from Washington about the need for a wide-ranging regulatory overhaul, and Wall Street executives girded for a fight.

Atop the agenda during their calls: how to counter an expected attempt to rein in credit-default swaps and other derivatives — the sophisticated and profitable financial instruments that were intended to limit risk but instead had helped take the economy to the brink of disaster.

The nine biggest participants in the derivatives market — including JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America — created a lobbying organization, the CDS Dealers Consortium, on Nov. 13, a month after five of its members accepted federal bailout money.

To oversee the consortium’s push, lobbying records show, the banks hired a longtime Washington power broker who previously helped fend off derivatives regulation: Edward J. Rosen, a partner at the law firm Cleary Gottlieb Steen & Hamilton. A confidential memo Mr. Rosen drafted and shared with the Treasury Department and leaders on Capitol Hill has, politicians and market participants say, played a pivotal role in shaping the debate over derivatives regulation.

Today, just as the bankers anticipated, a battle over derivatives has been joined, in what promises to be a replay of a confrontation in Washington that Wall Street won a decade ago. Since then, derivatives trading has become one of the most profitable businesses for the nation’s big banks.


Jim Sinclair’s Commentary

It is comforting to know that time tested experience honed in the running of major enterprise is the qualified hand that now molds the USA’s business future as a nation.

Any guess at his fraternity association at Yale?

The 31-Year-Old in Charge of Dismantling G.M.
Published: May 31, 2009

WASHINGTON — It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.


But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”


Jim Sinclair’s Commentary

A never ending story. Remember the Russian experience here and what it did to the USSR?

17,000 US troops in Afghanistan by mid-July
Sun, 31 May 2009 20:39:35 GMT

The bulk of the extra 17,000 US troops will be deployed in Afghanistan by mid-July as Washington strives to tighten its grip on the region.

"10,000 marines are beginning to arrive now and will continue to arrive for the next month and a half or so and they will be principally located in Helmand but also in Farah," Colonel Greg Julian, spokesman for US forces told Reuters on Sunday.

He added that some 7,000 US army troops along with "additional helicopters" will also be deployed to the mainly "rural areas" of southern Kandahar province by the set date.

Julian said that a further 4,000 troops will also be sent to the south and west of the war-torn country by August, mainly to train Afghan security forces.

Despite the growing presence of foreign troops in the southern Helmand province and the western Farah district, the area is considered as a haven for insurgents, where many NATO alliance troops deployed in the country, have met their deaths.


Jim Sinclair’s Commentary

Destabilization? There are 2,500,000 Pakistanis homeless and on the march. What do you call that?

Pakistan ‘fears destabilizing’ US policies
Fri, 29 May 2009 07:09:53 GMT

The Islamabad government is worried that the US President Barack Obama’s move to boost its military presence in Afghanistan could further destabilize Pakistan.

Pakistan’s Dawn News revealed on Friday that Civilians and military officials in Islamabad believe that an increase of 21,000 US troops in Afghanistan could further destabilize Pakistan by pushing more militants across the border.

Sources said increased US military activity may also spark an influx of refugees from insurgency-hit southern Afghanistan into border areas of Pakistan.

Meanwhile, US Central Command chief Gen David Petraeus paid a secret visit to Islamabad during this week to allay Pakistan’s concerns that the troops build-up in the war-ravaged Afghanistan would add to its woes, according to the report.

"Gen Petraeus told his interlocutors that the US had very few options other than to increase the number of troops in Afghanistan and that all possible efforts would be made to minimize its fallout on Pakistan," a diplomatic source told Dawn.


Posted by & filed under In The News.

Dear CIGAs,

Is this a nightmare or am I actually reading “BY NATIONALIZING GM”?

As the story broke a mini rally in the US dollar flopped.

U.S. Details Plan to Rescue G.M. Through Bankruptcy
Sunday, May 31, 2009 — 9:58 PM ET

WASHINGTON – President Obama will push General Motors into bankruptcy protection on Monday, making a risky bet that by temporarily nationalizing the onetime icon of American capitalism, he can save at least a diminished automaker that is competitive.

The bankruptcy, to be filed in New York, is a significant turning point for an industry that was once at the heart of the American economy. It culminates a remarkable four months of confrontation between Washington and Detroit that is expected to result in a drastic downsizing of the company.

It also places the government in uncharted territory as a business owner, as it takes a majority ownership stake in the company during its restructuring.

Reflecting the government’s extraordinary intervention in industry, aides say, Mr. Obama plans to tell the nation on Monday that he believes G.M. can be brought back from the brink of insolvency, even if the company looks almost nothing like the titan of old.

Administration officials briefed reporters on the G.M. plans Sunday night, as President Obama began to inform members of Congress. But the White House insisted that the aides who talked to reporters could not be named.

In his remarks on Monday, Mr. Obama will spell out a strategy in which a shrunken G.M. can make money even if new car sales remain at a sluggish 10 million a year in the United States and even if G.M., once the giant of the industry, drops below its current 20 percent market share in this country.

But to get there, American taxpayers will invest an additional $30 billion in the company, atop $20 billion already spent just to keep it solvent.


‘Gold price to touch $1,400 in six months’
2009-05-31 22:30:00

Gold investors know all too well the psychological importance of $1,000 gold. The yellow metal’s been hovering frustratingly near that level for weeks after briefly surpassing it in February. According to John Kaiser, editor of the Kaiser Bottom-Fishing Report, “we’re getting very close.” In this exclusive interview with The Gold Report, John shares his “modest” price forecast of $1,300 – $1,400 within the next six months and presents strategies for gold companies looking to create value.

The Gold Report: John, you have said that you believe gold may go up to $1,300 to $1,400, but probably not higher. Can you give our readers an overview of how you achieved those targets?

John Kaiser: I think we’re ready for a real increase in the price of gold, which is why I am looking at more modest targets, such as $1,300 to $1,400, happening fairly quickly, probably bouncing plus or minus $200 or $300, around that level, but it’s a real price increase without a corresponding catastrophic collapse in the U.S. dollar or hyperinflation descending upon us.

TGR: What time frame are you looking at?

JK: I think we’re getting very close. We’re knocking on the door of $1,000, which is a very important psychological level. I would say in the next six months, as people realize that the banking system is still troubled and will be for a long time because an uptrend in real estate prices is not in the cards for a very long time. And, in order to make the banks solvent, the underlying collateral needs to have liquidity and a stable price.


Jim Sinclair’s Commentary

Israel makes a major miscalculation!

Israel stages biggest-ever war drill
updated 7:37 a.m. EDT, Sun May 31, 2009

JERUSALEM (CNN) — Israel started its biggest emergency drill in the nation’s history Sunday to prepare civilians, soldiers and rescue crews for the possibility of war, the defense force said in a statement.

The five-day drill, nicknamed Turning Point 3, comes amid the nation’s rising tensions with Iran.

It will be conducted in public facilities, including schools, military bases and government offices. Students, soldiers and other civilians will practice how to gather at protected places during an emergency.

Officials said the drill will include simulated rockets, air raids and other attacks on infrastructure and essential facilities, and use of weapons on civilians.

Everyone is expected to go to a protected place at the sound of sirens, the defense force said, adding that more instructions will be broadcast on a public channel.

“It is of great importance that every civilian, institute and workplace will seriously practice in order to improve our preparedness and national resilience,” Maj. Gen. Yair Golan of the Home Front Command said in a news statement.


Jim Sinclair’s Commentary

Just another bailout where the taxpayer is burdened beyond the ability to cope.

FDIC Fund Running Dry
By: Dirk van Dijk, CFA
May 27, 2009

We highlight JP Morgan Chase & Co., Inc. (JPM – Snapshot Report), BankUnited Financial Corp. (BKUNA – Snapshot Report), Wells Fargo & Co. (WFC – Analyst Report) and Bank of America Corp. (BAC -Snapshot Report).

As the FDIC has had to step in to take over more and more insolvent banks, the fund has dwindled to dangerously low levels. At the same time, the number of problem banks continues to grow at a rapid pace.

At the end of the first quarter there were 305 “problem institutions” with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.

The first graph (from shows the steep drop in the coverage ratio. Just a year ago, the fund was equal to 1.01% of covered deposits. The current level is its lowest since the first quarter of 1993, when we were digging out from the S&L fiasco.

However, don’t worry about losing the money in your checking account if your bank goes under. Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped. This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit.


Jim Sinclair’s Commentary

The Chinese use their media to speak to other governments on all kinds of matters.

This is a direct salve across the bow of Geithner’s visit to China this week.

Chinese economists deem huge holding of US bonds “risky,” split on way out
2009-05-31 15:31:57

BEIJING, May 31 (Xinhua) — On the first day of U.S. treasury secretary Timothy Geithner’s visit to China, the Beijing-based Global Times published a survey of 23 famous Chinese economists on Sunday, saying that the majority of them deemed the vast holding of U.S. bonds “risky.”

Among the 23 experts polled, 17 said they believed that U.S. equities pose great risks to China’s economy.

eithner will begin his first visit to Beijing as US treasury secretary in an attempt to assure the U.S.’ biggest creditor that its large holding of purchased US bonds is safe.

The visit also highlights Geithner’s comments made earlier this year alleging that China has manipulated its currency.

Li Wei, an expert with the Institute of Ministry of Commerce, and Tian Yun, a scholar at the China Macro Economics Institute, expressed concerns over the risks, saying that the United States may export its deepening crisis to China “by printing U.S. dollar notes uncontrollably.”


Jim Sinclair’s Commentary

“We do not believe the sales, should they occur, will harm gold prices,” said HSBC analyst James Steel.

IMF gold sale: US Congress approval next week
Commodity Online

LONDON: The International Monetary Fund’s decisiion to sell its gold reserves could get the necessary approval from the US Congress next week.

At the G20 summit in London in April, participating countries agreed the IMF could sell 403.3 metric tons of gold as part of efforts to leverage up to $6 billion in concessional loans for low-income countries over the next few years.

In order for the sale to proceed, 85% of IMF shareholders need to approve the proposal. Since the U.S. has 17% of the votes, it has a de facto veto over the proposal, which requires Congressional approval, but IMF Managing Director Dominique Strauss-Kahn told Dow Jones Newswires this week he expects Congress will soon approve the sale.

On Friday, analysts said US Congress may approve International Monetary Fund gold sales as early as next week.

“This issue appears now fully priced into the gold market and any announcement confirming sales should not move the market – apart from perhaps a knee-jerk reaction,” said John Reade, an analyst at UBS.


Jim Sinclair’s Commentary

Have you ever heard of a Hack License? It is not a cab medallion in New York.

Contractors Vie for Plum Work, Hacking for U.S.
Published: May 30, 2009

MELBOURNE, Fla. — The government’s urgent push into cyberwarfare has set off a rush among the biggest military companies for billions of dollars in new defense contracts.

The exotic nature of the work, coupled with the deep recession, is enabling the companies to attract top young talent that once would have gone to Silicon Valley. And the race to develop weapons that defend against, or initiate, computer attacks has given rise to thousands of “hacker soldiers” within the Pentagon who can blend the new capabilities into the nation’s war planning.

Nearly all of the largest military companies — including Northrop Grumman, General Dynamics, Lockheed Martin and Raytheon — have major cyber contracts with the military and intelligence agencies.

The companies have been moving quickly to lock up the relatively small number of experts with the training and creativity to block the attacks and design countermeasures. They have been buying smaller firms, financing academic research and running advertisements for “cyberninjas” at a time when other industries are shedding workers.


Jim Sinclair’s Commentary

What are these people thinking?

Bank Of America’s New Green Hotel
Posted May 28th 2009 8:02PM by Deidre Woollard

Guests visiting Bank of America’s headquarters in Charlotte, North Carolina will soon have a more luxurious place to stay. As USA Today’s Hotel CheckIn reports, the nation’s largest bank is opening up a new Ritz-Carlton hotel across the street from its corporate headquarters.

The 18-story building will have a 12,000 square-foot penthouse wellness center, a street-side BLT Steak restaurant and 147 rooms including a 2,900 square-foot Presidential Suite. It will be the first LEED-designed new hotel in Charlotte, North Carolina and is being built for LEED Gold Certification making it the first green hotel under the Ritz-Carlton umbrella. The Ritz-Carlton, Charlotte at Bank of America Center is scheduled for completion in October 2009.


Jim Sinclair’s Commentary

1. Pakistan goes Taliban
2.Israel makes a major miscalculation.
3. Turkey is a victim.

Rebel Land: Among Turkey’s Forgotten Peoples by Christopher de Bellaigue
The Sunday Times review by Jeremy Seal

With Istanbul nominated European Capital of Culture for 2010, here’s a book that certainly rains on the Turkish parade. At once a contemporary investigation and a historical analysis, Christopher de Bellaigue’s brave and informed account of eastern Turkey’s brutalised minorities deserves a wide readership, even among those sure to find its contents unpalatable.

Ottoman cosmopolitanism largely accommodated the empire’s minorities. From the late-19th century, however, the Christian Armenians and Muslim Kurds were increasingly discomfited by rising Turkish nationalism. Accusations of genocide against the Armenians during the first world war have since been regularly levelled at the Turks, and consistently rejected by them.

De Bellaigue sets out to get his material, “gritty and unfiltered”, from the inhabitants of Varto, a benighted town near Erzurum, one that stands for “those hundreds or thousands of other small places across the rebel land, where the atrocities happened far from prying eyes”. The author brings a rare conviction to his descriptions of the town. An Alevi musician leads him across uplands deforested by the army to deny cover to Kurdish guerrillas. There are also run-ins with bureaucrats and the security forces, not least with the resentful captain of the local gendarmerie.


Jim Sinclair’s Commentary

Expect the Pakistan government to announce total victory in Swat soon, but don’t expect either victory or sustainability.

Public support for US declining in Pakistan: Petraeus
Daily Times – Lahore,Pakistan
LAHORE: Public support for the US is declining in Pakistan due to US drone strikes, Central Command chief General David Petraeus has said. …
See all stories on this topic
Pakistan: Corpses lie exposed in retaken Swat town
The Associated Press
MINGORA, Pakistan (AP) — Corpses lay exposed in the Swat Valley’s main town on Sunday, and residents rushed to mostly empty markets in search of food a day …
See all stories on this topic
Pakistan battles Taliban; Swat offensive “near end”
Reuters – USA
The United States and the Afghan government have long been pressingPakistan to root militants out of South Waziristan and other enclaves on the Afghan …
See all stories on this topic
Pakistan gains in Swat as trouble flares elsewhere
KGAN – Cedar Rapids,IA,USA
DERA ISMAIL KHAN, Pakistan (AP) — Fighting in a northwest tribal region ofPakistan could raise the odds that the army will extend an offensive to …
See all stories on this topic
More battles in Pakistan…Palestinians clash…magiclakers final …
AP DERA ISMAIL KHAN, Pakistan (AP) There’s more fighting in a northwest tribal region of Pakistan. Intelligence officials say Taliban fighters have fought a …
See all stories on this topic

Jim Sinclair’s Commentary

There will be many varied results as part of the Surge by Pakistan in Swat.

Al-Qaeda now recruiting ‘ready made’ Taliban terrorists from Pak to strike UK, other countries
May 30th, 2009

LONDON – The extent to which Al-Qaeda has dangerously penetrated into Britain can be gauged from the fact that it no longer relies on sending British-born men to Pakistan for terror training, instead it is now recruiting ‘ready made’ terrorists from among the Taliban based in Pakistan.

British investigators, who have been quizzing the 10 men arrested in the North West, believe that Al Qaeda has developed links with the Taliban which provide it trained militants who can carry out terror strikes at significant locations, The Telegraph reports.

According to the newpaper, a terrorist informant has told prosecutors that he was trained by the top Taliban commander in Pakistan, Baitullah Mehsud .

He also revealed that he was planning a series of suicide attacks in Britain, and other European countries with 11 other men.

It’s worth mentioning here that British security services had earlier disclosed that a terrorist cell was sent to Manchester from the Taliban heartland in Pakistan’s lawless tribal areas.


Jim Sinclair’s Commentary

The following link leads to a letter on the investigation results of the Bank of America and Merrill Lynch merger.

Click here to view the PDF file…

Jim Sinclair’s Commentary

This week Secretary Geithner will most politely get an ear full of the truth. You cannot guarantee dollars (US Treasuries) with dollars.

U.S. Treasury Secretary to visit China (05/26/09)

BEIJING, May 26 (Xinhua) — U.S. Treasury Secretary Timothy Geithner will visit China from May 31 to June 2, Foreign Ministry spokesman Ma Zhaoxu told a regular press briefing Tuesday.

As a special envoy of U.S. President Barack Obama, Geithner would visit China at the invitation of Chinese Vice Premier Wang Qishan, who is a special representative of Chinese President Hu Jintao, Ma added.

“The two sides will exchange views on issues of common concern,” Ma said, adding that those issues included the international financial situation, bilateral cooperation in coping with the financial crisis and preparations for the first round of the China-U.S. Strategic and Economic Dialogue.

The new mechanism was upgraded from the Strategic Dialogue and biennial Strategic Economic Dialogue (SED), which were initiated by the two heads of state in 2005 and 2006, respectively.

The Strategic Dialogue, co-chaired by a Chinese state councilor and a U.S. deputy Secretary of State, focused on political and strategic issues in the development of bilateral ties.

The first round of the China-U.S. Strategic and Economic Dialogue will concentrate on economic and financial topics including energy, environmental protection, intellectual property rights and services.


Posted by & filed under In The News.

What does a large new short do when DIRTY TRICKS FAIL.

1. Sell the stock as gold rises to unsettle the weaker hands
2. Work the charts, certainly at a gap close, that coincides with the most meaningful downtrend to work the day and inter-day traders.

Jim Sinclair’s Commentary

In this very interesting article three major points are made:

1. We have reviewed this which is the most important currency development in 136 years.

"In reaction to the Fed’s QE scheme, Brazil and China are working towards bypassing the US-dollar in bi-lateral trade transactions, challenging the status of the greenback as the world’s leading international currency. “We don’t need dollars,” said Brazilian President Luiz Inacio Lula da Silva. “It’s crazy that the dollar is the reference, and that you give a single country the power to print that currency.”

2. Take the word "Iran" out and consider the domino impact on markets that will be unleashed by the geopolitical Andromeda strain – Pakistan goes Taliban.

"For Iran’s neighbors in the Middle East, the atomic fireworks display in North Korea proves the West cannot afford to wait much longer, until intelligence agencies confirms Iran’s nuclear capability, because Tehran can surprise the world with an underground atomic test of its own. When that day arrives, crude oil futures could soar above $100 per barrel, lifting grains and precious metals higher for the ride."

3. QE has busted the bond market and the bust is only starting now. A break of the 30 year below 112 – 113 (which is going to happen) will result in a bear market in US Treasuries that will last at least a decade and announce the impending hyperinflation.

"However, what would happen if the QE addiction leads to a collapse in G-7 bond prices? “The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” Ernest Hemingway, “Notes on the Next War: A Serious Topical Letter”, 1935."

Can North Korean Nukes Rattle Global Markets?
Posted Wednesday, 27 May 2009
By Gary Dorsch, Editor, Global Money Trends

News that North Korea’s mercurial leader Kim Jong Il authorized the detonation of a nuclear bomb on May 25th, comparable to those that obliterated Hiroshima and Nagasaki, barely caused a ripple in the global financial markets. Japanese and South Korean stocks initially fell in a knee-jerk reaction, but soon recouped most of their losses, as traders shrugged off the nuclear fallout, – figuring it was just a harmless display of Kim Jong Il’s temper tantrums that erupts once every few years.

When foreign markets failed to take Pyongyang seriously, Kim Jong Il upped the ante by firing the Musudan-Ri missile, on which N-Korea could ultimately place a nuclear warhead, with a range of 2,500-miles. Pyongyang then fired three shorter-range missiles into the Sea of Japan. But global stock markets are so intoxicated with super-cheap money injected by the G-20 central banks each day, that even nuclear bomb blasts didn’t rattle the post March 10th“green-shoots” rally.

Pyongyang vowed on May 27th, to attack South Korea if its ships participate in a US-led effort to interdict vessels carrying missiles or weapons of mass destruction. Pyongyang also declared that the truce that ended the Korean War was no longer valid. “Those who provoke North Korea will not be able to escape its unimaginable and merciless punishment,” the North’s official news agency said. Calling South Korea’s government a “group of traitors,” “our revolutionary forces will consider the interdiction of ships as a declaration of war against us.”


Jim Sinclair’s Commentary

Plausible denial when it all goes wrong.

Fed: We Were Never Trying To Set Credit Market Rates
Joe Weisenthal – May. 29, 2009, 7:40 AM

The Fed has finally responded to the soaring mortgage rates, and the apparent failure of quantitative easing.

Their spin — courtesy of CNBC’s Steve Liesman (natch) — is that the Fed was never trying to force down mortgage rates or "set" rates. Rather, by stepping in and purchasing bonds, the Fed is merely trying to "support" the credit markets.

Frankly, we’re not sure that there’s a difference between the two statements. "Supporting" credit markets is another way of making sure that interest rates aren’t getting out of hand. And to the extent that the credit markets need that Fed support is not very promising.

Either way it seems clear. The Fed believes that depressing rates is how they’ll stabilize the housing market and the sudden spike up torpedoes that goal.


Jim Sinclair’s Commentary

Please take note of the discussion of Taliban tactics and the most probable performance of Pakistan forces.

Pakistan Civil War News Updates — May 29, 2009
FRIDAY, MAY 29, 2009


Taliban In Swat Slip Away, Live to Fight Another Day — Captain’s Quarters

One month ago at the beginning of the Pakistan offensive against the Taliban in the North West Frontier Province, the Pakistan Army claimed that the offensive would take approximately one week. We responded that the Pakistan Army, regardless of whether they had the will to conduct counterinsurgency operations, didn’t understand how to, adding that:

The Taliban would simply melt away, wait for the Pakistan Army to leave, and then re-enter the area and kill anyone who cooperated with the Army. Or if they stand and fight, the history of the Pakistan Army indicates that they will simply pull back and sign a new peace deal.


Jim Sinclair’s Commentary

When Pandora’s Box of Quantitative Easing was opened, it could not and will not be closed!

Bond markets defy Fed as Treasury yields spike
By Ambrose Evans-Pritchard
Last Updated: 5:51AM BST 29 May 2009

The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs.

Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed’s implicit target.

Yields have jumped to 3.69pc – after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage loan to 5.08pc and lifting the borrowing cost for corporations.

"The Fed is going to have to consider doubling its purchases of Treasuries," said Ashraf Laidi, from CMC Capital Markets. "We could be nearing the end-game for the US dollar but the Fed has little choice at this point. We’re in a vicious circle where any policy aimed at supporting the US economy must be at the expense of the dollar."


Jim Sinclair’s Commentary

The saying is "Records are made to be broken." This one will be.

Troubled Bank Loans Hit a Record High
May 30, 2009

OVERALL loan quality at American banks is the worst in at least a quarter century, and the quality of loans is deteriorating at the fastest pace ever, according to statistics released this week by the Federal Deposit Insurance Corporation.

The report highlighted that even as the government and major banks have scrambled to deal with the impaired securities the banks own, the institutions have been plagued by an unprecedented volume of old-fashioned loans going bad.

Of the entire book of loans and leases at all banks — totaling $7.7 trillion at the end of March — 7.75 percent were showing some sign of distress, the F.D.I.C. reported. That was up from 6.9 percent at the end of 2008 and from 4.1 percent a year earlier. It also exceeded the previous high of 7.26 percent set in 1990 and 1991, during the last crisis in American banking.

The F.D.I.C. has been collecting the figures since 1984.

Virtually the only encouraging news in the report was that the banks’ loan portfolio might be worsening more slowly than it was. While the increase of 3.65 percentage points in a year is the highest ever, the quarterly rise was smaller than in the fourth quarter of last year.


Posted by & filed under In The News.

As goes Motors, so goes the USA.
–Livermore and Seligman


Faber is wrong as increasing interest rates are meaningless as a tool to stop hyperinflation which is a currency event. How in the world can Farber not understand that axiom?

U.S. Inflation to Approach Zimbabwe Level, Faber Says (Update2)
By Chen Shiyin and Bernard Lo

May 27 (Bloomberg) — The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

Federal Reserve Bank of Philadelphia President Charles Plosser said on May 21 inflation may rise to 2.5 percent in 2011. That exceeds the central bank officials’ long-run preferred range of 1.7 percent to 2 percent and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

“There are some concerns of a risk from inflation from all the liquidity injected into the banking system but it’s not an immediate threat right now given all the excess capacity in the U.S. economy,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore. “I have a little more confidence that the Fed has an exit strategy for draining all the liquidity at the appropriate time.”


Posted by & filed under In The News.

Dear CIGAs,

The 28 year up trend line cut is right now 112 to 113 on the 30 year bond. When this very long term up trend is history the credit crisis that has never ended goes TERMINAL.

The trillions of dollars pumped into the world skeleton financial system, particularly the US financial system, is like the application of Clearasil on a zit. The zit is still there festering but it is tad more difficult to see.

One would expect a bounce or sideways move at or near here as the value is so close to the long term up trend line of the 30 year bond.

Rising U.S. bond yields may spark Credit Crisis II
Fri May 29, 2009 2:43pm EDT
By John Parry – Analysis

NEW YORK (Reuters) – The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.

Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

Optimists hope that a fragile two-month rally in world stock markets, a rise in U.S. Treasury yields from record lows during the depths of the crisis in late 2008, and some less scary economic data all signal that a recovery is around the corner.

But gloomy analysts insist that thinking is delusional.

Once Credit Crisis Version 2.0 ramps up, foreign investors may punish the U.S. government for borrowing trillions of dollars too much by refusing to buy its debt until bond prices plunge to much cheaper levels.

The telling harbinger is benchmark Treasury note yields’ surge to six-month highs around 3.75 percent this week, as investors began to balk at the record U.S. government borrowing requirement this year.

The U.S. Treasury plans to sell about $2 trillion in new debt this year to fund a $1.8 trillion fiscal deficit.

Heavy selling of U.S. dollar-denominated assets could trigger a full-blown currency crisis and usher in surging inflation, forcing mortgage rates and corporate bond yields up, undermining any rebound in economic activity.

"The financial crisis is a downward spiral with two twists," said George Feiger, chief executive of Contango Capital Advisors in Berkeley, California.

First came the banking crisis and a huge contraction of credit, starting in mid-2007 which resulted in the stock market panic of 2008 which triggered the deepest U.S. recession in at least two decades.

"Once you have got a recession you have good old-fashioned credit losses," Feiger said. "The second leg is now the consequences of the massive recession and it is just now working its way out," he said.


Posted by & filed under In The News.

Dear Friends,

The stairs on the Golden Ladder that will be climbed are:


The steps on the USDX us dollar are:


The timing was April 19th and middle June to establish the launch period.


1. Gold reacts as currency support for the dollar enters mid June to a slow decline (that is the official definition of a strong dollar policy, really).
2. End of 2nd week going into the beginning of the 3rd week of June Gold launches towards and this time through the neckline of the reverse head and shoulders formation.
3. Gold rises to $1224 where it hesitates.
4. The OTC derivative market takes on the dollar as short sellers into dollar support.
5. This OTC derivative currency short position builds.
6. It is the US dollar where Armstrong will get his WATERFALL.
7. The main selling takes place when Israel makes a major miscalculation.
8. Hyperinflation is always and will continue to be a currency event.
9. Hyperinflation will be a product of the upcoming massive OTC derivative short dollar raid.

Should I be correct in the gold price action going into late June, it will fit Armstrong’s criterion for a move to $5000.

Alf’s work permits an over-run of the gold price to $3500 in the major 3rd phase, indicating overruns into the major 5th.


Jim Sinclair’s Commentary

How is this for an understatement?

U.S. ‘Problem’ Banks Rise to 15-Year High, FDIC Says
May 27th, 2009

U.S. “problem” banks climbed 21 percent to the highest total in 15 years in the first quarter, and provisions set aside for loan losses weighed on industry earnings, the Federal Deposit Insurance Corp. said.

The FDIC classified 305 banks with $220 billion in assets as “problem” lenders as of March 31, an increase from 252 with the $159 billion in assets in the fourth quarter. Assets at “problem” banks were the highest since 1993, the agency said today, without naming any lenders. The FDIC said its insurance fund slumped 25 percent to the lowest level since 1993

“The banking industry still faces tremendous challenges,” FDIC Chairman Sheila Bair said today at a briefing in Washington. “Asset quality remains a major concern.”

Regulators have taken over 36 lenders this year, including BankUnited Financial Corp. in Florida on May 21 and Silverton Bank of Atlanta on May 1, which combined cost the FDIC’s deposit insurance fund $6.2 billion. Twenty-one banks collapsed in the quarter, the most since late 1992, as the pace of failures accelerated amid the worst crisis since the Great Depression.



Jim Sinclair’s Commentary

The Pakistan government is offering USD$62,000 for the capture or killing of Taliban. Get 10 of your buddies and go get paid USD$620,000 less modest cash.

You can expect a rash of captured but more likely dead "old" Taliban fighters as the Pakistanis elect their grandfathers and elderly family friends to contribute to the common good.

This will be like in the Monty Python movie when the plague body remover roams the streets calling "Bring out your Dead.” The elderly fellow wanders out and was put in the body wagon. He complained that he was not dead. The body remover replied; "You will be soon" and hit him over the head with a club. The same is going to be rampant in Pakistan. How do you tell if a dead guy is a Taliban? You can’t water-board him. Those bodies are going to begin to roll in overflowing wagons, literally. The smell is going to be awful.

See what foreign aid can do to improve the wellbeing of the receiver. Living over there is tough.

Jim Sinclair’s Commentary

With NK Kim unilaterally having cancelled the "Korean War Armistice," going to DEFCON 2 is a reasonable and modest military reaction.

The problem is if North Korea Kim does his usual nothing then he looks more like a hot air machine.

The nuclear threat is resident in his questionable mental condition.

Have you ever seen the movie, "Team America?"

Breaking: US Army moves to DEFCON 2
Thursday, 28 May 2009

Sources close to MiNa claim the US Army has moved their alert level to Defcon 2. This was initiated by the alarming situation in North Korea. The US Army has over 35,000 troops stationed in South Korea, well within reach of North Korean convential weapons.

North Korea has the largest artillery force (can be equipped with nuclear warheads) in the world, which adds more to the already tense situation.

Earlier today, N. Korea’s leader Kim Jong issued threaths to the South Korean and US Navy ships for coming too close to North Korea’s territorial waters. The South Koreans and the Americans, may be positioning themselves for a preemptive strike.

What is DEFCON?

The defense readiness condition (DEFCON) is a measure of the activation and readiness level of the United States Armed Forces. It describes progressive postures for use between the Joint Chiefs of Staff and the commanders of unified commands. DEFCONs are matched to the situations of military severity.


Jim Sinclair’s Commentary

Einhorn will be dead right the day Moody’s downgrades US debt and the entire company gets shipped to Gitmo.

Einhorn calls AAA rating a curse, shorts Moody’s
Chanos warns on impact of government involvement in business
By Alistair Barr, MarketWatch
May 28, 2009, 12:28 p.m. EST

SAN FRANCISCO (MarketWatch) — David Einhorn, head of hedge-fund firm Greenlight Capital, called AAA credit ratings a curse and said he is betting against rating agency Moody’s, during a speech at a closely watched investment conference on Wednesday

Einhorn said that many institutions with AAA ratings, including the U.S. government, turned that supposed benefit into a disaster by borrowing recklessly, according to a hedge-fund investor who attended the conference in New York and spoke on condition of anonymity.

Most of the companies that have run into trouble during the financial crisis were or still are AAA rated, including American International Group (AIG 1.67, +0.01, +0.60%) , Fannie Mae (FNM 0.71, -0.03, -3.80%) , Freddie Mac (FRE 0.78, -0.04, -5.44%) , MBIA (MBI 6.33, -0.17, -2.62%) , Ambac (ABK 1.23, -0.04, -3.15%) and General Electric (GE 13.11, +0.12, +0.92%) , Einhorn noted.

The leading purveyor of AAA ratings is Moody’s (MCO 26.28, -1.87, -6.64%) , so Greenlight Capital is short that company’s shares, the investor quoted Einhorn as saying.

Short sellers borrow a stock, betting its price will fall. When they return the shares to the lender at the original price, they profit from the difference.



Jim Sinclair’s Commentary

Regarding gold, the following is a non-event, is always a non event and will continue to be a non event.

Gold is not copper.

Gold Scrap Supply Won’t Hold Back Next Rally – Mitsui

SINGAPORE (Dow Jones)–Further gains in gold prices won’t be met by a huge increase in gold scrap supply, as happened in the first quarter, Mitsui Global Precious Metals said in a report dated Wednesday.

Posted by & filed under In The News.

Jim Sinclair’s Commentary


Faber is wrong as increasing interest rates are meaningless as a tool to stop hyperinflation which is a currency event. How in the world can Farber not understand that axiom?

U.S. Inflation to Approach Zimbabwe Level, Faber Says (Update2)
By Chen Shiyin and Bernard Lo

May 27 (Bloomberg) — The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

Federal Reserve Bank of Philadelphia President Charles Plosser said on May 21 inflation may rise to 2.5 percent in 2011. That exceeds the central bank officials’ long-run preferred range of 1.7 percent to 2 percent and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

“There are some concerns of a risk from inflation from all the liquidity injected into the banking system but it’s not an immediate threat right now given all the excess capacity in the U.S. economy,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore. “I have a little more confidence that the Fed has an exit strategy for draining all the liquidity at the appropriate time.”



Dear Friends,

If you had ears to hear you will recognize that today, after four months of having promised without any delivery, the Obama Administration in his Nellis Air Force Base speech on solar energy began his first meaningful FISCAL STIMULATION (466 million, small, but a start).

Fiscal Stimulation is like a magnet to Monetary Stimulation whereby the later is pulled out into price inflation. It will occur according to the amount and cost of FISCAL programs he starts.

The magnet for hyperinflation is the US dollar below USDX .8200 and .7200 as a currency event.

Respectfully yours,

Jim Sinclair’s Commentary

This is not playing with fire. It is playing with the fate of a nation for decades to come and the lives of its citizens, all to rescue Wall Street and the OTC derivative gang.

U.S. Treasury and Federal Reserve. Federal Reserve holding over $2 trillion in the Darkest Balance Sheet in Financial History.

The U.S. Treasury and the Federal Reserve have arguably two of the least transparent balance sheets known to humankind.  This wouldn’t be such a big issue if the amount of money funneled into these organizations was small.  That is not the case.  The Federal Reserve since October of 2008 has held on its balance sheet over $2 trillion in reserve bank credit and also, Federal Reserve Holdings of U.S. Treasuries.  This of course is the biggest bait in switch in history because in exchange for U.S. Treasuries, banks can offload practically any collateral (i.e., mortgages, auto loans, credit card loans, etc).  The U.S. Treasury and Federal Reserve are creating the biggest put option in the history of the world and the American taxpayer stands to lose big.

Let us take a look at the Fed’s balance sheet:


The Fed doubled its balance sheet in the matter of a few weeks.  It went from approximately $900 billion to $1.8 trillion in lightning speed.  And with this speed, the public unfortunately did not know what they were exactly buying into.  It is important to take a look at the Federal Reserve balance sheet broken down by category:


Jim Sinclair’s Commentary

There will be a gang of trucks with chains looking for these ATMs.

German firm plans gold ATMs to meet growing demand
By Peter Starck FRANKFURT,

May 19 (Reuters) – Private investors should hold up to 15 percent of their wealth in physical gold, according to a German asset management company which plans to set up 500 ‘Gold-To-Go’ ATMs in Germany, Switzerland and Austria this year.

A gold-dispensing automatic teller machine (ATM) was on display at Frankfurt’s main railway station for a one-day marketing test on Tuesday.

A one-gram (0.0353 ounce) piece of gold, the size of a child’s little fingernail and about as thin, cost 31 euros ($42.25) — a 30 percent premium to the spot market price .

The flat rectangular piece, bearing the imprint of Belgian metals and speciality materials firm Umicore (Brussels) , came out of the cash-only ATM in a tin box, including a certificate of authenticity.

‘This is more than a marketing gimmick,’ said Thomas Geissler, chief executive of, the company planning to set up the 500 gold ATMs at a cost of 20,000 euros apiece.

‘It is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 percent of your liquid assets in physical gold,’ he told Reuters in an interview.


Jim Sinclair’s Commentary

This is an inviting conclusion until the dollar goes into a freefall and hyperinflation is visible even to the Money Bunnies. Then equities for no good reason fundamentally will join gold in an up-move.



Jim Sinclair’s Commentary

China and other larger dollar holders will not stand still for this.

Exploding debt threatens America
John Taylor

Published: May 26 2009 20:48 | Last updated: May 26 2009 20:48

Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.

Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.


Jim Sinclair’s Commentary

Regardless of the daily bankruptcy GM is on, it doesn’t mean anything now. You can be assured it is a total disaster for the US economy.

GM says bondholder offer fails; bankruptcy likely
AP Auto Writers

(AP:DETROIT) A General Motors Corp. bankruptcy filing seemed inevitable after a rebellion by its bondholders forced it to withdraw on Wednesday a plan to swap bond debt for company stock.

GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labor cost cuts and plant closures. But a bankruptcy reorganization is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company’s stock had failed. GM has received $19.4 billion in federal loans.

The move came as crosstown rival Chrysler LLC headed to court Wednesday to ask bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy’s Fiat Group SpA in hopes of saving itself from liquidation. Attorneys for Chrysler maintain that the Fiat deal is the company’s only hope to avoid being sold piece by piece, but car dealers, debtholders, former employees and others are protesting.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout debtholders. Both automakers were pulled down by overwhelming debt, high pension, health care and other labor costs relative to competitors, a global auto sales slump and a dismal U.S. housing market that pulled down demand for pickup trucks, their top-selling vehicles.

News of the failed GM bond exchange offer sent its shares down 22 cents, or 15.3 percent, to $1.22 in afternoon trading.


Jim Sinclair’s Commentary

A state law concerning guns and martial law. Wow, things are getting dicey out there!

Proposal Stopping Confiscation Of Guns Now Law
Posted: May 23, 2009 07:15 PM

(AP) NASHVILLE, Tenn. – A person who legally possesses a gun would not have it seized during periods of martial rule under a proposal that has been signed into law by the governor.

The measure was signed by Gov. Phil Bredesen on Thursday and takes effect immediately.

Sponsors say martial rule is the same as martial law at the federal level. They say the law is necessary after law enforcement in New Orleans went door to door seizing weapons in the aftermath of Hurricane Katrina.

Republican Sen. Jack Johnson of Brentwood, one of the sponsors, has said he doesn’t expect such behavior in Tennessee, but believes legislation should be in place just in case.


Jim Sinclair’s Commentary

The market feels Kim of North Korea is full of hot air. He may or may not be but this answers the many questions over the past few days of why gold ignores North Korea nukes and threats.

Now if you want to see real problems, review what is occurring and pay attention to the special note from Debka at the bottom.

I have always thought Debka was Massaud.

The Russians are heading to the Middle East to put a shield between Israel and Russia’s trading partner Iran.

Russian warships call at Syrian port

MOSCOW, January 29 (RIA Novosti) – A group of Black Sea Fleet warships has called at the Syrian port of Tartus, a Russian Navy spokesman said on Thursday.

Capt. 1st Rank Igor Dygalo said the Azov and Yamal landing ships had docked at Tartus to replenish supplies.

He previously said the two warships, which were carrying naval infantry units, would join up with other Russian warships in the Indian Ocean, including the Pyotr Veliky nuclear-powered missile cruiser, for the INDRA-2009 exercise with the Indian Navy in late January.

Russian media recently reported that Russia was planning to set up naval facilities in Yemen (Socotra), Syria (Tartus), Libya (Tripoli), Vietnam (Cam Ranh), among other countries, in the next few years as an alternative to the Sevastopol base in Ukraine’s Crimea.


US and Russian warships line up in dispute over Georgia
Ian Traynor in Brussels

US and Russian warships took up positions in the Black Sea today in a risky war of nerves on opposing sides of the Georgia conflict.

With the Russians effectively controlling Georgia’s main naval base of Poti, Moscow also dispatched the Moskva missile cruiser and two smaller craft on "peacekeeping" duties at the port of Sukhumi on the coast of Abkhazia, the breakaway region that the Kremlin recognised as independent yesterday.

The Americans, wary of escalating an already fraught situation, cancelled the scheduled docking in Poti of the US Coast Guard vessel, the Dallas, and instead sent it to the southern Georgian-controlled port of Batumi, 200km (124 miles) from the Russian ships, where it delivered humanitarian aid.


Russian Warships To Dock In Syria

In an effort to expand its military presence in the international arena and reestablish a naval presence in the Middle East, Russia has dispatched a naval fleet to the region, including a guided missile cruiser, two anti submarine ships and 47 fighter planes. The fleet will dock at the Syrian port of Tartus where Russia maintains a technical base. At the same port, Iranian ships are also docked.

Russian Defense Minister Anatoly Serdyukov told reporters that the expedition "is aimed at ensuring a naval presence and establishing conditions to secure Russian navigations." Serdyukov added that the fleet will conduct tactical exercises with real and simulated launches of sea and air based missiles and intends to call at a number of different ports in the region.

In the past, Russian President Vladimir Putin stressed that Russia would respond in the event Iran was attacked by a foreign power. Boosting Russia’s naval presence in the area could well be an attempt to signal to Israel and possibly America that if Iran is attacked, Russia will strike back.


Russia’s first Persian Gulf naval presence coordinated with Tehran
DEBKAfile Exclusive Report
May 26, 2009, 6:47 PM (GMT+02:00)

Russian warships are due to call Wednesday, May 27, at the Bahrain port of Manama, seat of the US Fifth Fleet in the Persian Gulf, DEBKAfile’s military sources reveal. They will be following in the wake of the Russian vessels already docked at the Omani port of Salalah, the first to avail themselves of facilities at Gulf ports.

Their arrival is fully coordinated between the Russian and Iranian naval commands.

According to our sources, this is the first time a Russian flotilla will have taken on provisions and fuel at the same Gulf ports which hitherto serviced only the US Navy. Moscow has thus gained its first maritime foothold in the Persian Gulf.

The flotilla consists of four vessels from Russia’s Pacific Fleet: The submarine fighter Admiral Panteleyev is due at Manama Wednesday, escorted by the refueling-supply ship Izhorai, The supply-battleship Irkut and the rescue craft BM-37 are already docked in Salalah.

DEBKAfile’s military sources report that the Russians, like the Iranians, cover their stealthy advance into new waters by apparent movements for joining the international task force combating Somali pirates. While Iranian warships have taken up positions in the Gulf of Aden, the Russians are moving naval units southeast into the Persian Gulf.

Monday, May 25, the Iranian naval chief, Adm. Habibollah Sayyari, announced that six Iranian warships had been dispatched to "the international waters" of the Gulf of Aden in a "historically unprecedented move… to show its ability to confront any foreign threats." He did not bother to mention the pirates.


Jim Sinclair’s Commentary

If banks are permitted to bid on their own Toxic Assets in the public/private lending auction, it is the same as having a shill at an auction for the purpose of creating the price desired by the bank, thereby preventing any hint of true valuation.

Of course, if you can trust the honesty of banksters, I would be wrong.

What do you think?



Jim Sinclair’s Commentary

Falling off the cliff is starting to happen. This can be seen through all official and establishment estimates of the Federal Deficit going into the trash can. The Formula rolls on.

IRS tax revenue falls along with taxpayers’ income
By John Waggoner, USA TODAY

Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. "It illustrates how severe the recession has been."

For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.

"These are staggering numbers," Lynch says.

Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years.

"It’s one of the drivers of the ongoing expansion of the federal budget deficit," says John Lonski, chief economist for Moody’s Investors Service. The Congressional Budget Office projects a $1.7 trillion budget deficit for fiscal year 2009.


Jim Sinclair’s Commentary

Taxing the consumer (that is what a VAT tax is and inflationary by simple edict) is a great way to make the Formula more effective in running the Federal Budget Deficit further into the trash-can as it will cut short any incipient economic recovery.

If anyone of you believe in Green Shoots, a VAT tax is a super powerful plant killer.

What a bunch of lightweights that think higher taxes will positively affect the Federal Budget Deficit. They never really consider putting spending aside as they feel it is all necessary. DUMB! World class DUMB!

Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look
Levy Viewed as Way to Reduce Deficits, Fund Health Reform
By Lori Montgomery
Washington Post Staff Writer
Wednesday, May 27, 2009

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax — called a value-added tax, or VAT — has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

At a White House conference earlier this year on the government’s budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama’s policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.

"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table."

A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American — a tangible benefit that would be highly valuable to low-income families.


Jim Sinclair’s Commentary

Yes, and it is coming in three weeks or less.

Gold May Be On Verge Of Historic Breakout
By Peter Brimelow, MarketWatch

Is this it for gold? After a good week, gold watchers of all stripes think it

may be. Again.

After Friday’s 0.8% rise to $958.50 a troy ounce, Martin Pring, decidedly not a gold bug, set the tone in his Weekly InfoMovie Report: "Gold could be on the verge of a historical breakout. Watch that $990-$1,000 area like a hawk."

Pring has always laid very heavy emphasis on the predictive power of gold shares. His analysis: "The gold-share ETF, the GDX [Market Vectors Gold Miners ETF (GDX)], has just broken out from a major base. Since the shares often lead the metal, this is a bullish factor."

Dow Theory Letters’ Richard Russell has also been interested in GDX, saying this after Friday: "Ordinarily I would only add gold items on a correction. But gold seems on a roll now, so I added GDX."

Two developments are causing the excitement about gold. From a charting point of view, gold shares are generally agreed to have broken out, meaning that gold itself could well be about to do something very important. Australia’s The Privateer (whose free U.S.-dollar 5X3 Point-and-Figure chart looks very handsome after Friday) describes the situation:

"What is being traced … is a gigantic ‘reverse’ head-and-shoulders formation. The trading range between US$900 and US$1,000 was broken early in April. Over the month of April, a tighter range between US$870-US$910 was established. Now, gold has broken back above that range. The ‘right shoulder’ on the ‘reverse’ head-and-shoulders formation is getting wider. … There are two major resistance points. The first is at US$955 … where the chart is now. The second is, of course, at US$1,000, the level reached in March 2008 and again in February 2009." See chart.

Several other commentators see the same thing.

The second bullish gold development: general economic conditions.

As the Gartman Letter noted on Wednesday: "The dollar does look vulnerable. … Pushing government steadily leftward, the Obama Administration has set up the possibility of a U.S. dollar rout. … If this persists, commodity prices generally shall rise and rise materially, and gold shall too."

Dan Norcini at the Jsmineset Web site saw things similarly on Friday.


Jim Sinclair’s Commentary

1. Israel makes a significant miscalculation
2. Pakistan goes Taliban
3. Turkey is a Victim.

al-Sadr in Turkey
May 26, 2009 7:00 AM | Anna Mahjar-Barducci

Moqtada al-Sadr, the most prominent Shi’ite opponent of the United States’ military presence in Iraq, paid an official visit to Turkey for talks with the Turkish leadership. This was al-Sadr’s first public appearance since 2007.

It appears that the main reason for the Turkish government inviting Al-Sadr, was to ensure his support for Ankara’s policies toward the oil rich Iraqi city of Kirkuk, which is mainly composed of Kurds, Turkomans and Arabs – though almost all its ethnic elements are Shi’ite.

No official statement was released from the meetings with Turkish officials. An unidentified Turkish official declared that the discussions had evolved over the security situation in Iraq and the Turkish-Iranian relationships. The Turkish media reported that Ankara had sent a private plane to Iran to take Al-Sadr to Turkey. To ensure his security, a close protection team from the National Security Agency (MIT) went to Iran to minimize the risks during his trip to Turkey. According to Turkish reports, Sadr met with Prime Minister Erdogan and President Abdullah Gul, along with other Turkish officials.

Al-Sadr supports Turkey’s position over the status of Kirkuk, arguing that it should belong to the central government. The Kurdish daily, Helwer Post conducted an in-depth analysis to explain Al-Sadr’s opposition to the federal structure of Iraq, and particularly the special status of Baghdad and Kirkuk and the distribution of oil wealth. The Helwer Post suggests that because Al-Sadr’s supporters are mainly concentrated in Baghdad and to some extent in Kirkuk, this limits his ability to share the wealth of oil revenues. The status of Baghdad within a loose federation restricts Al-Sadr’s group accessing the oil rich regional administrations. If Iraq emerges as a viable federation, in the near future the Al-Sadr group will be economically and politically marginalized within Baghdad. Given that Al-Sadr cannot prevent an Iraqi federation, in order to access oil revenues he must keep Kirkuk within the control of Iraq’s central government rather than under the Kurdish Regional Government. Thus, it is critical for Al-Sadr to receive support from Turkey.

The timing of these meetings is also significant. On May 3, the Turkish press reported that UN diplomats working on the status of Kirkuk for more than one year had finally drafted their report. They suggested delaying for five years the planned referendum to determine the status of Kirkuk. As expected, Kurdish leaders strongly opposed these recommendations. Iraq’s President Jalal Talabani, a Kurd himself, clearly stated that he will not negotiate on the status of Kirkuk, which is already determined through the constitution.