Posts Categorized: In The News

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.


Posted by & filed under In The News.

Dear CIGAs,

Gold is getting ready for a ballistic move upwards. Are you hedge funds in denial?




Jim Sinclair’s Commentary


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

The Federal Reserve has no other option. They will continue Quantitative Easing.

The definition of Quantitative Easing is simple money printing.

Since the US will not (or cannot) consider a guarantee of Treasury Debt in gold at market related prices (lack of transferable supply) the Chinese central bank will continue their various efforts to diversify out of Treasury debt.

Those that feel the Chinese cannot diversify and think that the only way is via the open market for treasuries or dollars are so stupid it make me ill that they speak publicly.

China warns Federal Reserve over ‘printing money’
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed’s direct purchase of US Treasury bonds.
By Ambrose Evans-Pritchard
Last Updated: 9:19PM BST 24 May 2009

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

His recent trip to the Far East appears to have been a stark reminder that Asia’s "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

Mr Fisher, the Fed’s leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending.

However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".


Jim Sinclair’s Commentary

Of course it will be settled. There is so much dirt in these type transaction that discovery, a civil suit procedure, would reveal much too much.

UBS, JPMorgan Drop Asset Seizure Appeal in Milan
By Elisa Martinuzzi and Sonia Sirletti

May 25 (Bloomberg) — UBS AG, Deutsche Bank AG, JPMorgan Chase & Co.and Depfa Bank Plc dropped an appeal against the seizure of 345 million euros ($482 million) of assets amid a probe into alleged fraud involving derivatives sold to the City of Milan, said two lawyers representing the banks.

The banks dropped the appeal at a hearing in Milan today. The prosecutor is considering a May 7 request by the securities firms to put up about 100 million euros of cash in total in exchange for having the assets returned, the lawyers said.

The police froze the banks’ stakes in Italian companies, real estate assets and current accounts. The City of Milan is suing the four banks after it lost money on derivatives it bought from the lenders in 2005. The banks earned about 101 million euros in what prosecutors call illicit profit for arranging the contracts.

“The banks probably didn’t want to run the risk of a ruling against them so early on in the case,” said Giampiero Biancolella, an attorney who’s not involved in the case. “Lawyers may be buying time to reach an agreement with Milan outside the courts.”

Officials for Deutsche Bank and Depfa declined to comment. The claims at issue will be discussed in the course of the investigation, said UBS’s lawyer Giuseppe Bana.


Jim Sinclair’s Commentary

Let’s hear another big round of applause for the Greenwich, CT OTC derivative manufacturers and distributors who have taken to screwing the widows, orphans, homeless, frail, sick and dying.

Society must have a safety net or there is no society, just a bunch of people with little excuse for being.

Crime is going to skyrocket in California. Keep in mind the many street people are prior residents when there used to be bughouses.

Governor plans to completely eliminate welfare for families
3:58 PM | May 21, 2009

Gov. Arnold Schwarzenegger is proposing to completely eliminate the state’s welfare program for families, medical insurance for low-income children and Cal Grants cash assistance to college and university students.

The proposals to sharply scale back the assistance that California provides to its neediest  residents came in testimony by the administration this afternoon at a joint legislative budget committee hearing. It followed comments by the governor earlier today that he would be withdrawing a proposal to help balance the budget with billions of dollars of borrowing and replacing it with program reductions.

The proposals would completely reshape the state’s social service network, transforming California from one of the country’s most generous states to one of the most tightfisted. The proposals are intended to help close a budget deficit estimated at $21.3 billion.


Jim Sinclair’s Commentary

What have I been most concerned about for over a year now, warning you time and time again?

The answer is UNFUNDED PENSION FUNDS and similar make believe payable social/business obligations workers have become dependent on.

The next two decades are going to see massive draining of the gene pool.

Look at what is hidden in the article below that is deserving of its own headline.

The Oxford-educated Mr. Fisher, an outspoken free-marketer and believer in the Schumpeterian process of "creative destruction," has been running a fervent campaign to alert Americans to the "very big hole" in unfunded pension and healthcare liabilities built up over the years by a careless political class.

"We at the Dallas Fed believe the total is over $99 trillion," he said in February.

China warns Federal Reserve over ‘printing money’
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed’s direct purchase of US Treasury bonds.
By Ambrose Evans-Pritchard
Last Updated: 9:19PM BST 24 May 2009

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

His recent trip to the Far East appears to have been a stark reminder that Asia’s "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

Mr Fisher, the Fed’s leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending.

However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".


Jim Sinclair’s Commentary

Debt is totally out of hand and beyond control.

It is no longer just a possibility – it is now a reality. The Chinese are totally correct in demanding a guarantee.

Government debt swells as choices get harder
Carolyn Lochhead, Chronicle Washington Bureau
Sunday, May 24, 2009
(05-24) 04:00 PDT Washington

This year, the government is borrowing 50 cents of every dollar it spends. If that were just a blip caused by a historic financial crisis that necessitated a $787 billion fiscal stimulus and a $700 billion bank rescue in the space of about three months, there would be little cause for concern.

But it is not a blip. It is a relentless curve of red ink that will, within the decade, take U.S. debt levels to the record reached at the end of World War II, from 40 percent of the nation’s output now to 80 percent, and then rapidly thereafter into the realm of banana republics.

"We are accumulating a massive debt. We owe about half of that debt to foreigners, including the Chinese and others whose foreign policy is not always well aligned with ours," said Isabel Sawhill, a former Clinton administration budget official who now co-directs the Center on Children and Families at the Brookings Institution. "So we are really losing control of our economic destiny and possibly losing control of our foreign policy as well."


North Korea Claims to Conduct 2nd Nuclear Test


Published: May 24, 2009

SEOUL, South Korea — North Korea announced on Monday that it had successfully conducted its second nuclear test, defying international warnings and drastically raising the stakes in a global effort to get the recalcitrant Communist state to give up its nuclear weapons program.

The North’s official news agency, KCNA, said “The Democratic People’s Republic of Korea successfully conducted one more underground nuclear test on May 25 as part of the measures to bolster up its nuclear deterrent for self-defense in every way as requested by its scientists and technicians.”

The test was safely conducted “on a new higher level in terms of its explosive power and technology of its control,” the agency said. “The results of the test helped satisfactorily settle the scientific and technological problems arising in further increasing the power of nuclear weapons and steadily developing nuclear technology.”

Word of the test sent a shudder through Asian financial markets and clearly caught South Korea and the United States off guard. The news hit just as South Korea’s government and people were mourning the suicide of former President Roh Moo-hyun. And hours after the test was reported, South Korean state media reported that the North had fired a short-range missile.



Jim Sinclair’s Commentary

The real story here is the revision of the prior month. There was no so-called Green Shoot here ever this year.

U.S. home prices fell 18.7 percent on year in March: S&P
Tue May 26, 2009 9:33am EDT

NEW YORK (Reuters) – Prices of U.S. single-family homes in March fell 18.7 percent from a year earlier, while prices in the first quarter dropped at a record pace, according to the Standard & Poor’s/Case-Shiller Home Price Indices released on Tuesday.

On a month-over-month basis, the index of 20 metropolitan areas fell 2.2 percent in March from February, S&P said in a statement.

Price drops on both a month-over-month and year-over-year basis were worse than expectations based on a Reuters survey of economists.

The composite index of 10 metropolitan areas declined 2.1 percent in March from February for a 18.6 percent year-over-year drop.

"Declines in residential real estate continued at a steady pace into March," David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, said in a statement.



Jim Sinclair’s Commentary

2,300,000 Pakistani are homeless and foodless.

This is not what wins the hearts and minds of the populous when all they see is US equipment and Pakistanis in US combat uniforms coming over the hill blowing everything in sight to ashes.

Sustainability is the key to this action, and you can wager there will not be much of that.

Pakistan battles for Swat capital, 2.38m uprooted
By Lehaz Ali – 1 day ago

PESHAWAR, Pakistan (AFP) — Pakistan’s military said Monday it was facing "stiff resistance" as it battled to wrest Swat valley out of Taliban hands, in an offensive that has now scattered 2.38 million terrified civilians.

Military spokesman Major General Athar Abbas warned it could take up to 10 days to regain control of Swat’s capital Mingora, as the punishing assault across three rugged northwest districts entered a fifth week.

A Taliban spokesman told AFP that firebrand commander Maulana Fazlullah had asked Taliban to stop battling in the key city, but said the insurgents would continue to fight for their vision of imposing a harsh brand of Islamic law.

"Maulana Fazlullah has directed all his mujahedeen to stop resistance in Mingora and its surroundings to avoid hardships to the people and losses to the civilian population," spokesman Muslim Khan said from an undisclosed location.

But he added: "We will fight for the enforcement of sharia law till the last drop of our blood."

Ground forces have been fighting street-by-street with Taliban fighters in Mingora, the business and administrative hub of the scenic Swat region which has been ripped apart by a two-year insurgency by the Islamist extremists.



Jim Sinclair’s Commentary

The price of gold is preparing for a ballistic move upwards.

I count this geometric up-move in price to appear in weeks, not months.

Trading here borders on a serious case of self destructive tendency.

Gold bugs at last have their perfect trinity
China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.
By Ambrose Evans-Pritchard
Last Updated: 9:36PM BST 23 May 2009

The world’s top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon "AAA" club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.

Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a "Paulson Real Estate Recovery Fund", reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.

He may be wrong, of course. In his early fifties, he belongs to the baby-boom cohort most psychologically vulnerable to the 1970s "paradigm-error". And perhaps he has never lived in Japan.


Posted by & filed under In The News.

Jim Sinclair’s Commentary

I have not read a better encapsulation of conditions nor have I seen a better reason to get insured immediately if you are not in gold. If you are not insured, prepare to suffer the extraordinary loss of lifestyle you are accustomed to, if not your existence itself.

Let’s call our writer "CIGA Pedro the Informed."

A View From Abroad by an American in Brazil

We are witnessing the end of a very long phase in history. As a result there is a mass insecurity amongst the dominant nations of the past 300-years that is bordering on hysteria. This insecurity manifests itself in many different ways and markets are reflecting this. Gold prepares to soar, reflecting this insecurity, as gold is a barometer of fear.

Within the English-speaking world it is evident that “foreigners” are to blame. In the UK it is both the Poles and the “Pakis”. In America it is initially revealed via a general population  viewing the Kyoto Protocol as a Chinese-led trick to destroy our economy. Then it is the belief that Mexicans are “invading” and Arabs are trying to kill us all. One has to stop and ask what the root of this paranoia really is.

As the American power structure tries to prepare for “inevitable conflict” with world Islam (c.f. Huntington, Clash of Civilizations) it also tries to hide its obsequious relationship with the Saudi Royal Family, which is incestuous at best, and perhaps more symbiotic than most would want to know. The financial population cannot reconcile this anymore than they can the fact that (perhaps apart from Jim) the accurate, unblended analysis of this crisis seems to have been foreshadowed by a two people with names: Nouriel Roubini and Naseem Taleb. People remain confused by the fact that the American power structure lacks patriotism and seems to favor its own interests over the interests of the country. They lash out at everyone, including, now, their own leaders. People don’t know whether to “blame” Obama’s socialism or Bush’s self-serving capitalism. Their foreign policies seem different but the rest appears the same. Major banks appear to have more control than we thought….even while teetering on bankruptcy.

This is reflected in markets. Currencies gyrate wildly. As Jim has noted many times, anybody trying to fathom the FX markets and trade them is likely to be carried out of the pit on the proverbial trader’s stretcher with a coronary. First the Euro is finished – its break-down elucidating thoughts of its demise – but then the belief that jettisoning the PIGS (Portugal, Italy (Ireland?), Greece, Spain) might be causing it to rise. The markets are schizophrenic. They don’t know what to think. The dollar and sterling take the brunt. There are reasons for this.

This is a system headed for breakdown. The established historical order is drifting to a close, and nothing can stop it. Changes in policy are manifestations of history – alter it they cannot. Gold’s rise becomes inevitable as countries who have ruled the Imperial phase of history try and resist their diminishment in status. Markets are manipulated as they try and hold on to power, while history shifts under their feet. China and Brasil cut deals that don’t include the USA and UK…the UAE starts to view separate currency arrangements with Russia, foregoing overtures by Saudi Arabia for a Gulf wide (GCC-led) monetary regime. Riyadh’s relationship is too close to Washington. Washington is yesterday’s news. (So much for the conspiracy of Islam.)

The end of an era is upon us. That is the era of the Global hegemon. The first phase took place in Britain, the second in the Soviet Union, and the third in America. Fukayama’s theory of history’s end is immolated on its very alter. The debacle of Iraq, as well as Afghanistan stand as testimony. The dominant powers simply cannot draw borders they way  they did at San Remo in 1920 or via the Red-lines which economically created Kuwait. We seem to be unsure if we should break Iraq up, or let it be unified. Is it even our business, or has history out-run us and we have failed to acknowledge it?  As the global hegemon is characterized through the Imperial phase of history, now draws to a close, people stand confused and amazed. The rulers of the dominant nations appear ready to sell them out…and this appears as “news” to educated observers.

Nobody can be sure of any currency regime any longer. The markets gyrate wildly. As fear and insecurity mount, Gold prepares for take off.

Jim Sinclair’s Commentary

I told them this would happen, but only received a note that my personally paid for advertising on the subject of short of gold derivatives selling by producing companies was no longer welcome. This was in the London Mining Journal & Mining Monthly.

The big guys are still stuck with derivatives in the indenture of the development loans as well as on the books.

The egotistic hedge funds have no idea how stupid it is to be short of the up and comers who are "back to basics" and "royaltied."

AngloGold stumbles over hedges

The cost of betting on the gold price is now all too clear, writes Jim Jones

Back in the mid-’90s, when Anglo American’s gold division (AngloGold, as it came to be called) was more or less happy to be a South African company, management strategy was simple. The idea was to hedge about 10% to 20% of annual gold production forward for each of the coming five years. Annual revenues would be protected from a fall in the gold price and, should gold rise, the company would benefit from the rise on 80% to 90% of its output.

The company’s hedge book was then in the region of 100 tons of gold against annual production of about 200 tons.

But international expansion entered the picture. Under Bobby Godsell, AngloGold started heading out of South Africa.

By 1999 that expansion had introduced a sophistication that had lifted AngloGold’s total hedge book to 11.9 million ounces, stretching out 10 years and approaching almost twice the group’s annual production of 6.9 million ounces.

The suits running the show could congratulate themselves because, while the gold price was slipping, hedging gave the company a couple of percentage points on top of the spot gold price — 6/oz when spot gold was averaging 300/oz.


Jim Sinclair’s Commentary

The mindset of taking your gold home is a factual criterion of gold as insurance.

It is also the first movement of a TRUTH MACHINE because much of the gold, even sold at these levels, is paper gold.

The sale is agreed to, but the seller does not have all or sometimes any of the gold granted to the buyer. Receipts are issued, sometimes even with serial numbers.

Paper gold is purchased as a hedge but only in a ratio determined by the volatility.

As gold is called for in physical form on all levels, even at the COMEX, the true price of gold will emerge.

You can be sure that Hedge Wizard Paulson owns paper gold.

DMCC vault may store region’s gold reserves
By Shashank Shekhar  on Wednesday, May 13, 2009

Much of the region’s gold that has so far been held in London may soon return.

The new vaults of DMCC will be a home to the gold allocated to the Dubai Gold Securities (DGS) Exchange Traded Funds (ETFs). The vault may also become a natural choice for storage of gold reserves by central banks in the regional market, analysts said.

While the gold allocated to DGS is kept at HSBC’s vaults in London, the gold reserves held by GCC’s central banks are held by various other vaults in London, market sources said. Gold vaults have existed in London for more than 150 years.

DMCC’s new vault became operational on April 26 this year. "We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai. What has been holding us back is the difference in gold specification between London and Dubai," a DMCC official told Emirates Business. Until May 11, the total number of DGS traded stood at 15,200. Each security approximately amounts to one-tenth of an ounce of gold.

Though DMCC officials have declined a direct comment on the matter, a spokesperson with the centre said that ample care has been taken to make the vault "better than the others".

Another DMCC official said that the vault will also be used to store precious metals associated with the ETFs that may be launched in Dubai later this year. At a press conference organised recently, senior DMCC officials had disclosed that they plan to launch new "precious metal ETFs" in Dubai. The ETFs will be traded at Nasdaq Dubai, the Dubai-based regional security exchange where the DGS trades.


Jim Sinclair’s Commentary

All major US social and economic events start on the West Coast, moving quickly East. So will this according to the Formula you received here in 2006.

California faces its day of fiscal reckoning
May 22, 6:25 PM (ET)

SACRAMENTO, Calif. (AP) – The day of reckoning that California has been warned about for years has arrived. The longest recession in generations and the defeat this week of a package of budget-balancing ballot measures are expected to lead to state spending cuts so deep and so painful that they could rewrite the social contract between California and its citizens. They could also force a fundamental rethinking of the proper role of government in the Golden State.

"The voters are getting what they asked for, but I’m not sure at the end of the day they’re going to like what they asked for," said Jim Earp, executive director of the California Alliance for Jobs, which represents the hard-hit construction industry. "I think we’ve crossed a threshold in many ways."

California is looking at a budget deficit projected at more than $24 billion when the new fiscal year starts in July. That is more than one-quarter of the state’s general fund.

This week, voters said they no longer want the Legislature to balance budgets with higher taxes, complicated transfer schemes or borrowing that pushes California’s financial problems off into the distant future. In light of that, Republican Gov. Arnold Schwarzenegger has made it clear he intends to close the gap almost entirely through drastic spending cuts.


Posted by & filed under In The News.

Dear CIGAs,

JB Slear tells us that having a few COMEX 100 ounce gold bars in his hands has given him a warm and cared for feeling.


Jim Sinclair’s Commentary

You have to love how Great Britain’s lack of gold is referred to as a brown gutted reserve.

What more do you need to know? Gold is going to at least $1224 and $1650, here and NOW! Alf says it is going even higher.

Gold bugs at last have their perfect trinity
China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.
By Ambrose Evans-Pritchard
Last Updated: 9:36PM BST 23 May 2009

The world’s top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon "AAA" club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.

Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a "Paulson Real Estate Recovery Fund", reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.


Posted by & filed under In The News.

Dear CIGAs,

This is only the beginning.

I feel for the money bunnies, some of whom truly believe in the Easter Rabbit and Santa Clause. They don’t have a clue. Green shoots, rear view mirror economic statistics, Goldilocks Economy and all the trite crap run out by the PPT for media consumption to fool the public has fallen on its face.

This is a major wave in which the dollar will trade at least at USDX .7200 with gold at $1224 and $1650 as a minimum.

Sentiment wise, this is the major unwind in which respite will be brief and shallow.

This winter will be cold and hard on the US dollar.

I was invited to speak on Bloomberg today, but see no value in any disturbance to the social order.

It is enough that JSMineset shares it views with you. I am of the mind to do no further public interviews between now and 2012. Any small benefit is overshadowed by the hate it generates among people who do not recognize you have their best interests in mind. Hate is common. There is no need to go looking for these types.

Gold and general equities are not enemies in this period of Currency Event Inflation. At some point, maybe Armstrong’s low, gold and general equities will rise together, just as they did in terms of the Weimar Republic Mark.

Simply stated, dear Family, it has hit the fan.

Dollar stops being Russia’s basic reserve currency

The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote.

The dollar has thus lost the status of the basic reserve currency for the Russian Central Bank, the annual report, which the bank provided to the State Duma, said.

In accordance with the report, about 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The situation was totally different at the beginning of the previous year: 47 percent of investments were made in US dollars, while the euro investments were evaluated at 42 percent.

The dollar share had increased to 49 percent and remained so as of October 1. The euro share made up 40 percent. The rest of investments were based on the British pound, the Japanese yen and the Swiss frank.

The report also said that the reserve currency assets of the Russian Central Bank were cut by $56.6 billion. The losses mostly occurred at the end of the year, when the Central Bank was forced to conduct massive interventions to curb the run of traders who rushed to buy up foreign currencies. The currency assets of the Central Bank had grown to $537.6 billion by October 2008. Therefore, the index dropped by almost $133 billion within the recent three months.


Jim Sinclair’s Commentary

Swallow is an understatement. Digested and discarded is more like it.

Consumerism is dead for a considerable time to come and with it the Green Shoots nonsense of the past two months.

It is the constant denial that has complicated the problem.

The cheerleaders for equities on financial TV have blood on their hands. Debt will have to be liquidated as their is no other way.

CHART OF THE DAY: Credit Card Debt Swallows American Households
Joe Weisenthal and Kamelia Angelova

Americans built up a lot of spending power over the last three decades, but it wasn’t because they started earning more money. As today’s chart starkly illustrates, credit card debt has exploded, making up for more modest gains in median household income. As you can see, for the very first time in history, credit card debt is creeping down, though it has a long way to go. And of course, this doesn’t even include home all the home equity loans Americans used in place of the ATM. (Both lines are based on non-adjusted numbers)



Jim Sinclair’s Commentary

Get ready, get set, go and soon!

Please consider that the Taliban have similar plans and look a lot more like Pakistan regulars. The Taliban will have the support of the Pakistan intelligence and military, maybe even more.

U.S. Has Plan to Secure Pakistan Nukes if Country Falls to Taliban

The United States has a detailed plan for infiltrating Pakistan and securing its mobile arsenal of nuclear warheads if it appears the country is about to fall under the control of the Taliban, Al Qaeda or other Islamic extremists.

American intelligence sources say the operation would be conducted by Joint Special Operations Command, the super-secret commando unit headquartered at Fort Bragg, N.C.

JSOC is the military’s chief terrorists hunting squad and has units now operating in Afghanistan on Pakistan’s western border. But a secondary mission is to secure foreign nuclear arsenals — a role for which JSOC operatives have trained in Nevada.

The mission has taken on added importance in recent months, as Islamic extremists have taken territory close to the capital of Islamabad and could destabilize Pakistan’s shaky democracy.

“We have plans to secure them ourselves if things get out of hand,” said a U.S. intelligence source who has deployed to Afghanistan. “That is a big secondary mission for JSOC in Afghanistan.”

The source said JSOC has been updating its mission plan for the day President Obama gives the order to infiltrate Pakistan.



Jim Sinclair’s Commentary

There is no way. There is no chance.

I am getting the feeling that some of the front fellows are chosen because they really might be lightweights on practical versus academic economics.

Federal and state tax revenues are falling backwards off Mt. Everest.

Geithner Vows to Cut U.S. Deficit on Rating Concern (Update2)
By Robert Schmidt

May 22 (Bloomberg) — Treasury Secretary Timothy Geithner committed to cutting the budget deficit as concern about deteriorating U.S. creditworthiness deepened, and ascribed a sell-off in Treasuries to prospects for an economic recovery.

“It’s very important that this Congress and this president put in place policies that will bring those deficits down to a sustainable level over the medium term,” Geithner said in an interview with Bloomberg Television yesterday. He added that the target is reducing the gap to about 3 percent of gross domestic product, from a projected 12.9 percent this year.

The dollar extended declines today after Treasuries and American stocks slumped on concern the U.S. government’s debt rating may at some point be lowered. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade.

Geithner, 47, also said that the rise in yields on Treasury securities this year “is a sign that things are improving” and that “there is a little less acute concern about the depth of the recession.”

The benchmark 10-year Treasury yield jumped 17 basis points to 3.36 percent yesterday and was unchanged as of 12:18 p.m. in London. The Standard & Poor’s 500 Stock Index fell 1.7 percent to 888.33 yesterday. The dollar tumbled 0.5 percent today to $1.3957 per euro after a 0.8 percent drop yesterday.


Jim Sinclair’s Commentary

The foolish paper gold and gold share shorts will play their game but they are toast.

Gold is going to a $1224 and $1650 minimum on this phase move here and now. A ballistic up move for gold is inherent in the developing formation.

The gold share shorts have been GLIB in their selection of targets, focusing on leaders to paint the field. Now they are egotistically tied to their selection without fact checking in an objective mind set.

Dollar hits new multimonth low vs euro, pound, yen
May 22 10:42 AM US/Eastern

NEW YORK (AP) – The dollar kept falling Friday, notching fresh multimonth lows against the euro, pound and yen as a warning that Britain’s debt level may result in its credit rating being cut ricocheted into worries about the massive U.S. deficit.

The 16-nation euro rose to $1.4015 in morning trading from $1.3889 in New York late Thursday—its first time above $1.40 since Jan. 2.

The British pound rose to $1.5916 from $1.5890, peaking at $1.5945 earlier in the session, its highest point since Nov. 6.

Meanwhile, the dollar edged up to 94.51 Japanese yen from 94.23 yen—after earlier falling to 93.82, its lowest point since Feb. 23.

On Thursday, Standard & Poor’s said Britain may have its rating cut because of rising debt levels. Though the ratings agency reaffirmed the country’s actual long-term credit rating at “AAA,” it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.


Jim Sinclair’s Commentary

No increase in charges has a snowball’s chance in hell of providing the funds required now or in the future, without a bailout, to provide the funds the FDIC will need. This is pure spin.

FDIC: new fee system to replenish insurance fund

(AP:WASHINGTON) Federal regulators are adopting a new system of special fees paid by U.S. financial institutions that will shift more of the burden to bigger banks to help replenish the deposit insurance fund.

The Federal Deposit Insurance Corp. is meeting to approve the new fee system. It is intended to raise $5.6 billion in the face of a cascade of bank failures that have depleted the insurance fund.

The FDIC now expects bank failures will cost the fund around $70 billion through 2013, up from a previous assessment of around $65 billion.

FDIC Chairman Sheila Bair says: “There will be some shifting of the burden (to major banks). The shift is not huge to them. We’re asking them to pay more.”


Jim Sinclair’s Commentary

The troops have been very calm but don’t count of this as a given.

44 states lost jobs in April, led by California
May 22, 1:46 PM (ET)

WASHINGTON (AP) – Forty-four states lost jobs in April, led by California where employers slashed 63,700 positions, as the recession took a further toll on U.S. workers.

Trailing California in over-the-month job losses were: Texas, which saw 39,500 jobs vanish; Michigan, which lost 38,400 jobs; and Ohio, where payrolls fell 25,200, according to a U.S. Labor Department report issued Friday.

The few winners included Arkansas and Montana, followed by Florida – a dose of good news for a state that’s been battered by the housing collapse.

California’s unemployment rate dipped to 11 percent last month, fifth-highest in the country. Michigan’s jobless rate was the highest at 12.9 percent, followed by Oregon at 12 percent, South Carolina at 11.5 percent and Rhode Island at 11.1 percent.

As the recession eats into sales and profits, companies have laid off workers and turned to other cost-cutting measures, such as holding down hours and freezing or trimming pay.


Jim Sinclair’s Commentary

The best recruiting plan for insurgency is SURGES that displace 2,000,000 people using US equipment and look alike uniforms.

Think about it.

You are put on the road without food or water with your family. Your wife is afraid for her life and for the little ones. You must carry your five year olds because they simply cannot walk anymore.

You will fight against what you see as causing this.

When will the West learn.

The surge will be a major reason in the end for the loss of Pakistan to the West if in fact it ever was for the West.

AP Interview: Insurgents crossing into Pakistan
By FISNIK ABRASHI, Associated Press Writer Fisnik Abrashi, Associated Press Writer – 48 mins ago

BAGRAM AIR BASE, Afghanistan – The top U.S. general in eastern Afghanistan said Friday he saw “some very interesting movement” of insurgents across the border into Pakistan this spring, possibly to join Taliban militants battling government troops. Maj. Gen. Jeffrey Schloesser’s comments come amid concern in Washington and Islamabad that the buildup of 21,000 additional U.S. forces in Afghanistan may push Taliban militants into Pakistan, further destabilizing the border region in that country.

The Obama administration has declared eliminating militant havens in Pakistan vital to its goals of defeating al-Qaida and winning the war in Afghanistan.

Fighters have historically moved back and forth across the border to back Taliban insurgencies in both countries.

But Schloesser’s remarks in an interview with The Associated Press suggested a larger transfer into Pakistan than has been seen previously, as the fighting between Pakistan’s troops and the Taliban has intensified.

He suggested that most of the movement in the past has been from Pakistan into Afghanistan, calling the new development “an interesting movement backward.”


Jim Sinclair’s Commentary

Here comes another round of foreclosures with the debt upside-down to the home value.

Trouble Ahead: Millions of Mortgages Will Ratchet Upward Soon
Thursday, May 21, 2009 3:00 PM
By: Julie Crawshaw and Dan Weil

Zacks Research analyst Dirk van Dijk warns that another major mortgage crisis lies ahead as huge numbers of homeowners who have been making only minimum payments on their “pick a payment” mortgages have to start paying in full.

This can cause huge jumps in the monthly payment, with increases of over 50 percent not uncommon, van Dijk says, making these the ultimate “exploding mortgages.”

The number of these recasts is relatively small right now at $1 billion per month but will grow dramatically over the next few years, exceeding $8 billion per month in the fall of 2011.

“If the equity in your house is gone and your monthly mortgage payment suddenly jumps from $2000 per month to over $3000 per month, what do you think is going to happen?” van Dijk asks.

The next wave of foreclosures is going to have much higher average loan balances, so each foreclosure will hurt banks more than subprime foreclosures did.


Jim Sinclair’s Commentary

Truth has never found friends at its inception. The messenger gets the blame when the veracity of the message is proven.

I would like to thank the famous blog, the “Motley Fool” for their support, even if some popular media sees it otherwise.

Jim Sinclair 
Take it from a Fool who knows, those proposing exposure to gold as the ultimate safe haven from currency crises are no strangers to vitriolic opposition. Jim Sinclair, a leading precious-metals expert, has been forecasting $1,650 gold since 2001. Sinclair summarized some of the perspective that readers of his blog enjoy in a Bloomberg Radio interview on Feb. 20. The interview is too packed with golden nuggets to capture in selected passages, so instead I recommend a trip to my blog to discover the treasure yourself.

At this particular moment, when sheer human nature leaves investors susceptible to unchallenged optimism, I believe that insights from these straight-talking messengers provide a critical wake-up call. In tumultuous times, the line between hopefulness and denial can grow quite thin, and Fools are reminded to remain alert.


Jim Sinclair’s Commentary

Somebody noticed.

Gold visits old relationship with the US dollar
Allen Sykora | May 22, 2009
Article from:  Dow Jones Newswires

GOLD and the US dollar have moved back to their traditional inverse relationship lately, although some analysts say it remains to be seen how long this will last and how strong it will be.

A newly cast gold ingot is cooled in a bath of cold water at Metal-Art, in Budapest, Hungary. Picture: Bloomberg

Historically, gold tended to rise when the US dollar fell as investors turn to the metal as an alternative currency, and vice-versa. But that relationship went by the wayside for much of the last half year as both often moved inversely to the stock market, analysts said.

For instance, the US dollar index rose from a low of 77.688 on December 18 to a high of 89.624 on March 4. In the past, that might have pressured gold. But this time, June gold futures on the Comex division of the New York Mercantile Exchange rose from a December 5 low of $US748 an ounce to a February 20 high of $US1009.80.

Analysts said both gold and the US dollar often were bought as a safe haven during a tumble in equities that eventually carried the Dow Jones Industrial Average to a 12-year low in early March.

“People were using both the US dollar and gold as a store of value because they were worried about a market meltdown,” said Sean Brodrick, natural-resources analyst at Weiss Research and


Posted by & filed under In The News.

The fact that the money and power are leaving for China has escaped everyone in our leadership. They are totally blind to this. They cannot conceive that we have given up the lead to anyone, because we are so perfectly good. This is called Hubris and is a tool of the Gods to destroy any who dare to become Godlike.


Dear CIGAs,

Gold is a currency. In fact gold is the ultimate currency. It cannot be expanded to meet the needs of politicians as can paper currency.

Under .8200 the wheels of hyperinflation start to turn.
Under .7200 the impact of hyperinflation is in Main Street.
Under .5200 Zimbabwe Economics reaches the USA.

Gold and the USD as trend events are attached inversely at the hip. Hedge funds have played with that relationship but cannot change it.

Central Banks have NO tools that can drain the liquidity that has been injected into the INTERNATIONAL system over the last two years. Those in Europe that have been more conservative will be less effected even thought they are now derided for their heel dragging.

Asia will rule the economic world.

DJ MARKET TALK: Comex Gold Closes Higher As Dollar Eases

1742 GMT [Dow Jones] – Comex gold recouped some of the previous day’s pullback. "Part of it is the retreating dollar we are seeing today," said Carlos Sanchez, precious-metals analyst with CPM Group. "We were heading toward $1.35 [for the euro versus the dollar], but now are slightly back above $1.36."

Also, gold managed some technical strength when it bounced right back after an overnight dip below its 10-day moving average, says Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. Just ahead of gold’s close, this average stood at $921.30 an ounce. June gold settled up $5 to $926.70. Gold seemed to take its cue from the dollar since equities, which had dictated much of the metal’s direction lately, were largely flat, Nedoss adds. (ALS)


Jim Sinclair’s Commentary

Governments have never been able to operate or profitably influence the operation of businesses.

Few in leadership have ever operated at risk businesses, yet nationalization (their business management) in a functional sense has its tentacles now everywhere.

Once you have accepted money or a benefit from the government you have sold your soul.

There is no refund policy.

Fannie and Freddie in ‘critical’ condition
Regulator says companies still suffer from severe operational and financial weaknesses. Recruiting executives also tough.
By Tami Luhby, senior writer
Last Updated: May 18, 2009: 4:08 PM ET

NEW YORK ( — Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday.

The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance.

"With new senior management teams, each enterprise has made strides in remediating problems," the agency said. "But they still face numerous significant challenges including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship."

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) play a vital role in the national housing market, accounting for a combined share of 73% of mortgage originations in the second half of 2008. They also serve central roles in the Obama administration’s foreclosure prevention plan.


Jim Sinclair’s Commentary

Green shoots are shot and over for the next seven months of down leg. The point here is what do you think 2000 dealerships devolving into nothingness means in an economy? The 2000 dealerships does not include all that Ford is doing likewise without media coverage.

OTC derivatives are at fault for this and nothing else. What would have been a mild four year recession is now a multi decade disaster.

The OTC derivative dealers have all been bailed out and are as rich as cream, safe in their Greenwich, CT mansions. The OTC derivative manufacturers and distributors have become billionaires while this poor guy and a multitude like him are going straight down the drain. Take this story and times it by 2000, then think of the additional fallout the domino effect has in each town and village. Car dealerships are not small potatoes.

Housing and Autos were the drivers of the big boom of the 2000s. They are both the victims of OTC derivatives and now the downward spiral drivers of a disaster yet to be admitted to as the cause is still out there flourishing.

Nothing at all has been done to help this fellow and therefore nothing has been done to help the economy outside of more fancy paper shuffling of the Wall Street ilk mucking up everything it touches as usual.

God help us all.

Letter from a Dodge dealer
May 19, 2009

letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month.  All depend on our business for part of their livelihood.  We are financially strong with great respect in the market place and community.  We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees.  Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.



This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy.  This will also cause our 50+ employees to be unemployed. How will they provide for their families?  This is a total economic disaster.


I beseech your help, and look forward to your reply. Thank you.


George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Jim Sinclair’s Commentary

FASB will certainly go to hell for this. There is no redemption for canning the mark to market requirements.

FASB tightens off-balance-sheet loan rules

WASHINGTON_The board that sets U.S. accounting standards on Monday moved to end companies’ use of a device that allowed them to park hundreds of billions of dollars in loans off their balance sheets without capital cushions and has been blamed for helping stoke banks’ losses in the housing boom.

The change will tighten the use of so-called "qualifying special purpose entities" by requiring companies to report to regulators the loans contained in them and to increase their capital reserves in proportion as a cushion against potential losses.

It was the lack of disclosure and absence of capital supporting ballooning subprime mortgage loans in these special entities that aggravated the massive losses sustained by banks, regulators say.

The change by the Financial Accounting Standards Board could result in about $900 billion in assets being brought onto the balance sheets of the nation’s 19 largest banks, according to federal regulators. The information was provided by Citigroup Inc., JPMorgan Chase & Co. and 17 other institutions during the government’s recent "stress tests," an analysis designed to determine which banks would need more capital if the economy worsened.

In its quarterly regulatory filing earlier this month, Citigroup said the rule change could have "a significant impact" on its financial statements. Citigroup estimated it would result in the recognition of $165.8 billion in additional assets, including $90.5 billion in credit card loans.


Jim Sinclair’s Commentary

I would pay a reasonable premium for this assurance.

$4bn Swiss Gold ETF: Paranoia premium or plain expensive?
By Rob Mackinlay 19 May 2009

One of Europe’s largest and fastest growing physical gold ETFs is facing an industry backlash after suggesting that its higher trading costs are justified because its product is ‘safer’, in a case that throws the spotlight on charges paid by investors for different funds holding the same underlying asset.

The performance of physical gold exchange traded funds (ETFs) should not deviate much as they all aim to track the same underlying commodity and many of the products charge the same 0.4 per cent annual management fee.

This leaves investors with a handful of factors to consider when choosing a physical gold ETF, including trading costs and security. For buy and hold investors – and the many extremely risk averse investors buying these products – security is the key. For investors looking for quick returns, the trading cost will be the decider.

Until now investors would not have seen these two issues as being in conflict. But statements by Swiss ETF provider ZKB have raised the stakes by suggesting that this is indeed the case – security versus trading costs – and the ETF industry is now embroiled in a debate over the merits of the argument.

With many physical gold ETF investors paranoid about fundamental security issues (Could owning gold be banned? Hedge fund warning) anything that eases their minds could command a premium. One of Europe’s largest and fastest growing gold-backed ETFs, the Swiss  ZKB Gold ETF, has sparked a heated debate by suggesting that its product does just this, and that it is safer than its peers.


Jim Sinclair’s Commentary

This article is right on the money.

It is too bad, but the West defines everything according to their reality. It is unfortunate that the West’s reality has no application at all in Pakistan, Iran, Iraq and Afghanistan.

U.S. stirs a hornet’s nest in Pakistan
MAY 18, 2009

PARIS — Pakistan finally bowed to Washington’s angry demands last week by unleashing its military against rebellious Pashtun tribesmen of North-West Frontier Province (NWFP) — collectively mislabelled "Taliban" in the West.

The Obama administration had threatened to stop $2 billion US annual cash payments to bankrupt Pakistan’s political and military leadership and block $6.5 billion future aid, unless Islamabad sent its soldiers into Pakistan’s turbulent NWFP along the Afghan frontier.

The result was a bloodbath: Some 1,000 "terrorists" killed (read: mostly civilians) and 1.2 million people — most of Swat’s population — made refugees.

Pakistan’s U.S.-rented armed forces have scored a brilliant victory against their own people. Too bad they don’t do as well in wars against India. Blasting civilians, however, is much safer and more profitable.

Unable to pacify Afghanistan’s Pashtun tribes (a.k.a. Taliban), a deeply frustrated Washington has begun tearing Pakistan apart in an effort to end Pashtun resistance in both nations. CIA drone aircraft have so far killed over 700 Pakistani Pashtun. Only 6% were militants, according to Pakistan’s media, the rest civilians.


Jim Sinclair’s Commentary

Yes, another present from our OTC derivative manufacturers and distributors as an increase in crime comes with increased unemployment and a decreased police presence.

Last updated: 9:03 am May 19, 2009

Downtown Manhattan, the city’s party mecca, has been hit by an alarming spike in vicious street violence.

Assaults in Greenwich Village lead the frightening upturn, with a whopping 43 percent increase so far this year compared with the same period in 2008.

"I’ve never seen it like this before — never, ever," said G. Simon Chafik, a female photographer who has lived in Manhattan for 15 years.

"I’m a big New Yorker. New York is one of the safest cities. [But] I’m beginning to question that."

Other hot Manhattan neighborhoods tainted by the crime wave include TriBeCa, with a nearly 17 percent jump, and Gramercy, which has seen a 24 percent increase in assaults.

The danger zones also include the East Village from East 14th Street to Houston Street and the East River to Broadway, which has seen a 27.7 percent rise, from 47 to 60 assaults.


Jim Sinclair’s Commentary

The Devil is always hiding in the details, but a nice headline to see in the Wall Street Journal anyway.

China Gold Reserves May Back Yuan Internationalization-Report
MAY 17, 2009, 10:54 P.M. ET

SHANGHAI (Dow Jones)–China’s gold reserves may serve as backing for the yuan as Beijing promotes its use overseas, said Zheng Lianghao, managing director of the World Gold Council’s Far East division, the Shanghai Securities News reported Monday.

Zheng, who was speaking at a forum over the weekend, said increasing gold holdings would provide China with a useful hedge as the dollar faced the possibility of depreciation, according to the report.

In late April, the official Xinhua News Agency quoted Hu Xiaolian, the head of China’s foreign exchange agency, as saying China’s gold reserves had risen 454 metric tons since 2003 to 1,054 tons.


Jim Sinclair’s Commentary

South Florida, the crime capital of the USA (outside of Washington) fires police, keeps politicians?

The Long Layoff Arm of the Law
The Broward Sheriff’s Office told 177 employees Monday that their services were no longer needed
Updated 5:45 PM EDT, Mon, May 18, 2009

Times are so hard, even the lawman has had to swing a heavy ax.

The Broward Sheriff’s Office notified 177 employees on Monday that they will be laid off as part of a cost-cutting measure to meet the 2010 budget. The employees’ last day will be July 31.

The cuts include 48 current deputies currently patrolling the streets. In total, BSO is eliminating 264 positions, 77 of which were tabbed for deputies, said BSO spokesman Jim Leljedal. Some of the positions were vacant.

Broward Sheriff Al Lamberti warned county commissioners it would come to this when they asked him to cut $54 million from his budget. BSO still employees over 5,000 people, including law enforcement and fire rescue personnel, but losing so many can’t help but have a detrimental impact on service and safety.

One old saying goes, you never miss a cop until you need one. Well these cuts will put that adage to the test.



Jim Sinclair’s Commentary

The filth coming out of pay to play is going to be topped only by the horrid condition of what is left of the asset value of pension funds not required to mark to market.

How Pension Placement Agent Exploited Political Ties
By Martin Z. Braun and Gillian Wee

May 18 (Bloomberg) — After raising more than $1 billion for Democratic candidates, Eileen Kotecki transformed herself into a marketer for hedge funds and private-equity firms, eventually racking up more than $6.5 billion in sales.

Within weeks of wrapping up the 2000 campaign, Kotecki’s own attorneys said later in a lawsuit, she had begun “seeking to exploit” an “impressive network of contacts” gained in part from “extensive experience as a political fundraiser” to sell investment services to public pension funds and endowments.

Taking advantage of political work for private gain isn’t illegal. Yet Kotecki’s career shift from former Vice President Al Gore’s chief fundraiser into the placement-agent business illustrates how it has become the province of the well- connected, including campaign operatives, out-of-office politicians, former public pension officials and even a Pro Football Hall of Fame wide receiver.

“When you look at some of who the placement agents are, you say these are people who are really not in the financial business,” said Orin Kramer, who oversees pensions as head of New Jersey’s Investment Council. “These are politically connected intermediaries, and that’s not a way it ought to operate.”


Posted by & filed under In The News.

Dear CIGAs,

To answer questions from Cape Town, RSA today:

1. I have said for a considerable period of time that gold will trade at or above $1650 by January 14th 2011. I started saying this so far back it looked nuts.

That statement means exactly what is says. It is not hedged in any way.

2. Martin Armstrong is a market timer. Specifically, he times "SENTIMENT." Sentiment makes markets happen so his highs and lows need not be on the day (many are). They will be close.

Gold requires a lack of confidence in other alternatives such as the US dollar. Gold can be roughly attached to Armstrong’s changes in sentiment. Long term gold is attached in the inverse to Armstrong’s trends, especially under today’s unique and unprecedented circumstances.

3. Alf Field’s prediction of prices have been outstanding. Gold can do what he has outlined. My commitment to you is $1650.

Are we clear now?

Jim Sinclair’s Commentary

They are going to clean up as usual. The first low was on April 19th and the take off is in June. $1650 will be reached on or before January 14th, 2011. In all likelihood, the number will probably be much higher. The inside always knows. What more do you need to know?

Hedge Funds Making Big Bets on Gold
By Joseph Checkler

NEW YORK -(Dow Jones)- Hedge fund firms Paulson & Co. and Lone Pine Capital made big bets on gold during the first quarter, becoming the No. 1 and No. 2 shareholders, respectively, in the SPDR Gold Trust (GLD) exchange-traded fund, according to regulatory filings.

Paulson & Co. – run by John Paulson, who had already been beefing up his exposure to gold companies – bought 31.5 million shares of the ETF during the first quarter, according to its mandatory end-of-first-quarter holdings report with the Securities and Exchange Commission. That stake would be worth more than $2.8 billion if Paulson still holds all those shares at present.

Stephen Mandel’s Lone Pine bought 26.5 million shares of the ETF, which would be worth $2.4 billion if it still holds those shares. Lone Pine didn’t immediately return a message seeking comment.

Many hedge fund managers have been increasing their gold investments lately. More than 28% of the SPDR Gold Trust ETF’s outstanding stock was owned by hedge funds as of the end of the first quarter, according to Factset Research Systems.

The increased bets on gold come as the price of the yellow metal have remained high, above $900 an ounce. Funds also see hard assets as insurance against further turmoil in the financial system, including a decline in the value of paper currency.

Most active investing in gold has been by Paulson.

In March, Paulson paid $1.3 billion to buy Anglo American PLC’s (AAUK) remaining stake in South African miner AngloGold Ashanti Ltd. (AU). Paulson also recently introduced to investors a new share class pegged on the price of gold.


Jim Sinclair’s Commentary

10% of credit card debt gone bad is outrageous, most certainly if the 2nd leg of the collapse in SENTIMENT is starting TODAY!

American Express to cut 4,000 jobs
Mon May 18 22:38:11 UTC 2009
By Jonathan Stempel

NEW YORK (Reuters) – American Express Co, the credit card and travel services company, on Monday said it plans to eliminate 4,000 jobs, or 6 percent of its workforce, as the weakened economy causes higher customer defaults.

The cuts are part of the New York-based company’s plan to save $800 million over the rest of 2009. They are in addition to 7,000 job cuts and an expected $1.8 billion of savings from a restructuring it announced in October.

Like many rivals, American Express has been hurt by rising delinquencies among cardholders, with the U.S. unemployment rate having risen to its highest level since 1983.

On Friday, American Express said its net charge-off rate, or debt it does not expect to be repaid, rose to 10.1 percent in April from 8.8 percent in March.

"We continue to be very cautious about the economic outlook," Chief Executive Kenneth Chenault said in a statement. He said the cost savings "will be reinvested in the business to make sure we can take competitive advantage of opportunities as the economy begins to rebound."



Jim Sinclair’s Commentary

This is a grotesque result of Wall Street’s take over deal of Washington Inc. and total lack of any consideration for the victims of their deeds.

There are scared families out there right now. There are tears out there in fear of how the family will survive the loss of work by the wage earners.

Marriages have difficulty surviving hard downtimes in economics.

There are fixed income people out there hoping to die soon because they cannot afford to live much longer.

But up in Greenwich CT, they are high fiving over the screwing they have given the world.

Where is your rage?

Geithner’s gift to Wall Street
As the first TALF-backed deals for Ford, Honda and Harley’s debt hit the market, professional investors see an opportunity to make a killing.
By William D. Cohan, contributor
Last Updated: May 18, 2009: 10:39 AM ET

NEW YORK (Fortune) — Imagine if you were not really in the market for a house but the government came along and said that it would finance 94% of a home’s purchase price with a mortgage rate of less than 3%. Still not interested? Wait, Uncle Sam has some additional sweeteners: if you do the deal and buy the house for only 6% down, you also get the equivalent of rental income every month to the tune of at least an annualized yield of 10% of the purchase price.

But wait there’s still more: if, say, after two years, you decide you don’t want the house any longer, you can just walk away from it. No need to pay the balance of the mortgage (it won’t affect your credit rating), and you can keep the rental income received to date.

That’s essentially the deal that Treasury Secretary Timothy Geithner has offered qualified professional investors who participate in the so-called TALF (Term Asset-Backed Securities Loan Facility). Two months into the program as the first TALF- backed deals hit the market, you can see why the likes of hedge fund Fortress Investment Group are drooling over it. "I’m a big believer in the impact that TALF can and should have," Fortress CEO Wes Edens said on a May 6 investor call, adding that he expects that Fortress will be "a big participant" in the TALF program "three to six months from now."

The first few TALF deals — one for Ford Credit (the financing arm of the automaker), another for American Honda Receivables Corp., a third for the student loan company Sallie Mae and a fourth for motorcycle icon Harley Davidson — shed some light on our tax dollars at work.

"I’ve had accounts that dropped everything they were doing to take a look at this TALF financing," one Wall Street trader explained. "It was like nothing they had ever seen. It beats any financing that the private sector could ever come up with. I almost want to say it is irresponsible." For instance, Prudential Financial, Inc. (PRU, Fortune 500), the large insurer and investment manager, borrowed $786 million from the TALF as of March 31 and put up only $50 million to do so, some 6.4% of the deals.


Jim Sinclair’s Commentary

You think it might be a better idea to consider a guarantee for China than planting foolish media articles telling them to stuff it?

There is a better chance that the dollar is going to get stuffed, and magically China and Brazil will reveal it has only a few of those things left.

Where is the international police force for illicitly manufactured financial statistics?

They might be too busy busting the West to attend others.

Brazil and China eye plan to axe dollar
By Jonathan Wheatley in São Paulo
Published: May 18 2009 18:24 | Last updated: May 18 2009 23:31

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil’s central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

“Currency swaps are not necessarily trade related,” the official said. “The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi.”

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries’ central banks, were expected to meet soon to discuss the matter, the official said.


Jim Sinclair’s Commentary

Did you notice that Martin Armstrong suggests today is the high for green shoots? If you didn’t then go back to the "click to" chart below and get out your magnifying glasses.

Whatever happened to the promise of Fiscal Stimulation?

The answer is easy, Wall Street stole it and only Wall Street benefits from it.

"The Worst Is Yet to Come": If You’re Not Petrified, You’re Not Paying Attention
Posted May 15, 2009 09:31am EDT
by Aaron Task

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.

"We’re in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn’t petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

This outlook is based on the following main points:

* With the unemployment rate rising into double digits – and that’s not counting the millions of "underemployed" Americans – consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.

Jim Sinclair’s Commentary

This pretty much says it all.


Jim Sinclair’s Commentary

It starts as an investment, but becomes insurance. The policy pays off. Trading your insurance policy is not advisable.


Jim Sinclair’s Commentary

This is today’s market, all of it from bonds to Gold and equities.

The mood of the homebuilder’s sentiments versus expectations is just ebullient.

Of course it is because the equity market rallied.

Of course the equity market rallied but it cost north of USD $10 trillion to accomplish it.

The Libor rate looks like it fell through a black hole in the floor.

Of Course it does because it cost north of $10 trillion to produce that.

Now that a Sentiment Index is reported ebullient (versus expectations of course) who needs gold?

Mr. Armstrong, you are the master of timing, what is your opinion on economic sentiment?

Click here to view today’s piece from Martin Armstrong


Here is a question of manners:

Many of you call me with blocked numbers on my caller ID. You are entering my privacy but I cannot see who you are. Isn’t there something a tad wrong with that?

I let those calls go into the machine for return at a later time if the caller is known to me.

China and Treasuries today:

Here is an answer to today’s many inquiries.

The Wall Street party-line has always been that since the US has stuffed China with US Treasuries, China has no choice but to shut up, suck it up and choke on them. Hey, what is a trillion today anyway?

That viewpoint is extremely short sighted. Central banks have many alternative methods to offload dollar items than looking for buyers in the Forex or US Treasury world markets. This is most certainly true for those that finance international business of their quasi government private sector

Let us not forget buying gold as one way to pay in dollars that results in diversification of reserve assets.

Treasury instruments are fungible as collateral items into whatever currency is required in trade.

When I have discussed transactions with Chinese nationals in China a meeting with a personality of or at the China Trade Bank is standard fare.

Jim Sinclair’s Commentary

The Funds will of course be diverted. About that there is no question. It is an ages old tradition.

The management retirement program is the most probable recipient of the diversion judging on past performance of the similar.

Pakistan Is Rapidly Adding Nuclear Arms, U.S. Says
Published: May 17, 2009

WASHINGTON — Members of Congress have been told in confidential briefings that Pakistan is rapidly adding to its nuclear arsenal even while racked by insurgency, raising questions on Capitol Hill about whether billions of dollars in proposed military aid might be diverted to Pakistan’s nuclear program.

Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, confirmed the assessment of the expanded arsenal in a one-word answer to a question on Thursday in the midst of lengthy Senate testimony. Sitting beside Defense Secretary Robert M. Gates, he was asked whether he had seen evidence of an increase in the size of the Pakistani nuclear arsenal.

“Yes,” he said quickly, adding nothing, clearly cognizant of Pakistan’s sensitivity to any discussion about the country’s nuclear strategy or security.

Inside the Obama administration, some officials say, Pakistan’s drive to spend heavily on new nuclear arms has been a source of growing concern, because the country is producing more nuclear material at a time when Washington is increasingly focused on trying to assure the security of an arsenal of 80 to 100 weapons so that they will never fall into the hands of Islamic insurgents.

The administration’s effort is complicated by the fact that Pakistan is producing an unknown amount of new bomb-grade uranium and, once a series of new reactors is completed, bomb-grade plutonium for a new generation of weapons. President Obama has called for passage of a treaty that would stop all nations from producing more fissile material — the hardest part of making a nuclear weapon — but so far has said nothing in public about Pakistan’s activities.


Jim Sinclair’s Commentary

The most important points to consider are:

1. How do you guarantee US Treasuries with US dollars? Is it at an agreed relationship to the Yuan? Does that not sound somewhat like the old takeover deals where value was set and more shares issued if the value of the acquiring company declined below certain levels over time? The other method would be gold equal to face value and the final method would be the surrender of Treasuries for gold at a set value.

2. The Ruble as a reserve currency seems somewhat strange. In fact, why would any nation want that burden? If the Ruble was to be in some form tied to a basket of commodities such as oil and gold there might be a strategy.

3. The apparent estrangement taking place between the US Administration and Israel.

China’s Stockpiles Are New Sovereign Wealth Strategy, RBC Says
By Kevin Hamlin

May 18 (Bloomberg) — China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline, according to the Royal Bank of Canada.

“It’s part of an overall desire to decrease its exposure to dollar assets,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong, in an interview today. China fears the hundreds of billions of dollars the U.S. is spending on bank bailouts and stimulus will cause “higher inflation and a weaker dollar,” he said.

Premier Wen Jiabao has said he is “worried” about the safety of the nation’s $767.9 billion in holdings of U.S. Treasuries and called on the U.S. “to guarantee the safety of China’s assets.” Central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.

“Increased spending on commodities represents a reallocation of China’s sovereign wealth away from the accumulation of financial assets,” Jackson said in a May 15 research note.

China, the world’s biggest consumer of iron ore, boosted imports of the material to a record 57 million metric tons in April. China’s purchases of copper and copper products reached a record 399,833 metric tons last month, compared with 374,957 tons in March.