Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Trader Dan,

Appreciate all you do at www.jsmineset.com

That said, I am reading quite a lot these days from various sources about coming currency/exchange controls in the USA, along with the US Government regulations to be implemented that will force US citizens to sell their private gold holdings to the US Government for less than market value.

When are you and Jim going to address this issue "head on"?

If the dollar is going to collapse in value, as Jim keeps REPEATING over and over, then we all know what is coming. What good is gold in the "mayo" jar going to do for use if it will be a criminal offense (prison time) to hold and sell gold privately? And what good will stock certificates of companies incorporated in one country, doing business in another, and traded in still another do for us if we are NOT ready to expatriate from the US?

It would be the icing on the cake for those policies to be implemented… ESPECIALLY after all the criminals in and out of government have stuffed themselves full by feeding on the bailout and stimulus money they have stolen on top of all the money they have stolen prior to this mess erupting. We are truly being governed by KLEPTOCRATS.

It is TOO much for me to take.

I cannot stomach the idea that the ONLY people to be truly punished will be the savers… those responsible enough to pay as they go, to NOT be indebted, and to save their capital which they are so desperately trying to preserve.

PLEASE … even if you and Jim are not inclined to get vocal about this issue…
PLEASE… if you are indeed SERIOUS about helping what will otherwise be true victims….
PLEASE point us in a direction where we can get the info we need to make arrangements now while there is still time.

Thank you,
Ciga Dan B

Dear Dan B,

I will forward this on to Jim to see if he cares to comment on it. My own view is simply – “Why would the feds need our gold?”

The US Dollar is no longer on a gold standard of any type and therefore the Feds do not need any gold to ramp up dollar printing. Once upon a time, that was the case; it no longer is. They can create unlimited amounts of dollars with their electronic printing press – Bernanke as much as said this exact thing not too many years ago.

I am of the opinion that the Feds will at some point bring gold back into the monetary system in order to save the dollar but that will be done by a revitalized gold certificate ratio clause as Jim has mentioned many times on the site. In order for that to be effective, they will be forced to upwardly revalue their current gold price which is officially valued at the ridiculous price of $42 /ounce. The price will rise high enough to balance out the Federal Government’s outstanding obligations which at the rate they are increasing, means a substantially higher gold price. When that occurs, the price of gold will no longer be free floating in the sense that it is today but it will be more or less a type of floating peg for lack of a better phrase. That means it will oscillate around a set price by maybe $100 or so either way or a bit more depending on its level at the time.

When that does happen, it will be time to sell your gold if you are so inclined.

Gold goes through both bear markets and bull markets but when this bull market is over, the price of gold will not collapse like it did back when the last great bull ended in 1980.

Best,
Trader Dan

PS if you are still worried, then I would suggest you buy silver instead

Dear CIGA Dan,

Gold will not be confiscated. End of discussion!

Dan has explained the correct reasons why not.

In the 1930s very little gold was surrendered, almost none for that matter.

No one was prosecuted in the 1930s for failing to surrender their gold.

Regards,
Jim

Jim,

Look at the Berkshire Hathaway Inc.’s 2008 Annual Report disclosed on Feb 28th.

http://www.berkshirehathaway.com/reports.html

He predicts:

1. "an onslaught of inflation" (page 5): "In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation."

2. An extraordinary Treasury bond bubble  (page 18): "When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary. "

Regards,
CIGA Christopher

 

Dear Mr. Sinclair,

What exactly does this mean?

Regards,
CIGA Marc

US Treasury and Fed mulling special treasury financing to help Fed manage balance sheet.

"Reuters reports the U.S. Treasury Department and Federal Reserve are considering special Treasury financing and allowing the Fed to issue its own debt among ways to enable the central bank to manage its ballooning balance sheet, a source familiar with the deliberations said on Tuesday. The Fed and Treasury said in a statement earlier in the day that they would seek legislation to give the Fed additional tools it would need to control its balance sheet as it funds a program to support consumer lending that could generate up to $1 trillion in lending."

Dear Marc,

Should the Fed start to issue their own bonds (legislation required) they will compete with US treasuries already out there, starting rates upward. It would be a tactical error making it unlikely to occur.

Regards,
Jim

Posted by & filed under Jim's Mailbox.

Dear CIGAs,

Here are some of the 450+ great people that made it to the CIGA meeting in Toronto last week.

Thank you all for the warm welcome you showed me. If you have any more pictures, I would love to see them.

Jim

photo

Dear Jim,

You wrote:
“As long as we do not see a reinstatement of the "Uptick" rule and regulatory demand that this rule be attended to, as well as arrests for naked shorting, the inviting conclusion is that the activities of the 666 beasts are acting at the behest of ruling government, mopping up all the money on the planet still available.”

I spent the last week calling my Congressman and trying to get an answer on the progress of bill H.R. 302 – the restoration of the uptick rule. I also made calls to Congressman Gary Ackerman’s office (the bill’s author), and also to the House Financial Services committee (chaired by that genius, Barney Frank), the committee the bill is referred to. The experience was akin to talking to brain dead aliens. NO ONE in government knows:

1) The status of the bill
2) The implications of the passing of such a bill
3) The implications of NOT passing such a bill

If you ever want to feel the sensation of taxation without representation, make an attempt to contact your congressman’s office. I would suggest polishing off 2 or 3 of your favorite cocktails before attempting such a futile act, though. In the future, I plan to have a bottle of 7 star Metaxa by my side.

Do you think I would ever buy a non-gold or silver related asset after talking to them?  Quite the contrary – why should I participate in the stock market when our so called ‘leaders’ won’t make even the tiniest attempt to defend the sanctity of it? The Dow can go to zero for all I care – aside from gold, silver and precious metal mining shares, I won’t be participating in any of it.

CIGA Anthony

P.S. Here is the progress of the bill, which was introduced on Jan. 8th.  As you can see, this is not going to be happening any time soon.

http://www.govtrack.us/congress/bill.xpd?bill=h111-302

Posted by & filed under Jim's Mailbox.

Jim,

Am I the only one with a smirk on my face? There is no better indication of what banks will and will continue to do under "stress" than the breakdown of total bank credit through 1/1/09. There’s little change from previous months.

Get ready for nationalization if these trends continue.

CIGA Eric

Big Banks Get Ready for Stress Tests
Obama administration is getting ready to conduct "stress tests" on the nation’s biggest banks to judge whether they can hold up if the recession were to worsen.
Wednesday, February 25, 2009

WASHINGTON — The Obama administration is getting ready to conduct "stress tests" on the nation’s biggest banks to judge whether they can hold up if the recession were to worsen.

Banking regulators plan to scrutinize the financial conditions of Citigroup Inc., Bank of America Corp. and more than a dozen other institutions that have received billions from the Treasury Department’s $700 billion bailout pot.

The tests, expected to start on Wednesday, will help regulators decide whether the banks have sufficient capital — and the right mix of it — to withstand any additional shocks to the economy over the next two years.

The tests also will help regulators decide whether the banks may need additional assistance so that they can carry out the critical mission of boosting lending to customers, a key ingredient to the economic turnaround.

More…

Click chart to enlarge…

TBC Breakdown

 

Dear Mr. Sinclair,

Here is a very interesting Globe and Mail interview:

‘There will be blood’
Harvard economic historian Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession’ ends
HEATHER SCOFFIELD
Globe and Mail Update
February 23, 2009 at 6:45 PM EST

Harvard author and financial crisis guru Niall Ferguson has landed with a thud in Ottawa, spreading messages that could make even the most confident policy makers squirm.

The global crisis is far from over, has only just begun, and Canada is no exception, Mr. Ferguson said in an interview before delivering a presentation to public-policy think tank, Canada 2020.

Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same.

More…

Jim,

During the Q&A session Bernanke suggested that the SEC looking into restoring the uptick rule. He also suggested that its restoration was "worth looking into its restoration."

Regards,
Eric

Posted by & filed under Jim's Mailbox.

Hi Jim,

The so-called "uptick rule" or "tick test" was implemented in the 1930s after the stock market crash to ensure short sellers were not alone in causing a stock price to fall.

Until a change is made the most leverage market will control price.

CIGA Eric

Dear Eric,

What makes anyone think that our financial leaders want anything but chaos?

As long as naked shorts, pool shorts and no uptick requirements are enforced, you must conclude chaos is engineered.

Jim

Posted by & filed under Jim's Mailbox.

Jim,

The U.S. is encouraging China to continue investing in U.S. treasury bonds because "a speedy U.S. recovery will fuel China’s growth as well."!!!

This article also states the following:

"JPMorgan Chase & Co. predicted in a Feb. 6 report that China will keep buying Treasuries not only for the near-term stability of the global financial system, but also because there is no viable and liquid alternative market in which to invest China’s massive and still growing reserves.”

Time will tell.

Best regards,
CIGA Wallace

Clinton Urges China to Keep Buying U.S. Treasury Securities
By Indira A.R. Lakshmanan

Feb. 22 (Bloomberg) — Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama’s stimulus plan, saying “we are truly going to rise or fall together.”

“Our economies are so intertwined,” Clinton said in an interview today in Beijing with Shanghai-based Dragon Television. “It would not be in China’s interest” if the U.S. were unable to finance deficit spending to stimulate its stalled economy.

The U.S. is the single largest buyer of the exports that drive growth in China, the world’s third-largest economy. China in turn invests surplus earnings from shipments of goods such as toys, clothing and steel primarily in Treasury securities, making it the world’s largest holder of U.S. government debt at the end of last year with $696.2 billion.

China’s leaders understand that “the United States has to take some very drastic measures with the stimulus package, which means we have to incur debt,” Clinton said. The Chinese are “making a very smart decision by continuing to invest in Treasury bonds,” which she called a “safe investment,” because a speedy U.S. recovery will fuel China’s growth as well.

More…

Dear Wallace,

Just let China see some gold for sale, and the sucking sound you will hear is dollars out of China and gold moving in.

There are alternative ways to dump dollars and you can be assured all are being used by China.

Trader Dan will keep us posted on China’s buys.

Regards,
Jim

Posted by & filed under Jim's Mailbox.

Jim,

I always follow the money flows. As of last week the money flows into the Swiss Franc are bullish and have increased in intensity (15% for a lack of a better description is the acceleration factor).

CIGA Eric

Click chart to enlarge in PDF format

February1908-Eric.jpg

Posted by & filed under Jim's Mailbox.

Jim and Team,

Yes, OTC derivatives have killed us all; some more than others. Even Paul Volcker can’t escape their deadly grip.

The following quote speaks the awful truth of the human and financial toll on Man, Country and Nations Worldwide:

“One of the saddest days of my life was when my grandson – and he’s a particularly brilliant grandson – went to college. He was good at mathematics. And after he had been at college for a year or two I asked him what he wanted to do when he grew up. He said, “I want to be a financial engineer.” My heart sank. Why was he going to waste his life on this profession?

A year or so ago, my daughter had seen something in the paper, some disparaging remarks I had made about financial engineering. She sent it to my grandson, who normally didn’t communicate with me very much. He sent me an email, “Grandpa, don’t blame it on us! We were just following the orders we were getting from our bosses.” The only thing I could do was send him back an email, “I will not accept the Nuremberg excuse.”
–Paul Volcker

Paul Volcker: The banking world needs more Canadas
Posted: February 17, 2009, 1:15 PM by Kelly McParland

I really feel a sense of profound disappointment coming up here. We are having a great financial problem around the world. And finance doesn’t work without some sense of trust and confidence and people meaning what they say. You take their oral word and their written word as a sign that their intentions will be carried out.

The letter of invitation I had to this affair indicated that there would be about 40 people here, people with whom I could have an intimate conversation. So I feel a bit betrayed this evening. Forty has swelled to I don’t know how many, and I don’t know how intimate our conversation can be. But I will, at the very least, be informal.

There is a certain interest in what’s going on in the financial world. And I will disappoint you by saying I don’t know all the answers. But I know something about the problem. Let me just sketch it out a little bit and suggest where we may be going. There is a lot of talk about how we get out of this, but I think it’s worth remembering, or analyzing, how this all started.

This is not an ordinary recession. I have never, in my lifetime, seen a financial problem of this sort. It has the makings of something much more serious than an ordinary recession where you go down for a while and then you bounce up and it’s partly a monetary – but a self-correcting – phenomenon. The ordinary recession does not bring into question the stability and the solidity of the whole financial system. Why is it that this is so much more profound a crisis? I’m not saying it’s going to get anywhere as serious as the Great Depression, but that was not an ordinary business cycle either.

This phenomenon can be traced back at least five or six years. We had, at that time, a major underlying imbalance in the world economy. The American proclivity to consume was in full force. Our consumption rate was about 5% higher, relative to our GNP or what our production normally is. Our spending – consumption, investment, government — was running about 5% or more above our production, even though we were more or less at full employment.

You had the opposite in China and Asia, generally, where the Chinese were consuming maybe 40% of their GNP – we consumed 70% of our GNP. They had a lot of surplus dollars because they had a lot of exports. Their exports were feeding our consumption and they were financing it very nicely with very cheap money. That was a very convenient but unsustainable situation. The money was so easy, funds were so easily available that there was, in effect, a kind of incentive to finding ways to spend it.

More…

Hey Jim,

I’m sure you’ve seen this by now but just in case you haven’t … enjoy!

Your pal,
CIGA Peter

Click here to see a visualization of TARP…

Posted by & filed under Jim's Mailbox.

Dear Jim,

As an Australian expat overseas, I’ve been reading stories of the bushfires there. They are unbelievable stories, but a common theme seems to be, everyone could sense a disaster looming, but when it actually came, it was so much faster, bigger, and more terrifying than anything anyone could have imagined. As I read the stories I can’t help but feel they are a picture of what is coming financially.

Thanks for all your work, and tireless warnings,

CIGA Darren

These are some of the most incredible stories I have read.

"How we cheated the flames of death"

"Where the hell is everyone "

"No Phoenix of hope arising from the ashes" Gary Hughes

 

Happy V Day Jim,

Thank you for your selflessness, time and effort to see the community is safe. I’ve been reading JSMineset for a couple of years but forgive me ,as I’m not clear on all elements of protection, specifically retirements accounts. I remember your writings regarding true custodial accounts and the correct ‘titling" of such accounts. However, you recently wrote about the democratic party’s hearings on confiscation of IRAs/401ks etc. That makes me think I might want to liquidate my IRAs and take the tax hit! Presently I’m engaged in having the custodial agreement looked at by an attorney, ( as a very wise man has suggested). Would this be considered protection?

If I may ask a second question, do you suggest a second home outside of a major city due to crime/riots etc?

Thanks again and best of luck with the new puppies!

CIGA Lisa

Dear Lisa,

1. The process you are working on is to protect yourself from getting tied up in bankruptcy court concerning your assets.

2. This process you are asking about is protection from your government.

3. What Uncle gives you can be sure Uncle can take back.

4. I doubt that either gold or retirement accounts will be confiscated because an uprising of the public is waiting to happen just because of unemployment and terror concerning melted paid in retirement programs. The temptation to press hard will be cushioned by problems emanating from nothing else but the trend already in motion.

5. As a minimum do not add to mistakes by putting any additional funds in tax attractive retirement accounts.

6. Gold and related assets are the only means of guaranteeing retirement.

Regarding a second home:

I live in Bubbaville. That has its own problems.

My new neighbour, a Mr. Ram whose is a refugee from NYC not yet in residence, gave me a wood pile he had. Unbeknownst to me, he also gave the wood pile to a local Bubba. Those things can result in a shootout. It got real close.

Study well where you move and make sure you are up to it. I am.

Respectfully,
Jim