Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.


The rate of acceleration of the downtrend is historic. This is carnage. This is dangerous to the US dollar. Not much else to say.



Dear Jim,

Here is a well done summary of the virtual insanity of those who have priced bonds as if they deserved almost no return for taking a big risk in US paper. PT Barnum’s quote was correct when it comes to US Treasury paper. His quote was "There is a sucker born every minute.”

Your pal,

The bond bubble is an accident waiting to happen
The bond vigilantes slumber. As the greatest sovereign bond bubble of all time rolls into 2009, investors are clinging to an implausible assumption that China and Japan will provide enough capital to keep the happy game going for ever.
Ambrose Evans-Pritchard
Last Updated: 12:22PM GMT 12 Jan 2009

They are betting too that debt deflation will overwhelm the effects of near-zero interest rates across the G10 and nullify a £2,000bn fiscal blast in the US, China, Japan, Britain, and Europe.

Above all, they are betting that the Federal Reserve chief Ben Bernanke will fail to print enough banknotes to inflate the US money supply, despite his avowed intent to do so.

Yields on 10-year US Treasuries have fallen to 2.4pc – a level that was unseen even in the Great Depression. This is "return-free risk", said bond guru Jim Grant.

It is much the same story across the world. Yields are 1.3pc in Japan, 3.02pc in Germany, 3.13pc in Britain, 3.26pc in Chile, 3.47pc in France, and 5.56pc in Brazil.



Here are the corrections from yesterday (I should know better you told me to let the break tell me when).

I let the curve tell me when (if by chance this is the right fit) so my mistake for saying the end of 2012


image002 - 20090113_035118

Dear Alex,

You ask about the high 2012 potential, not 2010.

The answer is this chart maximizes along the upper trend line at Alf’s mark of:

Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE).


Dear Extended Family,

Trader Dan says it all:

"Don’t like the current psyche – stick around another week or so; next week it will probably be hyperinflation only to be followed by a return to the barter system the week after that, and then a round circle back to deflation once again. Don’t feel bad if you cannot understand what the markets are saying right now – the market itself has no idea what it is saying. Maybe it is attempting to get in touch with its inner child or some other sort of nonsense. Thank fund managers for clearing things up for us all."

Dear CIGA Browsers,

Let stay alert for the answer to last week’s request from Hedge Fund Association lobbyists to the Security Regulators of the USA, Great Britain and Australia seeking freedom from reporting Short Positions as part of the 13-F regulation interpretation.

Form 13F
What Does Form 13F Mean?
An SEC reporting form filed by institutional investment managers in accordance with the provisions of section 13(f) of the Securities and Exchange Act of 1934, which states that all institutional investment managers who are managing over $100 million on the last trading day of any month of the calendar year must disclose their holdings on a quarterly basis.

Posted by & filed under Jim's Mailbox.


The problem with socialism is that you eventually run out of other people’s money.
–Margaret Thatcher


Fort Wealth Trading Co. LLC
866-443-0868 ext 104

Dear Jim,

If the scale continued to the top of the Curve, is it possible by 2012 Gold would be in the 3,000 range?

If this is the right fit.. something interesting happens at the end of 2012


gold_log_jan1109 - 20090112_091735 

Dear Alex,


All the best,

Posted by & filed under Jim's Mailbox.

Hi Jim,

Maybe this has been answered on your website and I either missed it or didn’t understand it.

What needs to change in order to drive the dollar lower? We seem to have all of the ingredients in place for a weaker dollar yet that doesn’t seem to matter. When will it matter? When do the buyers of the dollar become sellers?

Again thanks for all you do. By the way I am 63 and also believe in your "burnout" before "rust-out" theory.


Dear Ron,

I had lunch this afternoon in Joberg with a group of very well known personalities in African Mining. Rob S, a member of this assemblage, told a story that I believe prophetically answers your question.

The monetary parable was about a special variety of monitor lizard in Australia that lives off road kill (Hedge Funds, I imagine). The species, like the Komodo Dragon, kills by infecting its victim with a vicious saliva.

Fortunately for our Australian friends this lizard becomes terrified quite easily and runs for the nearest high point, usually a bush or tree, when confronted with terror like a human being or a bad dream.

The knee jerk reaction to fears of an imploding world economy, the fear that Obama produced calling for Tarp funds now indicated that crisis is here, up the tree goes the down-under lizard. The Tree is the dollar and long bonds. This awful, stinking, road kill eating, vile lizard is what is left of the hedge fund business after Madoff.

Your question is when does it end.

The answer is that Fiscal Stimulation will produce a degree of economic results that draws out a measure of inflation from Monetary Stimulation relative to the intensity of the new Administration’s degree of concern. Acting as president and calling for legislative action NOW to release TARP funds before you are the president is a demonstration not only of concern but total panic.

As inflation starts to work its way out of absolute monetary madness, .72 on the USDX comes directly into the market’s cross hairs. Three back to back closes below .72 and the dollar show is over. The dollar will plummet after the realization that the Fed will never be able to issue bonds on the crap they have been stuffed with and kills the idea of the Rentendollar coming out of the Fed’s inventory of SIVs backing massive future bond issues. The game is then over and the beginning of the concept of the Federal Reserve Gold Certificate Ratio, Modernized and Revitalized becomes the tool of choice starts.

Gold is going to $1650 on its way to Alf’s numbers.

Today you have been had by paper gold ONE MORE TIME.


Posted by & filed under Jim's Mailbox.


In case you missed it, Merrill Lynch says the rich are turning to gold bars for safety

To the best year ever,
CIGA Bernie

Merrill Lynch says rich turning to gold bars for safety
Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.
By Ambrose Evans-Pritchard
Last Updated: 10:32AM GMT 09 Jan 2009

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.

"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.

Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.

The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. "It’s win-win either way," said Mr Dugan.

He added that deflation may prove the greater risk in coming months. "It’s very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."


Posted by & filed under Jim's Mailbox.

Dear Jim,


Today’s Financial Times had an article entitled “Fund Heads Voice Short Selling Fears.

The first paragraph said “Three associations representing fund managers in Australia, The UK and the US have joined forces to warn that their industry would be damaged if market regulators publish detailed information on short selling trading positions.”

What else is there to say? Evidently, the old song refrain… "let the sun shine… let the sun shine in” is not a favorite of the fund industry.

Respectfully yours,
Monty Guild


The unwise sold the Euro and bought US dollars due to this. Although the Euro is ugly it is a beauty compared to the US dollar.

Respectfully yours,
Monty Guild

RPT-ECB FOCUS-ECB faces lengthy wait for rate cuts to hit home
Wednesday, January 07, 2009 10:30:03 PM (GMT-08:00)
Provided by: Reuters News
By Krista Hughes

FRANKFURT, Jan 7 (Reuters) – If the European Central Bank was really hoping to start the new year with hard evidence that record interest rate cuts are helping the economy, it must be feeling disappointed.

ECB President Jean-Claude Trichet [ID:nLU207563] has batted back questions about the chances of another move this month by saying the bank was focussed on the impact of its 1.75 percentage points in cuts since October.

Yet indicators show little sign that euro-zone households and businesses are feeling the full benefit.

Average corporate borrowing costs have actually increased in the last few months, judging by corporate bond yields, and persistent financial market tensions are also dulling the pass-through of lower official rates to the real economy. (See [ID:nL798350] for factbox)

Meanwhile, with the euro zone economic outlook worsening by the week and inflation already well below the ECB’s 2-percent ceiling, having fallen to 1.6 percent in December, the ECB may have little time to wait and see.



Jim Sinclair’s Commentary

Deliveries out of Comex warehouse – the plot thickens.

It has been reported to me that the Comex is trying to argue people out of taking delivery of gold from the warehouse.

Tomorrow I am going to check my records to see who is the auditor for the warehouse.

You know on 9/11 all that gold was smashed in the cellar vaults when the Twin Towers came down.

I assume there was no damage to even one bar, nor was even one bar pocketed in the process of backhoe removal of debris.

Wasn’t all the floors of the collapsed Twin Towers about 6 inches thick when it was all over?

Maybe the Comex warehouse holds one very large and ugly bar of gold accounting for 75% of the ounces.

"In today’s world anything is possible." Quote from Bernie Madoff.

I love the following writer:

“We have made at least 15 calls and they are now asking WHY I want delivery.
They say it will cost a lot of money to sell it back to them. Ha!
Because I am from MTS they think I fell off a turnip truck.
–CIGA Hslm P."


I saw this article today and thought it was a nice confirmation of information Dan and Monty have been giving us for several weeks, not to mention Points 10 and 11 of your 9/1/06 Formula. Once again I found striking parallels in the language:

Jim’s Formula 9/1/06 Points 10 and 11:

10.  If the investment by non US entities fails to meet the exiting dollars by all means, the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

CIGA Richard

NY Times article 1/7/2009:

China’s voracious demand for American bonds has helped keep interest rates low for borrowers ranging from the federal government to home buyers. Reduced Chinese enthusiasm for buying American bonds will reduce this dampening effect…

Click here to read the full article…

Dear Jim,

I bought this on EBay today. Nothing like repeating history, eh?


Fort Wealth Trading Co. LLC
ext 104


Dear JB,

The question is what did you pay?



Hey Jim,

The statistical extremes reported by the non-reportable and commercial traders suggest that the down D-wave has terminated. Yet, fear keeps most players on the sidelines until a large chunk of the A-wave advance has already taken place. I expect one more dip over the summer, then a big move above $1,000 starting Fall 2009.

I’ll keep you posted.

Click any chart to enlarge all in PDF format

Gold Wave Analysis - 20090108_100731 COT FO CSWA - 20090108_100731 COT FO NRSWA - 20090108_100731

Posted by & filed under Jim's Mailbox.

Dear CIGAs,

CIGA Dean shares with us a case study on why the heard headed for the long bond, for the T bill and into every port that was and will be no port in this financial storm. There is only one and that is Gold. They will come at $1650 and again at $6000.


I wanted to pass this story on to you, Dan and Monty.

I grew up on a ranch. The largest structure on our ranch was a very large and beautiful classic designed barn.

One night when I was very young the barn caught on fire.

My Dad and his hired men risked running into the barn to rescue the horses. Naturally the horses were panicked and terrified. After getting the horses outside to safety the horses turned around and ran back into the barn. Despite their best efforts they could not stop the horses from running back into the barn and they all perished in the fire.

Why would the horses do such a foolish thing?

My Father told me that the barn was where they felt safe and secure. He explained to me that in their blind panic they ignored the obvious danger and they ran back into the only place they had been conditioned to feel safe in.

Sound familiar?




Here is a case of political correctness run completely amok… 

No one or no thing is safe until Washington is in recess. If it moves these people will tax it…

Trader Dan


What about taxing human flatulence at $10 a pop, of course with a national identity card placed appropriately so that automatic reports are made of offending incidents. We want zero tolerance when it comes to this offal subject.


EPA ‘Cow Tax’ Could Charge $175 per Dairy Cow to Curb Greenhouse Gases 
Farm Bureau warns just this one rule may increase milk production costs up to 8 cents a gallon.
By Jeff Poor 
Business & Media Institute
12/30/2008 4:55:19 PM

Call this one of the newest and innovative the ways your government has come up with to battle greenhouse gas emissions.

Indirectly it could be considered a cheeseburger tax, but one of the suggestions offered by the Environmental Protection Agency (EPA) in its Advance Notice of Proposed Rulemaking (ANPR) for regulating greenhouse gas emissions under the Clean Air Act is to levy a tax on livestock.

The ANPR, released early this year, would give the EPA the authority to regulate greenhouse gas for not only greenhouse gas from manmade sources like transportation and industry, but also “stationary” sources which would include livestock.

The New York Farm Bureau assigned a price tag to the cost of greenhouse gas regulation by the EPA in a release last month.

“The tax for dairy cows could be $175 per cow, and $87.50 per head of beef cattle. The tax on hogs would upwards of $20 per hog,” the release said. “Any operation with more than 25 dairy cows, 50 beef cattle or 200 hogs would have to obtain permits.”

Kate Galbraith, correspondent for The New York Times, noted on the Times’ “Green Inc.” blog that such a “proposal is far from being enacted” and that the “hysteria may be premature.”

But Rick Krause, senior director of congressional relations for the American Farm Bureau, warned it’s certainly feasible – especially based on the rhetoric of President-elect Barack Obama and the use of the EPA to combat global warming. Such action by an Obama administration would take an act of Congress for livestock to be exempt.


Posted by & filed under Jim's Mailbox.

Dear CIGAs,

The following is breaking news from CIGA Tom.



Dear Jim,

Just one little spark could blow this whole thing sky high and gold and oil with it!


‘Light the fire’ order set Mumbai ablaze

Evidence is growing that the bombings were orchestrated by militants in Pakistan

TENSIONS between India and Pakistan, the rival nuclear powers, are on a knife edge this weekend as Islamabad refuses to admit that the Mumbai terrorist outrage was planned and carried out by Pakistanis.

Zarar Shah, a leading commander of the Lashkar-e-Taiba group, has admitted under interrogation in Pakistan that he advised the terrorists by telephone as the attack unfolded.

Controllers in Pakistan watched live television and warned the gunmen of the arrival of Indian commandos, according to evidence amassed by the FBI and handed over to the Pakistani government.


Dear Big Tatanka,

Yes, in a big way.



Dear Jim,

It looks like a longer drawn out conflict with Israel. Barak says "it won’t be short and it won’t be easy." Tens of thousands is not a week long incursion! Freezing in Ukraine, Europe soon, bombs in the Middle East, Tanzania looks pretty good right now!

Israel okays call-up of tens of thousands of IDF reservists
By Barak Ravid, Haaretz Correspondent, and Reuters

Israel’s government has approved the call-up of tens of thousands of reservist soldiers, it was annnounced Saturday, almost simultaneously with the launch of a Gaza ground incursion aimed at halting rocket fire on Israel’s southern communities.

Prime Minister Ehud Olmert’s office said in a statement that, in accordance with a secret cabinet discussion Friday, the government ordered the armed forces "to draft the necessary reservists, on a scale of tens of thousands of troops."


IDF soldier killed, another seriously wounded in Gaza ground operation
By Amos Harel, Yoav Stern and Yanir Yagana, Haaretz Correspondents, and News Agencies

An Israeli soldier was killed in a clash with Gaza militants on Sunday, the first fatality suffered by Israel since it launched a ground operation on Saturday night against the coastal territory’s Hamas rulers.

The soldier, from the Israel Defense Forces Golani infantry brigade, was killed in the densely populated Jabalya refugee camp in the northern Gaza Strip.


CIGA Big Tatanka

Dear BT,

Looking your way today from Africa, it certainly looks that way.

a. Israel makes a serious mistake in judgment.
b. Pakistan goes nuclear.
c. Terror returns to major international centers.

There is potential for something terrible looking your way.