Posts Categorized: Jim’s Mailbox

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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

Posted by & filed under Jim's Mailbox.

Jim,

This my view of our current set of Politicians and their banker buddies. They are stocking up on tax money for the long depressionary winter to come that they themselves caused…

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Jim,

The same intellectual laziness that characterises the SEC characterises the American Public and therefore your readership. They deserve their fate. What they don’t deserve is you having to not only guide them through the darkness of these dangerous times, but to take every goddman last individual (supposed adults) by the hand and teach them how to read a F*!"ing map! There is enough on JSMineset to keep anyone busy from dawn to dusk WITHOUT having to badger you on the phone to repeat yourself ad infinitum

I AM DISGUSTED!

I want you to know that three of us, from London, Singapore and New York spent a good hour on a conference call yesterday just discussing the Armstrong PDF, the theories behind it, and the timing of how it might play out, after spending a good two hours or more reading it and doing background research associated to it.

None of this could have happened without you. Nobody would be properly protected without your help. Many of my friends, (all educated at top tier Universities, and allegedly intelligent) have made massive changes to their assets which have SAVED THEIR ASSES, solely because they started reading you. YOU were the one who gave us Armstrong. YOU were the one who turned us on to Harry Schultz. YOU were the one who said, years ago, that it would all end this way.

Gratitude will never be enough. Jim, you have played a significant role in saving the future of my family… of my children! I don’t really think I can say that about anyone else I know. I remain indebted, and at your service completely. I only wish there was a way to repay you.

Since you have intimated that you need deck-hands scanning the news, please know you have at least THIS researcher who works not only for himself, but is scanning the information network 7 days a week, in the hope that he may, in some small way, pay back the enormous debt he feels is owed to you.

These people leaning on you are Bums! They are like the SEC!

THROW THE BUMS OUT!

Your students are here Jim. We DO read. We DO study. We know our future survival depends on paying attention… especially to JSMineset. This is no abstract intellectual process, this crap is for real and believe me, some of us are very gravely aware of that… and very grateful for what you have bestowed.

I remain, Sir, your most humble and obedient servant.

CIGA Pedro

Dear Pedro,

I take immense joy in your, your family, and friends having protected themselves.

This has been our mission here.

You have made me very happy on a flu filled day.

Thank you,
Jim

Dear Mr. Sinclair,

I hope you are well! Did you see this article from the Wall Street Journal on February 12, 2009?

Senator Greg Walker has introduced a bill to Authorize the exchange of goods and services with gold and silver in the state of Indiana by the end of 2009. See the link below.

Click here to view the article…

Will other states follow?

CIGA Juan

Dear Juan,

Counting on the greatest conspiracy in human history, stupidity, the answer is no.

Regards,
Jim

Hi Jim,

Did you notice that Britain is now beginning to use the D word? They can only get out the first syllable so far. It’s kind of like the Fonz trying to apologize but can only get out sor…

CIGA Bernie

Bank may start printing money to reverse ‘deep’ downturn
February 12, 2009

The Bank of England’s Governor admitted yesterday that Britain is now in “deep recession” and signalled that it is ready to start “printing money” as soon as next month in aggressive, last-ditch moves to limit the slump.

Mervyn King indicated that the Bank is poised to move beyond relying on further interest rate cuts to combat recession. It will give a green light within weeks to a strategy of “quantitative easing”, the modern equivalent of printing money, he made clear.

More…

Dear Mr. Sinclair,

In this video Michael Greenberger, a University of Maryland Law Professor discusses "naked" credit default swaps and makes a recommendation to have them banned.

Mr. Greenberger appears visibly nervous however he does not waver in his message and his criticism of the CDS market.

Best Regards,
CIGA Marc

Dear Marc,

What is the difference between a naked credit default OTC derivative and what I think the ETFs are doing in gold? The answer is there is no difference.

Jim

Dear Editor Dan,

Here is an important piece of research for you.

Find out for me (ASAP) the reported amount of gold every Gold ETF has on the planet as of their last reporting period.

I smell a massive fraud that could easily collapse on a rising price of gold by the failure of the sellers to deliver anything.

The Madoff equation is saying that none of this gold is paper gold on a clearinghouse exchange. It can’t based on its size be real bullion, leaving only toxic paper (OTC derivative) gold.

I believe I know exactly how it is being done and by whom.

It is totally legal but so are OTC derivatives.

Jim

Jim,

I am working on it now. More on what I find out  soon…

Regards,
Editor Dan

 

Jim,

In your posting, entitled "Where Do All The Gold ETFs Get Their Bullion From?", you wrote the following:

"Don’t you think it is about time GLD and all the other popular international gold ETFs told its owners exactly what kind of gold they claim to own? …

"This begs one major question: From where did all the gold claimed to be owned by all the gold ETFs come from?"

I agree with what you wrote regarding the GLD ETF in the United States.

However, the "ETFS Physical Gold" Exchange Traded Commodity (ETC) Fund in the United Kingdom (UK) actually appears to provide some of this information on the ETF Securities web pages at http://www.etfsecurities.com/en/securities/etfs_physical_exposure.asp and http://www.etfsecurities.com/msl/etfs_physical_gold.asp

I suggest that you click on the underlined URL link entitled "Click here to view the list of allocated metal bars held by the Custodian" on either of these two web pages, which will download an Excel spreadsheet at http://www.etfsecurities.com/msl/bar_list.xls. I do not know if this list of allocated metal bars is accurate or not, but this list is publicly available for anyone to download and study or criticize.

If you download this bar list, you will discover that it also contains a list of all of the physical Platinum bars held by the "ETFS Physical Platinum" ETC Fund at http://www.etfsecurities.com/msl/etfs_physical_platinum.asp, a list of all of the physical Palladium bars held by the "ETFS Physical Palladium" ETC Fund at http://www.etfsecurities.com/msl/etfs_physical_palladium.asp, and a list of all of the physical Silver bars held by the "ETFS Physical Silver" ETC Fund at http://www.etfsecurities.com/msl/etfs_physical_silver.asp.

All of these ETC Funds managed by ETF Securities claim to be "Shariah compliant"! I do not know what it means for these Funds to be "Shariah compliant".  However, if this means that the underlying precious metals must actually exist, and each physical bar held be publicly accounted for, then I’m all for having ETF and ETC Funds that are "Shariah compliant".

The US GLD Fund does not claim to be "Shariah compliant", and does not make available any kind of similar list of all of its alleged Gold bar holdings.

There is one other point to consider:  In October, 2008, "ETF Securities Limited, the innovator and pioneer of Exchange Traded Commodities (ETC), has formally completed the acquisition of the world’s first gold ETCs – Gold Bullion Securities listed on the London Stock Exchange (LSE: GBS) and the Australian Securities Exchange (ASX: GOLD)."

See the ETF Securities press release at http://www.etfsecurities.com/en/news/etfs_news_081023.asp for further information.

The "Gold Bullion Securities" Exchange Traded Commodity (ETC) Fund is shown on the ETF Securities web pages at http://www.etfsecurities.com/en/securities/etfs_physical_exposure.asp and http://www.etfsecurities.com/msl/etfs_gold_bullion.asp. However, this Fund does not claim to be "Shariah compliant", but it does now make available a separate public list of its of its Gold bars. The latter web page for the "Gold Bullion Securities" ETC Fund also contains the same above referred to URL link entitled "Click here to view the list of allocated metal bars held by the Custodian", but this link takes you to a separate PDF document at http://www.goldbullionsecurities.com/pdf/gbs_bars_list.pdf. I do not know if ETF Securities intends to make its "Gold Bullion Securities" ETC Fund "Shariah compliant" sometime in the future. However, making the above list of its Gold bars publicly available might be a preliminary step in this direction.

The bottom line is that the GLD ETF Gold Fund in the US appears to be very different from its above two counterpart Gold Funds in the UK, the latter of which do make publicly available purported listings of all of their physical Gold bar holdings.

CIGA Richard

Dear Richard,

In today’s Madoff world who cares if the gold, claimed to be held in a vault, is claimed to be divinely compliant?

Thank you for all the reference material.

Respectfully yours,
Jim

Hi Jim,

Where Do All The Gold ETFs Get Their Bullion From?

You are wise to raise these questions.

Analysis complied by work done by James Turk
Source: www.goldmoney.com

Taken from the prospectus:

"The Custodian is not liable for the acts or omissions of its subcustodians".

In other words, if the subcustodian does not have the gold, ETF:

"Shareholders cannot be assured that the Trustee will be able to recover damages from subcustodians…for any losses relating to the safekeeping of gold by such subcustodian". This means that "Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may hold the Trust’s gold, failure by the subcustodians to exercise due care in the safekeeping of the Trust’s gold could result in a loss to the Trust."

These prospectus disclosures raise the question of does the gold owned by ETFs really exist? Why is the objective of the fund to provide investors with the opportunity to own gold rather than simply track the price?

“The Trust’s independent auditors may…visit the Custodian’s premises in connection with their audit of the financial statements of the Trust."

In what appears to be a glaring omission, the prospectus fails to disclose the important risk that the independent auditors will not visit the vaults of the subcustodians and sub-subcustodians, and more to the point, that the BoE does not allow auditors into its vault, even though the prospectus allows for the possibility that all of the fund’s gold may be stored in the BoE.

Taken from 10-Q Filings:

The asset reported on ***’s balance sheet says: "investment in Gold". It does not say just: "Gold." By declaring ***’s asset to be an "investment", it is an easier hurdle to meet for auditing purposes.  Investments in gold can be nearly anything gold related, and for example, include gold certificates and other promises to pay gold. All *** has to do to satisfy the auditors therefore is to show them a bank statement of the Bank of England for example, or any other subcustodian (i.e., a piece of paper) that says gold is stored with them.

CIGA Eric

Posted by & filed under Jim's Mailbox.

Dear Jim,

Here is a visual guide to the financial bailout.

Click here to open the file…

Respectfully Yours,

Monty Guild
www.GuildInvestment.com

Hi Jim,

The good news is that the trade deficit is shrinking. The bad news is that the trade deficit is shrinking (in a country with structural deficits).  The charts below illustrate this point.

http://www.facebook.com/photo.php?pid=1259083&l=20805&id=557304509
http://www.facebook.com/photo.php?pid=1259084&l=47bfc&id=557304509

Click charts to enlarge

February1109-Eric4 February1109-Eric5

Trade deficit drops to $39.9B; lowest in 6 years
US trade deficit in Dec. falls to lowest level in nearly 6 years as recession cuts imports.

WASHINGTON (AP) — The U.S. trade deficit fell to the lowest level in nearly six years in December as the recession depressed demand for imports. The trade deficit in 2008 fell for a second straight year and economists expect an even bigger decline this year.

The Commerce Department said Wednesday that the deficit in December fell 4 percent to $39.9 billion, from $41.6 billion in November. It was slightly higher than the $36 billion deficit economists expected.

For the year, the deficit shrank by 3.3 percent to $677.1 billion. It was the second straight annual decline after five straight years of record deficits.

More…

Jim,

Here is more of who is in charge in Pakistan.

CIGA BJS

Taliban using schools as leverage
Wed, 11 Feb 2009 16:43:59 GMT

Taliban has given the Pakistani military 3 days to withdraw from the northwestern regions threatening to destroy all the schools in the area.

Taliban threatens to destroy all the schools in northwestern Pakistan should military doesn’t leave the troubled region within three days.

“After three days we will spare no school in Bajaur and attacks on schools will be launched in other tribal districts in the next phase,” Tehreek-e-Taliban (TTP) Spokesman Maulvi Omar said Wednesday.

More…

Hi Jim,

Bailouts, stimulus packages, etc only exacerbates the problem as defined by the “Formula.”

Formula Charts:
http://www.facebook.com/photo.php?pid=1259387&l=e8b6a&id=557304509
http://www.facebook.com/photo.php?pid=1259386&l=2a6d1&id=557304509
http://www.facebook.com/photo.php?pid=1259385&l=9f2f1&id=557304509

Regards,
CIGA Eric

Click charts to enlarge

February1109-Eric3 February1109-Eric1 February1109-Eric2

Budget deficit swells to $569 billion
Wednesday February 11, 2:22 pm ET
By Ben Rooney, CNNMoney.com staff writer

The Treasury Department said Wednesday that the federal budget deficit grew $83.8 billion in January, bringing the total deficit for the first four months of the fiscal year to $569 billion.

By comparison, the Treasury ran a cumulative surplus of $89 billion during the first four months of fiscal 2008. So far this year, the deficit has already exceeded the $455 billion deficit for all of fiscal 2008.

More…