Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Jim,

This is what Merrill sent us today.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

David Rosenberg over the ML Squawk box this AM

Why we think gold and commodities too are a no brainer: The protectionist trend is fully intact — see the front page of the WSJ ("Nations Rush To Establish New Barriers To Trade"): The WTO is gathering on Monday to discuss stemming the "wave of barriers to world commerce".  Russia has raised trade barriers to such an extent that EU officials are headed to Moscow to meet the country’s trade officials. Egypt just raised duties on sugar.  The USA is planning retaliatory action against Italian water and French cheese — and levying new tariffs on Chinese-made goods too. This may not exactly be Smoot-Hawley, but this is starting to look more like the 1930s than many are willing to admit. Also have a look at "Free-Traders Conspicuously Quiet on Buy American" on page 2 of the FT.

Dear Jim,

What do you think of the equity market here?

Regards,
CIGA Green Hornet

Dear Green Hornet,

Short and sweet.

If the uptick rule is reinstated as Cox (ex SEC caretaker) advised going out the door of the SEC offices then a 1930 rally has a 70% chance of occurring. I think it would.

If the lobby of the hedgies is rich enough then the uptick rule will not be reinstated and the equity market rally will be short and lacking of any noteworthy character.

It is business as usual as the Big Money game of Hedgie Lobbyists own versions of pork.

The Hedgies are the short side of all markets.

See you in Toronto.

All the best,
Jim

Posted by & filed under Jim's Mailbox.

Dear Jim,

Being a farmer, I watch weather and commodity markets quite closely. It is my opinion that a major drought in the heartland of the US in either of the next 2 growing seasons (2009 or 2010) will bring massive food inflation. There is currently a drought in Argentina/Southern Brazil worse than they have seen in over 30 years. Click here to view a video on the drought…

There is a drought in northern China as I write this Click here to view an article on the drought…

We haven’t had a major crippling drought in the U.S. since 1988. The 19 year Benner cycle says we are overdue. If it occurs in 2009 or 2010 we will see massive food inflation worldwide in my opinion.

As always your efforts and counsel are hugely appreciated.

CIGA Eddie H.

Dear Eddie,

You should focus on the even longer weather cycles which underscore the conglomeration of cyclical indicators of types and kinds coming in a peak and trough just before or on January 14th, 2011.

Regards,
Jim

Posted by & filed under Jim's Mailbox.

Jim,

The US Empire’s death knell was sounded last year in South Ossetia/Georgia. Now the fallout/rollback begins.

CIGA Pedro

"Kyrgyzstan’s president said Tuesday that his country is ending U.S. use of a key airbase that supports military operations in Afghanistan.

A U.S. military official in Afghanistan called President Kurmanbek Bakiyev’s statement "political positioning" and denied the U.S. presence at the Manas airbase would end anytime soon.

Ending U.S. access would have potentially far-reaching consequences for U.S. and NATO operations in Afghanistan, where the United States is preparing to deploy an additional 15,000 troops to shut down the Taliban and al-Qaida."

Kyrgyzstan closing US base key to Afghan conflict
By MIKE ECKEL, Associated Press Writer

MOSCOW – Kyrgyzstan’s president said Tuesday his country is ending U.S. use of an air base key to military operations in Afghanistan_ a decision with potentially grave consequences for U.S. efforts to put down surging Taliban and al-Qaida violence.

A U.S. military official in Afghanistan called President Kurmanbek Bakiyev’s statement "political positioning" and denied the U.S. presence at the Manas air base would end anytime soon.

The United States is preparing to deploy an additional 15,000 troops in Afghanistan and Manas is an important stopover for U.S. materiel and personnel.

More…

Posted by & filed under Jim's Mailbox.

Jim Sinclair’s Commentary

As long as the uptick rule is absent from the market a 1930s type rally in equities cannot be sustained. That is fact.

January 25, 2009, 6:01 AM EST
Relevant excerpts:

 The latest attack on short selling could come in the form of a reinstatement of the so-called uptick rule, which requires that a stock moves upward in price before it can be sold short.

Many critics attribute the market’s recent downward spiral, in part, to the absence of the uptick rule, which was in place for nearly 70 years before the Securities and Exchange Commission repealed it in July 2007. They claim that without the rule, short sellers fuel volatility while driving stock prices down to unrealistic levels. . . . .

 Mary Schapiro, the new chairwoman of the SEC, has stated that she favors reinstating the uptick rule, according to published reports.

More…

 

Ackerman Urges New SEC Chief to Restore Uptick Rule to Regulate Short Sales of Stocks

Congressman also receives letter supporting reinstatement of the regulation from Christopher Cox, the former SEC Chair who rescinded the rule

January 27, 2009

 (Washington, DC) – U.S. Rep. Gary Ackerman (D-NY), a Senior Member of the House Financial Services Committee, today sent a letter to the new Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro – on her first day in office – that urges her to reinstate the uptick rule, the depression-era regulation that required a stock to increase in price before a short sale could be executed.

“One of the simplest but most important and effective initiatives that the SEC could undertake immediately to combat market volatility is the reinstatement of a so-called uptick rule” Ackerman wrote. “For more than 70 years, the uptick rule curbed short-selling runs until, short-sightedly, the Commission revoked it in 2007. The lack of a price test in our exchanges created an environment that provided short sellers with the ability to both exploit and accelerate the failures of a number of companies, including Bear Stearns and Lehman Brothers, the collapse of which had a devastating effect on confidence in the U.S. financial markets.”

Ackerman also received a letter from former SEC Chairman Christopher Cox dated January 20, 2009 – the day he left the agency – in which Cox said he supports the reinstatement of an uptick rule. Cox sent the correspondence despite the fact that the SEC rescinded and refused restore the regulation during his tenure as Chairman.

More…

Dear CIGAs,

The following is compliments of CIGA Kahama.

Acts2:38

A woman had just returned to her home from an evening of church
services , when she was startled by an intruder. She caught the man in the
act of robbing her home of its valuables and yelled: ‘Stop! Acts2:38!’
(Repent and be Baptized, in the name of Jesus Christ , so that your sins
may be forgiven.)

The burglar stopped in his tracks. The woman calmly called the police and
explained what she had done.

As the officer cuffed the man to take him in, he asked the burglar: ‘Why
did you just stand there? All the old lady did was yell a scripture to
you.’

‘Scripture?’ replied the burglar. ‘She said she had an Ax and Two 38s!’

Send this to someone who needs a laugh today and remember: Knowing
scripture can save your life – in more ways than one!

 

Good morning Jim,

It’s been a while since I’ve been in touch, so I hope all is well!

I was shocked to see this article on Bloomberg this morning.

Gold Rally Fills Vaults With Bullion as Bank Stimulus Increases
By Pham-Duy Nguyen and Nicholas Larkin

Jan. 30 (Bloomberg) — The same unprecedented steps that central bankers are taking to rescue the banking system are driving investors to gold, the commodity investors buy when they lose confidence in financial assets.

David Einhorn, manager of the $5.1 billion Greenlight Capital Inc. hedge fund, bought gold for the first time. Steven Lehman, the Federated Investors Inc. fund manager who beat 99 percent of his peers last year, is betting on bullion with Toronto-based Yamana Gold Inc. and Goldcorp Inc.

The combination of central banks spending trillions of dollars to prop up the banking system in the worst financial crisis since the Great Depression will cause gold to appreciate at least 17 percent this year from $882.05 an ounce on Dec. 31, surpassing the record of $1,032.70 in London, according to 16 of 24 analysts surveyed by the London Bullion Market Association. The metal traded at $909.10 yesterday.

“The government can print endless money, but they cannot increase the supply of gold,” said Michael Pento, chief economist at Delta Global Advisors Inc. in Huntington Beach, California, who is doubling holdings of the precious metal to 8 percent of his $1.5 billion in assets. “Anything the government cannot replicate by decree, I want to own.”

Investors typically buy gold during times of financial turmoil as a store of value. The commodity has gained in five of the past six U.S. recessions.

More…

Jim,

You were the first to warn!

I believe you think the risk of a planetary Weimar is more than 10%?

All the best,
CIGA Jeroen

Attali Warns of ‘Worldwide Weimar’ as Governments Print Money
Interview by Farah Nayeri

Jan. 30 (Bloomberg) — Imagine a country so ravaged by inflation that $1 will buy you 630 billion in the local currency, where a loaf of bread costs tens of billions, and where wheelbarrows are the new wallets.

That was the Weimar Republic in November 1923. A similar prospect may now await the world economy, says French economist Jacques Attali in “La Crise, et Apres?” (“The Crisis, and Then?”), a stinging new critique of the financial meltdown.

Attali, 65, served as a special adviser to French President Francois Mitterrand in the 1980s and later became the first head of the European Bank for Reconstruction and Development. He went on to found microfinance agency PlaNet Finance. In 2007, he steered a panel on economic growth that made recommendations to Nicolas Sarkozy, the current president.

More…

Dear Jeroen,

It gives me no pleasure to know this is occurring without any practical manner to oppose it.

All we care about is that those who read here protect themselves.

Respectfully,
Jim

Dear Jim,

As the following two pieces (one article and one press release) suggest, the uptick rule is in play with both new SEC Chairman Mary Schapiro and Congressional Democrats calling for its reinstatement. Even former SEC Chairman Cox – on his last day in office – pulled a 180 and called for the rule’s reinstatement.

I respectfully suggest that the readers of this site take this opportunity to contact both their representatives and the SEC to express their support for reinstatement. We know the hedge funds will be fighting back with all they’ve got. The direct email address for the SEC Chairman’s Office is:
chairmanoffice@sec.gov

Respectfully yours,
CIGA Richard B.

Market participants split on reinstatement of the uptick rule
While many question its effectiveness, some feel it’s better than an outright ban on short selling
By Jeff Benjamin
January 25, 2009, 6:01 AM EST

Relevant excerpts:

The latest attack on short selling could come in the form of a reinstatement of the so-called uptick rule, which requires that a stock moves upward in price before it can be sold short.

Many critics attribute the market’s recent downward spiral, in part, to the absence of the uptick rule, which was in place for nearly 70 years before the Securities and Exchange Commission repealed it in July 2007. They claim that without the rule, short sellers fuel volatility while driving stock prices down to unrealistic levels. . . . .

Mary Schapiro, the new chairwoman of the SEC, has stated that she favors reinstating the uptick rule, according to published reports.

More…

Ackerman Urges New SEC Chief to Restore Uptick Rule to Regulate Short Sales of Stocks
Congressman also receives letter supporting reinstatement of the regulation from Christopher Cox, the former SEC Chair who rescinded the rule
January 27, 2009

(Washington, DC) – U.S. Rep. Gary Ackerman (D-NY), a Senior Member of the House Financial Services Committee, today sent a letter to the new Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro – on her first day in office – that urges her to reinstate the uptick rule, the depression-era regulation that required a stock to increase in price before a short sale could be executed.

“One of the simplest but most important and effective initiatives that the SEC could undertake immediately to combat market volatility is the reinstatement of a so-called uptick rule” Ackerman wrote. “For more than 70 years, the uptick rule curbed short-selling runs until, short-sightedly, the Commission revoked it in 2007. The lack of a price test in our exchanges created an environment that provided short sellers with the ability to both exploit and accelerate the failures of a number of companies, including Bear Stearns and Lehman Brothers, the collapse of which had a devastating effect on confidence in the U.S. financial markets.”

Ackerman also received a letter from former SEC Chairman Christopher Cox dated January 20, 2009 – the day he left the agency – in which Cox said he supports the reinstatement of an uptick rule. Cox sent the correspondence despite the fact that the SEC rescinded and refused restore the regulation during his tenure as Chairman.

More…

Posted by & filed under Jim's Mailbox.

Jim Sinclair’s Commentary

Extremely good comments from an extremely gifted intellect.

Jim,

Now the most dangerous phase of the fiat money and credit cycle begins,

The extent of last year’s financial collapse caused deep systemic shock and insecurity to world governments, democratically elected political leaders by their nature are insecure and need to believe they operate within a predictable system that ensures their security and control and that future events over which they have authority progress substantially according to expectations or at least gives them adequate cover if they don’t,

The shock of last year’s events were of such magnitude that the resulting threat caused a temporary focus away from many national interests in favor of supranational solutions, governments in this instant looked to find their bearings, needed a breathing space and instinctively looked to rally around a common cause. It was almost as though national interests were paralyzed and a common cause ignited as an alien spaceship hovered menacingly in the sky threatening the existence of earth.

From disagreements emerging at the world economic forum at Davos it appears that we now move to the next entirely predictable but very dangerous, accelerating and possibly unstoppable phase where governments regardless of culpability find it politically expedient to polarize and hold other nations responsible for their problems,

CIGA Peter

Dear Jimmy,

OF course if this develops on an actual basis (countries actually start to do more protectionist things) and not just on a talk basis (countries brag how good they are and blame other s for world problems), then we have trade wars and a very long depression. My call for a depression ending in mid 2010 would have to be changed to a depression ending in 2012 or later.

Monty Guild
www.GuildInvestment.com

Posted by & filed under Jim's Mailbox.

Folks,

Mr. Sinclair often communicates in something I refer to as "Sinclair speak." He’s telling us quite a bit below. First, gold will re-enter the monetary system. Second, the implementation of the mechanism to accomplish this will result in STABILIZING the gold price at a new higher level… there will be no "crash." Finally, in the future, gold mining entities will be viewed as "utilities" and will pay dividends. How would you like to own something configured to take advantage of these eventualities?

CIGA Frank

"Everyone is looking for where and when the top in gold will come. Will it be Jim’s $1650 or Alf Field’s $10,000 plus before it comes back down?

To put it nicely, you are all wrong. Gold is going up and STAYING up.

There is no top to look for because like all things people strive for, the top does not exist.

Gold will trade within $200 of a given point as a product of the Master of the Financial Universe, Paul Volcker, taking control when all this is totally out of control. He will instate the revitalized and modernized Federal Reserve Gold Certificate Ratio, not gold convertibility, and not tied to interest rates as an automaticity.

The Gold mining business will then be the best business there is and the highest dividend paying monetary utility."
— James Sinclair

Dear Frank,

You are totally correct!

Jim

Posted by & filed under Jim's Mailbox.

Hey Jim,

There is a turn in energy around the corner. The Oil Service Index (OSX) to Airline Stock Index (XAL) ratio appears to have bottomed and is nearing a technical buy signal on the monthly time frame. Watch money flows into the Cando to confirm the move.

CIGA Eric

Jim Sinclair’s Commentary

Have you had enough? If you want to make a difference take delivery out of the Comex warehouse!

cartoon

Looking for hedge fund managers with pilot’s licenses flying Zeros, Mig 15/17 or M109-As?

plane.jpg

Wealth is Gold in the mayo jar.

image001 - 20090126_110025

Posted by & filed under Jim's Mailbox.

Dear CIGAs,

Thought you’d like this quote:

"The word "credit" derives from credo, i.e. faith."

CIGA Marty

Jim,

The new policy is in place. The focus is Pakistan…just as you said.
Best,
CIGA Pedro

"A suspected US drone missile attack has killed nine people in north-western Pakistan, local witnesses say."

Pakistan drone attack kills nine

A suspected US drone missile attack has killed nine people in north-western Pakistan, local witnesses say.

At least one missile hit a house in a village near the town of Mirali in North Waziristan, a stronghold of al-Qaeda and Taleban militants.

A second suspected drone attack has now been reported in South Waziristan but there is no word on casualties.

More…

 

Jim,

Well, everyone keeps dissing the dollar. How come the dollar doesn’t know it’s supposed to tank? I keep seeing all these predictions about the dollar’s downfall. Well where is it? My gosh, things are going to hell in a hand basket here. Is it because things are going there faster o’seas? In that case, where is the stable currency? Gold and silver?

I really would like a response from one or more of you because I have been a CIGA for 10 years.

Dick

Dear Dick,

You think I am a dick because the dollar hit directly on .7200 and has rallied since? Your viewpoint is a short term one. I am unchanged on what the future of the dollar will be regardless of your being a CIGA for 10 years while I have only posted for less than seven. I would advise that rather than sending poetry designed to deride, you simply put all your money quickly into 30 year US government bonds and maybe a few US financials and be quietly happy. How about full available commodity market margin?

All the best Dick,
Jim