Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.


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…



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 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!


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,

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?


Dear Juan,

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


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.


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,

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.


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.



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

Editor Dan



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 and

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 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, a list of all of the physical Palladium bars held by the "ETFS Physical Palladium" ETC Fund at, and a list of all of the physical Silver bars held by the "ETFS Physical Silver" ETC Fund at

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 for further information.

The "Gold Bullion Securities" Exchange Traded Commodity (ETC) Fund is shown on the ETF Securities web pages at and 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 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,

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

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.


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

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.

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.



Here is more of who is in charge in Pakistan.


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.


Hi Jim,

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

Formula Charts:


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, 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.


Posted by & filed under Jim's Mailbox.

Hi Jim,

Regarding the Gary Ackerman Video:

That video is unbelievable. The system is corrupt to the core. The American people know it. They will not stand for this much longer. I am willing to go out on a limb and say to you that people will stop paying their mortgages, loans and their taxes. This is inevitable. The status quo will not stand!

Thank you for shedding light on the world.

Your brother in Golden arms,
CIGA Selim

Posted by & filed under Jim's Mailbox, Trader Dan Norcini.

Hi Trader Dan,

Great post today; you nailed it!  Thanks, I really enjoy your commentaries.

Also, in terms of deliveries, I thought you and Jim might be interested in why there may be so few stoppers these days. Below is a message from my clearing firm regarding metals deliveries.

"Anyone who is thinking of taking delivery in metals should avoid the CBOT metals if they are going to take possession of the metals as the process, which took about a month in the past, is now so backed up that getting even an estimated time on getting the receipt is all but impossible."

By CBOT of course they are referring to the contracts sold by CBOT/CME to NYSE/Liffe.


Posted by & filed under Jim's Mailbox.


Pakistan making the guns…

This is a chilling reality of what we face as a Nation in Afghanistan.


Click here to view the video…

Dear Jim,

Mr. Armstrong is jailed. Before I accept his analysis give me some background on his problems.

Respectfully yours,
CIGA Dr. Bob

Dear Dr. Bob,

Armstrong was one of the three that in the 70s invented the OTC derivative of which three went to jail.

The OTC derivative structure then is no different from the OTC derivative structure out there today. No one is in jail.

His alleged contempt of court issue was because of a judge’s opinion he had funds hidden. As I understand it no client of his firm was harmed.

The basis of his problem is that many of the derivatives he created caused a tax credit.




The question being ask should not be when will this end but rather how bad will it get.


Click charts to enlarge

February109-Eric1 February109-Eric2

Posted by & filed under Jim's Mailbox.

Jim’s Formula:
September 1, 2006

  1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
  2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.
  3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
  4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.
  5. Lower profits leads to lower Federal Tax revenues.
  6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
  7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
  8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
  9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
  10. If the investment by non US entities fails to meet the exiting dollars by all means, then 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.
  12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.


You might have already seen this but wanted to sure you had.  It only reveals what your formula has told us was coming.

Report to the Secretary of the Treasury
from the Treasury Borrowing Advisory Committee
of the Securities Industry and Financial Markets Association

February 4, 2009

Dear Mr. Secretary:

Since the Committee last convened in early November, the contraction in economic activity has deepened and broadened, while financial markets have remained under duress. The unprecedented volatility present in capital markets when the Committee last met has diminished somewhat but conditions still are exceptionally challenging. Policy efforts have begun to unlock credit for select high-quality borrowers. But the magnitude of wealth destruction, the still heightened cost of economy-wide capital and the impaired system of financial intermediation continue to cast a dark cloud over the economic outlook.

Monetary and fiscal policy action now being implemented will help to prevent an even more serious downturn than otherwise would be the case. Policymakers’ efforts to restore the flow of credit to households and businesses, backstop critical financial intermediaries through capital injections and loan guarantees, and stimulate economic activity via lower interest rates, tax cuts and government spending are positives. Nonetheless, the necessary deleveraging of both the financial and household sector is considerable and has further to run.


Posted by & filed under Jim's Mailbox.


This is what Merrill sent us today.

Respectfully yours,
Monty Guild

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?

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,

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.