Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Dear Monty and Dan,

I think this is very important. An ex-Fed bigwig sees the solution as revaluing the gold on the books. I have not seen this commented on and thought it would be of interest.

The Gold comment is about 8 minutes into the video.

Click here to view the video…

He says not to worry about the Fed’s balance sheet because they can just revalue their "gold certificates." This comment is at min. 11:20

This is very interesting coming from an ex-Fed big wig. Gold revaluation is beginning to be discussed…

Thanks,
CIGA Andrew S.

Dear Dan and Monty,

This video has good things in it and not only on gold. It should be reviewed by serious students and investors in gold and the US dollar from the moment it starts until the very end.

Think "Federal Reserve Gold Certificate Ratio, Revitalized and Modernized," and not tied to interest rates but rather to a measure of international liquidity. This would require gold be re-valued to market prices.

It seems to me we will draw closer and closer to a US dollar FRGCR backstop being called on as we near the .62 to .52 range on the USDX.

Respectfully yours,
Jim

Jim,

For your information..

Global interest cuts:
Korea cuts rates 100bps to 3%, 50bps was expected;
Taiwan cuts rates 75bps to 2%, 50bps was expected;
South Africa cuts rates 50bps to 11.50%, expected;
Switzerland cut rates 50bps to 0.50%, expected;

Anthony R. Danaher
www.guildinvestment.com

Jim,

I own several warehouse receipts for numbered allocated silver bars but am concerned after reading Dr. Fekete’s recent warning:

"Item 6: Even allocated and segregated metal account gold is not safe. The temptation on the account providers to default will be irresistible. They are not going to release the gold until expressly ordered by the courts, and will make sure that no gold will be left by then."

Do you believe that this is correct and also true for silver? If so, what safe storage options are there for relatively bulky silver in the United States?

Your insights on storage options for precious metals and degrees of safety would be greatly appreciated.

CIGA Ron M.

Dear Ron,

This week on www.jsmineset.com I gave you a total review of how to take delivery, how to transport precious metals, how to store precious metals safely and even provided a person to help you do it.

My reasons are different from Dr. Fekete’s take, but the remedy is the same.

All the best,
Jim

Click here to read the original article…

Posted by & filed under Jim's Mailbox.

Dear Jim,

People have been incredibly slow to look ahead but the announcement today of a budget deficit of over $180 billion for the month of November 2008 (one month), seems to have spurred them to action. They have been selling the dollar and buying gold and iron ore (which benefits the infrastructure spending in China and the US). By the way, 12 times $180 billion is $ 2.16 trillion. That amount sounds to me like a good guess for the next 12 month’s budget deficit.

Respectfully yours,
Monty Guild

Fed Weighs Debt Sales of Its Own
Move Presents Challenges: ‘Very Close Cousins to Existing Treasury Bills’
By JON HILSENRATH and DAMIAN PALETTA

The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.

Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.

Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.

It isn’t known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency.

More…

Posted by & filed under Jim's Mailbox.

Dear Jim,

Can you comment on the rumor published on reliable sites that the IMF is going to pummel the gold market down to the $455 levels tomorrow at 12:22 PM?

CIGA Arlen

Dear Arlen,

That rumor is nothing more than RAVING BULLSHIT!

Jim

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

Jimmy and Monty,

What do you say that we pack up and head down under to Aussie land?

I have to give them credit however – at least they are sending the money directly to the people instead of to the greed-infested bankers.

The problem is what happens after the cash runs out and those new TV’s and other assorted goodies are through being purchased. What next?

Best wishes from your pal,
Dan

Australia hands people cash to splurge for Christmas
By James Grubel

CANBERRA, Dec 8 (Reuters) – The Australian government delivered more than A$8 billion ($5.2 billion) in cash payments to families and pensioners from Monday to stop the economy from sliding into recession and urged people to spend the money ahead of Christmas.

The cash is part of a A$10.4 billion economic stimulus package announced on Oct. 14 and aimed at boosting consumer confidence and retail sales as Australia fights off slowing growth and rising unemployment due to the global downturn.

But rather than pay off debt, the government wants people to spend the money in the run up to Christmas, saying the spending will help protect jobs and save the economy from further slowing.

"I’ve urged pensioners and families to spend this money responsibly, to use this money to make ends meet, to help out their kids and help out their grandkids," Prime Minister Kevin Rudd said on Monday.

"If the government doesn’t empower consumers at a time like this, in the midst of global financial crisis, then in fact we will have even greater challenges ahead."

More…

Posted by & filed under Jim's Mailbox.

Dear CIGAs,

Gold will wake up, and exceed $1650. Alf is right! In fact that is CIGA Alf standing on top of Gold.

Awake

Jim,

I wondered if you’d seen the article linked below, "The Manipulation of Gold Prices" by James Conrad that was featured on the seekingalpha.com website on 12/4/08.

Click here to view article…

It’s one of the best pieces I’ve ever seen written by someone outside of JSMineset and brings together the subjects of Comex gold price manipulation, the Fed’s efforts to control the value of the U.S. dollar, quantitative easing and the Fed’s eventual need (and design) to devalue the dollar vs. gold. The article is too complex and wide-ranging to be quickly summarized, but some of the more interesting passages are as follows:

"The Federal Reserve must now make a tough choice. In the past, Federal Reserve Chairmen may have felt it necessary to support regular attacks on gold prices to dissuade conservative people from putting a majority of their capital into gold. Now, however, the world economy needs much higher gold prices in order to devalue paper money, not against other currencies in a "beggar thy neighbor" policy, but against itself. This can jump start the system. If the Fed continued to support gold price suppression, that would collapse the stock market far deeper than they can afford, most insurers will end up bankrupt, and there will be no hope of avoiding Great Depression II."

"Anyone who reads the written works of our Fed Chairman knows that Bernanke’s long term plan involves devaluing the dollar against gold. This is the exact opposite of most prior Fed Chairmen. He has overtly stated his intentions toward gold, many times, in various articles, speeches and treatises written before he became Fed Chairman. He often extols the virtues of former President Franklin Roosevelt’s gold revaluation/dollar devaluation, back in 1934, and credits it with saving the nation from the Great Depression."

Interestingly, the author suggests that some of the recent taking physical delivery of gold at the Comex may be attributable to "smart players at big firms" buying gold at the Comex to re-sell into the spot market for a profit in a process he calls, "backwardization." In support of this theory he makes an assertion I have only seen you make before, that:

"In spite of the ostensible existence of a so-called "London fix," 96% of all OTC transactions are secret and unreported. The transactions happen solely between two parties, and are done opaquely, in complete darkness." The current London fix may well be just as fake as the bank interest rate reports that comprised LIBOR proved to be, just a few months ago."

His predictions about the value of gold in the near future are very encouraging and may provide some needed solace to members of our community.

"The price of our pretty yellow metal is about to explode, and it is probably going to soar, eventually, to levels that not even most gold bugs imagine. COMEX gold shorts will be playing the price a bit longer, in an attempt to shake out some remaining independent leveraged longs. Once that is finished, however, and it will be finished soon, the price will start to rise very quickly."

Best regards,
CIGA Richard B.

Dear Richard,

Good work, but I think I have read a lot of this somewhere before. Maybe it was here!

Regards,
Jim

Dear Jim,

It seems many are dependent on credit cards to survive. 2 trillion is a lot of credit to disappear!

Credit-card industry may cut $2 trillion lines: analyst
Mon Dec 1, 2008 4:06pm EST

(Reuters) – The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

More…

 

I can hardly believe people would pay for a dinner at McDonalds with a card!

Why Credit Cards Matter So Much

Yesterday put the nail in the coffin of a move from recession (small “r”) to Depression (capital “D).  Two pieces of news that were absolutely essential came out – and no, neither one was that we’ve been in a recession since last year, or that last week’s stock market rally was yet another sucker rally.  The first was the observation that McDonalds is now the second-largest merchant vendor on credit cards – that is,  people are now buying their Big Macs on plastic – in part because they don’t have the cash.  Credit card balances have risen enormously in the last few weeks, as people attempt to keep going through the holidays:

Commercial bank exposure via the total amount of credit card loans outstanding has risen more in the last 10 weeks than it did in the previous 10 months cobined. Moreover, the growth in the last 10 weeks — $32.3 billion, or roughly $600 million per shopping day — represents nominal growth of 9.3%, or 48.3% annualized over the last 10 weeks. According to American Express, delinquencies on credit payments rose to 4.1% of all credit outstanding in the third quarter, up from 2.5% in 2007, with Bank of America’s rate rising even more steeply – to 5.9% for the period. Moreover, the pool of loans deemed uncollectable rose to a high 6.7% in the third quarter, soaring from 3.6% last September. What consumer spending there is has been fueled in part by credit card: The second-largest merchant-vendor for credit card use is now McDonalds. This suggests that many consumers are in serious distress if they need to get their $4 Big Mac and fries with a credit card.

More…

 

Best,
CIGA Big Tatanka

Posted by & filed under Jim's Mailbox.

Jim,

I did a little checking about  the memorandum you put up today…"

MEMORANDUM TO ALL AMERICAN EAGLE AND AMERICAN BUFFALO BULLION COIN AUTHORIZED PURCHASERS
SUBJECT: 2008 and 2009-Dated Bullion Coin Products
November 24, 2008

"With the exception of the American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins, all 2008-dated bullion coins have been depleted. Weekly allocations will continue for these two products…."

A very good friend of mine at one of the premier coin and bullion shops in the country says he has not gotten Gold Eagles for at least 2 months.  As far as Silver Eagles,  he says he is getting maybe 500 every two weeks.  My friend says that  compared to the past the availability of Silver Eagles That amount is just a "trickle".  

Your friend,
Greg Hunter

Posted by & filed under Jim's Mailbox.

Dear Jim,

If BJP takes over, I shall see you in Kwa Zulu Natal/Zanzibar. I for one do not fancy a radiation cloud drifting my way, or the detonation of suitcase nukes in London, Paris or New York, that probably have already been distributed from Pakistani Intel (ISI) to Taliban operatives. Let the rise of the BJP in India be our cue to abandon ship. It’s coming. It’s very close. Few seem to recognize it.

CIGA Pedro

World stability hangs by a thread as economies continue to unravel
The political bubble is bursting. Spreads on geo-strategic risk are now widening as dramatically as the spreads on financial risk at the onset of the credit crunch.
By Ambrose Evans-Pritchard
Last Updated: 7:15PM GMT 01 Dec 2008
(Excerpts from article)

"If the atrocity now propels the Hindu nationalist leader Narendra Modi into office at the head of a revived Bharatiya Janata Party (BJP), south Asia will once again face a nuclear showdown between India and Pakistan.

Events are moving briskly in China too. Wudu was torched by rioters this month in a pitched battle with police. Violence has spread to the export hub of Guangdong as workers protest at the mass closure of toy, textile, and furniture factories."

"The global financial crisis has not bottomed yet. The impact is spreading globally and deepening," said Zhang Pin, head of the national development commission. "Excessive bankruptcies and business closures will cause massive unemployment and stir social unrest".

More…

 

Dear Pedro,

One way or another Pakistan will light the fuse that ignites the world.

Regards,
Jim

Posted by & filed under Jim's Mailbox.

Subject: RE: If the COMEX is to be busted, it is the bankers themselves who will do it.??????

Hi Bill,

I do not know who started this idea of “busting” the Comex but like I mentioned in my commentary today – our campaign is to have gold buyers systematically buy the gold that they had already planned on buying every time the bullion banks smash the paper price down with their sell orders. By so doing this, the paper shorts are being served notice that the very strategy they use in the gold market, namely selling strength and buying weakness, is now being turned against them. Only this time around, the onus is on them because they will be forced to actually acquire enough physical gold to deliver the metal to buyers who buy into the weakness with the express intent of taking physical delivery of the gold. Come delivery month, the paper shorts get assigned and must either have the metal to sell or have to get out. The longs who intend to take delivery can just sit tight which means that the paper shorts now have NO ONE TO BUY FROM and thus are forced to bid the market higher in order to exit.

Either way, the longs win. Remember the silver market of the Hunt Brothers’ day and how they trapped the paper shorts.

Trader Dan

Dear Dan,

I totally agree. The intention is NOT to bust anything.

The word bust is WRONG. Bust is the mindset of the predators who have attacked gold shares.

If BUST is the mindset of this initiative we are acting just like the Demonic Hedge Fund managers and their law-breaking broker intermediaries.

What we want is a level playing field.

A level playing field simply requires 21,000 contracts taken into delivery, and REMOVED FROM THE COMEX.

The Comex will never default or be broken. It is simply impossible in a practical sense. The Comex in the final analysis will transmute to a cash gold exchange. This will stop the activity that was clear in the Comex pre-US session and this morning

All the best,
Jim

Trader Dan,

I think your quote last night came from a famous trader of the 20s named "Sell em Ben Smith," a friend of my Dad’s. He and Bert cleaned up on the 29 break and after the 30s rally. Next time I get the honor of talking with you, I have a story about "Sell em Ben Smith."

Regards,
Jim

 

Jim,

The easy assumption for many is to assume that inflation is dead. The price at the pump has collapsed and price of oil creates inflation, right? Rising oil prices do not cause inflation. Inflation is caused by too much money chasing too few goods and services. As global monetary policy prints money to provide needed “liquidity,” it is absolutely essential to remember that monetary inflation always precedes price inflation.

While the alphabet soup of monetary aggregates, M1, M2, and M3 has receded from the recent highs, they continue to grow at alarming year-over-year rates. According to shadowstats.com M2 the arithmetic year over year growth rates for M1, M2, and M3 are roughly 8%, 8%, and 11% respectively.

 

Click here to view the charts…

 

History suggests that mature, stable economies require only a 2-3% per annum growth in money.

Excessive money growth, however, does not necessarily mean an increase in widely followed inflation measures or tangible goods. As long as excessive money growth can be redirected from traditional inflation measures, it can be largely hidden from the public.

One of the main conduits that redirected monetary inflation has been derivates (also known as ABS, securitization, SIV, etc). Jsmineset.com recently indicated that most recent BIS figures on derivatives going back one reporting period at one quadrillion, one thousand one hundred and forty-four trillion.

The recent collapse and ongoing failure of the OTC derivative market has not only crippled the financial economy but it also ability to redirect monetary inflation away from traditional inflation measures. If the redirection conduit has been closed, where will all the freshly printed money go? Unless a new financial creation arises from Frankenstein’s financial laboratory, history suggests that it will be:

(1) Out of the dollar
(2) Into Gold and precious metals
(3) Despite popular opinion right now, eventually into tangible goods such as commodities, energy, and base metals.

Regards,
CIGA Eric

Jim,

It’s bad enough to be in a car accident, but getting billed for the police and/or fire department response can make matters worse. Your insurance may not cover that.

CIGA Rusty Bayonet

‘Crash taxes’ add hefty fees for aid
By Peter Lewis

Imagine you’re cruising down the road when you hit a patch of black ice and slide into a guardrail. A passing motorist calls 911. Soon firetrucks and police arrive.

Weeks later, a $1,400 bill does, too — for the cost of the police and firefighters who answered the call. What’s worse, it’s not covered by insurance, and it might scar your credit if you ignore it.

Sound implausible? It’s happening in a number of towns, cities and counties in at least 24 states. And given today’s cratering economy (and property-tax revenue), more strapped local governments may be tempted to authorize so-called accident response fees.

More…