Posts Categorized: Jim’s Mailbox

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

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

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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".



Dear Pedro,

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


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,

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."




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 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). 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.



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.


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Your recent comment on Quantitative Easing cited an article "M3 where Art Thou" which used a 2008 graph of M3 from Capital Economics/Lombard Street Research which is so different from the figures estimated by both and that clarification of who is right is essential for an understanding of what is happening to M3 and its related effects.


Dear Ron,

Who do you think? The Establishment entity or those who have kept the calculations pristine from change and politically motivated adjustments. The answer to your question is that gives a more accurate M3.



I would really hate to see a VAT but agree it is probably coming.

Monty Guild

A European-style tax?
Like it or not, there’s only one way we’re going to be able to pay for our ballooning deficit: a value-added tax.
By Shawn Tully, editor at large
Last Updated: December 2, 2008: 9:27 AM ET

NEW YORK (Fortune) — It’s highly possible, if not inevitable, that Americans will soon live under a radically different tax system – one that the pundits and politicians aren’t talking about.

It’s called a value-added tax, or VAT, and it’s been used for decades to pay the bills and sustain the immense growth of governments around the world, from France to Mexico to Australia. Created in 1954 by a French economist, the VAT is the most potent, efficient machine for revenue generation yet invented.

And if there’s one thing the U.S. government needs as the federal budget balloons, it’s a ton of new revenue. "The bottom line is that the income tax cannot support the level of spending that’s projected, something other countries faced years ago," said Roberton Williams of the Tax Policy Center, a non-partisan research institute. Today the VAT raises almost half of the total government revenue in France, and a similar share in most of the developed world.


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In response to CIGA Green Hornet’s comments on the dollar and its short term rally:

Dear Green Hornet,

You clearly understand. I hope that this understanding finds home amongst those so dejected today.

The dollar cannot rise in the face of the Fed wishing to construct a less deflationary perception in markets and business. It is simply not possible to sustain.

The dollar rising in the face of the creation of so many dollars simply is not possible to sustain.

The dollar rising in the face of imploding financial and general business entities, being immensely bigger than the Euroland problems, is impossible to sustain.

The dollar rising in the face of Quantitative Easing cannot be sustained.

As you clearly recognize, gold is a currency, has always been a currency and will continue to be a currency regardless of today’s effort to the contrary.

Therein lies the future of gold which will trade on or before January 14th, 2011 at $1650.

When Comex deliveries represent 21,000 100 oz. bars taken delivery and removed from the COMEX warehouse, the price of gold will no longer be a game for the well known names out there.

The price of gold will reflect the true state of the physical market because the Comex in a practical sense will be a cash market.

The Comex as an observation also becomes a cash market at 100% margin requirement.

The effort here is in no way a covert attempt to break the playing board known as the Comex. The actions suggested and practiced here will with certainty level the playing field which is now totally leaning towards the professionals who are picking your pockets regularly and without fail on every single move.

I should know as both my wife and I were members of the Comex when it was across the street from my offices at 90 Broad Street and famous only for trading copper. Now there is a blast from the past.

All the best,

Dear Jim,

It seems India is ready for war with Pakistan!

Ciga Big Tatanka

Mumbai attacks: India raises security footing to ‘war level’
India will increase security in the country and on its borders to a "war level" in the wake of the deadly attacks in Mumbai that have been blamed on militants linked to Pakistan, a government minister said.
Last Updated: 4:27AM GMT 01 Dec 2008

The only one of the gunmen captured alive is believed to be from Pakistan and India claims to have proof of a Pakistani link to the Mumbai attacks.

In response to a string of public accusations from Delhi, officials in Islamabad said troops could be moved to the Indian border if relations continue to deteriorate.

"Our intelligence will be increased to a war level, we are asking the state governments to increase security to a war level," Sriprakash Jaiswal, India’s minister for state for home affairs, told Reuters.

"They can say what they want, but we have no doubt that the terrorists had come from Pakistan," Mr Jaiswal said.


Dear Big Tatanka,

You don’t think that India plans to do war with say the Ukraine? Pakistan is only coming into focus now. The Taliban is supported by the Pakistan Military and Intelligence. The so called Pakistan government is therefore captive, ineffectual and to a degree without blame.

You haven’t seen anything yet.

I tell you here and now that Pakistan/Taliban have the potential and substance to vault the world into a conflict so significant that it may well not have a precedent.

At the risk of getting a great deal of hate mail, I know this, I do not think this. What is coming is coming within three years.

Yes, things are that critical.

Here is another important fact sort of hidden in this answer to you. I have contacts with some of the most successful environmentalists and political scientists. Would you believe the safest place on the planet for living after January 14th, 2011 might well be East Africa? How is that a flip flop from accepted standard groups of so-called wisdom?

I wonder what my revered friend and Dean of Gold, Harry would say about that…

Respectfully yours,

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"Mechanically, reverting back to a global gold standard would be straightforward. First, an intrinsic global value of gold would have to be defined in order to convert various paper currencies. If the original Bretton Woods agreement were to be used as a model, we first divide the respective sizes of each central bank balance sheet by its corresponding official gold holdings. For example;

The Fed reports official US gold holdings to be roughly 8,100 metric tons, or about 286 million ounces.

The US Federal Reserve’s balance sheet liabilities (private banking system reserves) are approximately $2 trillion.

Therefore, the US dollar would have to be pegged to gold at somewhere around $7,000/ounce.

Aggregating the gold holdings of the ECB and the legacy central banks that comprise the Eurozone would imply a $6,300 gold price. Again using the Bretton Woods system as a model, the US dollar and Euro might be designated as “global reserve currencies” because they could most easily be converted to gold. The remainder of participating global currencies could then be made exchangeable into US Dollars/Euros at fixed, but amendable rates (floating foreign exchange rates)."

CIGA Pedro

Dear Pedro,

Mark Faber has the re-entrance of gold into the system down, but I feel he is not wholly clear on how Volcker will recommend the FRGCR as a major dollar crisis below .72 and near .62 on the USDX.

Some readers might consider sending Mark Faber all my articles on the "Modernized and Revitalized Federal Reserve Gold Certificate Ratio (FRGCR)." tied to a measure of international dollar liquidity and the price of gold which floats. A balance sheet problem can only be fixed by a balance sheet fix. Gold floats and fits comfortably into today’s system.

I will not argue with Mr. Farber’s price objectives.

All the best,

Posted by & filed under Jim's Mailbox.


When I saw those infamous words “In essence it is creating new money” I thought of the big helicopter drop and had a good laugh. Inflation? This should be called counterfeiting.

CIGA Marty

Fed bets $800 billion on consumers
Central bank and Treasury announce a massive plan to jumpstart lending.
By Chris Isidore, senior writer
Last Updated: November 25, 2008: 2:33 PM ET

NEW YORK ( — The Federal Reserve and Treasury Department on Tuesday unveiled a plan to pump $800 billion into the struggling U.S. economy in an attempt to jumpstart lending by banks to consumers and small businesses.

The government hopes that these initiatives will enable more money to flow to consumers in the form of loans than has occurred so far in previous bailout plans.

One program will make $200 billion available from the Federal Reserve Bank of New York to holders of securities backed by consumer debt, such as credit cards, car loans and student loans.

In addition, the Federal Reserve, announced it will purchase up to $500 billion in mortgage backed securities that have been backed by Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote home ownership. It will also buy another $100 billion in direct debt issued by those firms.

Together, the programs from the Federal Reserve and the New York Fed are more than Congress approved in October for a bailout of the nation’s banks and Wall Street firms. The Fed said the money will come from an increase in its reserves — in essence, it is creating new money.


Posted by & filed under Jim's Mailbox.

Dear Friends,

I have received close to 700 emails today. I will do my best to reply, yet at this number the task is quite overwhelming.

Truth be known, almost every question has already been answered here on

Respectfully yours,

Dear Jim,

The litany of disasters continues. The Fed has only one alternative to improve its balance sheet – get money from the Federal Government. The government can either borrow from the world through debt issuance, or they can print money. Either alternative exercised is very bad for the US dollar and very good for gold. As always you have called it again and again.

Respectfully yours,

Has the Fed Mortgaged Its Own Future?

The Fed’s highly leveraged balance sheet will make it hard to fight inflation.

IF THE FEDERAL RESERVE BANK WERE A COMMERCIAL LENDER, it would be a candidate for receivership, based on its capital ratios. Bank examiners generally view any lender with a ratio below 2% to be dangerously undercapitalized. The Fed’s current capital ratio, or capital as a percentage of assets, is 1.9%.

The Fed has provided so many loans and emergency credits — to banks, brokers, money funds and foreign countries — that its balance sheet, viewed one way, is as leveraged as any hedge fund’s: Its consolidated assets amount to 53 times capital. Only 11 months ago, its leverage on this basis was a more modest 25 times, and its capital ratio 4%. A caveat: Many of the loans are self-liquidating facilities that will disappear in a few months if the financial crisis eases.

Although the Fed’s role as a central bank is much different from the role of a private-sector operation, the drastic changes in the size and shape of its balance sheet worry even some long-time Fed officials. Its consolidated assets have swelled to $2.2 trillion from $915 billion in about 11 months, and contain at least a half-dozen items that weren’t there before. Some, like a loan to backstop the purchase of a brokerage, Bear Stearns, are unprecedented. (See table for highlights.)

Critics say this action could hinder the Fed in achieving its No. 1 priority: keeping inflation in check. To try to get in front of the crisis, many decisions have had to be made on the fly.

"If the Fed had been [a savings-and-loan] ballooning its balance sheet so fast, the supervisors would have been all over it," says Ed Kane, a Boston College finance professor.



Dear Jim,

In the heart of this derivatives crisis insurance companies are still selling their junk to unsuspecting customers seeking yield. If sovereign bonds are having trouble you can just see these products will blow up in the future, leaving investors hi and dry again and needing more government money.

Keep up the great work,
Ciga Big Tatanka

Insurers cash in on deflation fears
Firms are using the volatility of the stock markets to push poor products
Jennifer Hill

Investors are being lured into discredited products by insurers keen to capitalise on tumbling interest rates and volatile stock markets.

Legal & General (L&G) has reported a 186% surge in sales of with-profits bonds in the first nine months of the year, while Prudential saw a 174% jump in business. Norwich Union has sold bonds worth £1 billion in the first nine months alone.

With-profits bonds, which had fallen out of favour after the mis-selling scandals of the 1980s and 1990s, are an easy sell in the current climate because they are pushed as a “halfway house” between equities and deposit accounts. They invest in a mix of shares, gilts and cash, so claim to be less volatile than the equity markets.

They are also attractive to income seekers because they allow you to take an income of up to 5% a year with no immediate tax to pay. This is particularly attractive following this month’s 1.5 percentage point cut in Bank rate.



Dear Big Tatanka,

When these people depart the mortal coil the only way to keep them departed is to screw them into the ground.

As long as there is someone stupid enough to buy something, someone will manufacture and sell it.