Posted at 8:30 PM (CST) by & filed under Guild Investment.

Dear CIGAs,

Jim Sinclair has earned and deserves you appreciation.

In my opinion, Jim Sinclair deserves great praise and appreciation for his immense contribution. I have seen him call the price movements in gold beautifully, warn you about dangerous investments, identify risks you would never have thought of, explain the most arcane financial and economic information in a simple understandable manner, put you in touch with the thinking of top contributors such as trader Dan Norcini, and provide a great deal of free information to all of his readers at substantial cost to himself.

Running the JSMineset website costs a large amount of money each year. In addition Jim has spent a large amount of his valuable time serving the interests and needs of the investment community for no fee. I would like to express my appreciation to Jim, and I know that you will join me in thanking him for the wisdom and kindness that he has shown to all of the readers of JSMineset.

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Posted at 4:34 PM (CST) by & filed under Jim's Mailbox.

Trader Dan,

Appreciate all you do at www.jsmineset.com

That said, I am reading quite a lot these days from various sources about coming currency/exchange controls in the USA, along with the US Government regulations to be implemented that will force US citizens to sell their private gold holdings to the US Government for less than market value.

When are you and Jim going to address this issue "head on"?

If the dollar is going to collapse in value, as Jim keeps REPEATING over and over, then we all know what is coming. What good is gold in the "mayo" jar going to do for use if it will be a criminal offense (prison time) to hold and sell gold privately? And what good will stock certificates of companies incorporated in one country, doing business in another, and traded in still another do for us if we are NOT ready to expatriate from the US?

It would be the icing on the cake for those policies to be implemented… ESPECIALLY after all the criminals in and out of government have stuffed themselves full by feeding on the bailout and stimulus money they have stolen on top of all the money they have stolen prior to this mess erupting. We are truly being governed by KLEPTOCRATS.

It is TOO much for me to take.

I cannot stomach the idea that the ONLY people to be truly punished will be the savers… those responsible enough to pay as they go, to NOT be indebted, and to save their capital which they are so desperately trying to preserve.

PLEASE … even if you and Jim are not inclined to get vocal about this issue…
PLEASE… if you are indeed SERIOUS about helping what will otherwise be true victims….
PLEASE point us in a direction where we can get the info we need to make arrangements now while there is still time.

Thank you,
Ciga Dan B

Dear Dan B,

I will forward this on to Jim to see if he cares to comment on it. My own view is simply – “Why would the feds need our gold?”

The US Dollar is no longer on a gold standard of any type and therefore the Feds do not need any gold to ramp up dollar printing. Once upon a time, that was the case; it no longer is. They can create unlimited amounts of dollars with their electronic printing press – Bernanke as much as said this exact thing not too many years ago.

I am of the opinion that the Feds will at some point bring gold back into the monetary system in order to save the dollar but that will be done by a revitalized gold certificate ratio clause as Jim has mentioned many times on the site. In order for that to be effective, they will be forced to upwardly revalue their current gold price which is officially valued at the ridiculous price of $42 /ounce. The price will rise high enough to balance out the Federal Government’s outstanding obligations which at the rate they are increasing, means a substantially higher gold price. When that occurs, the price of gold will no longer be free floating in the sense that it is today but it will be more or less a type of floating peg for lack of a better phrase. That means it will oscillate around a set price by maybe $100 or so either way or a bit more depending on its level at the time.

When that does happen, it will be time to sell your gold if you are so inclined.

Gold goes through both bear markets and bull markets but when this bull market is over, the price of gold will not collapse like it did back when the last great bull ended in 1980.

Best,
Trader Dan

PS if you are still worried, then I would suggest you buy silver instead

Dear CIGA Dan,

Gold will not be confiscated. End of discussion!

Dan has explained the correct reasons why not.

In the 1930s very little gold was surrendered, almost none for that matter.

No one was prosecuted in the 1930s for failing to surrender their gold.

Regards,
Jim

Jim,

Look at the Berkshire Hathaway Inc.’s 2008 Annual Report disclosed on Feb 28th.

http://www.berkshirehathaway.com/reports.html

He predicts:

1. "an onslaught of inflation" (page 5): "In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation."

2. An extraordinary Treasury bond bubble  (page 18): "When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary. "

Regards,
CIGA Christopher

 

Dear Mr. Sinclair,

What exactly does this mean?

Regards,
CIGA Marc

US Treasury and Fed mulling special treasury financing to help Fed manage balance sheet.

"Reuters reports the U.S. Treasury Department and Federal Reserve are considering special Treasury financing and allowing the Fed to issue its own debt among ways to enable the central bank to manage its ballooning balance sheet, a source familiar with the deliberations said on Tuesday. The Fed and Treasury said in a statement earlier in the day that they would seek legislation to give the Fed additional tools it would need to control its balance sheet as it funds a program to support consumer lending that could generate up to $1 trillion in lending."

Dear Marc,

Should the Fed start to issue their own bonds (legislation required) they will compete with US treasuries already out there, starting rates upward. It would be a tactical error making it unlikely to occur.

Regards,
Jim

Posted at 3:53 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The setback from $1,000 continues with gold attempting to uncover some buying support to establish a floor from which it may consolidate. It appeared as if the $930-$920 region might hold it but a push from sellers, either from liquidating longs or fresh shorts (it is unclear at this time), took it into a series of sell stops just below that level and knocked it sharply lower on the day. Silver in particular was rocked as it has proved to have lived up  to  its nickname, “the playground of the funds”.

Let me reiterate once again, those of you who have not yet secured any of the physical metal but continue to plow all of your cash into the ETF’s, use price weakness such as these periods to acquire the physical metal. Do not buy it when all of the hedge funds are chasing it higher rather buy it from them as they unload. Be smarter than that group and take advantage of their ineptness as traders – that is exactly what the bullion banks do and why they are so easily able to clean their clocks time after time in the Comex paper markets. If you want to make money in the metals, you cannot imitate the actions of the funds or follow the advice of so many of the newsletter writers who also chase prices higher. Rather, institute a scale down buying program in which you can increase the size of your buys as price moves lower. In that way, you lower the overall cost of acquiring the metals even if you do not catch the exact bottom, something which I might add is pretty much a waste of time attempting to do in our brave, new world ruled by hedge funds and their “World of Warcraft” approach to trading. I want to emphasize that this approach is only for those buying the actual metal – traders must be very careful to buy in at technically significant levels or else you can end up as a statistic with no money left in your commodity account. Practice good trading discipline if you are a trader. That means cut your losses.

The mining shares are holding very well considering the selling barrage hitting the metals today. It could well be that the ratio of the shares to the metal had gotten too far out of whack again and that is being corrected. Either way it is nice to see them holding so well.

Today’s chatter surrounding gold is that record inflows into the gold ETF, GLD, have slowed down or halted. There has not been a reported outflow but neither has there been any increase in reported holdings and that has short term traders moving out waiting for those to resume. Also, there is a bit of thinking that the economic news has been so rotten that deflationary pressures are more likely than inflationary expectations which were beginning to build in the mind of many who are eying the massive liquidity infusions into the system. Short term deflationary-oriented thinking is leading to selling therefore. Lastly, India as a large buyer has been largely absent from gold since it moved to $1,000. They are usually fairly price sensitive over there but I suspect that they are welcoming this price level. We need India to offset any let off in investment demand.

Gold is moving down into very solid support near the $900 level with the region between $890 – $880 (our old friend) particularly looking to attract quality buying. Resistance is now $930 on the upside. I am still looking for a solid, consolidation pattern in gold to emerge. So far it is still probing for a low to a potential trading range. Once we get that, and we might just have done that this morning, then this thing can simmer down a bit and that will bring back the jewelry demand that has been absent and will also bring in the longer-term oriented investment buyers. Right now it is too volatile for many players to get involved. Also, a range trade will be the best thing for this market moving forward since it allows for end users to get accustomed to a newer, higher price level. Sticker shock sets in when markets run too high. I still feel very confident that the kind of buying that has driven gold from $680 to $1,000 was NOT primarily from hot money and the majority of the gold buying will therefore “STICK” pretty well. What you are seeing currently in gold is the exit of that portion of “hot money” that got involved in the recent leg up. They may very well be done for now.

Copper defied the selling trend today and shot sharply higher as stockpiles were drawn down out of the LME warehouses. Some are reading that as a sign that economic activity might have slowed as much as it is going to but others are saying that the drawdown is due to Chinese buying who like the wise traders that they are, are moving the metal into their stockpiles while prices are cheap. You have to hand it to the Chinese; there are no better long term oriented traders in the world. Those guys play chess while the West plays with a checkers’ mindset. China can diversify out of their Dollar holdings and acquire a valuable commodity at bargain prices killing two birds with one stone. Hats off to them for their savvy.

Friends, this madness in the markets is going to be with us a while, I am saddened to say. Your best way to deal with it is to attempt to tune out the day to day gyrations in price and keep a longer term perspective. I know that sounds trite by now but if you allow the hedge fund machinations to shape your fundamentally informed view, you will end up changing your convictions with nearly every tick in price. You cannot beat those guys with their expensive algorithms and computer-generated buying and selling unless you are willing to sit at a screen and trade one minute bar charts and scalp for a living. That might pass for fun among some, but I assure you, try doing that for a few months and see what it does to your family and your health for that matter. For most folks who work for a living and cannot sit in front of a screen all day, they must take a different approach. That means you formulate a long term view and then buy when prices set back and sell a portion of those holdings when momentum chasers run it up. Do it over and over again and you will make money. All you need to do is to take some money out of the middle of the move. Forget trying to nail exact tops and bottoms – that is for braggarts and liars. Let the ever decreasing number of hedge funds cut each other to shreds. Pretty soon only a few will be left.

Bonds are back to tracking equities in the inverse moving higher today on equity weakness and moving lower as equities would move up from their lows. Ditto for the Dollar – it is following the well being or lack thereof  of the broad equity markets actually moving lower as stocks move higher and moving higher when equities plunge.

Crude oil is back above $40 although not by much this AM. I am thinking that some guys are putting on long oil/short gold spreads right now in an attempt to catch what they think is a gold/crude ratio that is too far out of whack. That would explain some of the price action I am seeing in gold vis-à-vis crude oil. Nat gas is back above the $4.00 level which is a positive. Falling energy prices are not helpful to gold since it feeds into that deflationary mindset. Down here in oil country, layoffs are occurring in the oil patch with several projects begin shuttered due to the low prices. That too will eventually feed into reduced supply. Crude oil is setting up for one helluva upside run when this thing finally shifts gears and moves back into an inflationary mindset.

I continue to marvel at the resiliency of platinum which, although weaker today, still remains above the $1,000 level.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

clip_image001

Posted at 2:41 PM (CST) by & filed under General Editorial.

Dear Friends,

There is no end to this. Every friend of the present and past Washington Moguls in this are on the bailout list with no end to the financing of the losers on OTC derivative activities. These funds go in the front door and out the back door to unidentified others.

Markets everywhere are being manipulated and raped by entities that are being provided funds from the Federal Reserve, the hedge funds.

Anyone that thinks Bernanke is stupid is stupid themselves. The only conclusion with this, the lacking reinstatement of the uptick rule, and no action against the naked shorts is that devastation of capitalism and free enterprise is a desired result.

There will come a time in gold when the worldwide demand will totally outstrip manipulative fake paper supply.

Hyperinflation is unavoidable. The holes of many dykes will not stand against the flood of those that are coming to understand how crazy what is being said publicly right now is. It is becoming painfully obvious even to a dedicated numnut.

Respectfully yours,
Jim

Bernanke Says U.S. May Need to Expand Bank Rescue
By Craig Torres and Scott Lanman

March 3 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said policy makers may need to expand aid to the banking system beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits.

“Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today in testimony prepared for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.”

Bernanke’s comments suggest he sees a role for bigger federal outlays as the Obama administration seeks congressional approval for a budget of $3.55 trillion for the fiscal year beginning in October. President Barack Obama has already signed into a law a $787 billion economic stimulus package of tax cuts and government spending.

Obama’s first budget seeks standby authority for as much as $750 billion in new aid to the financial industry. Whether those funds will be needed “depends on the results of the current supervisory assessment of banks” and the evolution of the economy, Bernanke said.

Bernanke said policy makers would have “preferred to avoid” what is likely to be the largest ratio of federal debt compared with gross domestic product since the end of World War II, and he urged lawmakers not to lose sight of fiscal discipline.

More…

Jim Sinclair’s Commentary

With one side of his mouth Bernanke speaks of improving the condition of the Fed Balance sheet as soon as the anticipated recovery in everything economic occurs. On the other side in present times as below, the Fed embarks on buying more worthless crap from the Trillionaire Money Club mafia.

Fed Says Loan Plan to Start March 25, May Add Rentals
By Scott Lanman

March 3 (Bloomberg) — The Federal Reserve said its $1 trillion program to prop up the market for auto and business loans will start disbursing funds March 25 and will probably accept securities backed by vehicle-fleet and equipment leases.

The Fed also lowered interest rates and so-called collateral haircuts for loans tied to asset-backed securities with guarantees by the Small Business Administration or to government- guaranteed student loans, the central bank and U.S. Treasury said in a statement in Washington.

Chairman Ben S. Bernanke and his colleagues, after cutting the benchmark interest rate almost to zero, are counting on the Term Asset-Backed Securities Loan Facility, or TALF, to help revive credit and end what may become the deepest U.S. recession since World War II. The government today signaled it will use the program to support an even broader array of credit markets.

“The expanded program will remain focused on securities that will have the greatest macroeconomic impact and can most efficiently be added to the TALF at a low and manageable risk to the government,” the Fed and Treasury said.

The Fed and Treasury “currently anticipate that ABS backed by rental, commercial, and government vehicle fleet leases, and ABS backed by small-ticket equipment, heavy equipment, and agricultural equipment loans and leases will be eligible for the April funding of the TALF,” which is scheduled for April 14, the agencies said.

More…

Jim Sinclair’s Commentary

This stuff is as toxic as anything out there, yet there is pride-full leaks concerning earnings from OTC derivative granting operations.

This is akin to praising a person for effectively spreading Ebola.

It appears as if these really bad people will never stop until everyone is dead, them included by their own hand.

JPMorgan Said to Reap $5 Billion Derivatives Profit (Update1)
By Matthew Leising and Elizabeth Hester

March 3 (Bloomberg) — JPMorgan Chase & Co. managed to generate $5 billion in profit during the worst year in Wall Street history by trading over-the-counter fixed-income derivatives, two people with knowledge of the results said.

The largest U.S. bank by market value, which reported $5.6 billion of total net income in 2008, hasn’t disclosed earnings for its interest-rate swap, municipal bond and foreign-exchange derivatives group. The unit was among the most profitable at the New York-based company, said the people, who declined to be identified because they weren’t authorized to divulge the figures. JPMorgan spokeswoman Kristin Lemkau declined to comment.

The JPMorgan trading desk, led by the 38-year-old Matt Zames, who previously worked at hedge fund Long-Term Capital Management LP, may have benefited as the collapse of Lehman Brothers Holdings Inc. and JPMorgan’s takeover of Bear Stearns Cos. left companies and hedge funds with fewer trading partners in the private derivatives markets. JPMorgan emerged “unscathed by the disasters” on Wall Street and positioned to capture more revenue as trading volumes grew, said Craig Pirrong, a finance professor at the University of Houston.

“It’s a flight to quality,” Pirrong said. “They expanded the scale of business, the number of trades people wanted to do with them, and it gave them pricing power.”

Derivatives are contracts whose value is derived from an underlying asset such as stocks, commodities or interest rates. Over-the-counter refers to a type of private, unregulated derivative contract banks trade amongst themselves or with clients.

More…

Posted at 1:46 PM (CST) by & filed under General Editorial.

Jim,

Two rumors are starting to move around through the gold chat rooms. I wanted to give you a heads up so you can be prepared to quickly inform the community about them as you see fit. Both rumors have potential to shock weak gold holders into selling.

1. Volcker replaces Timmy. This could lead to a kneejerk gold selloff (based on the past) and equity volatility in both directions.

2. A gold exchange traders fund may have been holding bogus gold bars which have been fabricated by China. This piggybacks some phony Chinese gold coins that have shown up through an article in coin world. This would supposedly cause a selloff in GLD, therein frightening the community.

CIGA Ken

Dear Ken,

1. Volcker’s history of jamming rates could only occur even then with the full support of the sitting administration. To believe anything like that could happen is madness. Replacing the Secretary of the Treasury by this Administration at this time is only something a chat group could come up with.

2. There is reality to fake gold. China is a whipping boy. We have more criminals in the West and need not look to Asia for crime. Maybe start looking in Washington and then move outwards.

If an ETF is in paper gold that fails or has purchased fake gold that is a problem for the holders of that fund and is bullish for gold. Buyer would stop buying paper gold except on the COMEX where they would take delivery out of the COMEX warehouse and stop those criminals from manipulating the gold market. I am always amazed at how silly people can be when it refers to gold.

The internet is a tool of manipulation across the board. Those that believe either of the above chat site madness as negative to gold are raving idiots.

Volcker would be bullish for gold as the Father of the Federal Reserve Gold Certificate Ratio, modernized and revitalized.

What is happening you ask? The Chairman of the Fed is speaking so gold should be lower and the US dollar should be higher. This is a market applause for his total fabrication of fact. Traders knowing this will jump on these directions, having succeeded in the past .

Listen to the Senators question Bernanke. People are getting red in the face mad at this ongoing monetary madness.

Consequences will not be voided .

Hyperinflation is the end of all this madness, lies and outright theft.

Respectfully yours,
Jim

Posted at 6:58 PM (CST) by & filed under In The News.

Dear CIGAs,

The hedgies and OTC derivatives have not only killed everything and everybody they have touched, they both have killed capitalism.

The US dollar will not escape their bloodstained, cursed hands.

All the money from the bailout goes into the company and then out to the counter parties to AIG OTC derivative counter parties.

The financial black hole idea is total bulls**t. All that money is in the system in a concentrated form.

When the super wealthy criminals have all the paper money then they will have one hell of a paper problem.

Today’s AIG Bailout Won’t Be Its Last (AIG)
Joe Weisenthal|Mar. 2, 2009, 8:15 AM|clip_image0017

This morning the government officially announced plans to prop up AIG with another $30 billion, deeming the potential systemic risk of a collapse to be too great. Perhaps we should stop calling this a bailout of AIG, which, after all, has seen its stock killed. It’s basically worthless. It’s the company’s counterparties that are getting bailed out each time.

Everytime AIG has reworked its deal, we’ve been sure that it wouldn’t be the last time, and again, it doesn’t look like this will be either.

As significantly, the restructuring components of the government’s assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company’s finances. The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm. This will take time and possibly further government support, if markets do not stabilize and improve.

In other words, it’s a matter of when, not if AIG’s counterparties will need to be bailed out again

More…

Jim Sinclair’s Commentary

This is where we are headed:

Usdollar100Marx.jpg

 

OTC derivatives:

"Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth – the soil and the labourer."
–Karl Marx

The last 8 years:

"For the bureaucrat, the world is a mere object to be manipulated by him."
–Karl Marx

The Federal Reserve bailouts today:

"In bourgeois society capital is independent and has individuality, while the living person is dependent and has no individuality."
–Karl Marx

What is to come:

"Men’s ideas are the most direct emanations of their material state."
–Karl Marx

 

Jim Sinclair’s Commentary

Contrary to present opinion, AIG is a fine insurance company. It has insured the event of hyperinflation. Hyperinflation guarantees that Alf will be correct on the price of gold.

All of this a gift from the OTC Derivative manufacturers and distributors presently counting their huge ill gotten gains.

The new way to succeed is to be politically connected while trashing your company and employees.

Regards,
Jim

 

BNY Mellon’s fx team: Ultimately, buy gold
Posted by Izabella Kaminska on Feb 26 15:16.

Bank of New York Mellon’s London-based currency strategy team (made up of Simon Derrick and Neil Mellor) presented on Wednesday a very compelling view of what to expect in the forex markets in the next year.

The short view: euro, yen weakness cometh as the dollar strengthens. The longer three to six month view – ultimate dollar weakness and a gold rally.

Now for the very macro rationale…

Looking back over the crisis BNYM explain how most fx moves since 2001 could largely have been expected as they made complete rationale sense – eg. the development of the carry-trade because of Japan’s accomodative policy etc, and a hike in global liquidity because of low rates in the US. As they explain:

More…

Jim Sinclair’s Commentary

On and on it goes. Hyperinflation will not be avoided.

U.S. Treasury and Federal Reserve Board Announce Participation in AIG Restructuring Plan

Washington, DC – The U.S. Treasury Department and the Federal Reserve Board today announced a restructuring of the government’s assistance to AIG in order to stabilize this systemically important company in a manner that best protects the US taxpayer. Specifically, the government’s restructuring is designed to enhance the company’s capital and liquidity in order to facilitate the orderly completion of the company’s global divestiture program.

The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year and continued turbulence in the markets generally.  The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.

As significantly, the restructuring components of the government’s assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company’s finances. The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm.  This will take time and possibly further government support, if markets do not stabilize and improve.

Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high.  AIG provides insurance protection to more than 100,000 entities, including small businesses, municipalities, 401(k) plans, and Fortune 500 companies who together employ over 100 million Americans. AIG has over 30 million policyholders in the U.S. and is a major source of retirement insurance for, among others, teachers and non-profit organizations.  The company also is a significant counterparty to a number of major financial institutions.

More…

Jim Sinclair’s Commentary

Harvard is getting killed in OTC derivatives. Harvard has the greatest influence on the Obama Administration.

Does that give you a hint of what we are in for.

Failing at Harvard: Ivy Cash King Tumbles
Harvard University Pays the Price for Exotic Bets
By BERNARD CONDON and NATHAN VARDI 
Forbes.com
March 1, 2009

Stocks were tumbling last fall as the new school year began, but at Harvard University, it was as if the boom had never ended.

Workers were digging across the river from Harvard’s Cambridge, Mass., home, the start of a grand expansion that was to eventually almost double the size of the university. Budgets were plump, and students from middle class families were getting big tuition breaks under an ambitious new financial aid program.

The lavish spending was made possible by the earnings from Harvard’s $36.9 billion endowment, the world’s largest. That pot was supposed to be good for $1.4 billion in annual earnings.

Behind the scenes, though, a different story was unfolding.

In a glassed-walled conference room overlooking downtown Boston, traders at Harvard Management Co., the subsidiary that invests the school’s money, were fielding questions from their new boss, Jane Mendillo, about exotic financial instruments that were suddenly backfiring.

More…

Jim Sinclair’s Commentary

Here is a question that carries with it a logically inviting conclusion.

If one Gold ETF claims not to be an OTC derivative Gold ETF that means that others are OTC derivative Gold exchange traded funds.

Be careful "HOW" and "WITH WHAT VEHICLE" you protect yourself.

Allocated Gold Only for Dubai ETF
By: Peter Cooper, Arabian Money
Posted Monday, 2 March 2009

The Nasdaq Dubai and World Gold Council launched its long awaited gold exchange traded fund today, which is both Shariah compliant for Islamic investors and 100 per cent backed by physical gold.

‘This is not a derivative product because it is 100 per cent backed by allocated gold held in London vaults by HSBC, and audited both by traditional and shariah auditors,’ CEO of the WGC Aram Shishmanian told ArabianMoney.Net.

Allocated gold

He said it was important to understand the difference between unallocated and allocated gold. ‘The Dubai ETF has allocated gold, so there is no third party between the metal and its owner. The ETF certificate is an entitlement to one-tenth of an ounce of gold.’

Trading under the ticker symbol GOLD, the new ETF is the first new launch on the Nasdaq Dubai this year, and the one-time 60 basis point charge is exactly the same as other existing ETFs.

Will this make the Dubai ETF sufficiently different to attract regional investors who already have the exchanges of the world at their finger tips?

‘We have launched a series of ETFs around the world and have always found that a regional product stimulates new demand,’ said Simon Village, executive director of Dubai Commodities Asset Management.

More…

 

Jim Sinclair’s Commentary

Lacker calls for the US Treasury to bail out the Fed. Independence is NOT the issue. The Fed balance sheet is the issue.

Lacker knows what markets do not. The condition of the Federal Reserve Balance sheet is an open invitation to hyperinflation.

Hyperinflation is always associated with slow growth.

Fed’s Lacker Says Mistake to Rely on Slowing Growth
By Craig Torres and Anthony Massucci

May 23 (Bloomberg) — Federal Reserve Bank of Richmond President Jeffrey Lacker said it would be a mistake to rely on a slowing economy rather than central bank policy to curb inflation.

“It is central banks, not the labor market, that drive inflation down,” Lacker said in a speech to the Money Marketeers of New York University yesterday. “Clear communications accompanied by consistent actions could bring about a relatively prompt and low-cost reduction in inflation.”

Lacker, who alone voted to lift interest rates in the last four meetings of 2006, said after the speech he was “comfortable” for now that the Fed’s benchmark rate of 5.25 percent will achieve the bank’s aims.

His doubt that slower growth will cause inflation to recede clashes with the outlook of policy makers such as San Francisco Fed President Janet Yellen. Lacker has repeatedly warned of the danger that inflation expectations will drift higher the longer that price gains exceed officials’ comfort zone.

More…

Fed’s Lacker:Fed credit programs risk independence
By Alister Bull

ARLINGTON, VA March 2 (Reuters) – Emergency credit market support from the Federal Reserve has sidestepped Congress and could expose the U.S. central bank to political pressure that hurts its independence, a top Fed policy-maker said on Monday.

‘Using the Fed’s balance sheet is at times the path of least resistance, because it allows government lending to circumvent the congressional approval process,’ Richmond Federal Reserve Bank President Jeffrey Lacker said.

‘This risks entangling the Fed in attempts to influence credit allocation, thereby exposing monetary policy to political pressure,’ he told the National Association for Business Economics during a luncheon speech.

Lacker, a voting member of the Fed’s policy-setting committee this year, dissented at its meeting in January to protest against targeted credit easing programs that have pumped hundreds of billions of dollars into financial markets, which have been locked up in panic over bank losses.

He objected to the intrusion of the Fed into private sector lending decisions, and would have preferred the U.S. central bank ease credit conditions via the purchase of U.S. Treasury securities.

More…

Fed’s Lacker: Opposes Fed policy for picking winners, losers

WASHINGTON (MarketWatch) – Jeffrey Lacker, the president of the Richmond Federal Reserve Bank , said Monday that one reason he is opposed to the Fed’s new credit easing policy because it is picking winners and losers in the market. "While some market segments benefit from reduced funding costs, others may actually see their costs rise as credit is diverted to those markets that have been targeted for support," Lacker said in a speech to business economists. Lacker dissented from the Fed’s last policy statement in late January. Lacker wants the Fed to expand its monetary base but only though purchases of Treasurys because they are a more "neutral" asset class that would not impact other markets. Lacker said that there may be sound market basis that some credit channels are "frozen," suggesting that targeting credit programs are not needed.

More…

 

CIGA Marc’s Commentary

The US dollar or Gold? For me the choice is simple!  Particularly thanks to Mr. Sinclair.

Emerging economies eye gold reserves as dlr fears rise
Mon Mar 2, 2009 9:11am EST
By John Irish and Luke Pachymuthu

DUBAI, March 2 (Reuters) – Major emerging economies are seeking to raise their central banks’ gold reserve holdings as fears of a sharp depreciation in the U.S. dollar mount, senior industry officials said on Monday.

Investors have been piling into gold as a safe haven as the the world’s worst financial crisis since the 1930s depression sent global stock markets crashing.

"In this recession it is India and China which are going to grow at a slow rate, but they are growing," said Aram Shishmanian, chief executive officer of the World Gold Council.

"And they will naturally be looking to gold as part of their reserve asset management strategy, and=2 0I see them buying."

China, the biggest foreign holder of dollar denominated treasury securities with some $681.9 billion or about 12 percent of treasury papers outstanding, could reverse that by paring its dollar holdings.

More…